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Nicholas Carr’s “IT Doesn’t Matter” Featured

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Assignment

Nicholas Carr’s argument that IT has lost its strategic value for non-IT organizations is not correct. To the most part, the background to his argument is fact-based. It is correct to state that companies spend millions of dollars developing proprietary IT applications with the aim of gaining a competitive edge. Carr is also correct that these applications are more valuable when used in isolation, contrary to the case of infrastructure, which is more valuable when shared. It is also correct for Carr to state that the internet’s speed and standards have reduced the potential of companies to earn a competitive advantage through creation of IT applications. However, it is inaccurate to state that non-IT companies should not be at the forefront in the adoption of IT innovations because they do not offer a competitive advantage. In defense of the argument that IT innovations provide strategic value, I present the following evidences

  • The marginal cost of information products, especially IT applications or software, does not increase with increased scale or expansion (Strassmann, 2003).
  • Wal-Mart, one of the most beneficial non-IT companies traces the most part of its success to strategic integration of IT into its business processes (Hunter, McDonald, & Broadbent, 2003)
  • Impact from IT comes from incremental innovations, not “big-bang’ innovations, (Brown & Hagel, 2003).

Perhaps, it is necessary to expound on the evidences presented, in order to make them better understood.  In relation to the first point, investment in IT differs from investment in railroads, telephones, electric generators, and steam engines as Carr cites to justify his assertions. For these investments, marginal costs increase with an increase in the scale of the investment. However, according to Strassmann (2003), the marginal cost of investment in IT products does not increase with an increase in scope. In relation to the second bullet, organizations must also improve their business practices to accommodate IT applications (Brown & Hagel, 2003). Wal-Mart is a testimony of success that non-IT organizations can gain from investment in IT innovations. In relation to the third bullet, the strategic gain from IT investments is a result of gradual investments, rather than a one-off investment.

References

Carr, N. (2003). IT Does not Matter. Harvard Business Review, May 2003, R0305B

Strassman, P. (2003). Letter to the Editor. In Does IT Matter? An HBR Debate. ww.johnseelybrown.com/Web_Letters.pdf

Broadbent, R., McDonald, M., & Hunter, R. (2003). Letter to the Editor. In Does IT Matter? An HBR Debate. ww.johnseelybrown.com/Web_Letters.pdf

Brown, J. & Hagel, J. (2003). ). Letter to the Editor. In Does IT Matter? An HBR Debate. ww.johnseelybrown.com/Web_Letters.pdf

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