Nicholas G' Carr

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Does IT Matter?

• Nicholas G. Carr

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A strategic view of IT
Book May 2004
Article May 2003
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Two types of technology

• Proprietary
• can be owned, actually or effectively, by a
  single firm
• e.g., patents, secrets, exclusive licenses
• Infrastructural
• Is shared broadly by all firms in an industry or
  region
• e.g., rail, telegraph, telephone, electricity, IT

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Evolution of infrastructural technology
Proprietary advantages
Weak advantages
Diminishing advantages
Ubiquity
Advantage potential
Time
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Hardware commoditization
PCs
Servers
Storage
Network
Commoditization
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Software commoditization

• Extreme economies of scale in production
• lead to
• Sharing and vendorization
• lead to
• Overshooting and declining returns
• lead to
• Homogenization and commoditization
• Now open source, off shoring, factory
  production

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Vanishing advantage

• Distinctive systems once provided competitive
  barriers
• Access Americans Sabre
• Closed network AHSs ASAP
• Insight Reuters Monitor
• But barriers have rapidly eroded as
  accessibility, affordability, and standardization
  have increased

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The key lesson for users

• When an infrastructural technology becomes a
  competitive necessity but no longer provides
  strategic differentiation . . .
• Cost control and risk management become more
  important than investment and innovation

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New imperatives

• Focus on vulnerabilities, not opportunities
• Spend less
• Follow, dont lead

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Thank You