According to a Harvard Business Review (subscription required) article “IT Doesn’t Matter”, the information technology industry has matured, and executives need to change the way they view IT purchase and management. In the article Nicholas Carr argues that information technology has become standardized and commoditized to the point that managers need to focus more on the risks associated with IT than they do on strategic advantages developments in information technologies can provide.

Simply put, the article urges managers to “make IT management and purchase boring”. Carr compares the life cycle of information technology to the lifecycles of other infrastructural technologies such as railroads and the telegraph. He points out that, in these industries, the window for opportunity to use emerging technologies to develop a competitive advantage is very brief. Carr argues that once the initial development or “build out phase” occurs, infrastructural technologies become more of a tactical commodity than a strategic opportunity.

For instance, many companies who blazed the trail during the build out phase of information technologies were able to benefit from their early adoption and foresight. They may have taken some risks, but their risks had the potential to deliver substantial rewards. Carr cites the following five points as indicators that the IT build out phase is over.

  1. The power of IT has surpassed the needs of businesses
  2. Prices have dropped to levels where virtually anyone can afford
  3. Capacity for distribution (the internet) has caught up with demand
  4. IT vendors are repositioning themselves to be commodity suppliers. (Microsoft’s shift toward yearly subscriptions and updates and Dell’s shift toward sever management are good examples.)
  5. The investment “bubble” has already burst.

At this point in the lifecycle of IT, Carr argues that there is no need to take risks when managing IT. He states, “The key to success, for the majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously.” Carr even cites overpayment as one of the biggest risks associated with IT expenditures. In order to effectively manage IT purchases in the future, Carr makes three suggestions.

The first is to Spend Less. The higher the capital outlay on a given piece of technology, the lower the chance of recouping your ROI will be.

The second is to Follow, Not Lead. While this advice may seem counter-intuitive, being on the cutting edge becomes less beneficial as information technologies become more commoditized. When it comes to mature infrastructural technologies, blazing the trail increases your chances of purchasing flawed technology or technology that is “doomed to rapid obsolescence” while creating little strategic upside.

The third and final suggestion Carr makes is to Focus on vulnerabilities, not opportunities. He uses electricity as an example. While there is little strategic opportunity when it comes to the use and application of electricity, a company would crumble if they lost electrical power. Carr states that IT managers and purchasers should shift their focus away from capturing emerging technologies and toward safeguarding their systems against “technical glitches obsolescence, service outages, unreliable vendors or partners, security breaches, and even terrorism.”
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