ASSIGNMENT: EMBA 607-MIS

NAME: HUSEINI MOHAMMED

INDEX NO.: 10326174

Introduction: Nicholas G. Carr In his article, published in the May 2003 edition of the Harvard Business Review, he examines the evolution of information technology in business and show that it follows a pattern strikingly similar to that of earlier technologies like railroads and electric power. For a brief period, as they are being built into the infrastructure of commerce, these "infrastructural technologies," as he calls them, open opportunities for forward-looking companies to gain strong competitive advantages. But as their availability increases and their cost decreases - as they become ubiquitous - they become commodity inputs. From a strategic standpoint, they become invisible; they no longer matter. The following debate Against and For IT commoditization ensures. IT offers no competitive edge: The commoditization of hardware and software will make it increasingly difficult for companies to leverage IT to achieve sustainable competitive advantage. So said Nicholas G. Carr. He maintains that technology has become so pervasive "that [companies] can still innovate ... but the competitive advantage" gained through the use of IT can quickly be neutralized by corporate rivals, he said. And as companies have become more concerned about the cost of IT investments, Carr argued, "the center of innovation has moved from the user to the vendor. Users are saying, "I just want [technology] that's good enough from low-cost suppliers," he said. That phenomenon has already begun to play out for customers of third-party software, said Carr, pointing to the CRM market as a prime example. Until recently, vendors such as Siebel Systems Inc. built only sophisticated and expensive systems for corporate customers. Then low-cost rivals such as Salesforce.com Inc. hit the scene with cheaper and simpler CRM systems, forcing Siebel and others to respond with comparable offerings. As a result, the industry is reaching a point "where the technology becomes a necessity but no longer remains a source of competitive advantage," he said. Early adopters of leading-edge technologies are "going to pay a lot for the competitive advantage of a new technology, but they won't be able to maintain that advantage long enough to make [the investment] worthwhile." Carr said the same argument can be applied to homegrown software that companies develop themselves to help provide a service or product ahead of the market. The window of opportunity for companies to capitalize on internally developed applications is shrinking, Carr said. Instead, companies should strive to use existing technology "as efficiently as possible," he said, and not bother investing in technology that can provide, at best, only a short-term competitive edge. As I make clear in the piece, the IT infrastructure is indeed essential to competitiveness, particularly at the regional and industry level. My point, however, is that it is no longer a source of advantage at the firm level - it doesn't enable individual companies to distinguish themselves in a meaningful way from their competitors. Essential to competitiveness but inconsequential to strategic advantage: that's why IT is best viewed (and managed) as a commodity. McNee, a former Gartner Inc. analyst, said he disagreed with Carr's conclusion that IT innovation has slowed to a crawl. "IT is not dead, innovation is not dead," said McNee, pointing to recent technological advances in radio frequency identification tags and nanotechnology. "I'd say we're in the fourth or fifth inning of this thing." Drawing upon his experiences at Gartner and Saugatuck Technology, McNee
LECTURER: BISMARK DZAHENE-QUARSHIE, UGBS

ASSIGNMENT: EMBA 607-MIS

NAME: HUSEINI MOHAMMED

INDEX NO.: 10326174

estimated that "maybe" 5% of Fortune 2,000 companies could be characterized as leading-edge technology adopters, while another 15% to 20% manage to keep pace with current technology. The rest, he said, could be considered tech laggards. Therefore, McNee said, "there are very few firms that use IT as a strategic weapon." McNee also agreed with Carr that IT innovation can't provide companies with sustainable competitive advantage. But, he said, "channel masters" such as Wal-Mart Stores Inc. will continue to invest in IT wisely to help them dominate their respective markets Dan London, a partner in Accenture Ltd.'s Atlanta office, agreed that IT "in itself can't provide [a company's] competitive advantage." The companies that will succeed, said London, are those that apply IT effectively to gather the right information quickly for top brass to make informed business decisions.

Steve Lohr makes two critical points that ". . . it is possible to agree that technology can deliver broad productivity gains without necessarily delivering higher profits or competitive gains for individual companies, a point made by Mr. Carr. It is also possible to agree that the technology industry continues to be innovative and important, without also accepting that it will be a growth industry as it has been in the past." Software company CEOs say: "We just closed several deals with leading Fortune 100 companies using our software to differentiate their ability to get vast international sales and marketing ecosystems working together to respond faster and more correctly to customers. This is not a 'me too!'" But if he's already sold the same system to "several" Fortune 100 companies, one has to wonder how differentiating the technology really is. It's difficult to purchase competitive advantage from an outside supplier who's peddling the same "advantage" to your peers. Michael Schrage says in many markets "information has become so plentiful that it has become commoditized and marginalized" and who also recently said that "there is no correlation at all between innovation and profitability. Anybody who thinks there's a correlation between innovation and profitability doesn't understand innovation and doesn't understand profitability." Colin Boag notes that "support, maintenance and upgrades are the biggest problems faced by many businesses." IT offers competitive edge General Motors CIO Ralph Szygenda says business-process improvement, competitive advantage, optimization, and business success do matter and they aren't commodities. To facilitate these business changes, IT can be considered a differentiator or a necessary evil. But today, it's a must in a real-time corporation . . . I also agree on spending the minimum on IT to reach desired business results. Precision investment on core infrastructure and process-differentiation IT systems is called for in today's intensely cost-conscious business versus the shotgun approach sometimes used in the past According to Computerworld "You can get real business advantage with technology. You just don't get it from products, services and information. You get it from processes, skills and execution - the same things that let any business differentiate itself in ways that don't involve IT." Bill Gates said, "And so when somebody says, IT doesn't matter, they must be saying that with all this information flow, we've either achieved a limit where it's just perfect, everybody sees exactly what they
LECTURER: BISMARK DZAHENE-QUARSHIE, UGBS

ASSIGNMENT: EMBA 607-MIS

NAME: HUSEINI MOHAMMED

INDEX NO.: 10326174

want, or we've gotten to a point where it simply can't be improved - and that's where we'd object very strenuously." Just to be clear, what the article argues is that we're at the point where any technological improvement in the management of information will be quickly and broadly copied, rendering it meaningless for competitive advantage. David Kirkpatrick said the source of competitive advantage in business is what you do with the information that technology gives you access to." Yes, but how companies use the information they collect - about markets, operations, money flows, etc., - has always been a potential source of advantage, or disadvantage. (The same could be said of the way they use electricity Jack McCredie, CIO of the University of California at Berkeley, says that "at least in higher education, IT certainly matters." Conclusion Its early in calling a turning point for the IT industry -- for some companies, there probably still is strategic value left to be squeezed out of clever implementation of information technology. But the elbow room for seizing sustainable leads through technology is clearly diminishing as standards proliferate and computing power accelerates.

LECTURER: BISMARK DZAHENE-QUARSHIE, UGBS