- Carr, Nicholas G. Does IT Matter? Boston: Harvard
Business School Press, 2004. ISBN 1-59139-444-9.
- This is an expanded version of the author's May 2003
Harvard Business Review paper titled “IT Doesn't
Matter”, which sparked a vituperous ongoing debate about the rôle
of information technology (IT) in modern business and its potential
for further increases in productivity and competitive advantage for
companies who aggressively adopt and deploy it. In this book, he
provides additional historical context, attempts to clear up common
misperceptions of readers of the original article, and responds to
its critics. The essence of Carr's argument is that information
technology (computer hardware, software, and networks) will follow
the same trajectory as other technologies which transformed business
in the past: railroads, machine tools, electricity, the telegraph and
telephone, and air transport. Each of these technologies combined high
risk with the potential for great near-term competitive advantage for
their early adopters, but eventually became standardised “commodity
inputs” which all participants in the market employ in much the same
manner. Each saw a furious initial period of innovation, emergence
of standards to permit interoperability (which, at the same time,
made suppliers interchangeable and the commodity fungible), followed
by a rapid “build-out” of the technological infrastructure, usually
accompanied by over-optimistic hype from its boosters and an investment
bubble and the inevitable crash. Eventually, the infrastructure is
in place, standards have been set, and a consensus reached as to how
best to use the technology in each industry, at which point it's
unlikely any player in the market will be able to gain advantage
over another by, say, finding a clever new way to use railroads,
electricity, or telephones. At this point the technology becomes a
commodity input to all businesses, and largely disappears off the
strategic planning agenda. Carr believes that with the emergence
of low-cost commodity computers adequate for the overwhelming
majority of business needs, and the widespread adoption of standard
vendor-supplied software such as office suites, enterprise resource
planning (ERP), and customer relationship management (CRM) packages,
corporate information technology has reached this level of maturity,
where senior management should focus on cost-cutting, security, and
maintainability rather than seeking competitive advantage through
innovation. Increasingly, companies adapt their own operations to
fit the ERP software they run, as opposed to customising the software
for their particular needs. While such procrusteanism was decried in
the IBM mainframe era, today it's touted as deploying “industry best
practices” throughout the economy, tidily packaged as a “company in a
box”. (Still, one worries about the consequences for innovation.) My
reaction to Carr's argument is, “How can anybody find this remotely
controversial?” Not only do we have a dozen or so historical examples
of the adoption of new technologies, the evidence for the maturity
of corporate information technology is there for anybody to see.
In fact, in February 1997, I predicted that Microsoft's
ability to grow by adding functionality to its products was about
to reach the limit, and looking back, it was with Office 97 that
customers started to push back, feeling the added “features” (such
as the notorious talking paper clip) and initial lack of downward
compatibility with earlier versions was for Microsoft's benefit, not
their own. How can one view Microsoft's giving back half its cash
hoard to shareholders in a special dividend in 2004 (and doubling
its regular dividend, along with massive stock buybacks), as anything
other than acknowledgement of this reality. You only give your cash
back to the investors (or buy your own stock), when you can't think
of anything else to do with it which will generate a better return.
So, if there's to be a a “next big thing”, Microsoft do not anticipate
it coming from them.
August 2004 