IT Doesn’t Matter was an article written by: Nicholas G. Carr for the Harvard Business Review Magazine in 2003. The article outlines a situation, not quite as its title suggests, that IT is less relevant that it used to be in terms of a competitive advantage in Industry. This essay will consider what the point of view of Mr Carr is and whether it is a fair and accurate reflection of the reality on the ground.
With the benefit of 9 years of hindsight, It’s more of a case of what lessons can be learned and what nuggets of wisdom can be extracted from the article and apply the lessons learned to my industry, Property Sales and rentals. The Article. IT Doesn’t Matter. 2003. Nicholas G. Carr. This article created a bit of a stir when it was written. There were plenty of letters to the editor*, Thomas A Stewart, of the Harvard Business Review following publication of the article, from writers outlining their levels of agreement and frustration. *HBR June & July 2003. Letters to the Editor.
So what was the fuss about? Nicholas Carr’s article title suggests that in today’s world that IT does not matter. This is of course a ridiculous assertion as the whole modern world is co-ordinated largely through some form of IT whether it is in Business, leisure, Government administration, healthcare Etc. What Carr was getting at was that IT in business initially was a tool used to give a strategic advantage to a particular company that chose to adopt it. As the hype of IT caught on, and huge investment was poured into it, it became a ‘must have’ in business.
The problem Carr is getting at is that nowadays, everyone has IT and it no longer gives the company that uses it any advantage over their competitor. An analogy I liked that was used to convey this point was the comparison of IT rollout to the rollout of electrification of the US in the early 20th century. If you were a company then with electricity when many of your competitors had not, you had a huge advantage. When everybody eventually had access to reliable sources of power, then Electricity, whilst is absolutely vital no longer gave a company he competitive edge. In my view, this is in essence, plus a few going forward pointers, what the article is trying to say. Is the Article any good? I like his style and his David and Goliath attitude in taking the fight to the Big Boys. He was critical of the big Computer companies aligning themselves as Utility companies to extract even more funds from consumers that already had enough IT power. He didn’t like the rhetoric and sales pitch they made for the necessity of ongoing software upgrades.
He encourages companies to fine tune their organisations rather than throwing money at more resources to cope with the inefficiencies which would be something that rings true to my Modus Operandi in business. However, there has to be a balance employed. Modernisation, threat of obsolescence and a certain acceptance that your boat must rise with the technological tide has to be considered. IT has moved on considerably since the article was written in 2003. We have had massive IT companies come forward in that time like Google, Facebook and the resurgence of Apple.
It has to be fair to say that 2003 was hardly the point where the end of the line of strategic innovation was in sight? I would have left it there only for a few insights provided by my friends over Sunday breakfast……. Companies have used the products of these big new companies to enhance their business models to great effect since then and indeed a company with all the latest and greatest IT bells and whistles in 2003 would be in the dark ages today if they took Carr’s advice and fine tuned rather than upgraded.
It’s also fair to say that if the whole world took Carr’s advice and we were all running older leaner products, we wouldn’t be any wiser. There would be a dearth of IT innovation and many high end jobs today would have disappeared or never have been invented. I’m sure today Mr Carr is the owner of a Smart phone, an Mp3 player, a Sat Nav, Tablet computer, and running a more modern version of the initial Windows XP of 10 years ago. Fair enough, what’s it got to do with you though? You are hardly a Google or a Microsoft. I work in the property Industry in Galway.
I currently concentrate on Residential Rentals but have been involved in Property Sales for 10 years prior to that. In that time, the industry has gone from a wink and a nod with a paper file under your arm to a business that is essentially IT in all its administration. As I work through the article, it is surprisingly relevant to the experience I have had in the two companies I do work for since starting in my property career in 2000. I studied Estate Management (BSc Hons) in Birmingham from 1997 – 2000 and IT was being rolled out to beat the band.
It was probably not long after than that when Carr started to notice the seismic shift in attitudes to IT at the time. The Y2K Millennium bug was making its debut alongside the dot com bubble and IT spend in US was accounting for up to 50% of capital expenditure (US Dept of Commerce’s Bureau of Economic Analysis). Carr was probably giving the environment around him a lot of thought. The Y2K and the dot com bubble came and went. Meanwhile, Birmingham University were buying PCs and wiring the halls of residences with phone/internet lines.
At that time, internet access had to be booked at the library reception and only 10 PCs served the students. Nevertheless, we and the University management were aware of its importance and embraced it. When I finally graduated and started with O’Donnellan & Joyce Auctioneers in 2000, only the secretary’s had PCs. Just like Carr pointed out that it was once regarded as little more than the tool of a typist. During that year we provided a PC on a desk to whoever wanted one. The year after that we hired a company to build a website that could be updated easily, the first multimedia updatable property website in Galway with property pictures.
This went down a storm with the clients. They all knew about the importance web presence and the advantage of IT but knew little else about them. We were on a winner, and O’Donnellan & Joyce started to pull away from the competitors. O’D&J is the biggest real estate agency in the West of Ireland, it was at that point when the website was launched that started the company off in distinguishing itself from the others, all in the name of strategic advantage. Sherry Fitzgerald set up shop shortly after with a flashy national website.
The other competition soon followed and interestingly thereafter having your own website was no big deal. There were 2 new kids in town, Daft. ie & Myhome. ie and they were positioning themselves as web based utility companies for the real estate industry, just as Carr outlined in the case of IBM and Microsoft. Daft. ie quickly pushed Myhome. ie aside, especially outside Dublin, and for a nominal fee provided estate agents with a mass audience, far greater than their own websites that was ell positioned and somebody else looked after the headache and costs associated with running your own website. Agents still have their own websites but they are utensils of the trade that attract far less resources than before. Perhaps, IT is on a cycle, like the railroads and the Electricity network that attracted huge resources initially and now that it’s set up and running it is running on tick over mode maintaining a slight upward trajectory for now and heading for Commoditisation.
This was displayed in Graph form in the article and showed how new technologies of the time grew rapidly through huge initial investment, massive capacity and growth to meet demand and then falls off quickly again. It doesn’t fall off a cliff though; it steadies itself and become a necessity, a commodity but not necessarily an advantage over competitors. Where to now then? This can be answered two ways: 1. Search for new strategic advantages 2. Manage the IT that you have into the future
Search for new strategic advantages: Strategic advantage is not always IT based. In O’Donnellan & Joyce we were the first agency that started doing open viewings in Galway and it was a huge hit with vendors and buyers. This advantage is maintained today and our roll out of selling by auction has further compounded the advantage. I don’t think Carr expected the great new ideas like LinkedIn, Twitter and Facebook pages that came along after his article. They’re all great new advantages, linking staff with clients, clients with their friends and increasing the following all the time.
Manage the IT you have: Carr came up with 3 rules for IT Management going forward. They are: 1. Spend less: Carr hits on a very interesting area here. I would certainly agree with him to a great extent. He argues that big spend on IT does not necessarily translate into big results. He feels that companies are overspending on IT in pursuit of a competitive advantage which for the large part is no longer there. He is perhaps a little strong on the point and constant rejuvenation and tweaking of systems and procedures is good for a company whether its IT related or not.
In our own organisation, the days of big IT spend are gone for the foreseeable future. The cost will always be ongoing but occasional hardware and software updating is the only company IT cost. 2. Follow, don’t lead: I think from an IT point of view, Carr is on the money on this one. I remember requesting Dell X5 palm pilots for the sales staff. In terms of usability it was a disaster. I reckoned we could utilise them before anyone else and make ourselves more modern and streamlined etc. Had I waited, the smart phones of today would do the same job.
That was one time I wished I followed and didn’t lead. 3. Focus on vulnerabilities, not opportunities: Carr tells us in his article that we should be very careful while riding the technological wave, as all these IT systems that we now rely on could leave our companies very vulnerable should they fail for any reason. In our office much of what we produce on a computer is backed up remotely and we have paper files too. But we don’t have everything and what a hassle it would be trying to put the bits back together if it all went on the blink. Conclusion:
Carr has produced a very courageous and thought provoking article. I liked his challenge to the popularly held beliefs that IT is to be revered in business and the never ending pursuit of rolling it out should continue. It was an article that made me realise that in my own line of business, and perhaps many others that what Carr is saying is actually going on without us necessarily realising it. Traditional IT investment does seems to be rolling back a bit, perhaps because of recession or maybe smart technology is taking over from the tradition desktop PC.
More emphasis on Utility IT like Cloud computing (i. e. a third party storing your data), Daft. ie etc is taking a lot of upfront IT costs away from Companies. Perhaps it’s all just IT evolution. ………… www. smashingapps. com/2011/04/06/evolution-of-computers-whats-next-cartoon. html * The front cover image was chosen from a selection of MS Word clipart images. It was used to tie in the examples used in Carr’s article, i. e. the rollout of the railroads, and electrification, and the application to my Industry… real estate. All variables present in a train station.