Does IT really matter and why in new project pitches

¶ … waves because he took a position on information technology (IT) that went against the grain of how modern corporate cultures conduct their business and operate their technologies. In his article, Carr asserts that because so many companies depend so heavily -- and spend so heavily -- on IT, and because IT had become (in 2003) so ubiquitous in the daily activities of corporations, its strategic value has been severely diminished. Why did Carr take this position and does it hold up to the technological realities in 2011? What were the reactions from other technology sources to Carr's position? These issues and questions will be reviewed and critiqued in this paper.

What is Carr's salient argument? He writes, "You only gain an edge over rivals by having or doing something that they can't have or do" (Carr, 2003, p. 1). Hence, he goes on, the fact that all companies have IT, and that IT resources have become "essential to competition but inconsequential to strategy" it creates more "risks" than the obvious advantages it offers (p. 2). One of Carr's bones of contention against companies spending more and more dollars on IT is that too much money is spend on "discretionary, unnecessary, or even counterproductive" items. He uses the example of PCs, which corporations spend millions updating constantly when, according to Carr, as a general rule they are only used for word processing, email, Web browsing and spreadsheets.

It bugs Carr that companies have so consistently been suckered into buying upgrades for computers that are unneeded; moreover, IT buyers need to "throw their weight around" and "negotiate contracts that ensure the long-term usefulness of their PC investments" (p. 3). And so, it is Carr's viewpoint, as expressed in his Harvard Business Review article and in his book, Does IT Matter, that IT expenditures are too often wasteful, that resource purchases are unused and/or unnecessary, that companies often jump into IT investments that are "soon-to-be-obsolete" and that they should wait to make purchases "until standards and best practices solidify" (p. 3).

Meanwhile, in The Executive's Guide to Information Technology (Baschab, et al., 2007) (Foreword written by Carr) the authors launch narrative that appears diametrically opposed to Carr's assertions. They extol the value of IT investments. The book points to the year 2000 when the Federal Reserve gave IT "…investment credit for approximately $50 billion in productivity improvement"; that represented more than sixty-five percent of the entire "$70 million in productivity gains" that businesses enjoyed in the final half of the 1990s (Baschab, p. 5). The Fed in fact claimed that the "…most IT-intensive industries experienced significantly larger productivity gains than other industries"; Fed chair Alan Greenspan was quoted saying the "source" of "spectacular performance" in U.S. markets was due to "…the revolution in information technology" (Baschab, p. 7).

That having been said, Baschab presents bullet points specifically identifying how companies like General Electric -- using IT effectively -- have saved millions of dollars, lowered labor costs, established systems that improve processes, reduced overhead, and shortened the time needed to conduct pivotal in-house business (pp. 9-10). But by page 12, Baschab's book presents horror stories as to how IT systems were either ineffective or simply never worked properly. The Denver International Airport baggage handling fiasco, for example, cost the City of Denver a million dollars a day (for months) in lost revenue; Hershey Foods experienced "glitches" from its IT systems resulting in a 12.4% decrease in sales during the "peak buying season"; and Nike invested in expensive software that "failed to adequately match supply with consumer demand" and resulted in a $100 million "revenue drop" (Baschab, 12-13).

In page after page, Baschab lists disasters linked to faulty IT systems. "Satisfaction stagnates, or even diminishes," based on high expectations being dashed by troublesome, malfunctioning IT investments, Baschab insists on page 19. The quandary for corporations is that while "…they must invest in information technology" to keep up with competitors, the failure of IT departments to create "cost-effective, satisfactory results" have produced "misery on a massive scale" (Baschab, 20).

On Carr's blog (NicholasCarr.com) he presents a long list of varied responses and editorial critiques to his book. Some of that narrative amounts to self-congratulatory themes, and some is just using quotes from journalists, managers and others in the technology field. For example, in the Journal of Business Strategy two professors from the Weatherhead Business School find his argument "spurious"; they claim it's not the technology that is to blame, it is "the way you use it" (Carr, 2005). Another critic (John Soat), reviewing two books in Information Week suggests that while Carr "has a compelling argument" in his book, in the other book, written by Microsoft's VP Robert McDowell, the author claims Carr is "dangerously short-sighted." Tan Ee Sze, editor of Computerworld Singapore, finds Carr's "…logic persuasive" and his observations "valid" albeit he quibbles over Carr's "semantics."

Conclusion -- Justifying an IT Investment to the CEO

It is easy to find fault with title of Carr's book because IT really, truly, absolutely does matter to companies, and the technological revolution driving global markets is far from over. This paper believes that Carr chose that title just to draw attention to his arguments, which is coy. Further, Carr's out-of-date argument that because every corporation has IT, it becomes a wash between corporations, is bogus and hackneyed. It's how you use IT, not how much it costs or who else has it.