Organizations A Strategic And Competitive Advantage example essay topic

In the article 'IT Doesn't Matter' Carr suggests that IT is no longer strategically important, therefore, organizations need to change the way they approached IT investment and management. Carr does not dispute that information technology is the backbone of commerce that supports individual business operations, vendor supply chains and customer relationship management. He suggests that as IT's power and ubiquity increase, its strategic value or capacity to provide a sustained competitive advantage decreases. He implies that IT is no more significant than electricity at this point to an organization, it is 'becoming a cost of doing business that must be paid by all but provide distinction to none". According to Carr IT has become a commodity and should be managed accordingly. In the article Carr implies that IT is taking the same historical path as the steam engine, the railroad, the telegraph, the telephone, electric generators and the internal combustion engine.

Each of these innovations were built into the fabric of commerce, each one of them had a disruptive effect that eventually transformed the industries they were adopted in. Visionary companies who adopted these technologies early on were able to gain real strategic and economic advantages over their competitors. However, as time passed and the technology became more ubiquitous these things were reduced to nothing more than commodities, costs of doing business that should be no more exciting than using electricity or talking on the telephone. I suspect that much of what Carr suggested sparked controversy among advocates such as IT vendors, consultants and others who have a vested interest in IT's significance. I agree with much of what Carr has stated, IT is heading towards commodity status, however, I think it is premature to conclude that we are already there and that some companies through clever implementation of information technology do not have a competitive advantage however unsustainable. The question becomes, when does IT become a commodity?

In my opinion a commodity suggests standard components that vary only slightly from vendor to vendor, and standard protocols that must be adopted by all. However, the problem with many IT vendors is that no standard protocol has been adopted to allow for ubiquitous IT integration. We need only look at the cellular telephone industry as an example; most would agree that the cellular telephone industry is maturing, it is saturated to the point of being considered a commodity yet three different standards still exist; TDMA, CDMA and GPRS. The point is that Carr's notion of IT as a commodity and the implication of a ubiquitous infrastructure lends too much credit to an industry that is still very young.

Although there are probably fewer and fewer examples, IT can still provide a strategic and competitive advantage to an organization. The best example that comes to mind is Research In Motion (RIM) the makers of the blackberry handheld communication devices. This is an example of a company that has leveraged information technology to create a competitive advantage over its competitors, and through patents they will probably be able to sustain this advantage for some time to come. The idea here is not to completely refute Carr's suggestions of IT's position as a commodity, it is to suggest that perhaps such a sweeping statement is inappropriate or not yet as relevant as he suggests. Carr writes that IT management should become boring and that organizations should not be focusing on seeking strategic advantages through technology. He suggests that the greatest risk facing IT today is overspending, and in my opinion he is correct.

IT is so integrated into current business operations that large spending is inevitable, the key is to control this spending. In the global financial company I worked for, asset and software management was strictly tracked using a proprietary asset management system developed on an Oracle platform. Hardware, software, mobile phones, and blackberries for example were tracked and linked (by relational databases) to contracts. Using this system the company is able to monitor contract renewals, renegotiate contractual and financial terms and monitor spending in areas of software, telecommunications and hardware.

Discussions with many vendors revealed that most companies including their competitors did not have this type of asset management system. This is a perfect example of how IT can be used to gain a strategic and competitive advantage through effective implementation and management even if the parts used (Oracle) provide no distinct advantage on their own. Large storage companies such as Veritas, EMC, and StorageTek are all beginning to position themselves around the "utility computing" on-demand business model, which to me is a sign of the commoditization of IT. However, I think it is premature of Carr or anyone to suggest that we are anywhere near this point when clearly IT still affords some organizations a strategic and competitive advantage. Perhaps 15 or 20 years from now when networks are self healing, hardware and software protocols have been standardized and IT becomes as common as plugging in a kitchen appliances can we truly state there is no strategic importance. Until then IT's strategic importance will remain significant to organizations.