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April 09, 2004

IT Doesn't Matter - now in hardbound edition !

Economist did a revisit to the "IT Doesnt Matter" issue, looks like Nicholas Carr is expanding on his theory in his new book .
It sure is an existentialist debate and one which is ruffling many feathers on the mighty trillion dollar information-technology industry -

Though there are pros and cons to this whole debate and I am not able to avoid drawing connections from Nicholas Carr's point to the one made by Shai Agassi.

This is Carr's point -

Computer hardware and software, Mr Carr argues, have been following the same progression from proprietary technology to infrastructure. In the past, American Airlines, for example, gained a strategic advantage for a decade or two after it rolled out a proprietary computerized reservation system in 1962, called Sabre. In time, however, its rivals replicated the system, or even leap-frogged to better ones. Today, the edge that a computer system can give a firm is fleeting at best. IT, in other words, has now joined history's other revolutionary technologies by becoming an infrastructure, not a differentiator. In that sense, and from the point of view of individual firms, “IT no longer matters.”

This is Agassi's example as to why we need to manage by time -

Whirlpool—they can finish a design and the R&D of a product, and it takes them a year to get the product on the market. You know what happens during that year? All the Koreans get to the market before them. Why? Because they copy their designs—they see them in a show, on the floor, and they copy them—and they have a three-month time to market.

Same thing happened to Philips. Philips invented all the key innovations in the consumer electronics space, and they always were three months behind Sony. Even on stuff they invented, DVDs, they came in after. Manage that time to change, and you become Dell. You don't manage it, you become dealt.

Eventually it will come down to time, NOT THE COST as that will eventually level out due to the technology commoditization. This time factor will reflect in how companies manage their competitive advantage period (CAP), if your company doesnt mind its CAP then probably IT doesnt matter in your case, Otherwise you are busy Dell-ifying your processes and extracting every IT-enabled efficiency as possible.

April 9, 2004 in Economics of IT | Permalink


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