The Debate on the Strategic Value of IT: Rethinking Nicholas Carr's "IT Doesn't Matter"

ABSTRACT

When Nicholas G. Carr announced "IT Doesn't Matter" in the Harvard Business Review, his article triggered a massive debate among those in the IT world, IT and business strategy researchers, and business managers. Carr's assertion was that, just as in the cases of telephones, electricity, railways, and other fundamental technologies, IT is maturing and becoming a commodity input, and thus it will soon no longer be a source of sustained competitive advantage for companies.

Many people misinterpret Carr's article as claiming that IT is not important, but Carr is in no way arguing that this is the case. For Carr, the source of sustained competitive advantage is not something that diffuses throughout the market, but rather must be a resource that is scarce. In other words, it is difficult to develop sustainable differentiation through something as ubiquitous as IT, and thus the strategic value of IT is diminishing.

Carr notes that the "best practice" of using IT is already becoming embedded in software, and thus the use of IT is also becoming commoditized. The capability for actually using IT in business and management (i.e. IT capability), however, is dependent upon the human resources, organizational form, and corporate culture that a company possesses, and these elements are not easily imitated. Considering how easy it has become to acquire IT, perhaps a company's institutional capacity to exploit IT is itself becoming a critical source of competitive advantage.