Does IT matter?!

In today´s blog I am going to deal with the wideranging topic Information Technology. The article, that was supplied for us to summerize on our E-moodle desktop, was composed by Mr Nicholas Carr and was published in May 2003 edition of the Harvard Business Review. He examines the evolution of information technology in business and shows that it follows a pattern strikingly similar to that of earlier technologies like railroads and electric power.
c.f.  (2010, October 14). Nicholas G. Carr Webside, Retrieved 12:37, October 16, 2010 from http://www.nicholasgcarr.com/articles/matter.html

Nowadays, hardly anybody would arugue the fact,  that IT has developed to be become the fortitude of commerce. It supports operations of individual companies, ties together supply chains and mainly and most importantly links businesses to possible future costumers and the ones they already serve. In 1965, according to a study by the US Department of Commerce´s Bureau of Economic Analysis, less than 5 % of the Capital expenditures of American companies went to information technology. After the personal computer was introduced in the early 1980s, the percentage rose to 15 % and reached 30 % by the early 19990s and by the end of the decade it nearly rose to 50 %.
c.f. "Does IT matter?", Article supplied by Modul University of Vienna, Tourism and Hospitality Applications


Also the first so stuck up managers that wouldn´t even look at a computer, simply for the fact, because it was seen as a machine for low-level employees like secretaries, analysts, and technicians, now can not even imagen a step in their business without the every day use of their computers. It is routinely talked about the strategic value of information technology, by Chief executives. IT is also of high importance to gain a competitive edge, about the digitization of their business modes. [...]

IT can be propably be best described as the latest in a series of broadly adopted technologies that have reshaped and improved industry over the past 20 years. [...]

Correspondents have also discovered a connection between the expansion of IT, mainly the Internet, and the shrinkage of earlier technologies. Mostly the comparisons focused on  either the investement pattern (associated with the technologies), the boom-to-bust cycle - or the technologies roles in reorganizing  and finding new shapes for the operations in a company. [...]


A differentiation must clearly be made between  proprietary technologies and infrastructural technologies. Proprietary technologies is described by investopedia as follows "A process, tool, system or similar item that is the property of a business or an individual and provides some sort of benefit or advantage to the owner. Companies that are able to develop useful proprietary technologies in-house are rewarded with a valuable asset: they can either use it exclusively or profit from the sale of licensing of their technology to other parties." c.f  (2010, October 14). Investopia Website, Retrieved 15:21, October 16, 2010 from http://www.investopedia.com/terms/p/proprietarytechnology.asp


Infrastructural technologies are refered to as technologies that "offer far more value when shared then when used in isolation". In the text of Mr Carr he refered to an example of a company, possibly in the nineteenth century, which plans to create a railroad. The company could either go for the proprietary technology way, meaning throughout their supplies, its factories and its distributors and run its locomotives and railcars on the tracks. But for the braoder economy, it would make a tremendous difference if an open rail network, connecting many companies and many buyers, would be built. c.f. "Does IT matter?", Article supplied by Modul University of Vienna, Tourism and Hospitality Applications


What mainly is to be said about infrastructural technologies just as proprietary technolgies is, that infrastructural technologies and their influence is more felt at the macroeconomic level and not so much on the level of the individual company. The example provided in the text was that in a country which for instance lags in installing the technology, its domestic industries will suffer mostly. [...]

Just to give you some numbers on how IT and computers developed over the years Mr. Carr stated that the number of host computers connected to the internet grew from 80.000 to more than 125 million.  Also over the past 10 years, the number of sites on the WWW (World Wide Web) has grown from zero to nearly 40 million. Those are quite impressive numbers and I do think that it will continue to grow more and more.[...]

It seems that Nicholas Carr, in his article, wants to raise awairness to the fact that he is of the opinion that IT buildout is much closer to ist end than it’s beginning . He names several reasons for  this statement such as that IT has become affordable for pretty much everybody and the major point he named was „the investment bubble has burst, which historically has been a clear indication that an infrastructural technology is reaching the end of tis buildout. „ (Nicholas Carr, Article) 

So now the question is – What are companies to do? How much should really be invested into IT and IT management. A clear example was stated that we all are nowadays well aware of, but back some decades ago it was so new to people as IT was to us some years ago – Electricity. [...]

Nowadays there is no company that actually builds its business around its usage of electricity  Operational risks related to IT could be as follows, technical glitches, obsolence, service outages, unreliable vendors or partners..... etc. But he main risk that companies are facing regarding IT is simply overspending. IT is clearly a commodity, and its cost also fall quickly and surely. The most important thing to consider is therefor, companies have to be able to seperate the most neccessary investement from those which are of low importance fort he business or even counterproductive. [...]

Finally, Nicholas Carr suggests the following: „IT management should, frankly become boring. The key success, fort he vast majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously. The challange will be to maintain that discipline when the business cycle strengthens and the chorus of hype about IT’s strategic value rises anew.“ [...]

In my opinion, IT is almost irreplaceable for todays businesses and companys. It places advertisments and marketing on a whole new level. Accessable for everybody, with almost no effort. Bringing the product to the customer has become highly innovated through the introduction of IT systems. As also Mr. Carr stated, I think that hardly anybody could imagen going anywhere or doing anything without carrying their computer with them, using the wide range of possibilites with the World Wide Web. Research, Information search, interaction with possible future customers has become so easy with the help of IT and the Internet.  [...]