Below is a quick summary of the key points in Nicholas Carr’s May 2003 Harvard Business Review article and an opinion as to their accuracy:

IT is an infrastructural technology not a proprietary technology. it is like electricity or railroads.  Companies need it to do business, but can not gain a competitive advantage through its use. It is too easy and inexpensive for a competitor to copy any technical edge that an information system provides.  

• It has always been hard to implement use IT to gain a competitive advantage. While SABRE and American Hospital Supply were success stories in the 1980s, there were many failures. Similarly there were many bankruptcies in the internet era. eBay, Amazon and a few others will come out as firms that have used IT to gain a competitive edge.

Infrastructural technologies offer more value when shared. Companies do not build their own railroads, they share this infrastructure with others to save costs. Companies will similarly share IT, possibly using web services or purchased software. They will not build software from scratch to differentiate themselves from their competitors.

• This is essentially true. We will see less custom software, more purchased software and more purchased IT transaction processing services. Carr misses that there is still significant effort needed to customize and integrate purchased software and web services into organizations.

“The only meaningful advantage most companies can hope to gain from an infrastructural technology after its buildout is a cost advantage—and even that tends to be hard to sustain.”

• This is also essentially true. Organizations, however, are still in the ‘buildout’ phase with respect to IT. The technology is still improving rapidly. Organizations can still achieve significant cost savings and revenue increases through the implementation of technologies in areas such as knowledge management and business intelligence.

Organizations should 1) spend less on IT, 2) follow, don’t lead with technology investments and 3) focus on reducing vulnerabilities.

• The second and third conclusions have merit. Since most organizations are still building out their IT, they need to spend as much or more as they are currently spending. While we don’t advocate 20%+ spending growth, wise IT spending can be cost justified.

For the most part, organizations should look to follow with respect to IT implementation. There is a great deal of good software available. It can be purchased, integrated and customized. The development tools needed for customization and integration are becoming less costly and easier to use.

During the internet boom, many organizations did not do enough to insure that their infrastructure was well-maintained and secure.