Student Projects:Does IT Matter:Synopsis

Our Title: A Policy Brief: Dimensions of Merit and Demerit Regarding “Does IT Matter” and related works by N.G. Carr

Team production of:

Diana Bullion (UW) Erik Jansen (UW) Joanna Muench (UW)

Abstract:

In 2003, Nicolas G. Carr, business consultant and former editor of the Harvard Business Review, published a provocative article titled “Does IT Matter?”. In his article (and subsequent works), Carr developed a position that Information Technology (IT), which he defined as “all technology, hardware and software, used to store, process or transport information in digital form”, has become so ubiquitous as to become commoditized and thereby no longer a valid foundation for business strategy. Further, drawing upon his own analogies of IT to the institutionalization of rail, telegraph and electric power industries during the last century, he advised IT should be viewed principally as a source of business risk rather than strategic opportunity.

A tidal wave of discussion arose in the wake of Carr’s contentions, highlighting the gravity of his view and creating a storm of confusion among IT makers and business decision makers. It is for these policy and capital planning decision makers that our paper is written.

The balance of the brief will develop three approaches toward viewing Carr’s theme. In the first, various dimensions of IT resources and industry will be analyzed, identifying areas that could be classified as a commodity and other areas that don’t fit the categorization as well. This matches the view held by many of Carr’s critics that claim some components of IT are commodities, others are not. Carr’s own definition of IT encompasses the technology used to manage the data but not the data itself: others have coined it differently. Dan Farber defined commodity as, “IT is a commodity if the technology itself is built out of fairly standard components that don't vary greatly among vendors or provide truly unique advantages”. In our analysis, we develop three basic categories of IT: (1) Back Office (including ERP, Data Warehouse, Shared Services and a Meta Data Repository), (2) Customer Facing (Retail, eBusiness, Call Center, Shared Services, CRM and Work Flow) and (3) Infrastructure (Network, Operations, Desktop and Security).

In our second “test” of Carr’s platform, we look at trends in the deployment of some of these same IT resources. Carr argues that an infrastructure technology becomes a commodity when, “Both the technology and modes of use become standardized.” Our thesis here states that if IT use has indeed become standardized, there should be evidence of this in both (1) increased rates of IT project success, and (2) broader adoption of standard implementation practices among companies. As to the former, a recent report of the Standish group found a doubling of the success rate of IT projects over the last decade (with the caveat that the average project size is now smaller). Standardization of project management is harder to measure. As one measure, more individuals are seeking certification from the Project Management Institute, with an increase of 25% from 2002 to 2003 alone. However, only 60% of Senior IT project management positions recently posted on the Monster job site prefer or require certification. While contradictory data may make an absolute conclusion difficult, we will identify recent changes in success rates and current IT project management standards and discuss what these trends imply about the commoditization of information technology.

Finally, we identify corroborating and refuting situational data to test major portions of Carr’s platform that IT is not a meaningful source strategy (and thereby not a basis for superior business ROI). We expect that many of the examples will likely overturn much of Carr’s hypothesis in certain situations. We also believe that several of Carr’s baser positions may be shown as likely truths for businesses that are sub-critical mass or below scale within their chosen competitive ranks and/or industry.

Partial list of resources that we expect to use:

• A Balanced Approach to IT Project Management (portal.acm.org/ft_gateway.cfm?id=954015&type=pdf)
• Brooks, F.P. (1995) The Mythical Man-Month .
• Changing numbers reflect greater project success (http://techrepublic.com.com/5100-6330_11-1031505.html)
• Does IT Matter? Nicholas G. Carr. Harvard Business School Press. Boston, 2004.
• Does IT Matter? An HBR Debate. [A compendium of] Letters to the Editor. Harvard Business School Press. Boston, June 2003.
• Hawking, P. and A. Stein. (200) E-Skills: The Next Hurdle for ERP Implementations. Proceedings of the 36th Hawaii International Conference on System Sciences. (http://csdl.computer.org/comp/proceedings/hicss/2003/1874/08/187480235c.pdf)
• Numerous current and recent Business, IT and Trade periodicals.

November 20, 2004