Why It Does Matter

Carr's highly controversial article makes the following assumption:

"What makes a resource truly strategic--what gives it the capacity to be the basis for a sustained competitive advantage--is not ubiquity but scarcity. You only gain an edge over rivals by having or doing something that they can't have or do. By now, the core functions of IT...have become available to all. Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production."

Carr implies that in order for resources to be strategic, aid in the organization fulfilling some purpose or goal, that the resources must not be available to all. Instead the resources should be wanted by all but only had by some. In other words, a resource is best for one company when another does not have access to it. This is simply not true. There is no correlation between scarcity and the effectiveness of a resource being used strategically. There is a correlation between a strategic resource and the managing of the resource.

In his 2003 CIO Magazine article, "Why IT Really Does Matter," Michael Schrage poses three thought experiments. First, suppose we have two companies starting out and we give each $1 Million dollars to invest. Are we going to see that both companies have the same return on their investments? Of course we won't. Although both companies had the same amount of money, most likely they invested it differently. Therefore their results were also differentiated. It is not the money that mattered, but rather the management of these funds.

Secondly, suppose we allow both GM and Ford equal access to all honor students in the class of 2007 at Eastern Michigan. According to Carr, the talent these individual possess doesn't matter if GM and Form both have talented individuals. Each company is not going to get the same value from the students they hire. GM may have a better program which enables them to get more out of their staff. Ford may not put their students to use in the right way. In the end it would not matter who got which honor students but who used them in the best way.

Thirdly, GM and Ford give every employee their own laptop, PDA and cell phone along with all the free training and technical support they could ever want. We know from experience that everyone does not benefit from technology in the same way. Some employees will catch on to the new technology quicker than others. Some will make better use of the technology than others. As a result, the "productivity and profitability" of the technology will benefit each company in a different way.

IT is a strategic advantage for the company with the people who are most knowledgeable about the way it can be used and who make the best use of its capabilities. IT can help a company be the most innovative and creative in an industry or if used improperly, hinder its performance. While Carr is correct that some companies spend too much money on IT, he is incorrect in his assertion that a resource cannot be a strategic advantage unless it is scarcely available.

----------------------------------------------------------------------------------------------------

Where do you think the next IT-based strategic advantage may occur? Give an example.

There are a number of areas we could see an IT-based