Secrets Revealed: Where Is All Of That IT $$$ Going?

by drjim on March 2, 2009

Where Is All The Money That We Spend On IT Going?

Where Is All The Money That We Spend On IT Going?

Where’s the money going? Everyone knows that spending on IT departments and projects has been going through the roof for the last 10 years or so. Umm, does anyone know if the company has been getting any benefit from all of this increased spending?

Blame all of this discussion on Nicholas Carr‘s article “IT Doesn’t Matter Any More” in the Harvard Business Review back in 2003 in which he pointed out that IT resources and knowledge have become a commodity so no long term advantage can be provided by them.

Ouch! So how does this all play out? There are three points to consider:

  1. A firm can gain a competitive advantage if it has valuable, rare, and costly to imitate IT resources.
  2. If your IT resources are not all that special, but if you use them to realize the full potential of non-IT valuable, rare, and costly resources then you can have a source of competitive advantage.
  3. In the best case, if you have valuable, rare, and costly to imitate IT resources and you use them to realize the potential of non-IT valuable, rare, and costly resources then you really have source of competitive advantage.

Take that Mr. Carr!

But wait a minute, every firm spends loads of money on IT, why do only some (Walmart, FedEx) get a clear advantage from the money that they spend? A team of researchers lead by Dr. Gautam Ray talked with 104 insurance firms in order to get to the bottom of this question.

But I’m out of space this time, so we’ll have to discover what Dr. Ray’s team found out next time…

Has your spending on IT been going up? Do you measure the benefit that you get from your IT spending? Do you feel that you have good IT-business knowledge being shared in your firm? If so, how was it developed? Leave me a comment and let me know what you are thinking.

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