Welcome To 2009: Does IT Matter This Year?

by drjim on February 9, 2009

Lots Of Firms Invest In IT, But Does This Make Them Competitive?

Lots Of Firms Invest In IT, But Does This Make Them Competitive?

I’m not sure if you remember, but way back in 2003 Nicholas Carr wrote a piece for the Harvard Business Review called “IT Doesn’t Matter“. Man o Man did this set off a firestorm in the IT community – it was sorta like someone calling your sister ugly. However, time has passed since then and so perhaps it’s a good time to stop for a moment and ask ourselves, was Carr right after all?

Carr’s point at the time was that the tools of  IT have become so standardized and available to everyone that IT can no longer provide a company with a competitive advantage. At first glance, it looks like he’s got a good point here.

What do we spend most of our time on today? Keeping things up and running, meeting legal compliance issues, and trying to reduce IT costs. Sure doesn’t seem like there is a lot of innovation going on there.

The arrival of Cloud computing and web-based services such as Salesforce.com seem to drive the point home even further – anybody can get their hands on the same sets of IT services. So are we just technicians these days?

Well hold on just a moment, all may not be as bleak as it seems at first. Jeanne Harris over at Accenture is the author of a book called Competing on Analytics: The New Science of Winning in which she makes a couple of good points.

It turns out that some companies know how to use IT to get value. Some don’t. If you average out all companies, then you end up with a result that says that companies don’t get much value from IT. Harris points out that what Carr seems to be missing is that many firms do get a lot of value out of IT because they know how to use it.

Given all of this, here is a quick list of firms that “get” IT and have been putting it to good use. Yes, the components that they are using are available to everyone, it’s how they are using it that makes the difference:

  1. Walmart: has used IT tools to create set of a supply chain management applications that has allowed it to grow to occupy the top spot on Fortune’s top 500 list of largest firms.
  2. FedEx: used IT tools to create an integrated package tracking system that allowed it to offer greater visibility to its customers and thus zoomed by UPS to become the world’s biggest cargo airline.
  3. Citibank: used the new technology of ATMs to double its share of the New York City market back in the early 1980’s.
  4. American Airlines: used its inside IT resources to create the SABRE computerized airline reservation system that went on to become an industry standard.
  5. Harrah’s Entertainment: IT has been used to create their Total Rewards customer tracking database and their Fast Cash real-time incentive gambling management program.
  6. Toyota Motor Corp: IT has been used to create their just-in-time supply chain and its associated management systems.
  7. Exxon Mobile Corp: IT is being used to help search for the oil and gas deposits that are becoming increasing hard to find.
  8. Proctor & Gamble: IT provides the analytical tools that are needed for data mining that is required to track product sales and adjust pricing and promotions.
  9. Boston Red Sox: use IT to perform sophisticated data analysis of players, stadiums, other teams, and salaries in order to remain competitive.

Well there you go. In the end, Carr makes a good point – lots of IT shops are making the investment into IT hardware and software; however, they aren’t getting any real benefits from this investment. However, there is a subset of firms that are using those generic IT parts to build tools that help them to be highly competitive.

Does your firm do a good job of using the IT resources that you have? Which of the firms that I listed do you think has made the best use of IT? Who did I forget and leave off of my list? Leave me a comment and let me know what you are thinking.

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