IS605/606: Information Systems Instructor: Dr. Boris Jukic Does It Matter? Reading Discussion

Main Points of the Article Capital Investment Expenditures on IT are nearing the 50% mark Strategic Resource has to be scarce Infrastructure analogy: – Steam engine, telegraph, railroads, electricity – Processor, Operating system, Bandwidth New Infrastructure technology often goes through the phase of overbuilding – Railroads vs. High speed optic fiber networks

Main Points of the Article Not only the technology but the modes of its use can be commoditized IT is primarily a transport mechanism – Analogies with railroads and electricity grid will hold IT functions are becoming highly standardized and are highly replicable – At the basic application level such as , word processing

Main Points of the Article Internet based Web services will commoditize business IS applications much like electric power or telecommunications services – MS and IBM will become IT “utility” companies providing applications over the “IT grid” Fall in cost of processing power results in rapidly increasing affordability of IT functions

Main Points of the Article Proprietary technology may offer early competitive advantage – AHS example: proprietary ordering system Improved efficiency Locked out competition In the long run the, sticking to the same system may prove to be a liability – Emergence of standardized, out-of-the-box systems In many cases, though, early adoption of the IT solution may lead to further operational and marketing advantages (trust, brand recognition) – FedEx: Package Tracking System – AA: SABRE reservation system – E-Bay: Internet Auctions

Main Points of the Article Opportunities for Gaining IT Advantages are Dwindling – Best practices are quickly built into software or reveres engineered and replicated Most IT-spurred industry transformations have already happened

Main Points of the Article Five signs that IT buildout is at its end – IT “power” is outstripping business needs – Price of essential IT functionality has dropped to the universally affordable point – Internet bandwidth capacity exceeds traffic demand No more WWW: “world wide wait” – IT vendors are positioning themselves as utility suppliers Stable recurring charge model – IT investment bubble has burst IT is at the point where it should be treated to remaining competitive but inconsequential to strategy – Concentrate on operational issues: outages, glitches, other vulnerabilities

Main Points of the Article Organizations should avoid IT overspending – Separate essential form discretionary and even counterproductive spending – Look for simpler and cheaper alternatives Open source – Consider outsourcing – Eliminate waste PC example Data storage example – Avoid vendor pressure – Adopt longer IT investment cycles IT management should become boring – Risk avoidance and management