1. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com Nicholas G. Carr Does IT Matter?

2. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com IT is essential to business  Ubiquitous  Integral to modern business processes  Dominant capital expense for most companies  Prerequisite to survival  Can, in right circumstances, boost productivity... but is it essential to business strategy?

3. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com Two types of technology Proprietary: can be owned, actually or effectively, by a single firm e.g., patents, secrets, exclusive licenses Infrastructural: is shared broadly by all firms in an industry or region e.g., rail, telegraph, telephone, electricity, IT

4. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com Evolution of infrastructural technology Advantage potentialUbiquity Time Proprietary advantages - access - knowledge - foresight Weak advantages Diminishing advantages

5. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com  Not just hardware – software, too  “General purpose” technology  Malleable and flexible  Endless innovation potential Isn’t IT different? True - but market forces push IT toward rapid commoditization.

6. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com Hardware commoditization Commoditization PCs Servers Storage Network “Overshooting”

7. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com Extreme economies of scale in production lead to Sharing & “vendorization” lead to Overshooting (“good enough”) & declining returns lead to Homogenization & commoditization Now: open source, offshoring, utility service Software commoditization

8. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com Distinctive systems once provided competitive barriers: Access: American’s Sabre Knowledge: American Hospital Supply’s ASAP Foresight: Reuters’ Monitor But barriers have rapidly eroded as accessibility, affordability, and standardization have increased Vanishing advantage

9. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com  Spend less  Follow, don’t lead  Innovate when risks are low  Focus on vulnerabilities more than opportunities Shifting priorities

10. Copyright 2005 by Nicholas G. Carr. www.nicholasgcarr.com A worthy goal for CIOs? IT will come to “be thought of more like electricity or the telephone network than as a decisive source of organizational advantage. In this world, a company trumpeting the appointment of a new chief information officer will seem as anachronistic as a company today naming a new vice president for water and gas. People like me will have succeeded when we have worked ourselves out of our jobs. Only then will our organizations be capable of embracing the true promise of information technology.” - Max Hopper, 1990