On IT Doesn't Matter - Case Study Example

Case Study Table of Contents Case Analysis 3 Works Cited 4 Case Analysis The case argues that information technology, while important, will become commoditized and essentially cease to be a point of differentiation for firms, and no longer strategic. On the other hand, it can be argued that IT can be an enabler of other strategies for competitive advantage that build on the power that IT brings to firms. This progression can follow the way of other technologies that preceded IT, such as the combustion engine, as well as electricity.

One key lesson is how to use this insight to help strategists put any plans in perspective. If IT can no longer be a source of differentiation and competitive moving forward, how is one to properly strategize? One take is that while no longer strategic, IT investment and excellence remains something that is essential, as a kind of ticket to the game. Another take is that companies who are able to glean insights into how technology is to be used to further their own strategies have a leg up on others.

The case makes the point for saturation of infrastructure, where like in railroads there was a rapid and massive building phase, followed by a capacity glut. Again the take here is with capacity overbuilt strategies must look beyond using IT as a source of advantage, but rather something that is a given, to excel at, but not to necessarily get ahead of the others, who are basically doing the same thing and enjoying the same benefits from IT. Moreover, the insight from the paper is that there is the risk that companies may continue to spend a considerable part of their funds on IT, not heeding the warning from other companies, who are not realizing returns commensurate with the level of IT investments.

These constitute investment and operational, as well as broader risks. The lessons learned are in this area. The prescription from the article is that of greater focus on astuteness when it comes to investing in IT, focusing on such things as efficiency, and return on investments. What this means for strategy is that more care must be placed on those things that can add real value to the firm and differentiate it from others in the same field, and the warning is that IT is not the way to achieve this.

It is necessary, but it will not get you very far in terms of building a sustainable source of competitive advantage. One insight from the article is that that we should look elsewhere. There are problems in terms of actually having to excel in IT as a prerequisite for succeeding, to get to the starting block, but having likewise to go beyond that and to consider other strategies in other areas of the business, for example in innovation in key focus areas. The recommendation is to do this exactly, while making sure to optimize investments in IT as a given.

Investments in IT should not get in the way of devising sound strategies that go beyond IT, is the take, and the recommendation. The literature is increasingly replete with references to IT investments not as strategic investments but as necessary investments whose risks need to be managed, and this pieces of literature, for one, show the wisdom of the insights provided by Carr. Risk management in IT investments is a recognition that IT investments need to be viewed in the same way as other essential but not growth-inducing or differentiation-creating investments.

The same can be said of literature investigating the impact of IT investments on firm valuation or market value, which is to say, that the general lack of impact on firm valuation due to its investments in IT further corroborate what Carr is saying about IT investments being necessary but not necessarily equivalent to improving the future prospects of the firm relative to competitors and the general market (Carr; Dos Santos et al.; Benaroch and Kauffman). Works CitedCarr, Nicholas. “IT Doesnt Matter”.

Harvard Business School at Large. May 2003. Benaroch, Michel and Robert Kauffman. “A Case for Using Real Options Pricing Analysis to Evaluate Information Technology Project Investments”. Information Systems Research 1 (10). March 1999. Web. 29 January 2013. Dos Santos, B. et al. “The Impact of Information Technology Investment Announcements on the Market Value of the Firm”. Information Systems Research 1 (4). March 1993. Web. 29 January 2013.