IT As Strategic Business Differentiator Analysis

In this article, Nicholas Carr has makes a bit controversy about the role of IT as strategic business differentiator. He investigate the evolution of IT and argues that pattern of technologies is similar with the earlier technologies such as railroads and electricity. He said that because at beginning of their evolution, these technologies provided opportunities in order to compete each other and it transform into “commodity inputs” and lose strategic differentiation capabilities. The uses of technologies become “invisible” from a strategic viewpoint. Many people protested the articles that write by Carr and they misinterpreted Carr’s analysis. Carr argues that the companies should manage the costs and avoid the risks that relate with the IT. …show more content…
He said that proprietary technologies can provide strategic advantages if the companies consider the physical limitations, intellectual property rights, high costs or lack of standards. If the companies do not consider these factors, it does not give strategic advantage to the companies. It is different compared to infrastructural technologies when it provides greater values when it shared. Although to build an infrastructural technology in the early stages appear proprietary, but the characteristics and economics of infrastructural technology need to shared and become a part of the broader business infrastructure. Carr use railroad in order to make the people clear with this point. With this example, he state that the companies can get benefit if they focus on broader of railway network compared if they just focus on competitive advantage by building lines only to their suppliers. From that, he said that no companies would gain a cost-effective competitive advantage if their focus is narrow and implementing and Internet only between their suppliers instead of others. He also said that “IT as commodity”. Carr cites that major technology vendors such as Microsoft and IBM become IT utilities that control the provision of the business applications. IT capabilities become available to all because of the IT as utility, the cost of processing power decrease, and data …show more content…
It includes IT as transport mechanism, IT is highly replicable, and IT is subject to price deflation. Carr cites that IT as transport mechanism because it carries digital information same with railroads that carry goods and power grids transport electricity. He also said that the IT become valuable if it is shared compared to use it solely. Second characteristic is IT is highly replicable. The IT is highly replicable because of the economic efficiency and the generic business processes that are available, the costs savings and interoperability benefits that make the similarity cannot be controlled. Last characteristic is IT is subject to rapid price deflation. When the cost of processing power, data storage and data transmission has declined, it will make the commoditization cost decrease. When the cost decrease, the availability increases as well as fuels that use for the commoditization of IT. Carr agrees that companies such as American Airlines and Federal Express have gained important strategic advantage when they use IT, and he also said that the opportunities will be decrease. He believes that IT spurred industry transformations and although industry and markets will continue to change but some will still to undergo fundamental changes and he suggests that the companies should become closer with IT development at the end of stages compared with its