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Has IT lost its competitive edge?

A decade ago, Nicholas G. Carr declared that IT no longer mattered. It turns out that he was two-thirds right and one-third wrong.

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“It’s great that we can network the world, but what really matters is the data and how to leverage it better than anyone else.”

—Tony Young, CIO of Informatica.

When Nicolas G. Carr published "IT Doesn’t Matter" in the May 2003 issue of the Harvard Business Review, the IT community reacted with predictable outrage and immediate contempt. Carr argued that, as IT becomes ubiquitous, it no longer offers an organization a competitive advantage. Ten years later, this article still infuriates some CIOs, perhaps because there is some truth to his argument.

"I distinctly remember how taken aback people were. We were so appalled by what he was saying. But I think those CIOs were wrong. If you look back 10 years later, Carr was two-thirds right and one-third wrong," says Tony Young, CIO of Informatica.

Carr focused on infrastructure, the primary focus of most IT departments at the time. He predicted that infrastructure would become a commodity and cease to be a primary driver of company strategy.

Carr compared IT to the American railroads of the mid-1800s. The railroads gave companies an advantage when they all ran on private rails. Before long, however, the United States standardized the gauge so railroads across the country could interconnect. When they connected, and therefore became commoditized, individual railroads lost their competitive advantage.

This is now largely true with networking, compute power, and storage, as well as enterprise applications. These network technologies are now ubiquitous because the world is interconnected by the Internet. In the 1990s, the first companies to implement customer relationship management (CRM) and enterprise resource planning (ERP) applications had an advantage. That is no longer the case.

"The railroad is a great analogy. But Carr never practiced IT, so he does not understand what is truly important. What a company actually cares about is not the rail or the train itself. It really cares about the payload on the train: the data," says Young. "It’s great that we can network the world, but what really matters is the data and how to leverage it better than anyone else."

Capitalizing on data

Smart CIOs know that networks and applications themselves do not provide an advantage. But technology can still set an organization apart depending on how you use it to access your data.

“This is where you get a sustained competitive advantage. Can you use your data better than everybody else? Big data creates an even bigger advantage,” says Young. "It gives you large pools of information that can make you cheaper, faster, better."

Data is, in fact, the frontier for new business innovation. New types of data are available now that weren’t just a few years ago, particularly social and machine-generated data. As a result, new technologies and new approaches for data management and processing are creating new business potential.

To hear how Young sees CIOs driving increasingly more business value, watch his video on Perspectives, the Informatica blog.

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