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Over the years the importance of IT has increased a lot. So much so that whole business processes revolve around the IT system. According to Nicholas Carr, the huge increases in investment in IT systems may be because of the assumption by companies that IT provides them with a strategic advantage. However, this assumption is flawed. A technology doesn’t give strategic advantage because of its ubiquity but because of its scarcity. As IT becomes cheaper and available to everyone, its strategic advantage vanishes.
Secondly, IT being an infrastructural technology, it’s meant to be shared as it provides more value when shared than in isolation. Mangers believe that the innovations brought by infrastructural technology will last forever. However, this isn’t the case. As huge amount of investment pours in, competition increases and the technology becomes cheaper and commoditized. The same thing has happened with IT (Carr, 2003). After establishing that IT isn’t that important, Nicholas then proposes some recommendation for today’s managers.
Firstly, managers should start spending less on IT. They should rigorously analyze alternatives before investing in a particular IT system. Moreover, managers should look for open source or cheaper alternatives. Furthermore, managers should focus on reducing waste. More than thirty percent of storage capacity is used to serve the customer – the rest is used to store Mp3s, video and emails (Carr, 2003). Secondly, companies should follow instead of leading.
With every new technology becoming obsolete the next month, it’s better to wait and then make a move for the right kind of IT system (Carr, 2003).
Finally, IT should now be seen as important to the competition but insignificant to the company’s strategy. Managers should now focus on sustaining the current IT system rather than upgrading it, as a small disruption can have a destructive effect on the company’s profitability and reputation but an upgrade doesn’t contribute much to profits (Carr, 2003).
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