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Assignment #2
12/23/2014
Mohammad A. Al-Matar
G201307870
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1.0. SUMMARY
N. G. Carr does not argue the importance of IT to commerce and commercial business.
strategic to a business in the sense that it can provide a sustainable competitive advantage.
He argues that the affordability of IT have caused a mutation in its role from a strategic role
Carr’s view rests on his contention that IT today is, in essence, an infrastructural technology
and not a proprietary technology. The latter, like an intellectual patent, provides a distinctive
competitive advantage to its owner. On the other hand, infrastructural technologies by their
nature offer far more value when shared by all than when used by a single player. In this
railroads, telegraphs and power generation. All such technologies started off as proprietary
in the initial phase of their build-out but, over time, became accessible to all, thus providing
The position Carr takes recognizes that while IT is more complex and malleable than earlier
infrastructural technologies, it still possesses all the traits that will ensure its commoditization
in the very near term. In particular, Carr views IT as a commodity because of the following
traits:
interoperability.
2) It is by its very nature highly replicable and scalable.
3) Through the Internet, it has access to a perfect standardized delivery channel.
1
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4) It is swiftly becoming ubiquitous due to the rapid price deflation, making it not only
Carr concludes his article with the suggestion that with the erosion of the strategic value
recommends that companies manage costs and risks of IT more closely and exert less, if
any, time and effort pondering on the strategic value of IT. In short, spend less, follow but
2.0. REVIEW
Central to Carr’s hypothesis is that IT has started to display all the historical signs of an
infrastructural technology. A few decades ago, IT was a specialist function that was barely
taking advantage of the underlying potential of IT. Carr cites a few well-known examples,
including American Hospital Supply and its automated order entering system in the late
1970s, and American Airlines and its first online travel reservation system. He maintains,
however, that the opportunity for these types of advantages is dwindling as IT begins to
reach the end of the build-out phase—much like the railroads and earlier infrastructural
technologies. He further predicts that, in the years ahead, most of the benefits of emerging
and new IT technologies will reach almost all businesses concurrently, as they did with the
faster and larger rail networks. In short, IT will lose its potential for strategic differentiation.
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In fairness, whether one agrees with Carr or not, he does raise some valid issues:
some time. For instance, not much strategic analysis is required when buying a PC or
such as e-mail and word processing. On the contrary, cost and risk are the key
decision drivers.
2. There is also little to take issue with in his conclusion that cost minimization and risk
scale and impact of IT on most businesses. This has been true in the past and will no
3. His article is a salutary reminder that the drive to gain value from IT investments
business benefits from IT investments should be identified and realized as with any
What is at issue is whether all of IT has become purely infrastructural and, therefore, has
lost its strategic significance. This conclusion has caused much consternation and confusion
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