IT Doesn't Matter... Until Someone Clobbers You With It

Something is happening here that no government institution seeking to serve citizens should ignore completely

by / December 10, 2004
This month's issue of Public CIO features an interview I did with Nicholas G. Carr, author of IT Doesn't Matter. Because Carr has faced considerable opposition to his views since publishing the book last year, I thought that they deserved a fresh airing.

In his book, Carr argues that when it comes to competitive advantage, IT's strategic importance decreases as its power and ubiquity increases. Drawing upon historic examples, Carr argues that as technologies mature and get cheaper, they lose their power to distinguish one organization from others. What makes a business resource truly strategic and what gives sustained competitive advantage, he says, is not ubiquity, but rather scarcity.

Carr is careful to emphasize that this is only true in the context of the individual organization or business. Clearly, new technologies have revolutionized a society time and again. But if any business can simply go out and purchase the same tools that competitors are using at relatively low cost, then any strategic advantage is fleeting at best and can be easily matched.

Carr makes important points, not because he is completely right, but rather because he helps to clarify how we should think about the deployment of IT. It is very easy, especially for governments, to think of IT as an increasingly standardized commodity. As best practices are adopted and standards develop, what one government is doing these days with IT starts to look more and more like every other government is doing. Carr says that the challenge for governmental IT organizations now is to move from a "we need to be innovators" mindset, to one where IT departments are creative managers of resources.

Within a certain context, Carr makes a good case. And it is admirable that in the face of opposition and controversy, he has had the courage of his convictions and continues to defend and explain his reasoning.

However, the real question, to my mind, is not how IT seems to be following the same patterns of adoption as previous "new technologies" (a premise on which Carr's case rests), but rather how and why IT is different.

Take the notion, for instance, that any competitor can deploy similar IT tools, thereby delivering essentially the same services as competitors and destroying competitive advantage. On paper that may make a certain sense. But if it were completely true, Ebay would not have become the multi-billion dollar business it is in a few short years. Yahoo's online auctions would have rapidly grabbed a significant market share of the auction pie. That clearly didn't happen.

Today, Ebay's main competition is not other online auction sites that adopted similar technological deployments, but rather the distribution channels of major retail chains. That is that market share that Ebay is now eating into big time.

For some time now, my own conviction was that the IT revolution was going to be different than other technological revolutions. The basis of this belief was that information was different than other commodities. One piece of information was not the same as any other piece of information in terms of value or importance. There is an infinite, qualitative aspect to information that made the information revolution very different from the industrial revolution. (That was the comparative so often used for many years as people began hyping the information revolution.)

Author and consultant Don Tapscott, in speaking at the Forbes CIO Conference last year in a kind of rebuttal to Carr, made this same point most pointedly.

"Take the claim that 'it's hard to imagine a more perfect commodity than a byte of data -- endlessly and perfectly reproducible at virtually no cost,' said Tapscott. "In fact, nothing in the universe is as diverse as bytes of data -- which can carry information ranging from baby pictures to a digitally signed million-dollar bank transfer. I'd like to see him [Carr] make that infinitely replicable! It's like saying that Shakespeare's works are a commodity because William used the alphabet just like everybody else."

David Ticoll, co-author of The Naked Corporation put it another way. "Instead of information technology, think about information 'deployment' (how you create, capture, deliver and use information in your business). To say that information deployment will be fully commoditized in the near future is like saying innovation itself will be commoditized."

This is another point I have tried to make in much of my technology writing over the years. For governments, the IT revolution was not just about automating existing processes, but rather about finding better ways to do what needs to be done. And more importantly, about finding new things to do that people don't yet even realize are valuable and important.

Today, more and more citizens are widely cynical about government and believe that it needs to be reformed. It was that, rather than technology, which lay at the heart of the phenomenon of Howard Dean's presidential campaign -- a campaign that raised more money from everyday people than Bill Clinton could raise when he occupied the White House.

Technology was the enabler for the Dean campaign and also apparently helped Kerry raise more campaign money than any previous Democrat running for the presidency.

But underpinning technology innovations used in the fundraising is a fundamental dissatisfaction with much about government and this dissatisfaction seems to be spreading. President Jimmy Carter said the other day on Larry King Live that he didn't think the country had been so sharply divided since the American Civil War.

Something is happening here that no government institution seeking to serve citizens should ignore completely. Otherwise, it will be "business as usual" until suddenly it isn't business as usual.

Joe Trippi, speaking at the Commonwealth Club after the demise of the Dean campaign said, "Information is power as we all know, and the Internet delivers information. Therefore you can't just think of the Internet distributing information. It is also distributing power."

And today we are seeing that power exercised more and more in unexpected ways. Massive institutions, which themselves often arose out of innovation, are suddenly hit by something out in the IT left field. Napster and the music industry. Ebay and retail chains selling electronics and other goods. Blogs and the mainstream media. (The top 4 blogs now apparently have a combined readership greater than the New York Times!)

So is IT becoming a commodity as Carr suggests? Perhaps the hardware is in a fashion -- although even here innovation continues to rule. But what continues to be done with IT certainly is beyond any comparison to any other commodity. And I suspect any organization that begins thinking of IT as commodity leaves itself open to being clobbered sooner or later. Moreover, governmental organizations are by no means immune given the current political and social climate.
Blake Harris Contributing Editor