The Role of the IT Industry in Modern Digitalized Businesses Report

Introduction

First of all, the author summarizes the history of the IT industry and its implications for businesses in the second half of the 20^th century. Carr (2003) argues that the first businesses to take advantage of IT managed to gain a significant competitive advantage and paved the way for other businesses to use particular technologies and ready solutions associated with them. However, the author mentions that, as it happened to railroads and electricity, the standardization and commodification of IT technologies has led to the decrease in potency of such technologies in terms of both competition and business strategy. Moreover, Carr (2003) states becomes increasingly hard to avoid modern IT technologies as any undigitized company nowadays has a chance to go out of business by being cut from the market. Finally, the author believes that the companies that prefer to buy standardized software for their business solutions risk being replaced by their competitors. The business model of such companies is built on technologies that are easily substituted and, thus, is the model itself.

In turn, the author proposes a number of solutions for the aforementioned problems and presents them in a form of a rulebook for IT management. Firstly, Carr (2003) brings up the strategy employed by Dell and Walmart, the companies that patiently wait until a particular brand-new cutting edge technology has been deployed and sampled by other companies. The author believes that companies should wait until all the preliminary work has been done and there is a certainty that the business will benefit from the technology. Secondly, Carr states that “companies with the biggest IT investments rarely post the best financial results” (2003, p. 48). Therefore, the author implies that most companies should consider cutting down their IT department costs, giving an example of a typical employee requiring only a handful of software to operate and a limited amount of digital information to store. In conclusion, the author points out that instead of trying to gain direct benefit from modern IT technologies companies should ensure continuity in the technologies’ processes and avoid any disruptions in order to prevent losses.

My Opinion

In my opinion, despite being released almost two decades ago, the article surprisingly holds a lot of value and information that can be used by modern companies today. To begin with, the trend towards digitalization has successfully continued into the 2020s with industries like banking and securities spending well over 7% of their revenue on IT (Kark, 2018). Furthermore, a lot of companies nowadays bet on relatively new IT technologies and concepts such as artificial intelligence, neural networks and the internet of things to maximize their profit and gain a competitive advantage. However, Carr’s opinion remains valid as the windows for opportunity regarding modern IT technologies become increasingly small, and the more companies utilize particular technologies, the less potential value can be extracted.

As far as Carr’s IT management rulebook is concerned, it did not lose its merit and remains relevant for modern IT departments. For instance, the recent disruptions in Facebook’s servers have lasted for only several hours but led to losses counting billions of dollars (Taylor, 2021). This particular accident reinforces Carr’s thesis regarding “focusing on vulnerabilities, not opportunities (2003, p. 48). Moreover, while IT technologies continue to develop and become more complex, the majority of companies still only require simplistic standardized software and limited hardware processing power to sustain their business activities. A prime example of that is the modern cloud technologies. Businesses have found a way to optimize the physical storage on their computers, however, employees continue to abuse the technology dumping terabytes of useless information into the cloud servers.

In conclusion, I believe that most of the statements from Carr’s article remain valid and can be extrapolated onto modern IT technologies and businesses. In turn, some of the social and ethical issues involved with the modern digitalization of companies include the lack of data security and the competitive advantage the companies from first and second-world countries have over those from third-world countries.

10 Pieces of Information

1. Most infrastructural technologies start by being proprietary technologies.
2. First large U.S. manufacturers chose to build their businesses near power plants to gain a strategic advantage over their competitors.
3. First electric generators were used to power outdated technologies based on pulleys and gears rather than feeding factory machines directly.
4. Initial railroad systems were built on the blood of hundreds of laborers.
5. In the span of mere 30 years in the 19^th century, the total numbers for rail trackage, steamship tonnage and telegraph wires have increased tenfold several times.
6. Case of technology standardization where factories were instantly equipped with power outlets following national electrification.
7. Parallel between overinvestment in IT and in railway systems.
8. IT is a transport mechanism for digital information.
9. Parallel between replicability of software and businesses that employ it.
10. Rise and downfall of AHS owing to outdated technology.

References

Carr, N. C. (2003). IT doesn’t matter. Harvard Business Review, 81(5), 41-49.

Kark, K. (2018). IT spending: From value preservation to value creation. The Wall Street Journal. Web.

Taylor, J. (2021). Facebook outage: What went wrong and why did it take so long to fix after social platform went down?The Guardian. Web.