Does IT Matter?
An essay presented to the
Department of Information Systems
University of Cape Town
in partial fulfilment of the requirements for the course on
Information Systems Honours
1. I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own.
2. I have used the APA Convention for citation and referencing. Each contribution to, and quotation in, this essay from the works of other people has been attributed, and has been cited and referenced.
3. This essay is my own work.
4. I have not allowed, and will ...view middle of the document...
This essay illustrates that IT can still be regarded as a strategic resource, depending on how well it is used and managed.
The essay begins with a brief discussion on what makes a resource strategic, then using the characteristics identified, determines the relevance of Carr’s argument. After a critique of the argument, there is a brief discussion on how IT can be used to leverage a firm’s core competencies in order to gain sustainable competitive advantage.
The article in the Harvard Business Review (HBR) written by Nicholas Carr (2003), titled “ÏT doesn’t Matter”, sparked a great amount of controversy in the IT industry. The article suggested that IT’s strategic importance has diminished and that IT can now be regarded as a commodity. Throughout the article, Carr (2003) compares IT to electricity and railway lines, illustrating how IT, just like these ‘commodities’, was once a strategic resource, but now has become an operational cost of doing business. While Carr (2003) makes some very relevant points in his article, there are other points and conclusions that are quite questionable.
The purpose of the essay is to illustrate that although IT has become a commodity to firms, it does not mean that it must be disregarded when drawing up a strategic plan for a firm. IT can still be regarded as a resource that provides sustainable competitive advantage for a firm, it all just depends on how it is used and managed.
The essay will begin by defining what makes resources strategic, and after gaining a better understanding of what strategic resources are, the definition will be applied to IT. Using this definition, the essay will consider how correct Carr was in saying that IT does not matter. The essay will then proceed to illustrate the ways in which IT can be used as an enabler in gaining sustainable competitive advantage, thereby showing that it does matter as a strategic resource.
2. Resources: what makes them strategic?
“Resources can be defined as assets, capabilities, routines, and knowledge that are tied semi permanently or permanently to, or controlled by, an organization” (Morris 2001). They play an important role in the firm, and can determine the success or failure of a firm, therefore it is vital that the resources be well-managed - especially the strategic resources. Strategic resources are the resources that can be used in order to gain competitive advantage over other firms, therefore it is crucial that a good strategy is built around these commodities because “resources drive strategy and strategy drives resources” (Morris 2001).
1. Characteristics of Strategic Resources
There are a number of characteristics that make a resource strategic, thus enabling a firm to gain competitive advantage. “A firm is said to have competitive advantage when it is implementing a value creating strategy not...