When Nicholas Carr argued famously (and contentiously) a few years back that IT doesn’t matter anymore, his more subtle point was missed. Having effective IT just means you are part of the competitive status quo. Most of your competitors will have similar technology to yours, so where is the competitive advantage it supposedly conveys? IT doesn’t matter — unless you don’t have it.
Now comes a Harvard Business Review article, Investing in IT Makes a Competitive Difference, that argues just the opposite. Not only does IT matter, but those who leverage it best change the competitive dynamics of their industries, argue the authors, Andrew McAfee of Harvard Business School and Erik Brynjolfsson of MIT Sloan School of Management.
How? To be sure, enterprise technology is improving rapidly. But the real story here is how smart organizations use IT to lift their business processes to a new level. The article points to CVS pharmacy, which increased customer satisfaction by a hefty 5 percent via a simple rejiggering of its computerized prescription drug process. Thanks to technology, that improved work flow was deployed quickly and uniformly across the company’s 4,000 sites.
According to McAfee and Brynjolfsson:
“Just as a digital photo or a web-search algorithm can be endlessly replicated quickly and accurately by copying the underlying bits, a company’s unique business processes can now be propagated with much higher fidelity across the organization by embedding it in enterprise information technology. As a result, an innovator with a better way of doing things can scale up with unprecedented speed to dominate an industry. In response, a rival can roll out further process innovations throughout its product lines and geographic markets to recapture market share. Winners can win big and fast, but not necessarily for very long.”
Partnering with IT
That idea underlines an argument highlighted several times in this space. Information technology can no longer be left just to the technology department. Line managers and senior executives must become development partners with their plugged-in brethren over in the IT shop.
Or, as McAfee and Brynjolfsson write: “Fostering the right innovations and propagating them widely are both executive responsibilities — ones that can’t be delegated.”
Read the article for an in-depth look at how IT investments pay off, bolstered by several case studies.
By the way, the punch cards shown in the image at top are encoded weaving patterns used to operate machinery in a silk processing plant in Vietnam. There is nothing new about using technology to improve process.
(Punch card photo by Monty_McMont, CC 2.0)
