“THE most meaningful way to differentiate your company from your competitors, the best way to put distance between you and the crowd, is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.” — Bill Gates

There are three very interesting Information Technology articles that we will review today that demonstrate the maxim that the more things change, the more they remain the same. In this case — what remains the same is the critical importance of IT as a tool to assist organisations to achieve competitive advantage.

IT and competitive advantage

In 1984, McFarlan wrote an article (“Information Technology Changes the Way You Compete”) that articulated the point that IT during that era was a primary resource for an organisation to achieve competitive advantage. McFarlan reminded us that in 1984, IT was escaping from just a back-office restricted role and was emerging as the tool “to build a barrier to entry, to build in switching costs, and even, sometimes, to completely change the basis of competition.”

In the 1980s, information technology was mainly used to process payroll, accounts receivables and a few other accounting tasks, and that is the main reason why IT, even now, tends to fall under the management of the finance or accounting division.

Back in 1984, the author’s thinking on IT issues was predominantly that this was a new business tool that would reshape the competitive landscape. Now reading such an article, it is actually a bit humorous how he hailed the pioneering achievements of companies who used technology to “link customer and supplier!” The MBA student will note McFarlan’s heavy reliance in his article on Porter’s Five Forces, which at the time was only four years old — since Porter introduced it in his famous work, “Competitive Strategy” in 1980.

IT doesn’t matter!

The next article (“IT Doesn’t Matter”) was written by Nicholas Carr, a Harvard professor in 2003, and it created a firestorm in the IT world with many critics taking opposing polarised views of Carr’s statements. Gil Press in 2013 described the phenomenon quite well in his article “6 Lessons From The Success Of ‘IT Doesn’t Matter”:

Lesson #1: Use a provocative and controversial title. “Provocative” and “controversial,” in the context of a widely discussed article, usually mean that it reflects a prevailing mood, typically at the exact moment before it becomes “conventional wisdom”. It makes some important people (with a vested interest that’s being attacked) angry and defiant, helping to increase its prominence, but it also resonates with the great majority of the audience interested in the article’s topic, articulating and crystallising for them their feelings and attitudes, be they positive or negative.

Basically, the premise in Carr’s 2003 article was that information technology is now so pervasive that it has become a commodity and can no more be leveraged by organisations to achieve competitive advantage. Instead, Carr believed that it is just an essential basic item that you must have — because everybody now has it! He pursued the point by comparing IT to electricity stating that it cannot be used for competitive advantage because everyone has it, but if you do not have it you are just a late non-starter! If you think the use of electricity by Carr for comparison was a hard swallow — consider that he also used the railway, and its precipitous decline as a resource for advantage as a comparison!

Many IT equipment and software vendors took umbrage to Carr’s statements because he accused organisations that did not conform to his thinking of overspending on information technology in pursuance of a competitive advantage that was no longer possible from IT.

Managing IT for competitive advantage

The third article (“Yes, Managing IT is Your Job”) by Brad Power was written in 2013, about 30 years after the first article I mentioned above. The main premise of this article is that the new waves of information technology present ongoing avenues for using IT for competitive advantage by organisations. Some of the emerging technologies presenting more opportunities for organisations’ strategic considerations include cloud computing, social media and Big Data.

Two articles ago we looked at cloud computing, which in a nutshell involves processing via the internet. In this case organisations, for example instead of having to spend sometimes exorbitant capital to purchase and own big software, can subscribe to an Application Service Provider and access their software over the Internet for a monthly fee. In that case the organisation no longer owns the software, but accesses it like a utility.

We also looked at data in the last article. Big Data is the techno-speak way of referring to the use of data warehouse and data mining technologies to process the huge amounts of data that are piling up in organisations. Big Data seeks to use data analytics to glean valuable information and intelligence from the huge pile of data that now exists. To facilitate this, IT hardware development companies now see the need to build hard disks with capacities in the terabytes! For the uninitiated — do you remember the now lowly CD-ROM? Well if each CD-ROM were full with data, then it would take 1,500 CD-ROMs worth of data to get to one terabyte!

And here is something else even more mind-boggling — according to McAfee and Brynjolfsson in their article “Big Data: The Management Revolution,” 2.5 exabytes of data is being created every day! (I am not even sure if I understand an exabyte myself — but it is a one with eighteen zeroes, number of bytes!)

So now you will understand the reason for the term “Big Data.”

In summary, my main point in this article is that just as it was it 1984, so it is now, that the information technology resource continues to be a critical tool for organisations to achieve competitive advantage. Forget Carr’s IT Doesn’t Matter article! IT really DOES matter. And it is not like the electricity commodity, but keeps evolving with new and even more exciting features and dimensions — and each new wave presents new opportunities for organisations to leverage, and to leapfrog the competition.

Dr Kenroy Wedderburn is a MBA part-time lecturer. Send your e-mails to drkwedderburn@gmail.com