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Does IT Matter?

Does IT Matter?

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Does IT Matter?

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  1. Does IT Matter?

  2. Introduction By Thomas Stewart • notes that there are 3 perineal items • new ideas • truths (that should not be forgotten) • disputes • Carr started a dispute

  3. IT expenditures grew to almost 50% of corporate capital spending by 2000 and then collapsed -- why? • the article does not say IT is dead or that IT will not continue to be a source of dramatic, transformational change • the article does say that IT is becoming a commodity and that commodities are known to have little strategic impact

  4. Brown & Hagel Rebuttal • Carr is right, businesses overestimated the value of IT • how and why? • Carr is right, the critical nature of IT on daily business requires managers to become more focused on vulnerabilities • what do most managers know about the vulnerabilities and risks? • what strategies have managers used -- why is outsourcing a problematic response?

  5. where is Carr incorrect? • IT, by itself, never was the competitive advantage -- its advantage came by enabling innovative business processes and practices (they reference the McKensey Global Institute study and there are many more) • six of the 59 studied industries showed significant positive productivity correlated to IT investment while 53 were negligible improvement • why? the advantage of the 6 'pulled' the other 53 to respond -- they did not reap significant benefits because they were responders instead of innovators

  6. Carr was incorrect in counting only the impact of the cost of data storage, processing, and transmission • impact of business practice changes such as distribution changes ala Wal Mart • impact of team/community solutions made available via networks • relaxing the necessity of problem solvers being proximate to solve problems

  7. IT impact has been more incremental than 'big bang' even though popular media (and many business publications) only address the 'big bang' • the 'big bang' applications are high risk, they are more likely to fail spectacularly than to succeed • 'bolting on' applications (such as CRM) has been much more profitable but less glamorous

  8. IT impact continues to grow • Moore's Law has continually defied the experts by doubling power every 18 months for a constant price • that did not happen with Carr's examples of steam engines, electricity, railroads, and telephones

  9. managers buying IT did not pay attention • thought solutions to problems was in the buying of IT and not in the using of IT • did not buy the skilled labor to use the IT • IT is a long term practice, not a short term fix • IT is a means to an end, not the end itself (remember the selling or ERP systems for Y2K) • IT has little value as a stand alone asset, there is great value in marrying it to other assets in the business

  10. McFarlan & Nolan Rebuttal "In no other area is it more important to have a sense of what you don't know than it is in IT management. The most dangerous advice to CEOs has come from people who either had no idea of what they did not know, or from those who pretended to know what they didn't. Couple not knowing that you don't know with fuzzy logic, and you have the makings of Nicholas Carr's article."

  11. when McFarlan and Nolan talk about the societal changes of technologies they are talking the second wave theories • for example, most people now understand that the impact of railroads distributing goods to geographically dispersed consumers (as per Carr) was very small compared to the societal impact of transporting consumers to live in metropolitan areas

  12. the societal changes of a computer that runs 10 million times faster in 20 years for the same cost makes the train speed of 6 times faster in 20 years a laughable comparison • Russell Ackoff wrote "Management Misinformation Systems" in 1967 - it caused a similar uproar and many of McFarlan and Nolan's rebukes are similar

  13. the pace of computing theory (in communications, grid computing, etc) will continue to accelerate the fantastic growth even as stated by Moore • the lack of nurture to sustain IT competitive advantage has been a primary reason that it does not always lack (back to the earlier 'set it and forget it' attitude of managers towards IT)

  14. Strassman Rebuttal • points out that Carr's assertion that economic vale of IT is diminishing is wrong -- states that Carr cited Strassman for the decline but says Carr didn't understand what Strassman had written • pay attention here where Strassman differentiates between how hard technology (such as railroads) do not behave at the margin as soft technologies (such as software) behave

  15. stating that IT is a commodity and does not offer completive advantage ignores that most IT products are diverse and the strategic advantage is in the use of IT not the IT itself • the view that IT influence will be macroeconomic versus microeconomic beneficial to the firm is incorrect, it is a contradiction to believe that giving a benefit to your customers does not have a positive economic impact to your firm

  16. says that Carr's citing of standard Microsoft applications is invalid because of how it is used -- i.e. both Carr and Strassman wrote their articles using Microsoft Word yet the outcomes were substantially different • Carr's assertion that IT is reaching maturity is wrong since the evidence shows rapid growth in innovations and diversified applications • risks do not exceed advantages -- executives should better understand what the advantages are and where they come from

  17. Broadbent, McDonald, & Hunter Rebuttal • "To put it simply, it's not about the box; it's about what's inside the box." • "The source of competitive advantage shifted from simply having a computer to knowing how to use it."

  18. Schell's Rebuttal • it was never the IT tool but the skill of using the IT tool that mattered • managers of IT have frequently been chosen from non-technical areas because senior management viewed IT as a commodity -- as such, it was not considered a flaw that non-technical people were managing technology and technically trained professionals

  19. decision analysis and choice sets and timeliness of decisions matter -- tools that affect these problem characteristics must be understood, not just used • understand that Carr was making an editorial statement as opposed to an academic article - he achieved his objective, lively debate