Does it Matter

Summary of the article “Does it Matter?” by Nicholas Carr

This article is about the increasing importance of It technology and not.

What do I mean by that?

The author Nicholas Carr began the article with numbers of increasing spending of companies in IT after the introduction of the personal computer

1965   5%

1980s 15%

1990s 30%

2000s 50%

I have to ad at this point that 50% and even 30% of a companies’ capital expenditure is a bit high, organizations have lot of costs like wages, electricity, maintenance… that is why I think that some information is missing here.

However Mr. Carr formulated an assumption:

“IT’s potency and ubiquity have increased, so too has its strategic value”

BUT fact is that availability of information technologies increased and their costs decreased, which means nowadays computers, internet and so on is for more companies available since its cheaper.

Starting from this point the author began to question, if IT technologies are really such an advantage as we think they are; he showed us by drawing a parallel that there are similarities between the expansion of the IT and the “rollouts of earlier technologies”.

Explicitly he described the rise of railroads and electricity and the increased demand as far as those technologies became part of the “general business infrastructure”

Then Mr. Carr tried to underpin the effect if technologies are available to everyone;

“opportunities for individual advantage are largely gone” after the so-called build out phase of a technology and such completed technologies stop to influence competition, they influence an economy on a macroeconomic level, they became a standard of a country;

“What would Austria be without electricity: economical irrelevant.” by me (not proved !!!)

According to the Moore’s Law the transistors on a computer chip double every two years; or in other words; speed and memory capacity doubles.

AHS =Analytic Systems Automated Purchasing introduced in the 1976, a system that helped hospitals to purchase goods electronically, the heart of this system was a mainframe computer, which helped hospitals to order more efficiently.

After successive implementing this system for other companies, such companies using this system gained a competitive advantage.

Nowadays such systems are cumbersome in view of a competitive advantage; 

the personal computer is responsible for that.

But still companies are spending a lot of their revenue in information technologies although the 25 companies , which delivered the highest economic returns spend less in IT than the average does ( 25 best companies; on average 0,8% of revenue on IT, typical company; on average 3,7% of revenue on IT)

Hence organizations maybe rethink the importance of IT.

Till next week

Pius