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Strategic Issues in Information TechnologyChallenges and innovations

Published March 2011 Updated November 2011 9 lectures
Prof. Robert D. (Bob) Galliers
Bentley University, USA
Summary

Nicholas Carr published an article in the May 2003 edition of the Harvard Business Review, with the title ‘IT Doesn't Matter’. The article had a major impact and the staff of HBR voted it the best article to appear in the magazine during 2003. A sequel to this article, ‘The... read moreEnd of Corporate Computing’ appeared in the Spring 2005 issue of the MIT Sloan Management Review. In these articles, Carr considers how the business applications of information technology have evolved over the years. He points to what he terms ‘strikingly similar’ patterns of evolution to earlier technologies such as the railways and the supply of electricity. Carr sees such technologies as ‘infrastructural technologies’, technologies that can be leveraged by astute executives to provide competitive advantage. He concludes his argument by suggesting that this is true only in the earlier years of their evolution. That, as they become ubiquitous and their cost decreases, they become mere commodities. Thus ‘from a strategic standpoint, they become invisible; they no longer matter’.

Carr could not be more wrong in his argument. Thus, this series of talks takes a very different point of view. While IT per se may no longer matter, the management of IT, information systems and associated services has never been more strategic. Even here we must be careful in our too easy acceptance of the commodity argument. Information and communication technologies (ICT) themselves are developing so rapidly that the IT of the early 21st century bears very little resemblance to the IT of the late 1990s. If IT does not matter, then presumably we can leave an understanding of trends in and futures of ICT to the generalist manager? If IT does not matter, we can leave the management of sourcing relationships to the chief accountant, or the HR director, or the marketing director, or some other functionary? If IT does not matter, the management of our knowledge resources, knowledge creation and innovation can be left to … whom?

What Carr, and others who share his view, apparently do not understand is that competitive advantage never arose from the technology per se. The advantage came from the astute and forward-thinking harnessing of that technology. As Michael Porter points out in his 2001 HBR article, the Internet, for example, may well be just another means of doing business i.e. by opening up a new channel, but it is likely to increase competition and make it more difficult for companies to sustain their competitive advantage. Thus, in his view, ICT in and of itself, rather than being a force for competitive advantage, becomes a force against competitive advantage. He goes on to argue that ‘only by integrating the Internet into a company’s overall strategy will this powerful new technology become an equally powerful force for competitive advantage’. And this is the point, while some have argued that ‘the Internet renders strategy obsolete … the opposite is true … it is more important than ever for companies to distinguish themselves through strategy’. Thus, if I may be permitted to rephrase Porter’s conclusion, as I did in my chapter for the Oxford Handbook of Information and Communication Technologies (OUP, 2007), the next stage of strategy evolution will involve a shift in thinking from business strategy and knowledge strategy, to information systems strategizing. By integrating information systems considerations into business and knowledge strategy, the resultant thinking and practice will become significantly more robust.

By information systems strategizing I mean considerations that deal not only with the exploitation of new and existing ICT, but the exploration of new possibilities and innovations that are the hallmark of what Michael Tushman calls ‘ambidextrous’ organizations.

Thus, in this series, we take the strategic issues associated with IT very seriously. These issues include:
• The impacts and implications of emerging ICT, including mobile technology and open source software
• What is meant by information systems strategizing, in other words, the process of strategy integration and implementation
• Building IS capabilities and IT governance
• Managing sourcing partnerships, including dealing with issues of cross-cultural communication in off-shoring relationships
• Building and sustaining agile information systems
• Dealing with issues of security and privacy
• Getting the best out of enterprise systems
• Knowledge management and knowledge creation
• Innovation and re-innovation