In the very beginning of this essay I will

In this essay we will analyze if
‘Information Technology matters’ anymore nowadays. For that analysis we will
take a deep look in the articles of the most famous experts to derive to the
decision if ‘IT matters or not’ and if it brings sustainable competitive
advantage of business. In the very beginning of this essay I will start with
brief information about what is Information Technology. IT is a structural
component of Information Systems or explained with simple words: consider that
IT is the CPU of our computer which is only one component of the computer while
IS is the whole unit – the computer. IS includes each part of  the company
which is involved within the organization for example the information,
processes and the people who are connected with the dispersion of information.
IS can be seen as an executor of diverse functions like management, engineering
processes, marketing support to giving authorization for Cloud computing or
engaging with (VPN) access. The main distinction of IS and IT is that
Information Systems are concentrated on the information while Information
Technology is focused more on hardware and software.


 How important is IT for business?

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In this paragraph we will explore
what is the role of Information Technology in the successful business.
Incorporation of innovative and emerging technologies in business is expected
to contribute positive achievements to the business like bringing value, better
quality and higher productivity. The business over the last two decades has
been definitely influenced by the Information Technology. IT has made radical
reorganization of lives on people and organizations. The examples for that
change are well known to nowadays society such as online shopping, social
media, online marketing, cloud computing and digital communication which helps
us in everyday lives. In recent times business without IT can’t operate
effectively because it is impossible to prepare a business plan or to perform
instant customer support, or even implement efficiently its marketing program.

 There are driving factors for business success
which we will define as precise analysis, future plans, actions and vision for
the business. It is proved in a research that in the last twenty years
companies who have invested in innovations and technologies have gained success
in achieving bigger market share and higher competitiveness. We have the chance
to use IT in many directions for example in particular data analyses or types
of planning. With the opportunities that Information Technology gives us we can
plan the future our business or analyze specific data which will give us
directions how to proceed and what steps to undertake. In twenty first century
very important tool for the business is the digital marketing which enables us
to promote or sell our products or services from home or our office. The cloud
is giving us another advantage of global communication which gives us the
chance to monitor our office and employees from every part of the world.


 What is competitive advantage?


We can define competitive advantage
as a condition which allows you to produce better products or service at a
lower price compared to your rivals on the market. We have to find out if IT
brings competitive advantage to the company which is using it. We can consider
different components as a competitive advantage of a company. Such examples are
higher return on assets, higher profit margin, and good reputation of the
company which brings to customer loyalty or some unique competence. If the
company hasn’t identified any competitive advantage with which it can compete
on the market it is afraid to be exceeded by its competitors which will bring
the company to leave the market. The two main types of competitive advantage
are cost and differentiation advantage. Cost advantage means that the company
can offer the same product on a better price while differentiation means that
the company can offer product with higher degree of differentiation.


Nicolas Carr opinion


 The first person who pronounce the words “IT
doesn’t matter” is Nicolas Carr and there were many attacks later for his
action. In his article of Harvard Business Review he denies Information
Technology as a competitive advantage for the business. Nicolas Carr states
that the Information Technology strategic importance has diminished. According
to him all company functions depend on IT like the business operations and
customer services. IT has become a basis of every business in order to operate
and also an important part of the human life today. It is calculated that in
2016 people have spend 2.04 trillion dollars for IT which shows how important
is that industry for the world. Thirty five years ago all the old machines like
typewriters and calculators have been changed by computers. Can we say that IT
gives a strategic value of the business to gain competitive edge? IT is
ubiquitous technology almost used in every company which brings us to the
conclusion that it brings excessive strategic value. Is it true? What can be
the real reason certain resource to bring strategic importance for a company
and to be a basis for competitive advantage is not the ubiquity of certain
resource but its scarcity. If you have a business you can gain competitive
advantage over your competitors on the market when you produce or have
something that your rivals can’t do or they are unable to produce. Nowadays we
are witnesses of the developing technologies and the basis for IT operations
like data storage, data processing, and data transport are accessible for every
business at reasonable prices. When all these factors are compiled together respectively
they bring to the transformation of IT from a strategic resource for
competitive advantage to a commodity factor of production in order our business
to operate.  All factors are becoming an unseparable cost for contemporary
business and when they are paid from all the players in the business they do
not contribute a distinction to any firm. With simple words in an early stages
those companies who implemented IT, they could get advantage but nowadays it
cannot provide these advantages anymore.

Example for justifying his proof
Nicolas Car gives in his article for inventions that were created in the past
like the steam engine, the telegraph, the telephone and the electric generator
for a certain period they have given its companies opportunities to forward-thinking
that they can achieve competitive advantage. Due to the increased usage and
cost reduction all these inventions have become ubiquitous over the time which
transformed them from advantage edge to commodity inputs. And the same
transformation is appearing today with the information technology which is

 With those examples Nicolas Carr wants to
explain us that with the reduction of price of IT functionality has removed
probably the most important barrier to competitors. And the reaction of that
should be great revision of the strategy in IT investment and management.


Certainly Nicolas Carr was much
criticized for his words and one of the first people who was against his theory
was Bill Gates who in a speech in front of American CEOs said that ‘When
somebody says… IT doesn’t matter, they must be saying that with all this
information flow, we have either achieved a limit where it’s just perfect,
everybody sees exactly what they want, or we’ve gotten to a point where it
simply can’t be improved – and that’s where we’d object very strenuously’ Sad,
but true ‘IT doesn’t matter anymore’ John Naughton (May 30 2004)

 Another opponent of Carr is the web innovator
Marc Andersen who argues that ‘software is eating the world,’. A Mackinsey View
On..Joe Wainman (May 17, 2013)


Vrio framework


Can a company achieve competitive
advantage due to usage of Information Technology? We will explain it through
the VRIO framework which is a tool that is used to analyze firm’s internal
resources and capabilities. With that tool for appraisal we can identify if a
certain resource can bring sustainable competitive advantage. Barney, J, B.
(1995) is the author of the book ‘Looking Inside the Competitive Advantage’ in
which he explains what should be the sources which firm must own to gain
sustainable competitive advantage. In his book Barney, J, B (1995) has
described that company resources must be: ‘Valuable? Rare? Costly to imitate?
And is a firm organized to capture the value of the resources? If a company owns
a resource or capability which allows it to fulfill all these requirements this
resource can bring sustainable competitive advantage.

When we analyze Information
Technology with VRIO analysis we find out that it cannot contribute for
sustainable competitive advantage directly for an organization because this
resource is not scarce but ubiquitous and it is not hard to be replicated. With
the competition nowadays among the big companies which drops the prices IT is
not costly to be imitated.


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