Operations throughout the coming decades

Nicholas Carr’s writings on IT resource management. Carr presents arguments that corporate computing and IT departments as we know them are in the process of transitioning into radically different operations throughout the coming decades. Carr offers convincing proof for his assertions by analyzing industry trends and extrapolating to arrive at logical conclusions.

As he frequently does, Carr again takes aim at the idea that every company needs its own IT department. He argues that instead of maintaining in-house data centers, more and more companies will move toward the use of remote mega-computing facilities, a process he describes as analogous to tapping into electricity from centralized utility plants. This development is necessary because, as Carr claims, the replication of so many independent data centers, all running similar hardware and software and employing similar kinds of workers, creates a severe burden for the economy. According to Carr, the overbuilding of IT assets causes a decrease in the productivity gains that should typically result from computer automation. These seismic changes that Carr predicts will result in companies with an in-house IT department with little left to do once cloud computing shifts work from the data center to the cloud (Carr, 2008).

As one might expect, Carr’s prognostication creates a fair amount of controversy. During a Q&A session with Datamation’s Maguire, Carr offers more details on what IT departments of the future will look like. He envisions the transition away from the corporate IT department taking a decade or two to play out. During this time there will be increasing automation of formerly labor-intensive processes. Along with phasing out of the traditional IT department, Carr expects many of the jobs of data center workers to migrate to cloud supplier data centers.

One of the more interesting questions that Maguire posed concerned Carr’s vision of companies’ migration from data centers to cloud computing, whether large companies would allow their sensitive information to be processed by a remote computing facility or allow a third party to support their IT infrastructure. Carr acknowledged that small and mid-size companies would be more likely to transition away from corporate data centers than Fortune 500 companies. This difference would likely occur because larger companies already currently have the economies of scale that would motivate smaller companies to make the transition (Maguire, 2008).

In an interview with CIO, Carr addresses the question of whether IT has been rendered irrelevant in the discussion surrounding competitive advantage. Carr’s basic premise is that as long as investment in IT required time and expense to develop into distinctive technology, then competitors were less inclined to replicate the system. However, once IT became more standardized and less expensive, then it became harder to use technology as a competitive barrier because it became easier over time for competitors to replicate (Interview, 2004).

Carr suggests that more companies would benefit from questioning whether IT innovation is a source of competitive advantage. Each company needs to consider how much more it will cost them to be an innovator as opposed to a copycat. More importantly, according to Carr, a company must consider how long it can maintain an advantage before it gets replicated by a competitor or a vendor. Carr concludes that for the majority of companies, when it comes to IT innovation, it makes more sense to be a follower rather than a leader. For Carr, the answer to the question his book title poses, Does IT Matter?, is layered. IT is an essential component of business, but it does not matter strategically because IT does not set most companies apart from their competitors (Interview, 2004).

In a similar manner, Carr dismantles enterprise resource planning (ERP) systems for failing to live up to their hype. Carr discusses how the largest ERP suppliers, SAP and Oracle, continue to make billions while ERP continues to underperform. He labels ERP a stopgap, one that largely backfired by entangling companies in even more systems complexity at the same time that it drove up their IT costs. Carr cites Rettig’s analysis, which discusses ERP shortcomings:

The concept of a single monolithic system failed for many companies, with many running concurrent instances and versions of ERP.

The average price tag of $15 million for a large company’s ERP implementation meant that researchers were largely unable to demonstrate that benefits of ERP outweighed the costs and risks.

What should have achieved revolutionary business process reengineering succeeded instead in producing rigidity, barriers to change and hidden errors.

Carr concludes that the traditional approach to corporate computing led to a dead end with ERP (Carr, 2007).

Carr presents all his arguments in a compelling and logical manner that makes disagreement with his conclusions difficult. Yes, there appears to be needless duplication and waste that has occurred with data center deployment; recent cloud computing technology offers better solutions to small and mid-size companies in the near future. And yes, any company would be wise to do a cost-benefit analysis before deciding that IT innovation should be its leading strategy. In addition, ERP has proven to be just another version of the next big thing in corporate commuting, lots of hype and promises, but few concrete gains. I find Carr’s arguments cogent and convincing.

Works Cited

Carr, N. (2007). ERP’s troubled legacy. Rough Type blog. Retrieved July 8, 2011 from http://www.roughtype.com/archives/2007/08/erps_troubled_l.php

Carr, N. (2008). The big switch: Rewiring the world, from Edison to Google. New York W.W. Norton & Company.

Interview Nicholas Carr — the argument over IT. (2004). CIO website. Retrieved July 8, 2011 from http://www.cio.com/article/32264/Interview_Nicholas_Carr_The_Argument_Over_IT?page=1&taxonomyId=3154

Maguire, J. (2008). Nicholas Carr: IT departments face extinction. Datamation website. Retrieved July 8, 2011 from http://itmanagement.earthweb.com/news/Nicholas-Carr-IT-Departments-Face-Extinction-3721531.htm

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