Technology is a Differentiator

There are many catchcries that have been misinterpreted through history. Donald Horne meant it as an indictment when he referred to Australia as the "Lucky Country". Anne Thomas Manes said "SOA is Dead" to refer to the demise of SOA as technology "silver bullet" that could be applied without thought or substantial organizational shift. And Nick Carr has proved to be "spot on" when he says that "IT Doesn't Matter" meaning that as IT becomes more ubiquitous and commodified it is not the mere use of IT that matters, but how an organization uses IT that makes the difference.

Carr's 2003 Harvard Business Review article, argued the distinction between proprietary technologies and infrastructural technologies. Carr asserted that IT, like railroads and telegraph are an infrastuctural technology that holds strategic value for first adopters but becomes less strategic as it becomes common, commodified and standardised. Carr presaged the current move to IT as a service predicting this as a corrollary of the way previous infrastructure technologies became shared resources.

Perhaps I'm being too kind to Carr as he discussed the commanding advantages gained by companies such as American Airlines, Federal Express, Reuters, Wal-Mart and eBay by the way they used IT. Writing in the shadow of the dot-com bust, Carr says that the opportunity for such advantage was disappearing with the commodification of IT. With "web services" and subscription-based outsourcing on the horizon that commodification would only deepen.

Sure, the internet and midrange unix servers are now commodity infrastructure but the intervening years have seen no let-up in the advantages built by companies on that technology. The household names of 2014 - Google, Facebook, Amazon.com, Netflix, Apple - have built strategic advantages on commodity hardware and software not in what they use but how they use IT.

Amazon.com, a mere bookseller in 2003 when Carr wrote his missive is now the dominant force in Carr's predicted "IT as a utility" universe. Amazon.com's attitude to IT is exemplified by their 2010 shareholders letter which states:

All the effort we put into technology might not matter that much if we kept technology off to the side in some sort of R&D department, but we don't take that approach. Technology infuses all of our teams, all of our processes, our decision-making, and our approach to innovation in each of our businesses. It is deeply integrated into everything we do.

More colourfully, Steve Yegge in his famous rant lauded how Amazon.com's use of IT as a platform is a key differentiator even against the Google behemoth.

The 2011 Wall Street Journal article by Marc Andreesen "Why Software is Eating the World" has come to represent this world view where technology-powered contenders - taking advantage of utility computing - are disrupting and overturning established industries:

More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures.

But you don't have to be a disruptor to benefit from judicious use of technology. A recent survey by MIT's Sloan School of Management found that companies that use technology well have significantly higher revenue growth and margins than their peers. They also have more budget for new initiatives rather than "keeping the lights on." These companies aren't necessarily using different technology, they have technology re-use and governance programmes and a mature attitude to technnology use.

Donald Horne, Anne Thomas Manes and Nick Carr were all correct...lazy "cargo cult" reliance on rocks in the ground, SOA silver bullets or off the shelf technology are not a recipe for success. As innovators are proving all over the world, technology is a differentiator.

But technology won't make you clever. Clever use of technology will give you a strong competitive advantage.


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