Is "Strategic IT" Over?

Can IT no longer confer a competitive advantage?

According to the well-publicized writings of Nicholas Carr, it no longer can.  Whereas American Airlines' famous SABRE reservation system provided a true, and enduring, competitive advantage decades ago (and is still the subject of business school case-studies, as I can personally attest), Professor Carr argues that today's technology—Cisco routers, Dell PC's, even IBM services—are standardized commodities for sale to all comers.  In such an environment, it no longer pays to be cutting edge; indeed, the very concept of "cutting edge" becomes questionable.

Rather, CEO's and CIO's need to be realistic about the changed nature of the IT beast, and specifically:

1. Focus on "good enough."
2. Drive hard bargains (a commodity industry is often one with excess capacity, and excess capacity typically implies tremendous flexibility in pricing at the margin).
3. Don't be creative; shun proprietary systems.
4. Challenge ROI numbers.

This last point deserves elaboration:  One should, of course, always challenge ROI numbers, but I think Prof. Carr's point is slightly more nuanced—at least mine would be.  To wit, one can no longer assume when investing in a "commodity" that cost savings will flow through unimpeded to the bottom line.  That may be true for a day or a week or a month, but your competitors will soon adopt the same commodity cost-savings strategy, and you will no longer enjoy the "savings"—your customers will, through lower prices.

Which is, after all, exactly what Adam Smith would have predicted.