Sun chief, writer debate: Does IT matter?

San Francisco — Does IT matter? This was the question panelists sparred over during a debate at the SunNetwork 2003 conference here Thursday, featuring Sun Microsystems Chairman and CEO Scott McNealy and writer Nicholas Carr, who published an article in the May issue of The Harvard Business Review entitled, “IT Doesn’t Matter.” Also on the panel was venture capitalist Bill Gurley.

Carr stressed that the ubiquity of technology makes it hard to use it for a competitive advantage, although not having it can be a problem.

“One of the practical messages that I tried to make in the article is even though companies can’t get a competitive advantage from using technology anymore, you put yourself at a disadvantage” by using it in a sloppy manner, Carr said.

But he added technical innovation cannot be used to get a competitive edge because “any distinctive move can quickly be replicated.” And those who buy the technology afterward get it cheaper, Carr said.

“My suggestion is companies should start from the assumption that they should spend [less] on IT,” said Carr.

“They should be followers, not leaders. Let your competitors waste the money” on cutting-edge solutions, Carr said.

“You’re going to put yourself at a disadvantage by weak technical skills, but you’re not going to put yourself at an advantage” with IT, Carr said. Homogenization of software is occurring as more companies buy applications from vendors rather than build in-house, according to Carr.

McNealy sharply disagreed with Carr’s viewpoints and said technology is not ubiquitous.

“I just hope every one of my competitors listens and follows that strategy,” he said of Carr’s statements.

“My view is it’s pretty simple — that it isn’t IT for IT’s sake,” adding “IT has huge, huge opportunities,” he said.

The use of IT has enabled cost reductions that have provided for excellent gross domestic product growth, no inflation, and significant job reductions. Afterward, McNealy said the job reductions have enabled automating of jobs that should be done by computers so that persons formerly in these positions can take on more challenging work.

Gurley also opposed Carr’s premise.

“I disagree with Nick on the importance of marginal competitive advantage because that’s the only thing you’ve got going for you,” Gurley said. “You either try to get ahead or risk extinction.”

Companies that simply buy off-the-shelf equipment are laggards, Gurley said.

But Carr remained firm. “I think throughout the history of the use of computers from the ’50s on, we’ve seen them narrow in importance,” Carr said. Software is becoming commoditized in applications such as spreadsheets and word processors, he added.

“The power is moving from individual companies to the vendor, and that vendor is going to sell the same technology to your competitor,” said Carr.

“[The competitive edge] is narrowing, and for most companies, it’s not even worth worrying about,” Carr said.

McNealy said applications such as wireless computing and JavaCard technology provide a distinct advantage. He also cited airlines such as Southwest Airlines and JetBlue that have innovated to the detriment of struggling carrier United Airlines.

“JetBlue does everything Southwest does but puts call center agents in homes and used routing technology. They got rid of the call center,” McNealy said.

A technological edge is vital even if its longevity is shorter than it used to be, McNealy said.

McNealy in a press conference after the panel also said Sun sees PC vendor Dell as a channel, not a rival. “Dell is channel for us. They sell J2SE on every one of their computers, they sell Solaris on their x86 stuff,” McNealy said.