April 2004 | Commentary | Checking In

IT Does Matter

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Arguably the most important development impacting transportation, except for the invention of the wheel, has been the application of information technology. Yes, I know, the nationwide rail network, the excellent interstate highway system, the containerization concept, the Panama Canal ...

But the reason I think logistics IT is preeminently important is because it impacts everyone in the demand/supply chain without regard to transportation purchasing patterns or size of shipper or consignee.

Yet a debate about the value of IT investment has been raging for the past year. The spark igniting the controversy was a May 2003 Harvard Business Review article, IT Doesn't Matter, by business theory iconoclast Nicholas Carr. The title is sensational but Carr makes a compelling case that information technology has matured to the point where it no longer gives companies significant competitive advantage. Arguments like this, especially when made in an economic downturn, give solace to those in management looking for reasons—any reasons—to curtail investment.

Among the management experts taking the opposite position are Howard Smith and Peter Fingar. Their book, IT Doesn't Matter, Business Processes Do, presents a well-thought-out, analytical and intellectual rebuttal to Carr's claim. Smith and Fingar divide IT into three stages: IT infrastructure (web tone, for example), business automation (such as data processing, reporting, standardization), and business process management. IT does matter in the last area because it is a business process enabler, say Smith and Fingar.

I'm no intellectual, although I did drive by Harvard once. But I know Carr is wrong for a reason related to business process enablement. I know it because I've witnessed the experience of many readers applying IT to transportation, logistics and demand/supply chain management.

Consider that a lot of business activity occurs outside the Fortune 1000. Larger companies may be further along the continuum where IT's impact is commoditized, offering less differentiation and competitive advantage. But many smaller companies are entering the IT enablement stage now. Until recently, the transportation/logistics function didn't get the IT resources, and some would argue, respect, to reach the enablement stage. This was even the case in some Fortune 1000 companies.

How many in our industry have moved past IT's ability to process supply chain data and have real-time transportation, logistics and supply/demand chain decision support? How many have a dashboard on their desktop allowing them to drive the business process to best advantage? Not many today, but it is coming. That IT-driven ability does matter and as barriers to entry continue to fall, it will matter more.

Inbound Logistics believes IT does matter. So does business process. That's why we produce the annual Logistics IT issue. You'll find solutions that bring IT and business process into alignment, giving you significant competitive advantage.


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