Technology Is a Tool

Information technology can provide a competitive advantage. However, IT has no magic properties. In particular, technology cannot overcome poor strate­gies, inadequate management, inept execution, or major organizational lim­itations. IT implementation cannot overcome badly managed process change, insufficient political will to standardize data, or faulty business models.

The early experiences of Internet-based retailers have highlighted the problems created by sloppy inventory management, poor understanding of customer buying behaviors such as returning purchases, and insufficient knowledge of customer price tolerance.

Referring physicians will not find valuable and probably will not use a system that gives them access to hospital data if the consulting physicians at the hospital are remiss in getting their consult notes completed on time or at all.

McAfee and Brynjolfsson note a significant separation in the spread in the gross margin, over time, between those companies performing in the top 25 percent of their industry versus those performing in the bottom 25 percent as measured by variables such as return on capital. Beginning in the late 1990s the gap between winners and losers was widening.

McAfee and Brynjolfsson  made two major observations. First, IT had become sufficiently potent that its ability to advance organizational