Proprietary technologies were employed by companies to process technology and integrate information in ways that competitors would find hard to replicate. Carr acknowledges that, “as long as access to the technology is restricted, a company can use it to gain advantages over rivals” (2003, p42). Whilst this strategic competitive advantage was only obtained because of its scarcity, the ability to restrict the mobility of that access can be short lived, as the pace and ubiquity of technology removes the advantage. “IT [had] become subject to rapid price deflation” (Carr 2003, p45), which with it took away the competitive advantage by allowing everyone to mimic the deployment of technology by those initial companies. The result was companies investing heavily and battling among themselves (Byrd 2001), creating a continuous cycle that reduces the life span of technology, thereby further increasing competition in-line with further price cuts. This competitive dynamic of IT development and price deflation has made it ever more difficult for companies to gain competitive advantages from IT for any extended period of time. This dynamic also affects the decision to invest in such technologies, as their returns become more difficult to calculate due to competition in the IT industry.

Firms that still manage to secure competitive advantage “will be the exception not the norm” (Carr 2003, p47), protected from replication, perhaps, by time compression diseconomies, where accumulation of a resource needs a special skill and can not be rushed into production; historical uniqueness, involving unique and/or nonreplicable conditions; the embeddedness of resources, where the value of a resource may be linked to the presence of an additional resource; or casual ambiguity, where the link between the resources and competitive advantage isn’t understood (Lieberman and Montgomery 1998; Dierickx and Cool 1989; Barney 1991: Cited in Powell & Dent-Micallef 1997, p377). Additionally, for proprietary technologies to be successful they must be legally protected by patenting and copyrighting whilst companies must guard highly sensitive information from corporate espionage. Companies are also realising there exists significant potential to exploit their position to generate greater income by licensing and selling the technology to others (Hopper 1990, p121). Events like this would not have occurred during the IT boom of the 1970s and 1980s, but the commodity that IT is becoming means that sometimes it is advantageous for companies to surrender there monopoly over a certain piece of technology in order to gain in other ways. For companies to act as such suggests that they do not only see competitive advantage in their IS alone, but in other areas of their IT management. Carr further supports this by noting how, “IT vendors are rushing to position themselves as commodity suppliers or even as utilities” (2003, p47), whereas Preston acknowledges “vendors are scrambling up the value chain” (2005). Thus, the resulting value of proprietary technologies can be secured by supplying technology to other companies.

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