Why the "First Mover" Advantage in IT Often Turns Sour

Nicholas Carr, a noted blogger, hits the nail on the head in a recent note (see: For Wal-Mart, too, IT is a commodity) when discussing why the "first mover" advantage in IT development frequently turns sour. He uses Wal-Mart, frequently cited in the past as being an IT innovator in the retail sector, to illustrate his point:

Now, with commodity software greatly advanced, Wal-Mart's custom [information] systems have turned from advantage to disadvantage, and the IT analysts have changed their tune.

In his note, he quotes from an article on the web to reinforce his point (see: How Wal-Mart Lost Its Technology Edge). Below is an excerpt from it:

...[A]nalysts say that Wal-Mart's reliance on homegrown IT systems—and its conviction of their superiority—needs to change. [CIO Rollin] Ford and his team, they say, must bring in best-of-breed commercial applications, such as BI and price-optimization tools, that can help it compete with rising retail superstars such as Target, JCPenney and Tesco.

Very quickly, here's the sequence of events surrounding early software development in healthcare IT as well as other business sectors. I don't present the list to discourage software innovation bur rather to illustrate the point that too early may be just as disruptive as too late, particularly in the long run:

• Propelled by innovative leadership, hospital or lab personnel decide to roll the dice and develops custom software (i.e., home-brew software) to address some of its strategic information management issues. This can take the form of an LIS in the lab or an EMR in the hospital environment.
• If the software development project fails, as many of them undoubtedly will, the champions of the project will merely lick their wounds and wait for the development of a similar product to emerge in the commercial market.
• If the project succeeds, the lab or hospital then derives a competitive advantage from the software and will tend to invest more resources in it, adding the additional bells and whistles demanded by users of the system.
• In time, for-profit software companies notice the success of these first movers and begin to develop similar systems, avoiding the initial design errors. Because of the profit motive and economies of scale, these emerging best-of-breed products eventually surpass the quality of the home-brew products that spawned them in the first place.
• Meanwhile, the lab and hospital personnel become firmly wedded to their one-off products even if they begin to suffer by comparison with  competing products in the marketplace. Most of the in-house users of the system will resist any switch to a superior commercial product because they don't want to be burdened by having to learn a new system. The internal software developers also resist any change in order to protect their jobs. The first mover advantage has now gone bad.