IT's Strategic Business Role - Report Example

IT’s Strategic Business Role number Publish Introduction Information technology (IT) has emerged as one of thestrongest support mediums for businesses in recent years. IT has been seen as a largely positive growth that is set to augment the sectors it affects directly and indirectly. However, underneath the over optimistic IT advantage to businesses picture lays the fact that IT poses certain disadvantages to businesses as well. It must also be taken to note that the advantages posed by IT implementation far outweigh the disadvantages and hence IT deployment is pervasive throughout various sectors and industries. This paper seeks to explore various risks and supports posed by IT to competitive edge in business including two scenarios to support one support and support. Risks of IT Implementation to Competitive Business Advantage IT implementation proves largely augmentative to competitive business advantage but also tends to expose businesses to unwanted risks. The greatest risk posed by IT stems from its greatest advantage – simpler and easier accessibility. Enhanced accessibility allows a business to be better connected but it also presents the risk of unwanted intrusions. Since most information in the IT regime is stored in digital formats on computers, it is far easier to pry into confidential information stored on a company’s servers. No matter how much the IT industry tries to beef up its security, loopholes will always remain as new information is discovered (Olsen, 2012). Another risk posed by IT is the overwhelming dependence it creates in the organization. Typically when a business implements an IT regime, the most basic of functions are transferred over to computers citing their efficiency. However, in case that these systems break down for any number of reasons, alternative methods of work are not available. Essentially, the overwhelming dependence on computing leaves an entire business stagnated when its IT infrastructure collapses. The recent problems caused by Hurricane Sandy to IT infrastructure speak volumes of the inadequacy of dealing with a failed IT system. The argument presented above can be extended further to indicate that IT implementation tends to eliminate redundancies in a system. When business organizations are looking towards competitive advantage under the IT regime, they tend to remove system redundancies as means of promoting efficiency. However, the results are not always desirable given also the fact that certain redundancies that are still left are open for computers to decide about. In the regime of human business affairs, computers cannot be expected to take onto ethical and moral dilemmas no matter how advanced fuzzy logic ends up becoming (Warf & Stutz, 2007). One of the more esoteric risks associated with IT implementation is the removal of expertise from a company’s skill set. Generally IT implementation makes people’s jobs redundant and thus leads to issues such as downsizing. While this tends to support cost cutting well, it tends to eliminate a number of required skill sets where computers cannot be expected to decide. Again, no matter how sophisticated technology has become, it still depends on input from a human being with an eye for the larger picture to chart a course. Removal of the old skill set by IT implementation provides the company with a narrow focus on its operations that might lead to a loss of competitive advantage. IT implementation is also supported given the large volumes of data generated for analysis. Utilizing IT in every nook and cranny tends to spew out a lot of data but fails to provide how the data is supposed to be used to obtain competitive advantage. In these cases, IT implementation is able to produce voluminous reports and large dashboards but it fails to indicate what actions should be pursued. Often, it is the case that such large information banks take business executives on wild goose chases that end up with little or nothing. Supports of IT Implementation to Competitive Business Advantage IT has the greatest support to competitive advantage in terms of the greater connectivity it offers. Businesses are offered opportunities to explore foreign markets for sourcing supplies and for securing new customers at the same time. It is only through the adequate implementation of IT that this has been made possible. On another note, IT has the obvious augmentation of outsourcing operations to other countries to enjoy tax breaks, cheaper labor and other similar advantages. The reduction in costs offered by these factors allows businesses to expand on their existing competitive advantage. In recent years, the outsourcing trend has grown significantly especially in advanced economies where various business operations are being outsourced for greater efficiency and cost reduction. It is without any doubt that outsourcing is a retroactive effect of IT implementation in the business environment (Davies, 2004). IT has also made it possible for businesses to remain in transaction 24 hours a day, 7 days a week. The greater operating hours and the inherent flexibility offered by such transactions especially for services based businesses means that businesses will collect greater revenue. The ability to be in business all the time with a little more effort allows businesses to create competitive advantage. A seller who has online representation all the time has better opportunities to deal with a large mix of customers compared to sellers who are restricted to certain opening hours. Another key area where businesses are supported by IT implementation is the ability to simplify fiscal transactions. The flexibility offered by being paid and paying up as soon as possible allows businesses to use their resources for more business transactions than ever before. Moreover, this rapid fiscal transaction regime allows businesses to remain secure as per their payment cycles. Larger the fiscal cycle takes, the greater are the chances that fraud can occur since fiscal transaction confirmation would take time. However, with recent payment regimes such as PayPal, Money Bookers etc. it has become possible for businesses of all sizes to confirm payments in a few second which allows swifter identification of fraudulent activities. Businesses are also finding support with IT implementation since it allows them to identify, segregate and plan for customers accordingly. Using IT resources, a business can accurately identify the particular market segments that it is dealing with. Once the applicable market segments are identified, it becomes easier to tabulate their needs and preferences which in turn allow the creation of a fitting business strategy. IT implementation also has the advantage of allowing flexible business plan creation so that business plans can be modified as per need (Johnson, Scholes, & Whittington, 2008). Scenario One: Denial of Service (DOS) Attack on IT infrastructure In the past there have been multiple instances where businesses lost competitive edge when their servers were targeted by denial of service (DOS) attacks. A DOS attack overwhelms the target server by providing multiple requests until the server is unable to accept any more incoming requests. This kind of attack leaves a business highly vulnerable since the server tends to ignore requests from genuine customers and fails to provide them with substantial services. In the longer run, a DOS attack mars the business reputation leading to loss of revenue as customers look for other solutions to fulfill their needs. Therefore, a DOS attack leads to loss of revenue in the short run as customer requests cannot be dealt with and in the longer run as business reputation suffers. The only real method of dealing with DOS attacks is to utilize intelligent algorithms that analyze traffic to the server to identify a DOS attack. The system could be automated to a large degree but human input would still be necessary to decipher genuine traffic from DOS attacks. Scenario Two: Market and Customer Segmentation A number of businesses solicit electronic information such as feedback from their customers to identify the customer segments that they are more likely to deal with. This allows the business to segregate various market segments that they are dealing with. A business selling garments for example could easily ascertain the geographical location, socio-economic status and buying preferences of its users to identify which segments are more important than others. In turn the business could utilize this information to outline market segments where it is performing well and market segments where it needs to improve. Moreover, the business can solicit customer feedback in order to decipher new areas where it needs to focus in order to expand the customer base. Conclusion It is clear that IT implementation brings mixed blessing for the business environment. On the one hand, IT implementation offers certain associated risks but on the other hand it allows certain business support areas as well. IT implementation has been successful because the support offered outweighs the risks substantially. A successful business organization can manage the risks associated with IT implementation in order to take greater advantage of the support offered by IT implementation. References Davies, P. (2004). Whats This India Business?: Offshoring, Outsourcing, and the Global Services Revolution. London: Nicholas Brealey International. Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring Corporate Strategy (8th. Edition). Essex: F. T. Prentice Hall. Olsen, E. (2012). Strategic Planning Kit for Dummies (2nd Edition). New York: John Wiley & Sons, Inc. Warf, F. P., & Stutz, B. (2007). The world economy : resources, location, trade and development (5th Edition). Upper Saddle River: Pearson. Read More