Companys IT & Competitive Advantage - Essay Example

Company’s IT & Competitive Advantage Introduction: Information Technology is one of the most prominent and widely usable technologies of the present era. It can be used in almost any field and promises better results. It makes things easier to handle, understand, manage, organize, comprehend and even reuse later on. Be it any field like Health care, Medicine, Engineering, Production and Manufacturing, Business and Management or any Industry, information technology can make the processes faster, more reliable and easier to carry out. Applying IT in the business can help one earn larger profits. It can make employees more comfortable and happy, which in turn yields better results in productivity. It might also be able to conserve on time and resources by making work easier and faster. Information technology gives company reliability because of a reliable system which is less likely to come across human errors that can hinder the company’s performance. It is one of the most beneficial creations of the new century, which has taken human life into a new era of technological advancement, into a world where new possibilities are achievable and business experiences a new perspective, which is easier to handle, yet gives you better results, definitely a worthy option to be considered worth applying and thus executing a better corporate position and get endless business opportunities. Information management is one of the fastest growing areas of experimentation these days, with new areas being explored everyday and new evolutions and revolutions taking place in very short lapses of time. (C Kenneth Allard, 2004) The paper talks about the implications of information technology for businesses in order to achieve competitive advantage over other competent business rivals. Further more; it talks about different aspects of IT, the reasons why IT is not the only thing to be considered and finally, the different implications of IT and some examples of the systems that can be used to achieve competitive advantage. Competitive Advantage: Competitive advantage is basically a hold of a particular firm over the industry. It is an advantage that a company has over others due to a particular service that only this particular firm provides or any system that is integrated only in this particular firm etc. In order to maintain its competitive advantage, a company should keep a close watch over its potential competitors in order to minimize the risk of losing its competitive advantage for not being aware enough. It is a position of a firm in the world of business, a space that it enjoys being better than its competitors in a particular area or a general environment. But, no matter how much the competitively advantaged the firm is, its never unbeatable; not even in the cases of a monopoly. The competitive advantage only lasts till the competitors don’t have that particular advancement. The moment they do, the competitive advantage is gone. Thus, to conserve the competitive advantage, a firm must keep on updating its status and looking up for more opportunities of advantage. IT & Competitive Advantage: It is one of the biggest factors that help a firm in achieving competitive advantage. It has so many aspects attached to it that one aspect or the other is bound to provide competitive advantage. Nicholas G (2004) described that the only thing that is needed is the eye to look for it and the mind to implement it in a unique, personalized and customized way so that it is integrated in the firm and is hard for the competitors to achieve and thus ensures the possibility of long lived competitive advantage instead of a short lived one. IT assists Business Growth: The organizations and companies are under constant pressure of competition. First this competition was just with the local industries, organizations and companies, but as the world is coming closer and closer every day and is turning into a global village, the circle of competition has grown from local platform to the global platform. Now the firm of one country tends to compete with the firms of not only their own country but also the firms of other countries of the world. The use of information technology makes it a bit easier to compete. It makes them flexible and feasible, generates better productivity and yields better outcomes. It helps them far more than expected and is thought of in earning better profits, in fact even creating new sources of profits, which might include services like online business opportunities etc described by C Kenneth Allard (2004) such that Information technology can help a company to be less identifiable with all other related firms and be more different. It in fact can make a company stand out among the other competitors and can help it make and, more importantly, leave a mark of its own in the minds of the consumers, which goes a long way to help a company in achieving and maintaining competitive advantage. This is one of the major reasons why the statistics show a constantly increasing rate of growth in the part of the expenditure made on IT and its implications. In some of the areas, IT comprises as much as 50% of total capital investments. This shows how much emphasis is being made on IT these days, which is a very positive sign. There are some of those companies too, that are forced to implement IT in their systems in order to avoid the phenomenon of lagging behind just because of not having something that almost each and every rival has. IT is now being integrated in almost each and every kind of business and in such times, if there is a company that lacks in using IT, or keeps on neglecting the importance of IT, then that company is pretty obvious to lag behind and loose its hold on the industry. IT Tools In the corporate world IT is not about architectural complex diagrams or it is not about recording high speed motion. Information technology is to speed up information processes and also align these processes with decision making because the aim of information is to make decision making a lot easier. The tools for such decisions are closely integrated networks which help in the quick transfer of data and programs that help decision making faster. This concept of networks and programs has been integrated into what is now called ‘systems’. The enterprise resource planning system helps to plan and manage the business in a lot of ways, it combines all data and also keeps record of the accounting processes and procedures, these enterprise resource planning systems customized systems which helps the company with the flexibility that each company actually requires. Business context The IT revolution has helped almost all spheres of life but it has never affected any part as it has done so in the corporate world. It has affected the world’s stock exchanges, it has affected the news agencies and information processing is now a matter of seconds if it is not happening real time. It is hard to pinpoint any sector and say that this is the sector that has gained success due to IT. In this century it has been predicted by many that information would be the resource that would spur on every business and now as we are in this age we can truly recognize that how true these predictions have turned out to be. But it has been most affective to the import-export businesses because information is money and hence the faster the information flows the easier the decision making process. Different Implications of IT: (To achieve better competitive advantage) In order to achieve a better competitive advantage, that is comparatively long lived and more reliable, a firm has to have certain systems that it can rely on and make use of to be more efficient and effective in providing its services and whatsoever. Following are some of the most commonly integrated systems that, when used in a different way yield a different result every time and help a lot in achieving the competitive advantage over the competitors. (Adrian Payne 1998) DSS (Decision Support Systems): These are some of those systems that help the management of a firm take decisions and set up a framework to try to achieve as much competitive advantage as possible. These systems assist in strategizing and manipulating the best policies the system can have. With a little input, one can get a larger output if such strategies are fully and efficiently employed. EIS (Executive Information System): This system applies to the top management or the executive people only. It mainly comprises of such decision strategies that are necessary for the top-management to understand and implement while taking big corporate decisions, be it inter organizational or intra organizational, to ensure effective strategizing and decision making .(Robert M. Fulmer, Jay Alden Conger, 2004) MIS (Management Information System): It is one of the most wide spread form of systems used to create competitive advantage. The chief reason for its wide use is its numerous implications. (Adrian Payne – 1998) Used in various different ways, every single way yields a different outcome and therefore can be used to create different kinds of competitive advantages every time. ERP (Enterprise Resources Planning): It is a fully integrated and functional system that consists of all the three above mentioned systems, i.e. Decision support system, Executive information system and Management information system. Having all the three major systems integrated in one, it gives an all-in-one, i.e. all kinds of support. Be it a top executive or a lower level manager, everyone can benefit from such a software. There are many different ERPs available in order to suit different needs of different types of organizations. To elaborate, (Jeffrey Pfeiffer 1994) an ERP is software that is created to address all the needs of an enterprise enabling it to meet all of its organizational goals and integrate all its functions. Advantages of ERP: Highly Graphics based User Interface. Zero Down time/ planned down time. Readymade solutions for most of the Problems. Only Customization required. Integration of all functions ensured. ROI earlier than the software developed in-house. Easy enterprise wide information sharing. Suppliers and Customers can be on-line communication. Knowledge transfer between industries guarantees innovation. Automatic adaptation to new technology. CRM (Customer Relationship Management): A customer relationship management system is one of the most important and prominently functional systems which are one of the best ways of achieving competitive advantage in most of the organizations. It requires creating a complete set of data about the customers so that, when they perform business again, they are not required to submit all their information all over again. It creates a sense of belongingness in customers, makes them brand loyal and causes them to stick to the same organization and not switch to any other. Commonly, (Fergus O'Connell 2003 p62) “customer relationship management systems are used by publicly oriented organizations and businesses like hospitals, restaurants, supermarkets, traveling agencies, etc”. Artificial intelligence: Artificial intelligence is also another gift of information technology that can help long ways in creating competitive advantage for a particular organization. It is basically a science of making intelligent machines especially intelligent computer programs. It can be compared with a system that uses computer programs to comprehend human intelligence but being a machine, it is not confined to the biological methods of observation. But at the same time, no matter how intelligent a machine can get, it always remains a machine and can never be equal to, even if it is comparable to, a human brain. (Fergus O'Connell 2003) Knowledge management: Knowledge management is a diversified kind of information management. It first requires the conversion of information into knowledge, i.e. information is something that is told or noted; when its sense is properly understood and it is transformed into a ready-to-use form, it turns into knowledge. Knowledge management means integrating the knowledge into the system in such a way that it is accessible to the right person, in the right format, in the right place at the right time. Although knowledge management can be done by using numerous ways, it is most commonly carried out by organizations using: Data sharing Data warehousing Data mining Data marts Intranet (knowledge management portals), etc. The better the way of organizing and managing knowledge an organization has, the more competitive advantage it gets over its competitors because proper management of knowledge leads to proper customer support and thus results in customer loyalty. (Curtis M. Grimm, Ken G. Smith, Hun Lee 2005) Online Business: (Curtis M. Grimm, Ken G. Smith, Hun Lee 2005) Online business includes any kind of business that is carried out over the internet. It might be an independent online business, i.e. it exists only over the internet and does not have any physical existence, or it may be integrated with a physically existing business, i.e. it is just an extension of a physically existing business to increase accessibility. Online businesses are one of the most useful tools when it comes to competitive advantage since it provides with an extra way of access. The products or services are available to consumers more easily and it takes less effort as well, providing more comfort to the customer. More accessibility, more comfort and less effort mean more customer loyalty and this causes more advantage over the business rivals. Only IT is not enough: Although there are so many advantages of information technology that they even can’t be listed very easily, but still, using only IT is not enough in order to enhance competitive advantage. Although it is one of the biggest creating sources of competitive advantage, but it is definitely not enough when used alone, i.e. without any help of any other helpful strategy. There are many other things related to the topic which are necessary to make the usage of IT as functional as possible and there might be some drawbacks or limitations of using IT to enhance competitive advantage, as well. (Harvard Business School Press 2005) Competitive Advantage that IT provides is Short-Lived: First and the foremost problem with the integration and usage of information technology in order to gain competitive advantage is that this advantage is very short lived. What actually happens is that, when a firm integrates a certain technology, for the first time in the particular industry, it may gain quite a competitive advantage over the business rivals, but as the time passes, sooner or later, all the other competitors slowly and gradually get the same technology integrated in their organizations as well. This is the time when the competitive advantage due to that specific technology diminishes till it comes to a complete end. At this point in time, that technology becomes a necessity instead of an advantage because if now any organization related to that industry would not have such a technology, it will experience a definite set back and will lag behind in the race called business. Non-IT Technology is also important: In order to make the information technology more functional, the non-IT technology is very important as well. Such technologies support the integration of information technology and make it more reliable, more efficient and more effective. Such things may include manual machines, equipment, even training the employees accordingly can be included in this category since it helps a lot in integration of IT, in fact, the integration of IT is useless if the employees are not trained to use it and are not accustomed to it, Jeffrey Pfeffer (1994) argues that. Planning is very important: Whether before or after implementing any technology for the sake of competitive advantage, or for any other purpose for that matter, strategizing and planning is very important and plays a very important role. Even if the best possible technology is applied but was not planned and strategized accordingly, it is very difficult for the organization to catch up and thus, the plan ends up as a failure and instead of benefits, loses are incurred. On the other hand, if the planning and strategizing is done from the grass root level and is fully integrated, it shows blooming results and enhances the affectivity of the technology and thus increases competitive advantage further. Educating Employees: In order to implement the technology to its fullest level, the education and training of the employees, as stated earlier, is one of the most important tasks to be accomplished. For that matter, lectures, seminars, conferences, workshops and other training programs should be arranged from time to time so that the employees are fully aware and (Jeffrey Pfeffer 1994) educated regarding the information and other technologies that are implemented in the organization and can put in the best effort possible to create or enhance competitive advantage of the company over others. Unlearning and Relearning: After a while of implementation of a particular technology, i.e. when it becomes common in all the organizations and it is time for the implementation of a new technology, the employees should be retrained. This process takes two steps: (Harvard Business School Press 2005) Unlearning: Unlearning is a process that resembles the process of erasing away whatever is written on a slate. It is important to reduce information overload and cognition overload. It is not a definite step since it is almost impossible to completely forget, but the information can at least be pushed towards the back of the mind. Relearning: It means learning the new technology. This step is exactly like the one discussed before, i.e. learning new technologies and educating the employees through workshops, lectures, etc. Time Management: (Fergus O'Connell 2003) Time management is one of the most important aspects of organizational behavior, let alone the competitive advantage. Strategies implemented too early or too late, both can cause numerous inexplicable problems for the organization. Therefore, it is very important to take the right decision at the right time. Conclusion: Information technology is one of the fastest growing technologies of the present world. Able to be integrated in almost any kind of enterprise or organization, IT is one of the best possible strategies to create, enhance or save the competitive advantage over the business competitors. However, it should always be kept in mind that like everything else, IT too has its own limitations and can only be used to a certain extent and after that it is of no good; also, that IT is not the only solution, there are many little things that have to be kept in mind to get the best out of it and to get maximum and as long lived competitive advantage as possible. Bibliography: Allard C K – (2004) - Battling for Competitive Advantage - John Wiley and Sons Curtis M. Grimm, Ken G. Smith, Lee H – (2005) - Strategy as Action: Competitive Dynamics and Competitive Advantage - Oxford University Press US Harvard Business School Press – (2005) - Hiring Smart for Competitive Advantage - Harvard Business School Press (try to give the author) M. Fulmer R, Conger J A - Business & Economics – (2004) - Growing Your Company's Leaders: How Great Organizations Use Succession Management to Sustain - AMACOM Div American Mgmt Assn Nicholas G. - (2004) - Does It Matter: Information Technology and the Corrosion of Competitive Advantage – Harvard Business School Press O'Connell F– (2003) - The Competitive Advantage of Common Sense: Using the Power You Already Have - Financial Times Prentice Hall Payne A– 1998 - Relationship Marketing for Competitive Advantage: winning and keeping customers - Elsevier Pfeffer J– (1994) - Competitive Advantage Through People: Unleashing the Power of the Work Force - Harvard Business School Press Not sure what your thesis statement You must define what you mean by IT, because this is a very large topic, what specific programs, hardware, network systems do you mean when referring to IT. Explain how this IT will possibly give competitive advantage. Define ‘competitive advantage’ Define your business context Narrow your focus on specific business/ examples There are some descriptions but not enough No figures evident, use some data illustrate, e.g. graphs Read More