Competitive Advantage of Information Technology
Competitive Advantage of Information Technology
A fundamental change is happening in companies’ competition due to the changes in the global business environment, management thinking and experience and information technology.
In the new global method of competition, collaboration exists as a new established niche of competitiveness. In a traditional thought, collaboration pertains to office workers interacting effectively together to achieve a common objective and goal of the company. Here, the exchange of knowledge among individuals allows them to communicate and chare complex ideas and to form a collaborative work performance in crating value. Yet, competitiveness remains central to profitability, growth and business success. It is true that in many emerging markets and collaboration scheme competitors do not exist.
IT and Competitive Advantage
Technological innovations are having significant relevance to man. Rapid technology advancements have introduced major changes in the worldwide economic and business atmosphere. Information technology developments in banking sector have sped up communication and transactions for clients.
Technology has become the driver of change that is taking place in the banking sector. Technology-based tools greatly support the most innovative concepts currently being implemented in the market. The efficiency at which service levels are improved hinges on the appropriate use of the available technologies.
The emergence of information technology sets another trend in the economy of production and the profitability scheme of business firms and corporations. The advantage sets by information technology primarily seen in the cyberspace in the likes of e-businesses and other forms or business marketing in the marketspace becomes the new rule in maintaining one’s business organization and to gain competitive advantage and sustainable growth.
Competitive advantage is a fundamental requirement for an organization if it is to survive in the long term. The reality is that few organizations achieve competitive advantage and even fewer sustain their advantages. Porter identifies three generic strategies for competitive advantage: low cost, differentiation, and sustainability.
Information technology has been perceived as being a means to provide more efficient processes that would lead to lower cost products and services. Yet, the only barrier preventing all organizations from acquiring the same technology is the cost of acquisition.
Tapscott argued, “IT networks accelerated the development of global commerce and lowered transaction costs, enabling the global unbundling of the firm” (2005). In this case, IT serves to be a utility in which a firms’ competitive advantage sustained and make a stronghold.
The widespread impact of information systems is increasingly being acknowledged as being fundamentally strategic as new information technology continues to progressively penetrate into core business technologies. Information technology is not limited to specific applications unlike other application of technology for competitive advantage. For instance, the use of automation in manufacturing industries can increase the effectiveness of a factory.
On the other hand, as I mentioned above the utilization of IT is mostly seen in the cyberspace. The case in point, Edward Chen made a study on the Leveraging IT for a Competitive Advantage – A Case of eBay, the paper analyzes the information technology strategy and information systems policy adopted by eBay to react to the business dynamics while maintaining the leading position in the industry.
It uses technology and information systems to help the community members buy and sell items online. It develops and acquires programs and services to help the community transact business easily, safely and more effectively, such as Buy It Now, Pay Pal, buyer protection, educational tools, and feedback ratings. They are focused on providing a strong technology platform, so that customers can have reliable access the website from anywhere in the world.
Furthermore, “The company is resilient, versatile, and an excellent example of how a company can successfully leverage information technology for a competitive advantage.” (Chen, 2005)
It is to be argued and even by the most prominent scholars that Information technology cannot be construed as an organization which has a build-in competitive advantage. However, in this case, the idea of competitive advantage of technology is not necessarily based on a business construct but to identify the advantages, usefulness and benefits of IT in the competitive advantage of corporation and firms.
The usefulness of information technology are enormous and diverse, depending on the kind of products and goods a company is leveraging and producing. If in a case like manufacturing products, the usefulness of IT obviously to mass produce goods, highly qualified in just a few period of time. The IT in these industries is using software and other IT means in which to replace the manpower ability of mass production. In this way, IT generates multiple incomes for the firms compared to the human labor. Since, the primary task of a business organization is to generate profit; IT becomes a prominent tool to utilize. However, in purchasing high-end IT tools are quite expensive in which big companies can only afford.
On the other hand, the impact of the use of information technology on corporate performance should be examined. In some studies made, there is no monopoly of information technology on the performance of a corporation. It can be of generated by human resources, business resources and IT. The variance in corporate performance does not solely produced by technology resources. Moreover, some scholars believed that in a retail market industry, IT can bolster productivity, but it alone cannot guarantee sustained performance advantages. On the other hand, retailers that gained competitive advantage are those that employ technology to leverage intangible, complementary human and business resources. Since IT becomes a complex reality, there is a need for IT to be simplified in a way that it becomes more useful and adoptable to other business markets. IT simplification generates a smater, faster, more efficient and better for the environment. Companies and organizations want simple standards for computing on speed, innovation and efficiency. Businesses and governments want to invest in innovation, not maintenance and they want to spend their time and resources creating better services and better products for their customers. In this way, simplifying IT as a means for companies and government’s competitive advantage is a gateway to innovation.
In today’s data center operations, the use virtualization is the best technique for them to sustain its competitive advantage against their competitors. It allows multiple systems or applications to be run on the same server without any conflicts. It is indeed a revolution in IT efficiency.
Moreover, the simplification process in the IT system can be useful and beneficial for the large scale business and in the sustainability of the growth and competitive advantage.
The competitive advantage of IT ranges from being a new model or archetype of company’s leveraging process and profitability. It becomes a primary tool in which firms and transnational corporation rely prominently for its effectiveness and efficiency.
In the end, IT and its revolutionary trend set the global economy into a field in which becomes a competition between IT use and sophistication in generating profits and sustainable development and economic growth.
Chen, E. (2005) Leveraging IT for a Competitive Advanatge – Case of eBay, Issues in Information Systems, http://www.iacis.org/iis/2005_IIS/PDFs/Chen.pdf
Tapscott, D. (2005) Rethinking Information Technology and Competitive Advantage: Strategy in the Age of Collaboration. IT & CA, New Paradigm.