Information Technology systems have expanded in all the companies. IT includes hardware and software as well. Besides, IT may consider telecommunications networks, the management of data and many technologies based on the use of the Internet. Many believe that IT has a controversial value in strategic arrangement of organizations and productivity implementation, while others believe that IT affects enterprises in all the above mentioned sectors and after all that it is the backbone of every modern company. Nobody can deny that Information Technology plays important role in strategy and productivity of companies who use it. However there is a growing opinion that Information Technology has become a commodity and that has already lost its competitive advantage. The alternative opinion is that speed and flexibility may occur, via IT, into businesses. Moreover improvement of organizational structure is one more of the benefits companies can gain by the proper use of Information Technology. However in any occasion companies should innovate in continuous matter in order to conserve the strategic value of Information Technology.
The aim of this essay is to get a focused knowledge, through the literature review basis in Information Technology to achieve the critical judgment and appropriate selection of the strategic implementation of the use of Information technology. The intention of the author is to get a deep insight of the argument that has arisen between managers about the strategic value of Information Technology, as well the strategic advantages that can occur by its proper use.
Nicolas Carr's article "IT doesn't matter" (May 2003) expresses the opinion of senior managers concerning IT's business value. Nicolas Carr is of the opinion that Information Technology is not any more so strategic because nowadays everyone knows to use it. He supports the idea that the opportunities for improvement that the focused view into the use of a new technology may create, are not offered indefinitely. Besides he strongly believes that IT has become uncompetitive as it has been altered in something common in the market.
The proponents of Information Technology believe that IT is closely distinguished with infrastructural technology. Nicolas Carr in his article wrote: "The point is ,however that the technology's potential for differentiating one company from the pack -its strategic potential- inexorably declines as it becomes accessible and affordable to all". According to this thought, Information Technology has lost its benefit to make companies more competitive and also IT cannot help enterprises formulate their strategic organization.
Moreover the 'rivals' of Information Technology support the idea that IT should be correctly used by companies and employees and careless use is not needed. They think that Information Technology in many companies is not used in order to make them differentiate and improve. Companies spend a large sum of money to buy new applications but are thought to be wrongly used. As a result they believe that there is no excuse for misuse end negligence.
Finally they propose to managers of companies to think pragmatically when to use Information Technology. As Nicolas Carr m in his article "The key to success, for vast majority of the companies is no longer to seek advantage aggressively but to manage costs and risks meticulously". This opinion is translated that companies should pay a lot of attention when spending on IT and at the end they have to be very careful in their expenditures. Nicolas Carr firmly believes that IT should be used only to serve some needs of the companies, thus huge investments would be useless for them.
On the other hand there are many managers who believe that Information Technology Does Matter and has a really strategic implication and productivity use in enterprises. It is essential that managers have recognized what forces it is needed to face. Moreover they should have a broad and also focused view of the competitive strategic advantages , their organizations can win from the use from IT.
To begin with, businesses in order to succeed must develop strategies to counter some forces that seem to be stakeholders. Competition is a positive distinctive in industry that encourages stable try to achieve competitive advantage in the market. Besides new entries of companies into the market requires the investment in organizational resources. It is essential than enterprises should always be competing with new companies in the market while in many times to form considerable barriers to new entrants. 'The threat of Substitutes' is one more 'competitive force' that may detain a company. As most of products have some kind of alternative offered to the costumer, there is a durable force on companies. This force may be even strongest for industries during the time of inflation. Companies should always innovate in order to maintain this effect. Finally organizations must improve resistance to the often rival forces of clients and suppliers bargaining powers. Companies are forced to find manners in order to manage these two forces in order to create a competitive product in the market place.
However through IT companies are capable to develop some new competitive and innovative strategies. Cost leadership may definitely help companies turn into low-cost producers. The use of Information Technology into industries may significantly diminish the cost of the processes may take place into a company. Moreover suppliers or costumers are assisted to reduce costs. Finally costs are increased to competitors. 'Dell computers' used Information Technology to take advantage by the strategic value of cost leadership. The company managed to built support for its 100 percent build-to-order competence, extensively enhanced its demand-planning and manufacturing implementation accuracy, condensed order-to-delivery time and improved purchaser service. They collaborated with Accenture to produce a new, highly competitive planning solution. Now As a result, the income coming from the project's implementation was five times over through the first 12 months of operation. Dell now, is capable to settle in more quickly to swiftly altering technologies, and preserve its position as a high-quality business.
Furthermore companies are now capable, with the use of Information Technology, to differentiate their products and services from other competitive firms in the market. If they cannot do so they can at least reduce the competitive advantages created by their competitors. This strategy may allow organizations to focus their products or services in order to gain competitive advantages in certain segments of the market. Firms by using Information Technology can advance their visibility into the supplier community. They are able to have an extended analysis of supplier information real-time, so they can have access into their supplier's inventory, lead-time data and build up information, on a modern basis. Also industries can configure new systems in order to verify which parts to keep in stock.
Moreover companies can be based in innovation as strategic method that can be implemented through Information technology. Exceptional products or services can be distributed and essential changes to businesses' structure as well. Businesses and industries should innovative in a continuous matter or else IT's value can be useless. Researches have shown that IT investments have introduced negligible productivity improvements. However only those companies who innovate continuously have succeeded productive activities.
The innovations in business practices are required to be taken under serious consideration in order to develop potential for addressing business challenges. Companies should change terms of thinking about Information Technology's possibilities and would be far better advised to think in terms of opportunities to built long term relationship with companies possessing complementary assets and capabilities. Companies should think about the new business practices IT can bring, the economic advantages and the market leadership that can occur from durable process of innovation.
Additionally Information Technology helps companies to develop and at the end prevail into global markets. Businesses may use IT to deal with district and global business spread. Internet and global satellite tracking nowadays help enterprises to sell products all over the world only by ordering them via Internet. As a matter of fact this strategic advantage can help companies expand into new products or services, as also alter them into competitive components of the world market.
Also there are thoughts that using IT makes companies more able to launch linkages and alliances with customers, suppliers, competitors, consultants and other companies. These linkages can contain mergers, acquisitions, mutual ventures, forming of 'virtual companies' or other marketing, manufacturing, or sharing agreements between a business and its trading allies. Business use of Information Technology build up insight information systems linked by the internet and extranets that support strategic business interaction with customers , suppliers , subcontractors , and other partners. A significant example is the strategic use of Information Technology that "Procter & Gamble" (P&G) had delivered. This company with the use of Information Technology developed a very important project, essential for the company's structure. P&G through this project managed to get and distribute data rapidly. But the benefits did not stop there, P&G was more able to speed the ways they get products to market, while to apply techniques "friendly to consumers" and at the end to deliver new IT products and services to company's internal user base. Consequently P&G managed to reduce inventory rate via this innovative use of Information Technology and as a result their sales improved.
'Business process reengineering'(BPR) is thought to be one of the most significant processes of competitive strategies that can be often met with the term reengineering. Reengineering is an essential rethinking and fundamental change of planning of business processes to accomplish remarkable achievements in cost, quality, flexibility and service. A strategy of supporting business improvement is combined by BPR, with a strategy of building major innovations to business processes. Consequently a firm can develop into a much stronger and more flourishing competitor in market place. However this method may contain as many risks as the advantages can bring. Making fundamental modifications to business processes is not an easy task. That is the reason that many companies have accounted exciting achievements by executing the reengineering process, as many others that have experienced impressive failures or did not accomplished the enhancements they considered.
Information Technology has a major role in reengineering. The speed, the potentials it may produce in information-processing and connectivity of computers and Internet technologies can considerably enhance the competence of business processes. Besides telecommunications and cooperation among the people help business' processes in operation and management. There are severe group intranets and the Internet as well that enhance customer relationships. Moreover there can be created supplier-managed catalog systems and customer-accessible e-commerce Web sites which support them to order through Internet. Status checking and payment as well are achieved by the use of Information Technology.
The above mentioned strategic advantages gained by the utilization of Information Technology, have altered IT into the backbone of business structure. However these advantages are not reciprocally exclusive. An organization can use one, some, or all of the strategies in varying ranks to manage competition. Consequently, a given activity could fall into one or more of categories of competitive strategy. For example, one activity that a company would develop could be considered as a form of differentiation if the other companies in the market do not offer the same service. However, if they do offer the service, this activity would not provide differentiation from one organization to another. It can be easily understood from this example that, not everything innovative will enhance differentiation of one organization from another. Similarly, not everything that serves organizations to differentiate is automatically viewed as innovative. These kinds of annotations are true for any combination of the abovementioned strategies, therefore transforming them complementary to each other.
One additional point regarding the strategic use of Information Technology is that IT really affects the human resources of an organization. Thus via Information technology companies are able to design systems which support planning to meet personnel needs of the business. Additionally these systems can support progress of employees to their foul potential and finally organize all workforce policies and programs. For example a benefit of the expansion of the new systems is that they can provide a superior training tool. Workers can by far download directions and processes to get the information or education they want. In addition, employees using new technology can view training videos on demand.
As a matter o fact Information Technology is very useful in productivity of an organization. IT supports businesses to minimize cost, time. As an overall goal the systems created via Information Technology, is to develop flexible, agile, production processes that competently manufacture goods of the highest quality. Implementing such manufacturing projects a company is able to manage and realize customer requirements swiftly with high class products and services.
New computer based systems have three basic objectives. The first is to simplify production processes, product designs. Therefore the next objective is to automate fabrication processes and the business functions. This objective is supported efficiently with computers, machines and robots. The final objective is to integrate all manufacturing and support processes using computer networks cross functional business software, and other Information Technologies.
Besides Information Technologies give the ability to organizations to thrive in rapidly changing, global markets which repetitively ask for high-quality, high-performance, customer-configured commodities and services. The new technologies based in Internet support mass orders by offering specified high quality products while keeping large quantities of production.
Organizations nowadays are recommended to side with a long-term view of the challenges coming from Information Technology. Managers should have a high level view of the kinds of markets they are to be working in and the kinds of companies they plan to become. This long-term view will assist them to spotlight on near-term innovations in business practices, whereby helping to create fundamental strategic advantage across the challenges of the market.
Furthermore organizations and high level managers, as well, should take under consideration that Information Technology is not a panacea. There should be a thoughtful use of Information Technology into businesses. Massive use of IT is not probable that will solve all the problems of a company. IT should be regarded as a tool that enterprises gather force in order to implement their financial, productive and strategic goals. If none solution is coming from IT then it doesn't matter, at least what may concern its strategic value.
However if companies focus their work on new possibilities and initiatives IT can create then Information Technology does matter. A concerned and durable effort is required in order to have the new opportunities, IT can create, revealed. Thus the anticipated results of a company would appear and all the helpful consequences they may concern.
This opinion is definitely a bad message for IT vendors. They should probably change their current strategy concerning their sails of IT equipment to companies. The idea that the more application organizations use the more competitive would be, is absolutely wrong and in many occasions dangerous. Yet the option for technology vendors is to deal with the belief that IT does not matter. That change of strategy in sailing may be too painful for them but will help companies to have a more logical use of IT and reduce their expenditures in useless technology, thus giving them the opportunity to think of IT as a tool of implementing the competitive strategic advantages they have planned.
Another conclusion would be that technology would be planed and used by experienced employees. First of all the high-level managers should be accustomed with the opportunities may occur by Information Technology. Consequently according to the targets and possibilities their company may have they should use it. It would be a disaster for those companies which their managers do not have a focused idea about the opportunities Information Technology can bring. Moreover employees would be better to be familiar and even experts on the use and practices of IT in businesses. Specialized employees would use Information Technology only for their job, and not for pleasure, as they would know all the possibilities of the applications they use. Additionally the time of training would be much more reduced and the innovation procedures would be easier for them. As a result Information Technology investments, an organization may do would pay off and competitiveness of the company would be obvious.
Finally the most crucial issue is that managers and companies should have a focused view of their goals. Moreover the high-level managers should know the forces the companies they work for may face in the market. At the end they should have learned extensively in what manner the utilization of Information Technology helps their company to implement their goals and objectives but also the hazards it may include. In that occasion the managers would have the ability to expand their knowledge to the lower layers of the company. Consequently the firms they work for would be capable to differentiate and improve in the market world.
Reference and Bibliography
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