Can Information Systems Provide Businesses with a Competitive Edge? Are Such It Related Competitive Advantages Sustainable in the Long Run? Why or Why Not?

Topics: Strategic management, Information system, Information Systems Research Pages: 7 (2660 words) Published: December 11, 2007
Can information systems provide businesses with a competitive edge? Are such IT related competitive advantages sustainable in the long run? Why or why not? In recent years, many businesses have faced an increasingly uncertain future. As a result, there is an "economic imperative" to gain advantage over their competitors (Bakos & Treacy, 1986). A competitive advantage is attained when "a firm reaches its comparative efficiency or bargaining power (Bakos and Treacy, 1986). There has been a need for the introduction of information systems into many businesses due to human limitations, with bounded rationality concerning the "memory, computation and communication" capacities of an individual (Bakos & Treacy, 1986). There is limit to which individuals are able to solve problems without the use of information systems. In order to shift the boundaries of rationality, information system must be implemented to aid "memory, computation and communication" (Bakos & Treacy, 1986). Information systems designed to gain competitive advantage are defined as "information systems that drive or formulate the organisation's competitive strategy in order to provide it with (or to maintain) a competitive advantage" (Wiseman, 1985). Wiseman (1988) also stated that companies should pursue short, medium and long-term investment in information systems, which display sustainability. He claimed their success could be measured in number of new clients, increase in market share and general return on the original investment. Some might argue that the continuous exponential improvement in technology would render long-term investment in it impossible. However, most of these 'new advances' will not overly benefit all companies in all markets. The importance of a well- implemented information system is very real. Clemons and Kimbrough (1986) believed that "recent attention given to the strategic use of information systems or the priority placed on finding opportunities is not overstressed". In order for this to be effective, it must not just be a short-term advantage. In order for long-term advantage to be gained "consumers must view the company's differentiation favourably, the firm must have the capacity to maintain its differentiation over the competition and the business must endure (Coyne, 1986). Individual limitations are cited frequently for the rise in information systems and indeed corporations. If individuals were not limited, independent agents would operate instead of companies. This would flood the marketplace with excess competition and costs, which shows the existence of large firms is a necessity. In order to fulfil potential and overcome limitations, companies need to implement information systems. Nearly all modern corporations have an information system, but many are still limited by human factors. This is mainly because senior managers underestimate the importance of information systems. Companies also tend to resist change. A new information system can be an extremely daunting thing and can appear an undesirable option, especially if the company is doing well without one. There is a problem with "justifying the methodology, applying it and evaluating its output" (Sinclair, 1986). There was also a study conducted of eighty organisations (Lederer and Sethi, 1988), that the introduction of information systems and their planning of strategies were problematic, as they did not have the resources, processes or output for them. Managers in general were only to be fairly happy with the results. Some people believe that by implementing these new systems to solve problems with the old methods, they in turn will bring about new problems also needing new solutions. The resistance is a case of 'better the devil you know'. Managers are also wary of information systems as their benefit is difficult to quantify. Cooper and Kaplan (1988) stated that, even if their benefits are difficult to gauge, maintaining a competitive edge will result in a 'long-term...
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