Competing with Information Technology

Competing with Information Technology

Information technologies can support many competitive strategies. They can help a business cut costs, differentiate and innovate in its products and services, promote growth, develop alliances, lock in customers and suppliers, create switching costs, raise barriers to entry, and leverage its investment in IT resources.

Thus, information technology can help a business gain a competitive advantage in its relationships with customers, suppliers, competitors, new entrants, and producers of substitute products. The following are specific ways in which businesses can compete using IT]

Building a Customer-Focused Business

A key strategic use of Internet technologies is to build a company that develops its business value by making customer value its strategic focus. Customer-focused companies use Internet, intranet, and extranet e- commerce websites and services to keep track of their customers’ preferences; supply products, services, and information anytime, anywhere; and provide services tailored to the individual needs of their customers.

Reengineering Business Processes

Business process reengineering (BPR) is, in computer science and management, an approach aiming at improvements by means of elevating efficiency and effectiveness of the business process that exist within and across organizations.

The key to BPR is for organizations to look at their business processes from a “clean slate” perspective and determine how they can best construct these processes to improve how they conduct business.

Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management. It is the radical redesign of an organization’s processes, especially its business processes.

Rather than organizing a firm into functional specialties (like production, accounting, marketing, etc.) and considering the tasks that each function performs; complete processes from materials acquisition, to production, to marketing and distribution should be considered.

The firm should be re-engineered into a series of processes.

The main proponents of re-engineering were Michael Hammer and James A. Champy. In a series of books including Reengineering the Corporation, Reengineering Management, and The Agenda, they argue that far too much time is wasted passing-on tasks from one department to another. They claim that it is far more efficient to appoint a team who are responsible for all the tasks in the process. In The Agenda they extend the argument to include suppliers, distributors, and other business partners.

Re-engineering is the basis for many recent developments in management. The cross-functional team, for example, has become popular because of the desire to re-engineer separate functional tasks into complete cross-functional processes.

Also, many recent management information systems developments aim to integrate a wide number of business functions Enterprise resource planning, supply chain management, knowledge management systems, groupware and collaborative systems, Human Resource Management Systems and customer relationship management systems all owe a debt to re- engineering theory.

Information technology is a key ingredient in reengineering business operations by enabling radical changes to business processes that dramatically improve their efficiency and effectiveness. Internet technologies can play a major role in supporting innovative changes in the design of workflows, job requirements, and organizational structures in a company.

Improving Business Quality

Information technology can be used to strategically improve the quality of business performance. In a total quality management approach, IT can support programs of continual improvement in meeting or exceeding customer requirements and expectations about the quality of products, services, customer responsiveness, and other features.

Becoming an Agile Company

A business can use information technology to help it become an agile company. Then it can prosper in rapidly changing markets with broad product ranges and short model lifetimes in which it must process orders in arbitrary lot sizes, and can offer its customers customized products while maintaining high volumes of production. An agile company depends heavily on Internet technologies to help it be responsive to its customers with customized solutions to their needs and corporate with its customers, suppliers, and other businesses to bring products to market as rapidly and cost-effectively as possible.

Creating a Virtual Company

Forming virtual companies has become an important competitive strategy in today’s dynamic global markets. Internet and other information technologies play an important role in providing computing and telecommunications resources to support the communications, coordination, and information flows needed. Managers of a virtual company depend on IT to help them manage a network of people, knowledge, financial, and physical resources provided by many business partners to quickly take advantage of rapidly changing market opportunities.

Building a Knowledge-Creating Company

Lasting competitive advantage today can only come from innovative use and management of organizational knowledge by knowledge-creating companies and learning organizations. Internet technologies are widely used in knowledge management systems to support the creation and dissemination of business knowledge and its integration into new products, services, and business processes.