Social Icons


Friday, July 18, 2008

Information Technology


With the rapid growth of technologies, our economic society and life are changing significantly in the 21st century. The way to capture their competitive advantage has become the most important issue for enterprises in the rapidly changing and uncertain business environments. Many researches have pointed out that the adoption of technology is the most important tool for enterprises to keep their competitive advantage. The survival of an enterprise in the age of knowledge-based economy depends on how to improve their technological capability.
In this sense, firms should develop adequate methodologies, in order to adopt, in a successful way, new technologies in the logistics field, and also to integrate logistics into the corporate strategy for becoming even more competitive. Growing number of firms are under pressure from their partners to change their traditional management style, both operationally and organizationally, replacing them with integrated systems that help increase the speed and fluidity of physical and information flows. In order to reach this kind of integration they are investing on new Information and Communication Technologies (ICT).
Nowadays, as regards the data acquisition technologies, the firms usually deal with a large amount of goods and data which means that data collection and exchange are critical for logistics information management and control. Good quality in data acquisition can help firms deliver customers' goods more accurately and efficiently. To attain this goal firms could appeal to some data acquisition technologies in logistics field, such as the optical scanning, the electronic pen notepads, (Lin, 2006), the voice recognition and the robotics (Dawe, 1994).

Information Technology plays an important role

When a firm sustains profit that exceeds the average for its industry, it is called a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage. Competitive exist when the firm is able to deliver the same benefits to its customer at a lower cost which is considered to be the cost advantage. Not all companies will rely on internet for the establishment for the organization. Michael Porter has state that a competitive advantage enables the firm to create a superior value for its customer and superior profits for itself.
A continuing stream of information technology innovations, from the Internet to wireless networks to digital phone and cable systems, is continuing to transform the business world. Much debate has been taken place on the importance of technology and its benefits of using it. How far this is true and how successful is it in the establishment of the organizations. The continuing stream of innovations is enabling entrepreneurs and innovative traditional firms to create new business models, destroy old business models, disrupt entire industries, build new business process and transform the day-to-day conduct of business.
Briefly, the growth of the Internet, the globalization of trade, and the rise of information economics have raised the importance of information technologies and systems in business and management. It is essential that business students understand how information technologies are changing business firms and markets today and how they will likely change in the near-term future as digital technologies continue to evolve.
Nowadays companies should rely on the Internet and the networking technology to conduct more of their work electronically, seamlessly linking factories, offices and sales forces around the globe. Leading-edged firms, such as Cisco Systems, Dell Computer and Procter & Gamble, are extending these networks to suppliers, customers and other groups outside the organization so they can react instantly to customer demands and market shifts. The managers can use the systems to virtually close their books at any time, generating consolidated financial statements based on up-to-the minute figures on orders, discounts, revenue, product margins and staffing expenses. Executives can constantly analyze performance at all levels of the organization. This digital integration both within the firm and without, from the warehouse to the executive suite, from suppliers to customers, is changing how we organize and manage a business firm.
Ultimately, these changes are leading to fully digital firms where all internal business processes and relationships with customers and suppliers are digitally enabled. In digital firms, information to support business decisions is available anytime and anywhere in the organization.

Why should we choose Information Technology now and be safe

A combination of information technology innovations and a changing domestic and global business environment makes the role of IT in business even more important for managers than just a few years ago. The Internet revolution is not something that happened and then burst, but instead has turned out to be an ongoing, powerful source of new technologies with significant business implications for much of this century.
There are five factors to consider when assessing the growing impact of IT in business firms both today and over the next ten years.
Internet growth and technology convergence
Transformation of the business enterprise
Growth of a globally connected economy
Growth of the knowledge and information-based economics
Emergence of the digital firm
These changes in the business environment pose a number of new challenges and opportunities for business firms and their managements.

The importance of internet and technology convergence

One of the most frequently asked questions by Walls Street investors, journalists and business entrepreneurs is “What’s the next big thing?” As it turns out, the next big things are in front of us. We are in the midst of a networking and communications revolution driven by the growth of the Internet, Internet-based technologies, and new business models and processes that leverage the new technologies.
Although “digital convergence” was predicted a decade ago, it is now and undeniable reality. Although each industry has its favored platform, the outlines of the future are clear: a world of near universal, online, on demand, and personalized information services from text messaging on cell phones, to games, education and entertainment.
The Internet is bringing about a convergence of technologies, roiling markets, entire industries, and firms in the process. Traditional boundaries and business relationships are breaking down, even as new ones spring up. Telephone networks are merging into the Internet, and cellular phones are becoming Internet access devices. Handles storage devices such as IPods are emerging as potential portable game and entertainment centers. The Internet-connected personal computer is moving toward a role as home entertainment control centre.
Traditional markets and distribution channels are weakening and new markets are being created. For instance, the markets for music CDs and video DVDs and the music and video store industries are undergoing rapid change. New markets for online streaming media and for music and video downloads have materialized.
Today, networking and the Internet are nearly synonymous with doing business. Firm’s relationships with customers, employees, suppliers and logistics partners are becoming digital relationships. As a supplier, you cannot do business with Wal-Mart, or Sears, or most national retailers unless you adopt their well-defined digital technologies. As a consumer, you will increasingly interact with sellers in a digital environment. As an employer, you’ll be interacting more electronically with your employees and giving them new digital tools to accomplish their work.
So much business is now enabled by or based upon digital networks that we use the terms electronic business and electronic commerce frequently. Electronic business or E-business, designates the use of Internet and digital technology to execute all of the activates in the enterprise. E-business includes activities for the internal management of the firm and for coordination with suppliers and other business partners.
The technologies associated with e-commerce and e-business has also brought about similar changes in the public sector. E-business really helps the departments to store or keep the information for future reference.

Information Technologies and E-Business Models

Several classifications have been proposed in the literature to categorize E-Business models. According to Torbay et al. (2001) most authors suggest two dimensions in order to rate the business models: functional integrations and degree of innovation; type of relationships and degree of externality; power of sellers and buyers. This authors identified in literature, as 4 principal dimensions for classifying the business models the follow:
i) The user role
ii) The interaction pattern
iii) The nature of the offerings
iv) The pricing system
v) The level of customization

Torbay et al. (2001) suggest a model to classify and compare the business models. They exemplify the way how to translate the core processes of the business models into a set of
relevant measures for each component of the adopted framework. The model is divided into four main components:
(i) The set of products and services that is offered by firm and that represents a substantial value to a target customer (value proposition):
This element refers to the value the firm offers to a specific target customer segment. IT has their most important impact on new ways of creating and delivering value. Customization is another common value proposition proposed by the authors enabled by the rapid development of IT.
(ii) The relationship capital the firm creates and maintains with the customer, in order to satisfy him and to generate sustainable revenues (Customer relationship management)
IT offer a whole new range of opportunities to exploit existing customer relationships, and to identify the customers needs in order to establish and develop a long relationship with him;
(iii) The infrastructure and the network of partners that is necessary in order to create value and to maintain an adequate partner relationship management
The infrastructure component describes the value system configuration that is necessary to deliver the value proposition; that is, the relationship between in-house and/or partners’ resources, assets and activities and a network;
(iv)The financial aspects that can be found throughout the three former components, such as cost and revenue structures
Financial aspects embrace the costs required to make the productive get the infrastructure add value, and also the revenues that are generated through sales. The difference between revenues and costs determine the profitability of a firm.

Marketing strategy for customers

Through technology, the firm is able to create customer relationship management where the customers will be interacting with the purchasers via internet or online. Having detailed customer information from an eCRM system allows a company to predict the E-relationship marketing kind of products that a customer is likely to buy as well as the timing of the purchases.
Knowingly, customers are the main income in any organization which indirectly links to the best of the competitive advantage obtain in any companies. Therefore, from eCRM, customer information collected is useful for developing an effective marketing strategy. A strategy includes an integrated view of the customer, customer decision analytic, optimized customer interactions (Walker, 2002).
In addition to influencing the purchasing involvement, eCRM can also help create customized products. Traditionally customer profiles were either demographic or behavior-based. A demographic profile may have included marital status, if customer had children, where the customer lived and what magazines he likes.
A behavior based profile may describe the number of times a customer clicked a particular Website because it is more focused around the action of the customer. eCRM adds intelligence to the customer profiles and can help deploy customized products.

Quality Function Deployment (QFD)

Quality function deployment (QFD) offers a rigorous analysis methodology for understanding customer outcomes and developing comprehensive product specifications.
QFD tools and principles are traditionally used for product development but they are just as appropriate for the development of business strategy, (Walker, 2002).
QFD strategic planning involves two key steps and they are known as:
The development of customer strategies.
The development of enabling strategies.

The development of customer strategies

QFD principles insist that business strategy must be firmly based on effective customer strategy. Corporate strategy is sometimes simplistically viewed as a top-down process where visioning leads directly to decisions on products, processes and operations. In QFD, the outcome is definitely the stakeholder in where it leads to a strategy for each business and then to the corporate strategy to manage the business portfolio.
The development of corporate strategy is a vital step and all these steps can be seen from the diagram below, Figure 1.
A major problem in planning, whether it is for products, organizations or any firms that relies on the Information Technology, is not establishing a customer strategy that properly resolves the “fuzzy front end” before latching on to the strategic direction, (Killen and Hunt, 2000 )
Failure is inevitable if plans re developed before the key deliverables are understood. Often, organizations that are striving for innovation and improved performance realize that they should be customer-driven, as customers play an essential role. The QFD approach to solving the fuzzy front end in strategy projects involves answering essentially the same questions as in product and service development projects.

What makes a resource truly strategic

In the 20th Century, IT was the main subject in business. Without IT, a company won’t survive. Which is true in those days, but in the 21st century, IT has become a commodity and no longer a competitive advantage in business.
“Their very power and presence have begun to transform them from potentially strategic resources into commodity factors of production”, Nicholas G. Carr (2003)
IT has lost its strategic advantage in business because of the time factors. In the case study, we have learned that like railways and electric power, these used to be a strategic business advantage too. With electricity, a company can be more productive comparing to a company with electricity. This goes same with railways. As time passes, the availability and cost of purchasing such utility has become cheap and affordable, they became ubiquitous. This is the same with IT. As buildings are being built, IT will also be built into the infrastructure of the building together with all the wires and pipes. This shows that IT has become a need, a commodity and no longer a competitive advantage in business.
There is only one way to use IT as a strategic business advantage as this is Innovation.
“The window for gaining advantage from an infrastructural technology is open only briefly”, Nicholas G. Carr (2003)
“Superior insight into the use of new technology”, Nicholas G. Carr (2003)
Without innovation, IT will only become a commodity. When the company is able to utilize the technology to the fullest, new or old, the company will be able to make that a business advantage.
An example is AirAsia. Online booking is very common in the world even in Malaysia. Before AirAsia came along, Malaysian were able to booked many things online such as hotels, bus tickets, even other airline company provide online service, but why is it that AirAsia is able to use online booking a competitive advantage? The answer is AirAsia utilize the technology and use innovation in the business strategy. By just forcing consumer to purchase tickets online, AirAsia were able to reduce cost in the operation. Now look at Malaysia Airlines (MAS). MAS tried to use the same business strategy but they were not as successful as AirAsia. Why?
“If an industry lags in harnessing the power of the technology, it will be vulnerable to displacement”, Nicholas G. Carr (2003)
Another good example of using Innovation as a business strategy is Apple Computers. “The designer central to Apple's recovery in the '90s has quite a list of hit products to his credit, including the iMac and iPod.”
“Rather than just draw pretty pictures, they're leading innovators in the use of new materials and pioneering production processes say, the ability to put a layer of clear plastic over the white or black core of your iPod, giving it a depth of quality that most consumers don't even realize they appreciate.”
Apple Computers was one of the biggest names in the computer world back in the 80s when computers were first being introduced to the mass market. As Apple history tells us, having innovation itself will not help make a company successful; a company must also have a good business model and strategy.
The revival of Apple in the 20th century was with the help of Innovation. First we saw the impressive new iMac (1998), PowerMac Cube (2000), iPod (2001), Mac Mini (2005), Ipod Nano (2005) and the list goes on.

The development of enabling strategies

The second major step in strategic planning is developing enabling strategies that will match the organizational capabilities with the target opportunity areas. QFD relationship matrix analysis is often dispensed with in strategic QFD because the customer positioning results in a focus on a small number of opportunity areas. The concept selection technique (Pugh, 1981), which is commonly used with QFD, has been adapted for generating and evaluating alternative strategic concepts.
Strategy concepts are sets of enabling strategies and strategic initiatives that are coherent and mutually supportive. In most organizations there are numerous solutions, ideas and suggestions to be considered – ranging from improvements in the utilization of existing resources to innovative new technologies. Strategic concepts are built up by considering each outcome opportunity and identifying the possible solutions that address the key opportunities.
Each idea is scored on its effectiveness in meeting customer outcomes using the market research data. Sometimes other criteria are also evaluated, such as cost, effort required, risk of failure and vulnerability to competitive replication. The concept selection technique allows the alternative solutions to be modified and improved during the process. In contrast, conjoint analysis requires the alternatives to be defined up front before the research is conducted, which largely precludes innovation. The technique starts with base strategic concepts that are automatically generated from all the proposed solutions for each high opportunity outcome.
Evaluating strategic concepts using clearly identified and prioritized criteria removes subjectivity and clarifies the interactions between opportunities and strategic initiatives. It also ensures strategic decisions are not technology-driven. New strategy sets are usually created by mixing and matching features from the different concepts, and this often leads to new insights and breakthrough ideas. The technique is iterative, and in each cycle the best strategic concept is examined to find new ideas. The focus on key opportunity areas means that usually only a few iterations are needed before the final set of strategies is determined.


The literature review suggests that information is a valuable resource. The flow of information has been recognized alongside the importance of materials flows in the logistics channel. In recent times several changes occurred that have highlighted the importance of technology either as a source of competitive advantage, or as a crucial strategy.
Through the intensive use of Information Technology in the business currently, namely, acquisition, communication, and identification technologies, the information flows are, efficiently, used by firms, in order to reinforce the existent competitive advantages, or alternatively, to create new competitive advantages. I’m totally agreed that IT delivers competitive advantage from various sides because by using information technology we can do our job smoothly and properly. As simple example for hypermarket, everyday lot of customer comes to take their necessitates items, as the moment of payment they have to stand on a queue, If that shopping mall doesn’t have any technology to make bill then it would be very difficult to disburse one customer bill because it will take long time. At the same time it also takes long time to see the daily or monthly report if they do it manually. But with the help of information technology they can handle everything properly and faster. In the computer industry, DELL also doing their business totally depends on the online systems but got success by using information technology and still now getting more competitive advantage rather than others. IT is also like a commodity as like Electricity, Gas, and Phone etc. Without it also we can run our business but we all are using all this utilities to take advantage. Definitely IT can give competitive advantage but we have to use IT in that way that it would be sustainable for long time. If we totally depend on technology then it would become a commodity as like others utility but if we select right person to use that technology then we can gain more competitive advantage and besides that with keep changing of technology, we also have to update the system accordingly to get competitive advantage then it would not become a strategic necessity after few years.
In this sense, taking into consideration the conceptual model now proposed, future studies may be developed in order to identify the dominant factors that determine the competitive advantages obtained through the Information Technology in the usage for increasing sales adoption, according to each stage of firms’ life cycle.