Using Technology for Sustainable Strategic Advantage

UNIVERSITY COLLEGE CORK

IS1114 INFORMATION SYSTEMS IN ORGANISATIONS

Author: Stephen Walsh

Student Number: 115756109

For the purpose of this paper a review of current technology has been carried out in response to the question of technology providing little or no sustainable strategic advantage. In the last twenty years or so the digital revolution has transformed the way business carries out commerce in the developing world, whether on the ground or online, commerce has increased dramatically and technology has unquestionably facilitated that growth. Over ten years ago in 2003 author Nicholas Carr published a widely discussed article in the Harvard Business Review titled (Carr, 2003) IT doesn’t matter. In the article Nicholas argued that the opportunities for gaining IT based advantages were receding. Best practices were built into software or otherwise replicated and as for IT encouraged industry transformations most of the ones that were going to happen had already happened or were in the process of happening. Carr argued that IT is like other “infrastructure technologies” that lost their competitive potential once they became “accessible and affordable to all. Has technology enabled business decision makers to gain strategic advantage over competitors in light of the developments in technology of the last number of years. The following paragraphs will look at recent trends in technology and whether these trends can provide a sustainable strategic advantage going forward to decision makers.

The attainment of strategic sustainable advantage from technology is immensely important to small and medium sized business and large organisations, in 2017 there is a myriad of ways in utilising technology and in particular information systems technology to improve business operations. Organisations can employ information systems to fundamentally shift the cost of doing business (Booth, 2011) or reduce the costs of business processes and or lower the costs of customers or suppliers, i.e. using online business to consumer & business to business models and e-procurement systems to reduce operating costs. An example of a business to business model is an Irish start up by the name of Bullet HQ which is aiming to disrupt the accountancy marketplace with its online accounting and payroll software targeted at small and medium enterprises in Ireland. Eighty percent of companies in Ireland are SMEs with four staff or less and this software is tailored to business owners for the purpose of doing their books, payroll and all tax returns thus enabling them the time to run other business practices related to their operation and replaces the expense of hiring an accountant.

This platform used by Bullet HQ is employing cloud technology which has become a great shift in the way business organisations manage their IT operations. The arrival of Software as a Service (SaaS) applications allow business organisations to run a virtual business in which business functions are outsourced to cloud services. (SaaS) applications have emerged as one of the advanced technologies utilising cloud computing and has great potential for the strategic management of IT technology in dynamic business environments. As the global economy has crept back from recession it has become paramount to organisations to reduce risks and assure safe returns for their investments. Most companies are now trying to find ways of reducing their operation and productions costs and reducing IT costs are part of it. Companies have started to find solutions to operate their information systems on a pay-as-you-go basis instead of investing huge amounts of funding in IT infrastructure and this has become possible with the recent developments in cloud computing. With software-as-a-service models companies only need to pay for what is used and can adjust service agreements as IT requirements increase or fall over time. (Gartner, 2012) Has stated worldwide software-as-a-service revenue was forecast to reach 14.5 billion dollars in 2012. (SaaS) distribution will experience healthy growth through 2017, when worldwide revenue is projected to reach 40 billion dollars. Traditionally implementing business information systems is a major undertaking for business in that it can cost a significant amount of money for organisations small or large. Organisations need to hire IT consultants and IT professionals to deploy solutions with their current systems and data needs. The requirements for the timeframe, budget and human resource for the implementation of these business solutions pose a significant risk for organisations. The on demand model of software-as-a-service removes the typical requirements related to traditional software delivery models. (SaaS) applications can be accessed anytime from any personal computer or device with an internet connection. Strategic benefits such as high adoption rates, lower initial costs, updates and provider managed upgrades, and seamless integration with existing Enterprise Resource Planning (ERP) systems makes software-as-a-service as a major differentiator in the IT services management market. A study by International Business Machines Corporation (IBM, 2014) highlighted that software-as-a-service helps enterprises with the highest level of (SaaS) adoption to have strategic advantages by providing differentiation in enterprise efficiency, deeper collaboration, better decision making and market agility.

The Internet of things (IoT) sensors plus actuators connected by networks to computing systems is not a futuristic trend but it is here now and has received enormous attention over the last five years. A report by Mckinsey states that internet of things has a potential economic impact of 3.9 trillion dollars to 11.1 trillion dollars a year by 2025. (IoT) is crafting a new world, a calculable world where people and business can manage assets in a better informed way and make more timely and informed decisions about what they want or need to do. This new connected world will bring massive changes to consumers and society as a whole. For the first time ever the mobile phone will no longer be the most common device used to connect people to the internet it will be cars, home appliances, industries, cities and wearables. It is expected by 2020 that there will be 28 billion connected devices worldwide with more than half being internet of things devices. As all these things are connected new opportunities will arise for industries, cities and organisations. Current examples of internet of things technology include connected smart buildings whereby the Ericsson group implemented solutions to assist facility managers in space utilization, space management, the planning of maintenance based on usage, temperature control, air quality and ventilation optimization thus in turn providing optimised funding channels. A large range of new technologies is emerging that enable new value and capabilities for connecting the next new (IoT) device to a new generation of analytics and applications. From a business strategic perspective internet of things represents an opportunity to collect real time information about every physical operation of an organisation. Internet of things sensors can transport information real time and transform raw (IoT) data into business and operational insights using effective data analytics. Assets equipped with sensors give an information system the capability to communicate, capture and process data and in turn that will create massive opportunities in distribution, innovation and production efficiency. (Jacques Bughin, n.d.) states that business to business applications will account for almost seventy percent of the value that is estimated will flow from (IoT) in the next ten years. Nearly 5 trillion dollars would be generated almost exclusively in business to business settings i.e. factories, agriculture, healthcare environments, mining, gas and oil, construction and office settings. Here in Ireland there has been many developments in the internet of things sphere, (Kennedy, n.d.) Crossmolina in Co.Mayo will be the first town in Ireland to implement a smart lighting system, the US technology firm Silver Spring whose tech manages over 23 million devices in cities around the world has deployed an internet of things platform for Mayo County Council for smart street illumination and also a residential energy efficient project for the council with the project been part funded by the Sustainable Energy Authority Of Ireland (SEAI). Peter Mcloughlin, executive engineer of Mayo County Council has stated that the technology enhances the council’s objective off reducing energy usage, reducing cost and reducing C02 emissions and also increases the capacity of the community to relate with and understand their energy use. Another development is the rollout out nationwide of a Sigfox platform across Ireland by the the Irish startup VT Networks. Sigfox is an internet of things network that uses low power, wide area communications to connect up devices from smart meters, smoke alarms, interactive billboards and robots. VT is targeting Irish business with services that include home solutions, smart metering, smoke alarms, security sensors and security sensors on gates for farmers, machine monitoring devices and recovery and tracking of stolen farm items.

The internet of things revolution will have a range of aids for dealing with health related issues, especially prolonged health issues that use up resources in Irish Hospitals. A project currently being tested using internet of things technology is a project by North East Doctor on Call to enable paramedics to see patients and enable remote diagnosis by GPs and consultants along with the use of internet of things sensors in the home. On the research front academic and industrial partnerships led by research groups such as Tyndall, CRANN, Connect, Insight, TSSG and Adapt have put Ireland on the world centre stage for internet of things breakthroughs.

The previous paragraphs have given an overview of currently technological trends and it is clear that these trends are here to stay and in terms of providing a sustainable strategic advantage these technologies will provide long-term advantages to business going forward. The principal means of utilising these technologies for business decision makers is to be innovative in their thinking. It is vital for business people to understand the use of information technology and in order to stay ahead of the competition they should work with technical people to achieve this, by working with an IT consultant small business owners across Ireland for example can gain an advantage on competition by implementing streamlined processes to their business resulting in profitability, higher revenue growth and productivity growth. An information technology consultant will provide excellent guidance in helping a business gain an advantage over competitors. One of the ways the consultant would do this is by using (Porter, 1985) Michael Porter’s five forces model, looking at the rivalry of competitors within the client’s industry, by looking at the threat of new entrants within the clients industry, the threat posed by substitute products which might capture market share, the bargaining power of customers and the bargaining power of suppliers. By analysing these five competitive forces and consultant can then implement a strategy to counter these forces, A business must develop and implement strategies to effectively counter the above five competitive forces. (O’Brien, 2011) suggest that organisations can follow one of five basic competitive strategies, which are based on Porter’s three generic strategies of broad cost leadership, broad differentiation, and focused strategy. The five competitive strategies are: cost leadership, differentiation, innovation, growth, and alliance. The following conveys how Information systems could be a critical enabler of these five competitive strategies,

1. Cost Leadership: Organisations can use information systems to fundamentally shift the cost of doing business (Booth, Roberts & Sikes 2011) or reduce the costs of business processes or/and to lower the costs of customers or suppliers, i.e., using online business to consumer & business to business models, e-procurement systems to reduce operating costs

2. Differentiation: Organisations can use information systems to develop differentiated features or/and to reduce competitors’ differentiation advantages, i.e., using online live chatting systems and social networks to better understand and serve customers; using technology to create informediaries  to offer value-added service and improve customers’ stickiness to your web site/business(Booth, Roberts, and Sikes 2011); applying advanced and established measures for online operations to offline practices (i.e., more accurate and systematic ways of measuring efficiency and effectiveness of advertising) (Manyika, 2009)

3. Innovation: Organisations can use information systems to identify and create (or assist in creating) new products and services or/and to develop new/niche markets or/and to radically change business processes via automation (i.e., using digital modelling and simulation of product design to reduce the time and cost to the market (Chui, 2011). They also can work on new initiatives of establishing pure online businesses/operations. At the same time, the Internet and telecommunications networks provide better capabilities and opportunities for innovation. “Combinational innovation” and Open innovation are two good examples. There are a large number of component parts on the networks that are very expensive or extremely different before the establishment of the networks, and organisations could combine or recombine components/parts on the networks to create new innovations (Manyika 2009). Meanwhile everyone is connected via personal computers, laptops and other mobile devices through cabled Internet or wireless networks or mobile networks, there are plenty of opportunities to co-create with customers, external partners and internal people.

4. Growth (including mergers and acquisitions): Organisations can use information systems to expand domestic and international operations or/and to diversify and integrate into other products and services, i.e., establishing global intranet and global operation platform; establishing omni channel strategy to gain growth (omni channel strategy looks at leveraging advantages of both online (or digital) and offline (or non-digital) channels) (Rigby, 2011).

5. Strategic Alliance: Organisations can use information systems to create and enhance relations with partners via applications, such as developing virtual organisations and inter-organisational information systems.

To conclude, the potential to use technology for sustainable strategic advantage is evident and by innovative thinking it can be realised with the correct technological tools and strategies. Technology will undoubtedly change the way commerce is carried out and information systems combined with technology will improve business processes and living standards going forward. It is the job of the information systems practitioner to always be aware of developing technologies and make use of them to improve business needs and to find solutions to business problems and also look at the possibility of developing the applications (SaaS) or otherwise needed to solve these issues. Additionally information systems by itself or in conjunction with internet of things could be used strategically to improve not only business processes but human lives by utilising (IoT) technology and information systems to build out platforms for concerns surrounding health and climate change issues.

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Carr, N. G. (2003, May). https://hbr.org/2003/05/it-doesnt-matter. Retrieved from Harvard Business View.

Chui, M. &. (2011). Inside P & G’s digital revolution. McKinsey Quarterly.

Gartner. (2012). Forecast: Software as a Service, All Regions, 2010-2015.

IBM. (2014). Champions of Software as a Service: How (SaaS) is fueling.

Jacques Bughin, M. C. (n.d.). http://www.mckinsey.com.

Kennedy, J. (n.d.). www.siliconrebublic.com.

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