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Information Technology has been heralded, by many, as the greatest invention after the wheel.

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Introduction

Information Technology has been heralded, by many, as the greatest invention after the wheel. While scanning contemporary literature, it becomes quite impossible to find anything that goes contrary to what is said above. There are some who temper their predictions by mouthing a few warnings against improper usage etc. there are very rare instances when somebody has raised his / her voice against the prevailing wind. At this juncture we need to examine the fact that though IT has pervaded our life in a way unimaginable a few decades back, is it sufficient to get us competitive advantage in today's dynamic and fast-moving marketplace. Organisations have to proverbially run to keep pace with the requirements of their stakeholders. At this juncture, we need to re-examine if IT is the end-all be-all? Is it the panacea to falling sales?? Traditional view of IT First let us examine what can give us competitive advantage?? Michael Porter's five forces model is given below. Buyers Buyers in an industry are strong if they make volume purchases or are made up of large, concentrated consumer groups. If there are only a few buyers for several not well-differentiated suppliers, the buyers can be very powerful relative to the suppliers. One method for firms to defend against powerful buyers is by building switching costs into their product or service. Forward integration is a more subtle form of establishing switching costs. The McKesson Drug Company, through its ECONOMOST ordering system, made it possible for pharmacists to order supplies over hand-held terminals that read shelf lists. ...read more.

Middle

Studies of corporate IT spending consistently show that greater expenditures rarely translate into superior financial results. The key to success, for the vast majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously. The challenge will be to maintain that discipline when the business cycle strengthens and the chorus of hype about IT's strategic value rises anew. The Path of Development of Strategic Information Systems Theory ---Roger Clarke http://www.anu.edu.au/people/Roger.Clarke/SOS/StratISTh.html Clarke starts with an brief of the role of information system down the years. He then examines Porter's strategic theory and the five key forces. The two basic strategies that enterprises can adopt are a> low cost b> product differentiation He talks about the second mover advantage phenomenon, where the first user actually incurs a disadvantage. He also draws a distinction between sustainable and contestable competitive advantages. An analysis of the prevalence of the use of the terms 'comparative advantage' and 'competitive advantage' as though they were equivalent and interchangeable. He postulates that innovation in IT is of strategic advantage only if compatible with, and preferable leverages upon the company's existing characteristic and advantage. STRUCTURAL DIFFERENCES AMONG FIRMS: A POTENTIAL SOURCE OF COMPETITIVE ADVANTAGE IN THE APPLICATION OF INFORMATION TECHNOLOGY by Eric K. Clemons & Michael Row (1987) In this article they see Information systems as strategic business tools, frequently essential to a firm and central to its competitive strategy. Their importance is now acknowledged. ...read more.

Conclusion

And at the end of the day what is a PC most used for - playing games, watching movies and net surfing. It leads to wastage of time of self and others, the repeated headache of trying to make systems work. Thomas Haigh is correct about many aspects. Essentially IT has become a general purpose technology much like electricity has become today and hence can not contribute to a significant and sustainable competitive advantage. Issues in the Application of Information Technology for Strategic, Competitive Advantage by Virginia Franke Kleist (http://www.be.wvu.edu/divmim/mgmt/kleist/) Kleist starts with the productivity paradox. He then talks of tangible vs. intangible benefits from IT. The benefits from It are more intangible than tangible. So how do we measure it effectively and truly?? Also IT doesn't help an organization be unique rather what it helps is in staying even with competition. Thepercieved value additions that IT industry flouts were actually from simple automation projects. In contrast, value from highly risky, but strategic IT projects has yet to be realized effectively. Hence the risk vs. return analysis should not allow IT spends to so astronomical. Conclusion After review of the above articles our group is of the view that * Strategic or competitive advantage can only be obtained by a company's vision and process and IT can only be a facilitator. * Greater spending on IT does not translate into superior financial results. * The smartest users of technology - here again, Dell and Wal-Mart stand out - stay well back from the cutting edge, waiting to make purchases until standards and best practices solidify. ...read more.

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