Chapter 1

The Information Age

With the rise of IT came the shrinking of the world, via the internet and communications, resulting in a single global market for goods and services. IT has changed every aspect of how we do business (Byrd 2001, p27), and the companies that were first to market gained great strategic competitive advantage (Byrd 2001, p33). Not only has the speed of operations increased, but the possibility of “sharing large amounts of information along supply chains has enabled real-time collaboration and integration between supply chain partners; improving forward visibility, production planning, management and distribution” (Sanders 2007, p1332). “IT has the ability to add economic value to a firm by reducing the firm’s costs or by differentiating its products or services” (Mata et al 1995, p488); from those of its competitors. In addition, IT allows firms to sell its goods and services in markets to which it never previously had access, responding quickly and accurately to changing market conditions. Competitive advantage results in greater profits and market value, as Porter (1998, p1) emphasises, “competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition”; through the organisations capabilities and the resources available. The sustainability of this competitive advantage, however, is potentially short lived. The rush to invest in IT leads to increased competition, increased supply and consequently falling prices, which, in-line with earlier technologies, has made it more accessible and affordable to all (Carr 2003, p43). This had, and continues to have, a great effect on the way IT and Information Systems (IS) are managed, with a need to re-evaluate its usability in order to keep one step ahead of the competition.

ISs have evolved as IT has progressed, but more emphasis is now put on the importance of its successes; with some describing IS infrastructure as “the new competitive weapon... crucial in developing sustained competitive advantage” (Boar 1993 and 1997; Davenport and Linder 1994 cited by Byrd 2001). ISs deal with the long term plans of a company, including development, management and information processing; enhancing the decision making processes and streamlining information. However, markets change so often that it is difficult to plan ahead, meaning that changes may occur in the IS as organisational changes occur. IS compatibility has enabled companies to “break down organisational walls, empowering employees, and makes data, information and knowledge [within the organisation more] readily available” (Tapscott and Caston; Cited by Byrd 2001, p30); reducing costs and time to market, and realising the importance of companies utilising human knowledge. To illustrate this point, an accountant is not hired for his mathematical skills, but for his knowledge of accounting practices; computers can calculate the mathematics and represent the results.

Next Chapter: Strategic Competitive Advantage