Whether IT may bring sustainable competitive advantage for organizations?

By
Lohash Lakra

These days IT is crucial to the majority of businesses. Almost all companies use IT to some extent, making it important for employees to have proficient knowledge in the area. It is not longer just IT jobs where staff needs a good knowledge of IT. Almost all office based jobs are now almost entirely based around computers and IT.
IT can be complex, especially in businesses that use it to a large degree, and as with all technologies there will be things that go wrong.

According to Porter: -

A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the
costs occurring throughout the activities.

The five forces model should be used at the line-of-business industry level; it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. Porter makes clear that for diversified companies, the first fundamental issue in corporate strategy is the selection of industries (lines of business) in which the company should compete; and each line of business should develop its own, industry-specific, five forces
analysis.

Characteristics of a sustainable competitive advantage are as follows: -

1. It cannot be copied or replaced by competitors
2. It continues to add value year after year
3. It can be renewed over time
4. It has better value, in some manner, than the alternative(s)

According to C.Garr: -

The way we approach IT Investment and management needs to change, When the technology’s commercial potential begins to be broadly appreciated, huge amounts of cash are inevitably invested in it, and build out proceeds with extreme speed. By the end of Build out phase, the opportunities for individual advantage are largely gone.

There is a need to make a distinction between proprietary and Infrastructural technologies. When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.

Delaying It investments can be another powerful way to cut costs rather than a firm having obsolete technology. IT can only benefit in the case of First Mover’s advantage or Innovation and not in every case. The key to success for the vast majority of companies is no longer to seek advantage aggressively but to manage costs and risks meticulously.

According to Brown, J.S., and Hagel III, J.

It is inhererently strategic because of its indirect effects – it creates possibilities and options that did not see and exist before. It may become ubiquitous, but the insight required to harness the potential will not be so evenly distributed. Therein lies the opportunity for significant strategic advantages. IT’s economic impact comes from incremental innovations rather than “big bang”
initiatives.

IT only matters in the context of a concerned effort to innovate based on new possibilities and oppurtunities created by technology.

Conclusion: -

There is a need for a IT methodology to keep their IT management on track. The most widely used methodology is ITIL, which stands for Information Technology Infrastructure Library. ITIL is a set of concept and policies for managing the IT within a business. Essentially it is the IT best practice.

Having good IT skills gives you a major advantage over those who do not. Most admin tasks in any business are now performed through the use of IT and for the large part the traditional numerous filing cabinets are gone.

IT knowledge may give you an advantage over other candidates and help you once you are employed. Employees are expected to know the basics of IT in most jobs and there is an assumption that you are able to perform basic computer related tasks. Email is often the main mode of communication, while employees are also expected to be able to write documents and use spreadsheets.

And YES IT brings sustainable competitive advantage for organizations.

(The writer is a B.Com graduate at the prestigious Punjab University, and pursuing Chartered Accountancy - Inter. He is also an Ethical Preventive Hacking and attended London School of Economics- Summer School this season)

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