Technology and Competitive Advantage

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Authors: Anil Kumar Kartham,
Faculty Associate
ICMR (IBS Center for Management Research).

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Impact of Information Technology on Organizations

New information technologies such as broadband networks, mobile communications, and internet promise to improve businesses and industries. Companies have to look at what technologies are capable of before adopting strategies. In the 1990s, companies invested lot of resources in deploying new information technologies. They spent millions of dollars on sophisticated software packages, tele-conferencing equipment, broadband networks, mobile communications, and other digital technologies. This was necessary to pace with the level of technological use by competitors. But now, firms are forced to be selective about their technologies. They are choosing technologies that are relevant to businesses, their strategic objectives, and sales & marketing activities.

Electronic deliverability is one characteristic of new technologies. Some products have large components that can be delivered electronically. For example, customers can book reservations online for their air travel. They can obtain confirmation and tickets through e-mail. New technological environment can be described in terms of information intensity as well.

All products and services have some information content. But the amount of information associated with the products keeps changing. A company that sells cars offers lot of information through product manuals on operating instructions. On the other hand, a company that sells ice cream offers no information except the name of the flavor and ingredients. In the past, information on comparative benefits was limited and difficult to collect. There were no independent agencies to rely upon. Web is allowing customers and organizations to collect or offer such information easily. Organizations today can offer information that is not possible to cover in product manuals.

Customizability is another major benefit offered by new information technologies. Today organizations are able to tailor their products based on the specific needs and preferences of individual customers. For example, newspapers provide same information to all buyers, irrespective of their interests. Online editions are customized to offer news & information that the subscriber is interested in. Dell Computers offers PCs to its customers based on their requirements in terms of right disk space, microprocessor power, and other features. New information technologies are allowing Dell Computers to offer made-to-order computers at competitive prices. Other companies operating in this environment and competing with Dell Computers have to mould their strategies based on the realities of new technological environment.

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