It is important to note that this paper is in two sections , and it is critical that the writer follow every bit of instructions noting that this is a continues paper of which another section will be coming in the weeks ahead. They are resources at the end of the paper that can also aid in the completions of the paper.
The Current State of IT in Your Organization: A Snapshot
For this paper you will have an opportunity to examine theoretical, practical, and empirical points of view regarding the use of IT to establish competitive advantage. This exercise will allow you to apply the knowledge you have gained to the MIS situation in your own organization, or one you know well. You will conduct first-person research, so choose an organization where this will be possible. You will conduct an assessment of the “state” of IT within your organization, or the organization you have chosen to investigate, including an analysis of the organization’s key MIS initiatives, in which you evaluate the current MIS strategy and its impacts. A key element of the Praxis Paper is the identification and framing of an organizational problem that relates to the topics covered in the course. Your research should lead you to identify possible solutions to the problem(s) you identify. You will apply knowledge gained in the course in order to present advantages and disadvantages of various approaches to the problem(s).
The Praxis Paper 1 will comprise 8�10 pages in APA format. One to three diagrams and presentation slides may be included, but they will be additional to the required length of the paper. You are required to include research from at least two first-person interviews and at least two peer-reviewed practitioner or scholarly journals. For this paper, you will submit 2 sections to your Instructor:
As you identify and analyze key MIS initiatives, strategies, issues, and/or problems unique to your chosen organization in your paper, be sure to incorporate a discussion on subjects such as :
� Any ethical concerns related to managing and communicating data or information that may be confidential or protected, such as customer information or intellectual property.
� The types of knowledge that your organization is attempting to or would like to encode in KM systems.
� Issues related to knowledge management and sharing across business units such as products, services, and sales.
� The impact of database management and knowledge management on business objectives.
The Current State of IT in Your Organization
Amazon.com is an internet giant and one of the fastest large-scale retail companies selling its products online through their website. As such, it will offer a good case study for analysis of the state of IT in earning competitive advantage within the industry. Since its 1995 inception, it has grown to become the largest internet retailer globally. Amazon has special interest in innovation in business strategy as well as the management of information systems. The two aspects of business, innovation and management of IS, are interconnected at Amazon with its business innovations being driven by the huge investment the company has in information systems.
The founder, Jeff Bezos, took advantage of the business opportunity being offered by the internet back in 1995 to start Amazon as a website for selling books online directly to customers. The idea was to store as many books as possible, which would not have been possible through a physical bookstore. The concept of the virtual bookstore presented this opportunity, and he was able to offer lower prices since he did not have to maintain much inventory rather operating through distributors. Consequently, he did not have to pay for the maintenance of a physical storefront or a large sales staff. Through online tracking and shipping information, ability to pay for purchases using a single-click and a credit card, and telephone and e-mail customer support, the company is able to provide superior customer service. 1n 1998, Amazon expanded its sales and revised its business strategy to include other products such as music, CDs, DVDs, and videos as well as electronics, gourmet food, jewelry, personal care, apparel, and home improvement equipment (Thompson, 2013).
At Amazon, the three individuals to be involved in the interview are Jeffrey Blackburn; Business Development Director, Andrew Jassey; the Web Services Director, and Jeffrey Wilke; Consumer Business Director. The three directors were chosen for the interview because of their availability and the fact that on request they agreed to participate in the study. Again, the three leaders are well versed with the company’s strategy pertaining to IT and the competitive advantage it offers the company.
Commenting on how they are able to maintain a competitive advantage over rivals, Jeffrey Blackburn in charge of the company’s Business Development talks of benchmarking the business processes against competitors and consequently identifying best industry practices. They do this by comparing the effectiveness and efficiency of their business processes against strict standards and then embarking on measuring performance against those standards. This sets the platform for the improvement of the business strategies and processes through operational excellence, improving profit margins, lowering costs, and fostering a closer relationship with suppliers and customers. He further notes that by working with all the people involved in the company and information systems, Amazon is able to gather customer information from all available avenues and harness this electronically and to use it to improve the customer experience. For instance, at Amazon, they have systems that make it easy for suppliers to open stores and display goods on their website. The company has a well-developed system that coordinates the shipment of goods to the customers. Moreover, the shipment tracking system enables them to access customer information for use in benchmarking.
For Jeffrey Wilke, the Consumer Business Director, the customer tracking strategy where they are able to customize customer’s experience is an effective way of gaining a competitive advantage for the company. By analyzing the information gathered through the knowledge management strategy, they are able to recommend certain products for existing clients every time they visit their website. Wilke affirms that Amazon is able to offer personalized customer service based on an analysis of their past purchases. The company also adopts the direct Amazon-to-buyer approach to sales.
Andrew Jassey is the Director in charge of the Web Services in the company notes that their multi-leveled e-commerce strategy is what offers them a competitive advantage that they enjoy over others in the industry. The company has an application on their Website that allows potential sellers to use their platform to reach out to customers. Through the application, Amazon allows the sellers or associates to build websites on their platform. Jassey notes that this application allows the growth of a very rich database of applications and products accessible by customers. At Amazon, Jessey further notes that IT plays a powerful role in establishing business ecosystems. The company through the use of IT systems has developed IT-based platforms that other companies can use. Amazon’s offers their online store business platforms to other companies such as Fortune 500 firms like Dell to sell directly to the customers. IT has enabled Amazon to create highly synchronized industry specific value chains. The value webs are a collection of independent companies using IT to coordinate their value chains so as to produce a product for the market collectively.
The value web diagram:
(Goh & Kauffman, 2013).
Strategic IT systems have the capacity to change a company as well as its operating procedures and products, driving it into new behavioral patterns. Amazon has had to change their business strategy a number of times so as to reflect new technologies, procedures, and products as the company expands. The case of Amazon demonstrates that successful use of MIS is a challenging task that calls for precise coordination of the management, organizations, and technology. According to Goh and Kauffman (2013), companies using the MIS strategy to earn a competitive advantage over others in the industry are faced with the challenge of losing it over time as other companies have access to the same and can easily copy and adopt the systems. As such, there is a need for continuous and aggressive adoption of new strategies and technologies to keep ahead of others. This should, however, be coupled with effective management strategies and other organizational elements such as unique corporate culture as is the case at Amazon.
One of the ethical dilemmas facing Amazon is on the ownership of the company data. Customer information is such a crucial asset for Amazon, which poses a challenge in safeguarding it from potential theft by employees or system hackers. Such intrusions by criminals could lead to comprise of crucial customer information and great losses for the company (Goh & Kauffman, 2013). The company has a mandate to safeguard customer information from any intrusions. Amazon’s knowledge management strategy treats knowledge component of their business activities as an explicit concern of business and reflected in their business strategy, policy, and practice at all the levels of the company. This has been made collaborative and integrated process directed towards creating, capturing, organization, and access of the intellectual assets. Through the knowledge management process, customer information is turned to actionable knowledge and electronically made available in a usable form to the various departments.
Some scholars have in the past claimed that IT no longer earns businesses a competitive advantage. Nick Carr in his article “IT Doesn’t Matter,” for the first time challenged the strategic value of IT. His argument is that the opportunities for gaining competitive advantage through it are dwindling. The idea is that most of the best practices that most can be built into software and for IT-spurred transformations has already happened or is in the process of happening. Carr instead advocated for less spending on IT as a means of reducing costs and decreasing the risk of buying the equipment that are fast turning obsolete (Carr, 2003). During the time of writing the article, IT companies were in a hurry to sell latest server models seen then as a key to strategic advantage. Companies were in turn in a hurry to position their business on the cutting-edge of infrastructure. One thing though is certain; Carr got people thinking about the direction that IT application was going. For instance, the main challenge of companies concerning their It department has shifted to cloud computing. Companies are now restructuring their IT departments in an effort to form them around cloud systems and applications.
The skeptic view of IT in earning a competitive advantage for companies, in other studies and by several scholars, has been widely refuted. Scholars postulate firms can achieve a better understanding of the IT-based competitive advantage by demarcating specific forms of capabilities. Specifically, companies need to clearly distinguish between dynamic, competitive, and value capabilities as the three distinct types of capabilities. Moreover, within each of the categories specific capabilities can be identified as IT business experience, It infrastructure, intensity of organizational learning, and relationship infrastructure.
Bhatt and Grover in 2005 conducted an empirical study involving chief IT executives from 202 manufacturing firms. The aim of undertaking this analysis was to test the model describing the relationship between the three distinct types of capabilities and competitive advantage. The findings of the study revealed that the relationship infrastructure and the quality of IT business expertise had a significant effect on competitive advantage. In addition, the intensity of organizational learning was also shown as significantly correlated with the capabilities. As such, the results point to the significance of delineating capabilities that can create differentiation in the marketplace and the dynamic capabilities as important antecedents to IT capacity building (Bhatt & Grover, 2005).
In another study, Roberts and Grover investigated how IT facilitates a company’s customer agility and in so doing competitive advantage. The study conducted in 2012 involved 1200 marketing managers working in high-tech companies. The results showed that a Web-based customer infrastructure to a great extent facilitated the capability of a company in customer-sensing. They also identified that systems integration moderates the relationship between the capability of a company to respond to customers and the inter-functional coordination positively. In addition, they found out that agility alignment also affects the efficacy of an organization’s competitive actions. Information systems play a crucial part in facilitating a firm’s knowledge creating synergy derived from the interaction between a firm’s analytical ability and its Web-based customer infrastructure. In turn, the alignment between a company’s customer-sensing capacity and its customer-responding capacity greatly impacts its competitive advantage (Roberts & Grover, 2012). The study confirmed claims that IT capability to create knowledge and enhance processes can be a great step towards facilitating a company’s ability to sense and respond to market opportunities. By facilitating a company’s customer agility, IT promotes competitive advantage. Agile organizations are in a position to adapt and perform well even in rapidly changing environments through capitalizing on opportunities for competitive action and innovation such as developing strategic alliances, entering new market segments, and launching new products. The advancement of IT presents a unique opportunity for companies to engage their customer agility. Customers can generate ideas for new products and use IT-based tools to provide end-user product support on the online environment. As a result, the social relationships developing between the different entities in online communities generate a continuous flux of very valuable knowledge. Consequently, companies that are able to absorb this external knowledge effectively are better able to sense and respond to opportunities.
As Luse and Mennecke (2014) note, other studies have revealed positive linkages between IT investment and productivity attributing the scenario to improvement in business structures, processes, and practices needed to leverage technologies. This is contrary to the earlier discussed assertions by Carr that It is ubiquitous, costly, and accessible to all companies and as such cannot provide differentiation advantage. In this regard, what companies need is to distinguish between undifferentiated IT assets as the ability to manage the assets. Effective managing of the IT assets is a capability capable of creating uniqueness and providing competitive advantage.
Information Technology strategy:
(Goh & Kauffman, 2013).
In economic sense, IT alters both the cost of information and the relative costs of capital as a factor of production substituting the traditional labor and capital. As such, It should be seen to reduce the cost of production in terms of labor and cost of certain capitals such as buildings and machinery. The use of networks is helpful in lowering the cost of market participation making it worthwhile for companies to contract external suppliers instead of the use of internal sources. Arguing from the Agency Theory perspective, IT can also reduce the internal costs of management. According to this theory, a firm is conceptualized as a nexus of contracts that is in existence among self-interested individuals in it rather than a unified, profit-maximizing entity. The principle owner then employs agents to perform work on his behalf. Nevertheless, agents will require constant management and supervision, and as firms grow in size, the agency costs rise (Luse & Mennecke, 2014). By reducing the cost of gathering and analyzing information, IT allows companies to reduce the agency cost since it becomes easier for the management to oversee greater number of agents.
The interaction between IT and an organization is dependent on several mediating factors such as organizational culture, structure, business processes, politics, management decisions, and surrounding environment. Information systems have in the modern marketplace become an integral, online, interactive tool in the daily operations of organizations. They have over the past decade fundamentally altered the way activities are carried out within organizations, thus, greatly impacting on the possibilities of conducting business.
Bhatt, G. D., & Grover, V. (2005). Types of Information Technology Capabilities and Their Role in Competitive Advantage: An Empirical Study. Journal Of Management Information Systems, 22(2), 253.
Carr, N. G. (2003). IT doesn’t matter. Harvard Business Review, 81(5). Retrieved from the Business Source Premier database.
Goh, K., & Kauffman, R. J. (2013). Firm Strategy and the Internet in U.S. Commercial Banking. Journal Of Management Information Systems, 30(2), 9.
Luse, A., & Mennecke, B. (2014). IT can matter: co-evolution fostering IT competitive advantage. Management Research Review,37(6), 574.
Roberts, N., & Grover, V. (2012). Leveraging Information Technology Infrastructure to Facilitate a Firm’s Customer Agility and Competitive Activity: An Empirical Investigation. Journal Of Management Information Systems, 28(4), 231.
Thompson D. The Riddle of Amazon: the global shopping behemoth is beloved by investors despite practically nonexistent profits and a bewildering grand strategy. What exactly is Jeff Bezos trying to build?. The Atlantic [serial online]. 2013:26.