A company gains competitive advantage by providing a product or service in a way that customers gain more value than with a competitor. However, it is not information technology that gives a company a competitive advantage; it’s the way they use information technology that makes the difference. Businesses need to use information technology innovatively.
Innovation is the process of devising ways to do things in new and creative ways. Using information technology to tackle a business problem the same way the other companies have been doing is probably not going to give a firm the competitive advantage. The company has to invent or develop creative ways to create something new their competitors don’t have yet. Below I have listed a few detailed points on the Use of Information Technology in Competitive Advantage
1. The CEO’s Attitude Toward Information Technology
The CEO’s vision can influence how managers think about things within their company, including information technology. If the CEO understands that IT can be a powerful competitive weapon, a message is relayed to the entire organization; that coming up with creative IT ideas can lead to a company’s growth and improved customer satisfaction. Company leadership is very important in determining its competitive advantage using information technology.
2. Use Information Technology to Bridge the Gap Between Business People and Technical People
Business people must understand the use of Information technology to gain competitive advantage. In this case, they work hand in hand with a technical team to achieve this goal. Designing an information system that gives the competitive advantage needs at least two things. First, it requires an understanding of the business problem you are trying to solve. Second, it requires knowledge of available technologies to use in designing a creative solution for the business problem. It’s beneficial for business people to study management information systems (MIS). Doing so will help them better analyze technical issues if the need arises.
3. Use Information Technology to View Business Problems from Another Perspective
It is imperative to view a business problem from the perspective of your customers. These are the owners of your business, not you, because, without them, the business will not survive. IT can provide businesses with valuable information to better understand the needs and requirements of their customers and stakeholders. Being informed of limitations and inconveniences experienced by the customer should result in the more effective use of resources to resolve these issues.
4. Use Information Technology in Creative Designing
Creative design of an IT system is one that solves the business problem in a new and highly effective way. One of the biggest mistakes most business people make when designing new information systems is to come up with a design that is typical, something very similar to what other companies are doing.
A good example is Bing & Google. Bing is a search engine owned by Microsoft, and it is using the same technology used by Google to index and suggest data. However, Bing has added some extra value to its search engine right from its glamorous home page which is better than Google’s white homepage (controversial) . Bing is useful when you’re making keyword search for a specific project because of its relevant suggestions of keywords; Bing will also record all your past searches to help you remember and find data quickly. Doing so has helped Bing compete with Google. Also, companies should note that being the first adopters of new technology will not make you the winner all the time, later adopters may still alter and innovate the technology to provide customers with a better service.
So, it is imperative to know what consumers need and what adds value to your organization. Companies like Facebook.com have gained competitive advantage by changing and adding value to their existing technology to serve their users.