¶ … Strategic Planning in IT IT Impact on Service Industry Performance

Cooperative Competitive

Competitive Advantage

Implementation of IT Innovations

1992 U.S. VALUE-ADDED AND EMPLOYMENT BY INDUSTRY

AVERAGE ANNUAL GROWTH IN GDP PER HOUR,

MAJOR SECTORS OF THE U.S. ECONOMY

Management TASKS IN BUREAUCRACY VS ADHOCRACY ORGANIZATIONS

This paper addresses the following problem statement: "Without information technology (IT), a business will not be able to compete globally in any industry, nor in any market it wants to enter. It will not be able to effectively and efficiently optimize its success."

In order to evaluate this statement, a number of issues were examined. The rapid pace of technological change and the effects of technology revolution have launched the world into an era of organizations that are experiencing extraordinary growth in both the development and the dissemination of information and communications technologies. This paper reviews the current literature on the subject of the integration of IT into modern business entities. Successful use of IT in a company clearly requires numerous elements. IT planning must be made an integral part of overall strategic planning, a building block in the way the company does business. Management must understand that IT innovation does not always result in a measurable gain in traditional performance measurements. The concept of competitive cooperation is alive and well in many industries today. Cooperation on IT innovation can help place everyone in a better position to compete effectively, and indeed, at all. What all companies seek is a way in which to gain a competitive advantage. This occurs whenever a company can provide what its customers want, when and where they want it, and at a price they are willing to pay. IT will continue to play an ever-increasing role in that process. Finally, what it comes down to is the implementation of IT. When top executives in a company decide to adopt an IT innovation, they must be prepared to recognize that it requires much more than just vocal support. It requires a champion, support and appropriate resources.

Business and Technology Analysis

Introduction

Problem Statement: "Without information technology (IT), a business will not be able to compete globally in any industry, nor in any market it wants to enter. It will not be able to effectively and efficiently optimize its success."

According to the American Heritage Dictionary of the English Language, information technology is defined as "The development, installation, and implementation of computer systems and applications" (2000). Information technology, hereinafter referred to as IT, is further defined in the World Economic Outlook as "...computers, computer software, and telecommunications equipment" (2001, p. 105). IT allows us to do things that we are not already doing, fostering innovation. It is all about exploiting the latest technologies to reach new and never-before-attainable goals. Unfortunately, recent history is littered with examples of failures to understand the real benefits of new information technologies.

Initially, 1950's era IBM considered, somewhat shortsightedly, that the worldwide demand for data processing computers would be about 50 machines.

Twenty years later, mainframe computer manufacturers considered the minicomputer to be little more than a toy. In 1980, the personal computer received virtually the same reception. Conventional wisdom of the time was that needs were already being met by larger machines, so who needed a personal computer? As we now realize, the virtue of personal computers was not in their ability to do the same things that the larger machines already did, but in opening up entirely new kinds of applications (Wright, 1999).

Lack of inductive thinking about IT has become our new problem. Thomas Edison, who invented the phonograph, once said he thought its value lay in its capacity to allow "dying gentlemen" to record their last wishes. Marconi, who developed the radio, regarded his invention as a wireless telegraph that would operate point-to-point. He did not recognize its amazing potential as a broadcast medium.

The strength of the Xerox copier was not found in replacing existing copying technologies, but in performing services far beyond the reach of existing technologies. Xerox copying is simply an extension of Say's Law. Jean Baptiste Say, a French economist, observed in 1820 that quite often supply creates its own demand. Once people understand that they can have something, they begin to feel that they cannot live without it. This is a good description of today's information economy (Wright, 1999).

IT and the new economy it has created have set about saving time, one of our most valuable resources. Companies with products that deliver the greatest convenience are those that will find prosperity in the future. Speeding up transactions to save time for customers and suppliers also speeds up the process of competition....

Companies must provide immediacy, meaning that goods and services must be available when customers need and want them.
While technological change is an ongoing process, there are times in world history when technological progress is especially rapid, resulting in new products and services, as well as decreasing prices of existing products with widespread uses. Examples of such periods include textiles and steam power during the industrial revolution, railroads in the nineteenth century, and electricity in the early twentieth century.

The effects of these technology revolutions most often occur in three main stages, which frequently overlap one another (WEO, 2001).

In the first stage, technological change raises the growth of productivity in the innovating sector. In the second, quickly falling prices encourage greater capital investment. In stage three, significant reorganization of production around the new capital goods embodying the emerging technology generally results. At the heart of today's IT revolution are advances in materials science, which have led to growth in the power of semiconductors, and corresponding rapid declines in semiconductor prices.

Over the past forty years, the capacity of semiconductor chips has doubled roughly every 18-24 months. This phenomenon has come to be known as "Moore's Law," as a result of a prediction made in 1965 by Gordon Moore, then Research Director at Fairchild Semiconductor. In turn, cheaper semiconductors have allowed rapid advances in the production of computers, computer software, and telecommunications equipment, once again, leading to steeply falling prices within these industries (WEO, 2001).

The rapidly falling prices that have come to personify IT have stimulated amazing levels of investment in these goods and services. Today, we are living through an era of organizations in industrialized societies that are experiencing extraordinary growth in both the development and the dissemination of information and communications technologies. Across all sectors of the world economy, both public and private, with little regard for organizational boundaries, computer-based information systems are everywhere. Concurrently, many researchers have touted the dawning of a new age, calling it the information society or the information economy, in which society itself is on the verge of transformation through the use of IT (Bloomfield et al., 2000).

Methodology. This paper reviews the current literature on the subject of the integration of IT into modern business entities. The literature on the history of technology and the role of technological developments in economic growth is extensive. The economy's information intensity has been trending upwards for over one hundred and fifty years. Office automation equipment has been used extensively and underwent rapid technological change long before the advent of computers. Other important economic innovations have enjoyed rapid price declines, just as computing services have done more recently.

These historical continuities are important because how recent developments in IT are viewed affects perceptions of the likely impacts of this technology on corporate success and daily life. If recent developments are viewed as unique, then the expectations of a large impact on productivity naturally follow. However, if recent developments are viewed as a steady continuation of past situations, then more reasonable and sustainable expectations logically follow (Sichel, 1997).

Much of the media coverage in recent years suggests that the latest developments in IT are unprecedented, and that a surge in productivity is certainly on the horizon. Some have said that "we may be on the cusp of that long-awaited productivity surge" (Rothschild, 1993, p. 17). This coverage echoes the commentary on computers, with extreme optimism being the standard fare in the media since the dawn of the computer revolution. Many researchers, beginning with Fritz Machlup and Daniel Bell, have assessed the importance of information in the economy (Machlup, 1962; Bell, 1973).

Review and Discussion of Results.

Strategic Planning in IT. The integration of IT planning and strategy with corporate strategy, along with the strategic use of information systems, has been of interest to management practitioners and researchers for some time. For example, from 1988-91, the issue of greatest concern to data-processing (DP) managers was that of integrating IT with corporate strategy (Price Waterhouse, 1989/90, 1990/1, 1991/2, 1992/3). This seems to reflect a long-standing preoccupation with the problem of tailoring IT to fit business needs.

However, business needs in relation to IT have not remained historically static. The discussion has shifted from a focus in the 1960s and 1970s on improving administrative and productivity performance a 1980s and 1990s view that emphasizes contributing to the development and implementation of business strategy (Knights, et al., 2001). This shift is linked to better connectivity and cost-performance ratios in technology. It can also…