Innovation and Value Chains: Implications

Innovation and Value Chains: Implications for Information Technologies The reliance on innovation and continual technological advances are the catalyst of economic growth in the high technology, information technologies (it) and information systems (IS) industries (Raj, Pedersen, 2010). The intent of this analysis is to show the patterns of it and IS innovation and how these innovations influence the Porter value chain over time. Also analyzed is why innovations in it and IS areas concentrate on the value chain activities as defined by Dr. Porter in his value chain model (Porter, 1986).

Innovations in it and IS Targeting Process Inefficiencies The primary factor driving innovation of it and IS development in the context of value chains is that this framework provides a solid conceptual framework for comparing interdepartmental, highly integrated processes across an enterprise. An example of this is the continual innovation occurring in Customer Relationship Management (CRM) software, most noticeable in the sales success of Salesforce.com and other Software-as-a-Service (SaaS) application software vendors in this market.

The levels of innovation occurring in it and IS are being driven more by the level of process inefficiencies inherent in how companies are using customer data and less by a big-bang, disruptive change in a relatively short period of time (Raj, Pedersen, 2010). As a result, the innovation tends to be more value-focused and less on cost alone (Leavy, 2010). Innovation occurs within the context of the Porter value chain when massive inefficiencies and a lack of interprocess integration become evident in how companies struggle to attain their goals.

Innovation is driven by removing the roadblocks of how information is used within a company, delivering significant cost saving and revenue uplift potential at the same time (Leavy, 2010). As these innovations are focused on incremental innovations to deliver significantly greater value over time, it and IS development continually focused on how to take the most dominant workflows businesses rely on and streamline them.

This occurs especially in the area of CRM, order management, supply chain management (SCM, and the continual evolution of Enterprise Resource Planning (ERP) systems as well (Raj, Pedersen, 2010). Taken together, these innovations focus on taking one aspect of the value chain and making it much more efficient than it has ever been in the past. In creating that efficiency there is also the potential for revenue uplift to customers as well, thereby creating greater value for them in the process (Leavy, 2010).

This approach to innovation makes it extremely valuable for companies who rely on it and Is to run their businesses, and whose companies align with the Porter value chain and who need to operate in a highly coordinate, synchronized manner. Conclusion Innovation in it and IS gradual in many of the enterprise software markets due to the resistance to change in many.