A Counter Argument to ‘When an Information System can deliver (sustained) Competitive Advantage

21 Nov

I have previously stated in my last blog when an information system can deliver sustained competitive advantage I would like to offer a counter argument. In an article by Breznik (2012) called ‘Can Information Technology be a Source of Competitive Advantage’, which looks at literature by various authors on whether or not IT is a source of competitive advantage. One of the main points is that while IT is the ‘backbone of our society’ it cannot alone provide a sustainable competitive advantage. This further reiterates a point made by Agblogail’ in one of his earlier blogs (IT Failures), that IT is much more than software and hardware, it is about the people that use it and the resources.

 

In Carr’s 2005 article ‘The end of Corporate Computing’ he makes the argument that IT cannot be a foundation for achieving competitive advantage within organisations because IT is now ubiquitous. Furthermore Tippins and Schi (2003) make the point that IT is now a competitive necessity rather than a source of competitive advantage. In order for a firm to sustain and maintain a competitive advantage with regard to IT and information systems, organisations must constantly develop, change features and processes of its information systems to sustain their market leadership. If this is the case then what happens when the firm runs out of new ideas and ways to improve their information systems?

 

Oz 2004 (Management Information Systems (4th ed), makes the point that “information systems are often short lived because competitors quickly emulate the systems for their own benefits” (pg64). Breznik (2012) offers the example of Wal-Mart were able to gain competitive advantage over its competitors K-Mart by implementing a new information system. However K-Mart implemented a similar system in their shops. Nevertheless, Breznik (2012) notes that “indeed, K-Mart imitates Wal-Mart’s good practice successfully, but without possessing and exploiting “the right capabilities” K-Mart has still not been able to overcome Wal-Mart. Therefore Wal-Mart still hold their competitive advantage but the question then has to be asked is this down to their information systems or something else?

 

In an article by John Whondeer, he makes the statement in relation to information systems and technology that “there is no such thing as a sustainable competitive advantage” (http://ezinearticles.com/?Sustaining-Competitive-Advantage&id=2240669). He refers to the example of Sears. Sears was the leading retail company in the United Sates until Wal-Mart came and took over. This was a huge surprise to everyone including Sears itself as they were “heavily computerized with more expenditure going into information technology and networking than all other non-computer firms in the United states apart from Boeing.” (http://ezinearticles.com/?Sustaining-Competitive-Advantage&id=2240669). Sears tried everything to gain back its leadership in the retail sector by adopting lower price strategy and renovating their stores. However it didn’t seem to work. Sears began to look at its information systems and realised that these needed to be changed. One thing that Sears did was they linked their suppliers to a computerised ordering system. While this has boosted Sears it has not allowed them to gain back their original competitive advantage against Wal-Mart.

 

Therefore with everything that I have highlighted in this post I am going to have to conclude and agree with John Whondeer opinion that “it is really difficult if not impossible to sustain any competitive advantage for a very long time. This is so because of the rate of technological changes, changes in business strategies, and the fact that customers’ loyalty can wane and affect sales leading to a fall in market share and thus competitive advantage.” (http://ezinearticles.com/?Sustaining-Competitive-Advantage&id=2240669)

What are your thoughts?

 

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4 Responses to “A Counter Argument to ‘When an Information System can deliver (sustained) Competitive Advantage”

  1. ismisetusa November 23, 2012 at 1:38 pm #

    I would tend to agree with you with the fact that a competitive advantage must continuously evolve and change in order to stay on top.
    I find your references are excellent in reinforcing your ideas and I would be surprised to find that someone would disagree with your statement.

  2. cmcoughlan November 26, 2012 at 6:05 pm #

    Really good blog! I agree, IS alone cannot sustain a competitive advantage. As you said it is how you use IS that gives you a competitive advantage. IS cannot provide a sustainable advantage unless a business continues to change its strategy and business model to combat market forces such as competitor rivalry.

  3. 04ac November 29, 2012 at 7:41 pm #

    Interesting blog, I read your previous blog on how an information system can deliver competitive advantage. This blog shows a good argument against your previous work and as ‘ismisetusa’ says your references have managed to back up your argument and make it a very balanced. I would have to agree with the points you make on how difficult it is to sustain competitive advantage for an extended period.

  4. 011000100110100101101110011000010111001001111001x November 30, 2012 at 4:16 am #

    The problem with these thinkers is that they are rehashing old ideas that were developped during the Industrial Revolution. From a recent blog post of mine, a quote from Adam Smith:

    “The establishment of any new manufacture, of any new branch of commerce, or any new practice in agriculture, is always a speculation, from which the projector promises himself extraordinary profits. These profits sometimes are very great, and sometimes, more frequently, perhaps, they are quite otherwise; but in general they bear no regular proportion to those of other older trades in the neighbourhood. If the project succeeds, they are commonly at first very high. When the trade or practice becomes thoroughly established and well known, the competition reduces them to the level of other trades.”

    An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith, 1776, Book I, Chapter X, Part I, pg.136

    https://sopinion8ed.wordpress.com/2012/11/28/new-tools-new-patterns-new-thoughts-the-great-dialogue/

    I dont need to detract too heavily from the value of Carr’s suggestion, more temper the significance of his piece. Carr had taken an old idea from an economic textbook that formed the blueprint for the early American economic model. While in economics I would suggest a lot of Smith’s legacy has been misappropriated in economics I find it dissapointing that his core ideas get ignored or even copied in the information systems field.

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