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Information Technology

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Information technology (IT) is defined as an application of computers and telecommunications to the collection, processing, storage, and dissemination of voice, graphics, text and numerical information (Tansey, 2003).

For business, IT is the use of knowledge to make and implement commercial decisions. Efficient organizations require established systems to empower them to make the best possible decisions in the situations they are likely to meet. Therefore, an organizational information system (IS) is a set of interrelated components that gather, control, store and distribute data and information and deliver a corrective reaction to meet organization's objectives or goals (Stair & Reynolds, 2008).

The rising complexity of the business industries in which the companies are operating, their internal processes and also, jointly with the emergence of the digital economy have displayed the importance and necessity of an organization's to determine its competitive advantage in the digital economy and to implement strategies to acquire its information system infrastructure. The 'right' strategic information system supports the competitive position and strategies of a business enterprise, plays strategic roles and provides effective support in an organization's effort for achieving competitive advantage (Grant, Hackney & Edgar, 2010).

The focus of this paper is to diagnose and discuss how organizations applied the strategic use of IS/ IT to achieve competitive advantages. This paper is structured in the following manner:

Under section 2 of this paper, an assessment of the engineering and technology industry is done using Porter's Competitive Model (1979). The section also covers the importance of IS/IT to the engineering and technology industry.

Companies' perspective of using strategic IS/IT to achieve and/ or enhance competitive advantages is covered under section 3 and 4. The successful examples selected for discussion are the implementations from Siemens AG and M+W Group. As for the unsuccessful example, the case study was about a difficult CRM (Customer Relationship Management) implementation in OSLO-based Institute of Technology.

The structured analysis of IS/IT, in section 5, emphasizes the internal and external factors that influence the success or failure in the attempts at gaining and enhancing competitive advantage, lessons learned, and factors influencing the use of IS and the internet to achieve strategic success) are comprised in section 5.

As a final point, the 'Conclusion' section wraps up the analysis whether the success of business strategy and IS/ IT can effectively position any organizations for the future.


In today's business setting, almost all organizations will recognize that their information systems or information technologies play an important role in contributing to their success. The three companies that I have selected for discussion are Siemens AG (Siemens), M+W Group (M+W) and OSLO-based Institute of Technology (INTSOK) because all of them are project-based solution providers and the use of information technologies and/or information systems to manage and harness their knowledge management is part of the companies' core business and competitive intelligence strategy.

2.1 Porter's Competitor Model for Industry Analysis

Michael Porter's five forces model is the best-known framework for identifying a company's position in a given industry and analyzing competitiveness (Rainer & Cegielski, 2009). This model helps to avoid inspecting the competition too narrowly by breaking the industry into logical parts; intensity of rivalry, threat of new entrants, bargaining power of suppliers, bargaining power of buyers and threat of substitute. The diagram below illustrated that Engineering and Technology is overall an attractive industry.

2.2 Business Strategies Model

In general, the interaction process is divided into 4 distinct sub-processes: Sales and Marketing, Design, Supply Chain Management (SCM) and, Support and Maintenance.

However, it is no longer that business is run with 'standard product' concept. Instead, a value innovator thinks in terms of the total solution customers seek, i.e. an engineering company looks into its asset and competence to satisfy customers. According to a study by Professor Carl Fornell (2001), satisfied customers lead the way to excellent business performance.

Value Engineering is a long term business strategy applicable to Siemens, M+W & INTSOK.

It is a professionally applied, function-oriented, systematic team approach used to analyze and improve value in a product, facility design, system or service. By enhancing value characteristics, Value Engineering increases customer satisfaction and adds to the company's investment.

2.3 The importance of IS/IT in the engineering and technology industry

By looking at the current size and type of the engineering and technology industry, including the consideration of value engineering element, a supportive IT environment that supports the business and global strategy of a company is vital. The information systems must be able to support a seamless flow of information over process and organization boundaries.

The Value Chain of the engineering and technology industry (below) shows the common components that support the daily business operations. Information Technology support is throughout the value chain. For the purpose of this paper, the diagram illustrates on Marketing, Design, Development, Installation, Support and Maintenance and, Consultancy. For instance, CRM (Customer Relationship Management) system can support Marketing and Consultancy and, ERP (Enterprise Resource Planning) system can support the rest of the processes.

2.3.1 IT in company's strategy that enable the firm to gain competitive advantage

IT has become a worldwide approach in the formation of company's strategy for the engineering solution provider. For instance, IT enables quick transfer of information to manage global technical support and customer service. With the support of the net-worked or web-based technologies, information



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