Achieve Operational Excellence

Businesses continue to seek ways to improve the efficiency of their operations. Efficiency refers to identifying the best way to complete a task or process. Information systems provide many of the tools that are used to achieve higher levels of efficiency and productivity in organizations. For example, in 2018 Walmart was ranked as the number one company on the Fortune 500 list, with over $500 billion, up 2.8% from the previous year (Fortune, 2019).

Walmart uses a variety of information systems to enable significant business relationships with its suppliers and customers. For instance, Walmart uses its Retail Link systems to achieve digital integration with its suppliers to facilitate inventory management. When a customer purchases an item, the information is automatically shared with the appropriate supplier. By enabling the suppliers to manage inventory, Walmart has significantly improved the inventory management process while reducing costs that can be passed on to consumers. 

Create New Products, Services, and Business Models

Entrepreneurs and organizations are increasingly using information technologies to create new products and services as well as new business models. While you are familiar with how organizations have integrated information technologies into their products (e.g., music, movies, news) and services (e.g., finance, travel, and education), you are more than likely unfamiliar with the concept of business models. As mentioned previously, a business model describes how an organization produces, delivers, and sells a product or service.

In today’s on-demand economy, organizations are increasingly using innovative technologies to create new on-demand business models to provide real-time fulfillment of products and services. For example, Airbnb’s housing rental app enables the organization to automate the entire process from booking accommodations to paying for the service.

Improve Customer and Supplier Intimacy

Intimacy between the business and either its customers or its suppliers refers to a strengthening of the bond between the two parties. Information systems can be used to increase the bond between the business and both its customers and suppliers. For example, using information systems, Amazon has achieved high customer intimacy by allowing one-click checkout, recommending relevant products to customers, and allowing customers to maintain a wish list of products.

Improve Decision-Making

Information systems give managers the tools to facilitate data-driven decision-making. For example, a manager can look at the data about what products are selling and make a better decision about what products need to be reordered and what quantity of product should be reordered. In addition, using a spreadsheet tool such as Microsoft Excel, a manager can examine different pricing scenarios to find the optimal price for a product.

Achieve Competitive Advantage

When organizations achieve one or more of the aforementioned strategic business objectives—(1) operational excellence; (2) new products, services, and business models; (3) customer and supplier intimacy; and (4) improved decision-making—they are more than likely to have achieved a competitive advantage. For example, Walmart derives significant cost savings from using Retail Link to achieve higher levels of efficiency and productivity. As a result, Walmart is recognized as the low-cost leader in the retail industry.

Survive

Businesses today incorporate information systems into their daily activities as a necessity for doing business. Sometimes these necessities are driven by consumer preferences and demand. For example, using the Internet and mobile apps has become a business necessity and a source of competitive advantage. As a result, organizations that are not using innovative technologies, such as digital payment systems and mobile apps, may be at a competitive disadvantage in certain markets.