Part - I

Executive Summary

A major area that has sprouted in recent times as a potential source of competitive advantage is Information Technology. Although, the initial investment required in IT is quite substantial, there is enough reason to believe that the returns are quite phenomenal in the long term.

There are several challenges that companies face while making a transition from the conventional 'Brick and Mortal' model to the IT based model. These may include the high initial cost, redundancy (and hence waste) of legacy systems, gelling with the organizational culture, opposition from conservative lobbies and concerns regarding future benefits. But the most prominent objection of most managers is about the high investment. Unquestionably, these investment decisions are difficult. They are often complicated by a slew of obstacles: costs that are difficult to estimate, benefits that might or might not materialize, requirements that evolve and change midstream, all contributing to significant delivery risk. But smart investments in IT also offer the promise of huge rewards. Not surprisingly, this has intensified the urgency to build I.T.-enabled capabilities.

IT is being seen by many as a necessary and strategic investment. Before taking the plunge into the incorporation of I.T. in a company, several factors need to be studied i.e. Market-driving capabilities, Role and impact of IT, Current investment portfolio, I.T. cost and investment profile etc. This gives an insight into the feasibly and potential effectiveness of the investment.

IT provides several tools to derive competitive advantage in the 'Dog eat Dog' business environment of the 21st century. These include e-commerce, ERP systems, knowledge management systems, e-procurement systems etc. Most of these systems tend to reduce operating costs, enhance productivity and efficiency, improve transparency and aid the management in taking decisions. Data warehousing and data mining may be employed to understand sales patterns, consumer behavior and map transactional efficiency. The security of the sensitive data can be ensured and threats of pilferage and corrupt practices are mitigated.

In an organization IT could be incorporated in the form of three models: Data model, Cost model or the hybrid model. The hybrid model is the clear choice of the managers of today. It combines the best practices of both new age theories and the conventional or traditional organizations.

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* Contributed by -
Siddharth Mohan Patnaik, B.Tech. (Electronics),
Ravulpathi Janaki, B.Tech. (Mechanical),
II Year, IIM Lucknow.