As increasing competitive pressures drive ever changing business needs, Enterprises are increasingly relying on Information systems to attain business agility and deliver competitive advantages.
Porter’s value chain is a framework for thinking strategically about the activities involved in any business and assessing their relative cost and role in differentiation . Value can be created by differentiation along every step of the value chain, through activities resulting in products and services that lower buyers’ costs or raise buyers’ performance. The sources of value creation come from policy choices, linkages, timing, location, sharing of activities among business units, integration, learning and institutional factors.
Information Systems (IS) is pervasive and affects every point in the value chain. It is also affecting competitive scope and reshaping the way products meet buyer needs. Every value activity performed within a firm has the information processing component which encompasses the steps required to capture, manipulate, and channel the data necessary to perform the activity. From logistics to servicing, IS is performing optimization and control functions, transforming products and processes providing more judgmental functions. IS is helping firms re-design manufacturing tools, improve logistics, promote marketing, boost product performance and enhance customer service. It is enabling globalization of firms.
IS is able to affect the industry structure by altering each of the five competitive forces and create industry attractiveness. It has helped firms establish competitive edge by lowering costs and enhancing differentiation, spawn new business by making existing businesses technologically feasible, create derived demand for new products and establish new businesses within existing ones.
I have provided examples of Information Systems within an E-Business environment which create immense value for the enterprises. These systems include manufacturing, supply chain, financial, performance management and business intelligence applications.
Value creation extends through every primary and support activities of the value chain.
Value is created in e-business systems by means of:
Transactional efficiencies – Achieved by reducing distribution costs, streamlining inventory management, simplifying transactions allowing individual customers to benefit from scale economies through demand aggregation and bulk purchasing, streamlining the supply chain, and speeding up transaction processing and order fulfillment, thereby benefiting both vendors and customers.
Complementarities – E-businesses can leverage this potential for value creation by offering bundles of complementary products and services to their customers.
Lock-in – The value-creating potential of an e-business is enhanced by the extent to which customers are motivated to engage in repeat transactions and by the extent to which strategic partners have incentives to maintain and improve their associations.
Novelty – new products or services, new methods of production, distribution, or marketing, or the tapping of new markets, innovate in the ways they do business, that is, in the structuring of transactions.
Implementing an enterprise wide Manufacturing Application will help optimize production capacity, from raw materials through final product — regardless of manufacturing methodology. Businesses can automate customer orders, optimize subcontracting, and manage for cost, quality, and compliance.
Using Supply Chain Management Technology , firms can automate all key supply chain processes, from design, planning and procurement to manufacturing and fulfillment, providing a complete solution set to enable companies to power information-driven value chains. Companies can reduce spending on goods and services, streamlines procure-to-pay processes, and drives policy compliance
Implementing a Financial System will meet the growing demands of global financial reporting and tax requirements with one accounting, tax, banking and payments model.
It will also enable shared services across businesses and regions.
The implementation of Performance Management Applications will support a broad range of strategic and financial performance management processes and enable management excellence. It will drive profitable growth for a company by delivering predictable results, improving transparency and compliance, and increasing business alignment.
The implementation of Business Intelligence Applications will deliver intuitive, role-based intelligence for everyone in the organization which will enable better decisions, actions and business processes and deliver value from multiple data sources.
Today, IT must be conceived of broadly to encompass the information that businesses create and use as well as a wide spectrum of increasingly convergent and linked technologies that process the information.