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Strategic Uses of Information Technology

What is information technology?

How can information technology be used in an organization to improve its efficiency?

How much investment should an organization make in information technology?

What are the business benefits and opportunities an organization may achieve from using information technology?

These are some of the most important questions many organizations ask themselves before investing their capitals in information technology. 

In an academic term, information technology is defined as hardware, software, telecommunications, database management, and other information processing technologies used in computer-based information systems.

There are many ways that organizations may view and use information technology.

However, in today’s competitive business environment technology is no longer an afterthought in forming business strategy, but it is the actual cause and driver.

In other words, for a firm to maintain or improve its business competitiveness it must use information technology to achieve strategic advantage. 

Information technology can help a company substantially reduce the cost of business processes and lower the costs of customers or suppliers. 

Information technology can help a company differentiate its products and services from others. 

Using information technology, a firm can create new products and services or make radical changes to business processes. 

A firm can use information technology to manage regional and global business expansion or to diversify and integrate into other products and services. 

A firm can use information technology to create virtual organizations of business partners or to develop alliances with customers, suppliers, and other business partners. 

Information technology can dramatically improve the efficiency of business processes and the quality of products and services. 

Using information technology, a firm can build a strategic information base of all the information collected. 

Some experts argue that use of information technology has become a strategic necessity rather than a strategic advantage, because most competitive advantages don’t last more than a few years.

Whether the statement is true or not, most companies may not want to wait too long before investing in information technology because it would be tough to catch up later once you get behind your competitors, especially when everyone is playing with newer, better technology.