3.6 Information technology strategy

Corporations are increasingly using Information technology strategy to provide business units with competitive advantage. When FedEx first provided its customers with Power Ship computer software to store addresses, print shipping labels, and track package location, its sales jumped significantly. UPS soon followed with its own MaxiShips software viewing its information system as a distinctive competency. FedEx continued to push for further advantage over UPS by using its web site to enable customers to track their packages. FedEx uses this competency in its advertisements by showing how customers can track the progress of their shipments. (Soon thereafter, UPS provided the same service.) Although it can be argued that information technology has now become so pervasive that it no longer offers companies a competitive advantage, corporations worldwide continue to spend over $2trillion annually on information technology.

Multinational corporations are finding that having a sophisticated intranet allows employees to practice follow-the-sun management, in which project team members living in one country can pass their work to team members in another country in which the work day is just beginning. Thus, night shifts are no longer needed. The development of instant translation software is also enabling workers to have online communication with co-workers in other countries who use a different language. For example, Mattel has cut the time it takes to develop new products by 10% by enabling designers and licensees in other countries to collaborate on toy design. IBM uses its intranet to allow its employees to collaborate and improve their skills, thus reducing its training and travel expenses.

3.6 Information technology strategy

Many companies, such as Lockheed Martin and Whirlpool, use information technology to form closer relationships with both customers and suppliers through sophisticated extranets.

For example, General Electric’s Trading Process Network allows suppliers to electronically download GE’s requests for proposals, view diagrams of parts of specifications. And communicate with GE’s purchasing managers. According to Robert Livingston, GE’s head of worldwide sourcing for the Lighting Division, going on the web reduces processing time by one-third.