The rapid pace of technology
Information Systems at times can be a huge cost to justify in gaining a competitive advantage. The main reason being that benefits derived from such a system are not obvious immediately. Some big systems take years to implement even and require a constant stream of cash flows in order to start up. Many projects fail due to high budget costs and are discontinued in the middle. The three main reasons however due to which IS/IT advantage is hard to sustain are as follows: The rapid pace of technology: technology is advancing at a quick pace. Advancement today will become obsolete sooner than many think.
This requires firms to ensure that all its systems are kept up to date prior to the competition. First mover advantage nowadays provides a very small window of opportunity and to take advantage of it, the whole firm should be adaptable, not just is IS/IT systems. Examples would be ERP systems that were the buzz word only a few years ago and now everyone has it. It is a good system to use but all those huge costs become unjustifiable if it fails to provide a competitive advantage. Unjustifiable costs: many systems in order to be kept up to date require constant cash inflows.
These costs at times become hard to justify. Even if a system is successfully implemented, something newer and better comes up due to which the older system has to be scrapped. These costs cannot always be justified because the measurement of the benefits cannot be conducted in quantitative terms. Many firms that installed huge server based systems had no choice but to switch to ERP systems eventually. All their previous investment seemed to go to waste. Failure to monopolize resources for competitive advantage: any new technology can be bought to be used but cannot be bought so as to prevent its use by competitors.
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Licensed software is note enough for this purpose and with the advent of open source programming; it has become even more difficult for firms. If they can buy it, anyone with the right kind of money can as well. This means that first mover advantage again provides a very small opportunity time frame which has to be acted upon as quickly as possible. Issues regarding the design of global systems are as follows: Impediments to Communication: are various. Apart from language barriers, the way communication is established is another major issue.
Although internet through fibre optic cables is seen as a viable option, it still isn’t the same as managing people face to face. Furthermore, the interface has to be such that it can be localized according to the regional language, or the staff has to be trained to use one common language. Time differences: are always an issue. Work timings differ due to the differences in time zones and this hampers the amount of work that can be done. Although it can also be seen as an advantage, that is only the case when different locations work autonomously.
Quality Assurance: one cannot assure quality of staff and input from halfway across the world. One trained individual form the home country has to be present at least to keep check and balances.
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