ASSIGNMENT I

The Role of Information System and Information Technology

to Increase the Competitiveness in Business

Information System (IS) and Information Technology (IT) have a big role in
modern organization. IS and IT are often considered synonymous. In reality, IT is
a subset of IS. Both IS and IT deal with computers. Even though both fields are
considered to be synonymous, IS and IT have distinc characteristics and specific
career paths that require different education and training.

According to Azarez, J. (2017), IS is an umbrella term for the systems, people and
processes designed to create, store, manipulate, distribute, and disseminate
information. Although IS are heavily reliant on computers and other technology-
based tools, the term predates computer can include non-technological systems.
While IT falls under the IS umbrella but deals with the technology involved in the
systems themselves. IT can be defined as study, design, implementation support,
or management of computer-based information systems. IT typically includes
software, hardware, database and networks. IT focuses on managing technology
and improving its utilization to advance the overall business goals.

Business can also be considered as one of the modern organization. Therefore, IS

and IT definitely play big role in business. In business, IS and IT are used to gain
competitive advantage.

Companies use IS to manage data processing and record-keeping activities

associated with business transactions like maintaining the general ledger (book
keeping), payroll, billing, inventory management, etc. The focus is mainly on
maintaining files and databases related to day-to-day operations. IS also used to
provide products and services of the highest quality at affordable prices and top-
rated customer service, help the companies to enter new markets through e-
commerce and eliminate inefficiencies in processes such as order tracking. By
understanding the IS role, the company is able to maximize the information to

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achieve the competitive advantages (The Role of Information Systems in Running
the 21st Century Organization, 2015).

Writer, L. G. (2016) states that the adoption of IT resources allows companies to

maintain a competitive advantage over their rivals. Companies using a first-
movers strategy can use information technology to create new products, distance
their products from the existing market or enhance their customer services.
Companies that follow a low-cost product strategy can look to information
technology solutions to reduce their costs through increased productivity and
reduced need for employee overhead. Businesses can also build-in information
technology to their products that makes it difficult for customers to switch
platforms or products.

According to Millar, M. E. (2014), IT is changing the way companies operate. It is

affecting the entire process by which companies create their products.
Furthermore, it is reshaping the product itself: the entire package of physical
goods, services, and information companies provide to create value for their
buyers.

Information technology is a key to a firms competitiveness. Organizations that

are unable to adapt to the rapid pace of technology change will not survive in the
marketplace of the future (Anderson, Chris, 2017). Business will no longer be
thought of as operating as usual. A focus will be placed on both the speed at which
information can be passed through the organization and the importance of that
information. Systems will be developed to increase the rate at which information
passes, while the importance of information will become the deciding factor in the
marketplace. In order to remain competitive, organizations will need to
incorporate more information technology while developing a greater
understanding of the importance of information and how it relates to workflow
and productivity.

According to Rackoff et al. (1985), there are five competitive strategy. The
competitive strategies are:
1. Differentiation of products and services

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 2. Reducing value system costs or raising costs of rival companies
3. Innovating with products or processes to change the nature of business
within the industry
4. Growth by vertical or horizontal integration or geographic expansion
5. Making strategic alliances or agreement.

Five Competitive Strategy (n.d.) states that IT can be used to solve the five
strategies that Rackoff stated. The usage of IT in solving the strategies can be seen
in table 1 below.

Table 1 The Usage of Information Technology in Solving Competitive Strategies

The Usage of Information Technology in Solving Competitive Strategies
Lower Cost
Use IT to substantially reduce the cost of business processes
Use IT to lower costs of customers or suppliers
Differentiate
Develop new IT features to differentiate products and services
Use IT features to reduce the differentiation advantages of competitors
Use IT features to focus products and services at selected market niches
Innovate
Create new products and services that include IT components
Develope unique new markets or market niches with the help of IT
Make radical changes to business processes with IT that dramatically cut
costs, improve quality, efficiency, or customer services, or shorten time to
market
Promote Growth
Use IT to manage regional and global business expansion
Use IT to deversify and integrate into other products and services
Develop Alliances
Use IT to create virtual organizations of business partners
Develop interenterprise information systems linked by the interner and
extranets that support strategic business relationships with customers,
suppliers, subcontractors, and others.

One of example how Information System and Information Techonology improve

the competitiveness in business is Go-Jek, an on-demand motorcycle taxi
smartphone app that launched in 2010, has attempted to digitalize and disrupt this

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traditional business model. By formalizing an informal economy, Go-Jek has
improved standards both for its drivers and its riders.

Figure 1 Go-Jeks Logo

Bansal, Aparna (2016) stated that through the Go-Ride service on the Gojek app,
drivers now have access to real-time traffic information that they can use to
identify areas with the most demand and maximize the revenue that they earn.
Meanwhile, customers are served with the price transparency that the app offers,
as customers are able to book rides at fixed prices without having to bargain with
drivers. Customers do not need to spend longer time explaining the route to the
drivers, as the app includes a GPS function to guide drivers. Go-Jek also provides
online payment (Go-Pay) with any discount or cash payment which contributing
to the apps ease of use.

Go-Jek also has differentiated the products and services into several features,
revolutionizing the larger landscape of on-demand informal services. Since its
inception, the app has expanded become 16 features, which is shown in figure 2.
By managing and updating the application, the company can fulfill the growth and
change from the customerss needs and wants. This make Go-Jek become more
competitive in this era. That is become the role of Information System and
Information Techonology.

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 Figure 2 Go-Jeks Features

Go-Jek also develop business partnership with others parties. Services such as
beauty treatments, massages and cleaning have traditionally been driven by word-
of-mouth marketing in Indonesia, but the Go-Jek app allows these entrepreneurs
to gain greater visibility and expand their customer base. It allows a segment of
the population that is more financially vulnerable to gain a steadier and more
predictable flow of income, in line with Go-Jeks guiding principle of social
impact.

Others example how IS and IT can improve competitiveness is Alibaba.com. The

website helps connecting exporters in China (and other countries) with companies
in over 190 countries around the world. The system allows a business in the UK to
find a manufacturer in China and have a range of goods produced and shipped. It's
not just businesses that use Alibaba's websites. It also owns taobao.com, China's
largest shopping website, and tmall.com, which offers a wide selection of branded
goods to China's emerging middle class. Alibaba Company also runs the online
payment system alipay.com, which operates like Paypal, and offers online
marketing, cloud computing and a logistics operation. (Broad, Mark, 2014).

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 Figure 3 Alibaba Groups Logo

In conclusion, Information System (IS) and Information Technology (IT) have

main role to increase the competitiveness in business. IS focuses in arrangement
of people, process, and techonology to support and improve day-to-day operations
in a business. IT focuses on managing technology and improving its utilization to
advance the overall business goals.

References
Azares, J. (2017, April 14). Information Systems vs. Information Technology.
Retrieved May 19, 2017, from https://www.floridatechonline.com/blog/
information-technology/information-systems-vs-information-technology/
The Role of Information Systems in Running the 21st Century Organization.
(2015, February 02). Retrieved May 19, 2017, from http://elearning.
scranton.edu/resource/business-leadership/the-role-of-information-
systems-in-increasing-productivity
Writer, L. G. (2016, October 26). Business Benefits of Information Technology.
Retrieved May 19, 2017, from http://smallbusiness.chron.com/business-
benefits-information-technology-4021.html
Millar, M. E. (2014, August 01). How Information Gives You Competitive
Advantage. Retrieved May 19, 2017, from https://hbr.org/1985/07/how-
information-gives-you-competitive-advantage
Anderson, Chris. (2017). How Is Information Technology Changing Business?
Retrieved May 21, 2017, from https://www.bizmanualz.com/
Rackoff et al. (1985). Managing information and systems: the business
perspective.

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 London: Routledge.
Five Competitive Strategy. (n.d.). Competitive Advantage with Information
Systems, 1-30. Retrieved May 19, 2017, from http://www4.comp.polyu.
edu.hk/~csajaykr/CA.pdf
Bansal, Aparna. (2016). Go-Jek. Retrieved May 21, 2017, from https://rctom.hbs.
org/submission/go-jek-or-go-home/
Broad, Mark. (2014). Alibaba: What exactly does it do?. Retrieved May, 21, 2017,
from http://www.bbc.com/news/business-29077495