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58 CHAPTER 1 » MANAGING IN THE DIGITAL WORLD FIGURE 1.19 Packages travel through an extensive network of conveyor ‘belts, where they are routed to their intermediate and final destinations. Source: Stephen Mahar/Shutterstock. Information Systems for Competitive Advantage The American Airlines and FedEx systems are typical of systems that are pervasive in today”s life or used in large, complex organizations. These systems are so large in scale and scope that they are difficult to build. It is important to handle the development of such systems the right way the first time around. These examples also show that as we rely more and more on informa- tion systems, the capabilities of these systems are paramount to business success. Not only were these systems large and complicated, but they were—and continue to be— critical to the success of the organizations that built them. The choices made in developing the systems at American Airlines and FedEx were strategic in their intent. For airlines, computer- ized reservation systems are a strategic necessity; the systems developed by FedEx are devel- oped and continuously updated to help gain or sustain some competitive advantage (Porter, 1985; Porter & Millar, 1985) over its rivals. Let us not let this notion slip by us—while the use of technology can enable efficiency and while information systems must provide a return on investment, technology use can also be strategic and a powerful enabler of competitive ‘advantage. Although we described the use of information systems at two very large organizations, firms of all types and sizes can use information systems t0 gain or sustain a competitive advantage over their rivals. Whether it is a small mom-and-pop boutique or a large government agency, every organization can find a way to use information technology to beat its rivals. Some argue that as information systems have become standardized and ubiquitous, they are now more of a commodity that is absolutely necessary for every company, and companies should focus information technology strictly on cost reduction and risk mitigation and that investing in information technology for differentiation or for competitive advantage is futile. Yet, as evidenced by the advances in smartphones, emergence of social networks, or changes in various creative industries, IT is changing rapidly, and many companies have gained competitive advantage by innovatively using the potential of new technologies. Specifically, companies from Amazon.com to Zynga created competitive advantage by combining certain commoditized tech- nologies with proprietary systems and business processes. Companies with bad business models tend to fail regardless of whether they use information technology or not, but companies that have good business models and use information technology successfully to carry out those busi- ness models tend to be very successful. For companies such as Google or Facebook, data gener- ated by the customers create value, and how data are being gathered, processed, and used can be a source of sustained competitive advantage (Vellante, 2011); companies such as Amazon.com use their IT expertise to sell cloud computing services to other businesses, directly generating revenue from their IT investments. In sum, we believe that information systems are a necessary part of doing business and that they can be used to create efficiencies, but that they can also be used as an enabler of competitive advantage. Organizations should also note, however, that the competitive advan- tage from the use of information systems can be fleeting, as competitors can eventually do the same thing. 
