4 Chapter 1 • Managing IT in a Digital World
Computer Networks: High Bandwidth, Wireless, Cloudy
The introduction of a Web browser in the mid-1990s that
used an Internet communications standard (TCP/IP) to link
companies and individuals to the Internet has been de-
scribed as a “killer application” due to its widespread global
impact. Demands for high-speed Internet access have
spurred investments by government and the private sector to
install fiber-optic (high-bandwidth) lines. Today, many
households in developed countries pay a monthly fee for
cable, satellite, or a telephone utility for integrated data,
voice, and perhaps television services in their homes. New
investments by Western countries in high-bandwidth lines to
their own rural areas as well as to emerging nations in Africa
are also being announced as this textbook goes to press.
Satellite and cellular technologies now link remote
workers to central support centers, travelers to travel serv-
ices, and delivery personnel to transportation schedulers.
Wireless technologies have also enabled some emerging
countries to bypass expensive investments in hardwired
telecommunications lines to more remote areas.
Investments in wireless connectivity to better support
mobile workers insidean organization’s walls have also
recently increased. For example, physicians and nurses
with mobile computer and communications devices have
increased their productivity and service quality by commu-
nicating more easily with clinicians on other hospital floors
or at other worksites as well as by accessing electronic
patient records and test results at the patient’s bedside.
Another growing trend has been the usage of the
Internet to obtain remote “hosting” or other IT capabilities
from “the cloud” (Bala and Henderson, 2010). In Software-
as-a-Service (SaaS) models, third-party service providers
deploy, manage, and remotely host software applications on
a rental or lease agreement. This is an especially attractive
option for small organizations, but industry pioneers (such
as salesforce.com) also provide 24*7 access to distributed
organizations and remote workers for Fortune 1000 compa-
nies. Other vendors offer computer infrastructure services
(IaaS) via the Internet, such as computer server processing
and data storage, which enable organizations to more effec-
tively handle peak processing loads.
New Ways to Compete
Computers and communication networks enable compa-
nies to compete in two primary ways (Porter, 2001):
- Low Cost—competing with other businesses by
being a low-cost producer of a good or a service - Differentiation—competing with other businesses
by offering products or services that customers
prefer due to a superiority in characteristics such as
product innovativeness or image, product quality, or
customer serviceComputers can lower the costsof products or services by
automating business transactions, shortening order cycle
times, and providing data for better operational decision
making. Since the 1980s, a flood of IT innovations have led
to efficiency gains in manufacturing firms alone—such as
shortening the time to develop new products with computer-
aided design tools; optimizing a plant floor process with
software that implements a human expert’s decision rules;
and speedily changing a production line with computerized
planning systems based on sales information.
IT has also been used by companies to differentiate
their products or services from those of competitors. IT
applications can provide sales personnel with information
to help them better service a specific customer; just-
in-time replenishments of supplies for business customers
based on inventory levels rather than manually initiated
purchasing orders; and decision support applications with
embedded industry knowledge, such as best practices for
first responders to treat a heart attack or stroke patient.
After the introduction of the Web browser in the
mid-1990s, most companies first began to use the Web to
create a brand “presence” on the Internet: Managers regis-
tered memorable names for a URL for their company’s
public Web site and then posted information (initially just
based on hard-copy materials dubbed “brochureware”) for
potential customers, stockholders, and other stakeholders.
By the late 1990s, traditional companies could see how
Amazon.com and other dot-com innovators were using the
Web, and they too began to find innovative ways to use
Web technologies to reach customers. However, since the
features of a public Web site are also visible to competitors
and can be quickly copied by them, it has also become
more difficult for companies to compete by product or
service differentiation via the Web than it perhaps was for
them in an offline world.
For example, a company’s customers may use Web
sites that allow them to easily compare not only their prod-
ucts or services—and their prices—but also those offered
by competitors. Consumers can also request their “own”
price and be electronically alerted to price changes as they
occur. The airline companies in particular have faced se-
vere industry pressures for low prices and have found it
more difficult to differentiate their services.
On the other hand, the Internet can increase a compa-
ny’s “reach” to new customers and new suppliers, who may
even be on different continents. Airline companies now
have a direct channel to consumers and business customers,
which means they don’t have to pay travel agents or online