No one can doubt today that Information Technology (IT) especially computers, has created a dramatic impact on the business environment. In every office, there must be telephones, facsimile machines and computers. IT has become a need. Companies spend millions of dollars investing in IT with the hope to gain a competitive edge over their competitors.
However, in June 2003 a raging debate was going on in the business circle. Everyone was engaged in heated discussions over a thought provoking article, "IT DOESN'T MATTER". This article, first appeared in the May 2003 issue of the Harvard Business Review, was written by Nicholas G. Carr.
Carr (2003) argued that IT is very affordable today. More and more companies are investing in and implementing IT. IT has become a commodity and its investments do not justify the required returns. Therefore, IT is diminishing as a source of competitive advantage and should be managed defensively (spend less on IT and avoid risk).
So, is it possible that IT is diminishing as a source of competitive advantage? Can IT still support and sustain organisational competitive advantage?
This report critically analyses this issue but before these questions can be answered, it is important to understand the functions of the organisation, the role of information technology and the process of achieving sustainable competitive advantage.
Subsequently, the analysis touches on the ability of IT to continue supporting and sustaining competitive advantage and demonstrates that IT does matter with a case study on a successful company, Federal Express.
2. BUSINESS ORGANISATION.
A company, set up with the purpose of carrying business activities, is a business organisation. Elliot and Starkings (1998, p. 198) defined a business organisation as '...a human activity system that deals with, and is affected by, the internal and external forces found within the business...