Using IT to Drive Innovation

Over the past few decades, the underlying technology in computers and communications has improved dramatically and drastically. In order to take advantage of this constantly improving technology, companies must constantly change their business processes and the way they organize and execute decision-making. Many companies properly utilize the technology and adapt strategies based upon new innovations in technology. Some companies, however, need to revamp their business processes and properly utilize technology to become more efficient and productive. Erik Brynjolfsson, director of the MIT Center for Digital Business at the Sloan School of Management, says: “Most companies still aren't using IT effectively to do things like measure the success of promotions or the performance of supply chains—data that can inspire changes that fatten revenues and ultimately benefit consumers.”(Talbot)

A decent amount of existing companies have done a stellar job in effectively using IT in their business processes. Companies such as Amazon.com and Cisco have “fundamentally changed their culture, are data-driven, and use the data to drive their decisions.”(Talbot) For example, Amazon.com runs approximately two hundred tests and experiments on a daily basis. They test various algorithms to help with product recommendations, and they make constant visual changes, such as changing the placement of the online shopping cart, to keep the site fresh and exciting for customers. Even offline companies, such as Harrah’s—a major casino business—have used IT to improve business. They collected detailed data about customers and their preferences and habits through the use of incentive systems such as the Total Rewards card. They found that different demographics preferred different incentives, which allowed them to alter their offerings based upon location and customer base. Harrah’s has since improved its position as a third-tier gaming casino to a world leader through its use of IT.

In contrast to successful companies like Amazon and Harrah’s, a lot of industries need to catch up in their use of IT. “It's fair to say that in most industries 70, 80, 90 percent of the companies aren't even close to using IT to the potential it could be used.”(Talbot) Sectors such as education and healthcare have not quite learned how to embrace IT. In his article, David Talbot goes on to describe how he things companies should improve the effectiveness of IT: “It starts with the digitization of analog business processes, but also includes a shift toward decentralized power; broader information sharing; tighter linkage of performance to compensation; more emphasis on high-quality people and screening people who are hired; and more investment in training and education for the workforce once hired.”(Talbot)

With the vast amounts of technology available in this day and age, it is a DEFINITE necessity for companies to discard old processes and work new strategies with IT support. Companies need to utilize the tools—and the data—at their disposal in order to improve the way they run. “According to [Google CEO] Eric Schmidt, there was more data created in the last two days than in all of history until 2000.”(Talbot) Clearly the scarcity of data does not pose a problem to companies, rather an inability to properly manage the data to implement business strategy. Companies need to sink more time, money and effort into adjusting to the new age where IT runs rampant.

Works Cited:

Alfreds, Duncan. "Education Needs Technology." 24.com. News

24, 15 April 2010. Web. 21 Feb 2011. .

Bowman, Dan. "U.S. Healthcare." Fierce Healthcare. Fierce

Healthcare, 23 June 2010. Web. 21 Feb 2011. .

Talbot , David. "Using IT to Drive Innovation." Technology

Review. MIT, 16 Feb 2011. Web. 21 Feb 2011. .