Why Business Firms Invest Heavily in Is

Why business firms invest heavily in information system?

Business firm invest heavily in information system to achieve six various reasons. Firstly, achieving operational excellence. Business improves the efficiency of their operations in order to achieve higher profitability. Information systems are important tools available to managers for achieving higher levels of efficiency and productivity in business operations. A good example is Wal-Mart that uses the RetailLink system, The RetailLink system is a system whereby it digitally links its suppliers to every one of Wal-Mart's stores. In this case, as soon as a customer purchases an item, the supplier who is monitoring the item will immediately know when to ship a replacement to the shelf without much hassle.

Secondly the high investment in information system is the need to be in touch with new products, services, and business models. Information system is a major tool for firms to create new products and services, and also an entirely new business models. A business model describes how a company produces, delivers, and sells a product or service to create a higher rate of wealth. For an accurate example, Apple Inc. transformed an old business model based on its iPod technology platform that included iPod, the iTunes music service, and the iPhone.

Besides that, as services need to keep up with the coming time, there is a strong need for customer and supplier intimacy. When a business serves its customers well, the customers generally respond by returning and purchasing more which leads to the raise of revenue and profits. The more a business engages its suppliers, the better the suppliers can provide vital inputs. For an example, The Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of information systems and technology to achieve customer intimacy. They use computers to keep track of guests' preferences, such as their preferred room temperature, check-in time, television programs in...