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140 Part One Organizations, Management, and the Networked Enterprise

ecosystems related to these products and how it might use IT to enable partici-
pation in these larger ecosystems.
A powerful, current example of a rapidly expanding ecosystem is the mobile
Internet platform. In this ecosystem there are four industries: device makers
(Apple iPhone, RIM BlackBerry, Motorola, LG, and others), wireless telecom-
munication firms (AT&T, Verizon, T-Mobile, Sprint, and others), independent
software applications providers (generally small firms selling games, applica-
tions, and ring tones), and Internet service providers (who participate as
providers of Internet service to the mobile platform).
Each of these industries has its own history, interests, and driving forces. But
these elements come together in a sometimes cooperative, and sometimes
competitive, new industry we refer to as the mobile digital platform ecosystem.
More than other firms, Apple has managed to combine these industries into a
system. It is Apple’s mission to sell physical devices (iPhones) that are nearly
as powerful as today’s personal computers. These devices work only with a
high-speed broadband network supplied by the wireless phone carriers. In
order to attract a large customer base, the iPhone had to be more than just a cell
phone. Apple differentiated this product by making it a “smart phone,” one
capable of running 700,000 different, useful applications. Apple could not
develop all these applications itself. Instead it relies on generally small, inde-
pendent software developers to provide these applications, which can be pur-
chased at the iTunes store. In the background is the Internet service provider
industry, which makes money whenever iPhone users connect to the Internet.

3.4 USING SYSTEMS FOR COMPETITIVE

ADVANTAGE: MANAGEMENT ISSUES

Strategic information systems often change the organization as well as its
products, services, and operating procedures, driving the organization into
new behavioral patterns. Successfully using information systems to achieve
a competitive advantage is challenging and requires precise coordination of
technology, organizations, and management.

SUSTAINING COMPETITIVE ADVANTAGE

The competitive advantages that strategic systems confer do not necessarily last
long enough to ensure long-term profitability. Because competitors can retaliate
and copy strategic systems, competitive advantage is not always sustainable.
Markets, customer expectations, and technology change; globalization has
made these changes even more rapid and unpredictable. The Internet can make
competitive advantage disappear very quickly because virtually all companies
can use this technology. Classic strategic systems, such as American Airlines’s
SABRE computerized reservation system, Citibank’s ATM system, and FedEx’s
package tracking system, benefited by being the first in their industries. Then
rival systems emerged. Amazon was an e-commerce leader but now faces
competition from eBay, Yahoo, and Google. Information systems alone cannot
provide an enduring business advantage. Systems originally intended to be
strategic frequently become tools for survival, required by every firm to stay in
business, or they may inhibit organizations from making the strategic changes
essential for future success.

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