Impact of IT/IS Innovation on Business Performance: Case Studies

This report examines the significant impact of Information Technology (IT) and Information Systems (IS) on business innovation and performance. It explores how companies like FedEx, IKEA, Amazon, and RFID are leveraging IT/IS to gain a competitive edge. The report delves into specific examples, such as FedEx's online package tracking and the use of "Internet of Things," IKEA's virtual home imagination technology, and Amazon's ventures in phone and tablet manufacturing. It analyzes factors contributing to the success or failure of IT/IS innovations, including market research, process innovation, and adaptability. The report highlights lessons learned, emphasizing the importance of customer focus and market analysis. It also provides recommendations for organizations seeking to improve their IT/IS strategies, offering valuable insights for business development and operational management. The report emphasizes the importance of innovation in maintaining a competitive advantage, adapting to market changes, and meeting customer needs. Overall, the report underscores the pivotal role of IT/IS in driving business growth and ensuring long-term success.

Running head: INNOVATION AND BUSINESS PERFORMANCE
INNOVATION AND BUSINESS PERFORMANCE
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Table of Contents
Introduction......................................................................................................................................2
Examples of IT/IS based innovation in companies.........................................................................3
Lessons learned................................................................................................................................6
Internal and external factors............................................................................................................7
Recommendations to improve.........................................................................................................8
References......................................................................................................................................10

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Introduction
The advancement in technological developments have made information technology (IT)
and information systems (IS) an integral part of any business in the modern day. The
organisational structure can heavily influenced and shaped by either of the two and can decide
how is the organisation going to undertake its tasks, interact with its customers as well as what
are going to be the communication strategies and methods for the organisation, both internal and
external (Fichman, Dos Santos and Zheng 2014). An information system refers to all the
resources that are used by the organisation that help to deliver information and process the same
to benefit the organisation while making a decision or business operations. Complicated software
systems are integrated into the business operations to help the companies critically view and
understand different results and make sure decisions while in a specific adverse situation
(Peppard and Ward 2016).
Innovation is a key way to make sure that organisations stay ahead of the competition and
hold a substantial market share. Being able to innovate on the existing products is a brilliant way
of keeping the customers engaged and excited about new products, which would also help the
marketing of the new product (Peppard and Ward 2016). IT software and systems can help
organisations keep this innovation cycle up and ensure that their customer based is constant.
Information technology coupled with innovation can be a huge boon for the organisations in
making sure that the operational management stays ahead of the peers in the industry. The
following paper looks into the different ways IT/IS can boost innovation within the organisation
in different aspects and ways and how can organisations benefit from these.

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Examples of IT/IS based innovation in companies
The four companies that have been selected in this paper are as follows:
 Federal Express: Federal Express (FedEx) is an American multinational courier delivery
service provider that had pioneered overnight delivery services in the 1970s. Then in the
1990s, they were the first company to introduce the concept of online package tracking,
making it easier for their customers to know exactly where is their purchased product.
 Ikea: The Swedish furniture giant has always managed to position themselves ahead of
the curve and stay at the top position in the industry. With the company’s new
technology, the company aims to provide the customers with an opportunity to
understand their own requirements in a better way through virtual home imagination.
 Amazon: Amazon is one of the biggest companies in the world and they do not have any
physical headquarters. Their entire operations are done virtually and online and
innovation have always been the prime driver for the company to make sure that they are
much ahead of the competition (Forbes.com, 2017). However, their latest innovations the
Fire phone and the Fire tablet have failed miserably in the market that already has a lot of
competition.
 RFID: Technological innovation has always been driven by one major requirement; to
make sure that the day-to-day lives of the humans can be made a little easier than before.
Radio-frequency identification is one such technology that aims to reduce the time it
takes for the people when doing simple daily necessities every day.
Success or failure factors
It is not always easy to achieve innovation, be it internal matters or overhauling any
existing product in any stage of its production process. However, innovation is sure to throttle

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the organisation towards better prospects, making it inevitable for every organisation to
continuously strive for betterment of the services and products, that would in turn help them to
gain competitive advantage over the others. Process innovation is one of the most popular way of
ushering innovation into the organisational process and this is achieved by adopting new
methods of producing, selling and distribution of a product or service that is already existing
(Galliers and Leidner 2014).
 FedEx: FedEx have always sought to deliver premium services to their customers and
ensure that their products are delivered to them on time. Maintaining a courier service all
over the world and operating in almost everywhere on the planet is something of a
remarkable feat and FedEx has successfully kept on doing so for decades (About FedEx,
2017). Innovation has been at the helm of the company ship since the 1970s, the
organisation has never failed on their promise and responsibilities to the customers. In
recent times, the company aims to use “Internet of Things” to make sure that the
customers get real time updates for their products. Using this technology, the company
can make sure that their entire operations will be connected to a larger network that
would give the customers every update they need in real time, including the conditions of
the inside of the package as well as giving them the opportunity to track their package as
well (About FedEx, 2017). It is not easy to maintain such a network and FedEx hopes
that this will help their services even more integrated and precise.
 Ikea: The company is using virtual reality as their new aspect of operations to enable the
customers to have the opportunity to first understand how would their desired product
look like as well as giving them an idea about the position of the furniture (IKEA
Highlights 2016, 2017). Ikea has always sought to make sure that their customers get

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what they want and this technology is going to be the pivotal moment in the company’s
history. The hardest part of purchasing products from Ikea, according to many, is that
they have to assemble those themselves. However, another major aspect is to imagine
how would the new product will look in their homes. Ikea now is focused on using the
new VR technology to help the customers in this very aspect. Their new technology
would give the customers the opportunity to do exactly this. Ikea’s new catalogue app
helops customers to visualize 3D images of the products that they want to buy as well as
helping them to understand how will they look inside their rooms (IKEA Highlights
2016, 2017).
Various attributes and factors come into play to ensure that an innovation is successful
and the project is fulfilling the goals that were set in the initial stages of the venture. Proper and
accurate market survey is the first and foremost requirement for any marketing venture and
innovation depends heavily on this to ensure the success of the new product that is being
launched in the market (Majchrzak and Malhotra 2013). In most cases completely overhauling
the business process is essential so that costs are curbed and higher profit is ensured. This means
that competitive advantage dictates the rules of the manufacturing process and must be adhered
to, if the company wished to stay ahead of the peers in the industry. Being agile and being able to
adapt to the prevailing conditions of the market to overcome the adversities is essential for any
organiation that seeks to remain on top of the chain. Constantly evolving itself and continuously
providing the customers with exciting commodities is of the utmost importance and this is a rule
that must be at the heart of any business operation (Fichman, Dos Santos and Zheng 2014).
While companies like Sony, Citibank have excelled through completely re-imagining the
products or services in their respective fields and giving the customers something new to look

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forward to, others have fallen short of doing so and hence have lost their importance in the
market simply because of being unable to accept the new ways, or simply because they have
failed to roll out new products that were the market requirements during that period of time.
Technologies had become obsolete and hence made it impossible for them to keep the market
that they have enjoyed over the years (Yoo 2013).
 Amazon: With the growing technological industry and the ever expanding requirements
for new phones and products, Amazon wanted to step into the market themselves and
manufacture their own phone and tablet products (Forbes.com, 2017). The Fire phone
and tablet were projected by the company as revolutionary products that would radically
alter how the products are used by people. However, these products made Amazon
realize that it is not at all easy to break into a market with so much competition. The
products rendered the customers unable to use many of the apps that they are used to by
now and are needed on a daily basis. The company had plans to facilitate the shoppers
who are used to brick and mortar shops to navigate through millions of products in an
easier manner and buy what they exactly wanted using an app called Firefly that used
three-dimensional technology to help the customers understand their needs better
(Forbes.com, 2017). Through the phone and the tablet, Amazon wished to pull more
customers into using their own service, like Apple or Samsung. However, it was unable
to do so as the products were not up to the mark as per the industry standards.
 RFID: This technology has been said to work better than barcodes in terms of being
identification codes that help to track different products that are purchased by the
customers. A magnetic chip is used by the technology that connects to a network of
things and any purchase are immediately recorded through the scanner and the customers

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in this case do not even have to wait to pay for the products they buy as their bank details
are directly connected and the amount is deducted from their accounts as soon as the
codes are scanned (Journal, 2017). This reduces valuable time for the people leaving
them to able to do other things every day.
Lessons learned
From the examples of the four different products and other innovations, it is clear that
market surveys often play the key role to understand the requirements of the customers and also
can effectively predict how may necessities change over time. This is very important as market
requirements are the first and final thing that decides what products can be beneficial for an
organisation to expand business upon.
 FedEx: FedEx’s prime focus on the requirements of the customers is the major reason for
the success of the company. With its new technological innovation, it has kept on doing
so and further enable their clients to have clear ideas about the products that have been
purchased. Giving them real time details about their packages and other things would
certainly make sure that the customers are happy and more relaxed because they do not
have to worry being able to track the packages in real time (About FedEx, 2017). By
providing information about the conditions inside the package, the customers are also
allowed to understand if their products are damaged in way, helping them to take action
accordingly and not wait for the package to arrive. Proper market analysis and the desire
to provide the customers with something that is not offered by the competition have
helped FedEx to stay ahead of the curve.
 Ikea: Advanced thinking and technological prowess have been the keys for the success
of the new innovation of Ikea. Advanced thinking and customer satisfaction have made

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sure that Ikea continues to provide their customers with the exact things that they need.
Taking it one step ahead, the company has been able to help the customers to have prior
knowledge and even visualize their products making it easier to make a choice based on
what they see and not only limit it to imagination (IKEA Highlights 2016, 2017).
Creative thinking and technological aspiration is a mixture that has been used perfectly
by the company to ensure their success.
 Amazon: Improper market research has led to the downfall of the new inventions of the
company. Amazon completely failed to understand that in the market of cell phones and
tablets, giving the customers “adequate” services is not enough, they have to be given
something extra to induce them to buy their products. Amazon should have understood
that to bring the customers under their exclusive services is not easy, but has to be done
in an organic flow-like manner, rather than forcing them to buy products off their own
channels and services. The “buy” button on the apps of the phones and the tablets that
were linked to Amazon’s online store was seen by many as invading personal choices and
this is not tolerated in the free market of today at any cost.
 RFID: The necessity to give the customers enough time to enable them to do things
rather them cost them time for simple things is important and RFID has been of help int
his very aspect. The new technology links almost every product to a larger server and a
simple scan is all that is needed to make sure that they are bought (Journal, 2017).
Reducing time for the daily requirements is the major factor for the success of this new
technology.

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Internal and external factors
Various internal and external factors come into play to ensure the success of any
organisation. The established working culture of an organisation is often the most important
attribute that determines how the internal operations of a company would be running and this is
the core of every company that sets them apart from the peers in the industry (Goetsch and Davis
2014). In most cases, no two companies have the same culture and it is very important to have a
culture that benefits the organisation in every way possible. Organisational hierarchy and the
structure of the organisation also dictate what kind of a relationship are the employees going to
have with the senior management and how can that be changed if the established conditions do
not help the organisation to reach its objectives. With the size of the organization growing
increasingly, it also becomes increasingly hard to control the internal functions of the company
(Johnston and Marshall 2016). The services or the products that an organisation sells in the
market also often determine the success or failure of the company based on the nature of the
product offered.
 FedEx: The internal functions of the company is the first thing that ensures a complete
focus on the requirements of the customers and giving them full details about their
packages (About FedEx, 2017). With the development of technological inventions, the
company has adopted them to give the customers all the necessary things that they
require.
 Ikea: Visualization is an integral part of buying products and this has been used by the
company to its full potential. The company believes in giving their customers every
possible option so that they can select what they need. A further step has enabled them to
make the customers to even imagine how would the products look like in their homes

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(IKEA Highlights 2016, 2017). With no other in the market with this sort of services, it is
easier for Ikea to grab as much market share as possible.
 Amazon: Amazon’s failure can be attributed to the external conditions, that of the
market. The industry of cell phones and tablets vis highly competitive and improper
market surveys led to the downfall of the two products of the company (Forbes.com,
2017).
 RFID: This technology has seen its success due to be able to fulfil the market
requirements in a proper manner, catering to the needs of the customers.
Recommendations
IT based innovation in most cases is led by external factors rather than internal factors.
Granted, internal requirements of an organisation have at times helped to give birth to
remarkable things that have changed the world forever (like the World Wide Web), but external
market needs are the foremost factor that has made sure that companies are never satisfied with
the current state of things and are always striving to give their customers something new, thus
ensuring competitiveness (Urbancova 2013). IT based innovation is often not something that is
very apparent at the beginning and may even escape the eye of many people, the changes being
in software level. IT based innovation is led by market competition. Political conditions also
have some influences in the innovation process, being a propeller to come up with something
new to adhere to specific requests from specific political parties to which the company may be
affiliated to (Meihami and Meihami 2014).
FedEx is on the right path with their operations, so is Ikea. These two companies need to
keep on with their current operations and keep providing their customers with the services that
they are currently giving.

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Amazon needs to conduct better marketing surveys to understand the industry trends and
standards, so that in the future they can be able to provide the customers with what they need.
Also, Amazon has to stop influencing the choices of the customers at a very basic level, which
can fend off many people as a breach of privacy.
RFID needs to bring every product under its network as soon as possible, so that it can
effectively reduce the time needed for the daily works.
Conclusion
While it is essential for organisations to establish and maintain a form of organisational
hierarchy and also go by an operationqal procedure that is conforming to the ideologies of the
company, it also equally important to continuously changing these very things of the business. A
strong organisational culture is necessary, but constant innovation through new means and ways
is just as important. Organisations must be able to understand this key aspect of business running
and need to adapt to the same so that there is no communication gap between the higher
management and the employees of the company. Organisations are recommended to establish an
organisational culture that encourages innovation through cooperation and also hosts
multifaceted operational methods, that can help them to effectively achieve competitive
advantage and through this may be ushered in through innovation. Organisational leadership
plays pivotal here, which must be done in a proper and efficient way.