Information System and Competitive Advantage

1. Sustainable Competitive Advantage

In the research done by Reed and Defillippi (1990), they agreed that the competitive advantage was the main objective of a company strategy, it can lead companies to higher performance. And in the same research, the word sustainable was not be clearly defined, the authors simply gave it the meaning of "keeping it going over time" (Reed & Defillippi 1990). Black and Boal used the 'SWOT' analysis and Porter's 5 forces to interpret the meaning of sustainable competitive advantage in their researches (Black & Boal 1994). If the firm wants to gain a sustainable competitive advantage, the firm needed to use its preponderance to make opportunities and avoid or eliminate its weakness (Learned et al. 1965). Like in Reed and Defillippi's research, there was no clear definition about sustainable either. Maybe because the period of sustainable is largely depend on the property of different industries. There are some factors will greatly affect the sustainability of firm's competitive advantage, such as barriers to imitation, scope of economic and reinvestment (Reed & Defillippi 1990).

2. Case analysis

In the following part, we will provide two cases to illustrate how the information system provided sustainable competitive advantage to a firm.

2.1 RFID

In this paragraph, we will focus on a case about how Radio Frequency Identification (RFID) technology brought sustainable competitive advantage to a Taiwan hospital (Wang et al 2006).

From the official website of RFID, we can know the RFID is a system that "transmits the identity (in the form of a unique serial number) of an object or person wirelessly, using radio waves" (RFID.J 2010). We can simply describe RFID as marking items with tags, and the tags can be classified into active and passive. These tags can store and send information to the RFID readers (Weinstein 2005). This technology largely improved the conventional identification, tracking and stocking of objects, and even the barcode system. Furthermore, RFID is excepted to make the supply chain more effective, strengthen security and defense stealing, improve the inventory control (Wang et al 2006).

RFID had already been applied in most of largest companies in the world, now it was introduced into the field of healthcare. The target is to significantly reduce cost, enhance patient safety and improve medical service (Wang et al 2006). The case we discussed here was about the Location-based Medicare Service project (LBMS) at Taipei Medical University Hospital (TMUH). Because of SARS in 2003, the hospitals in Taiwan needed to indentify and trace the infected patients and possibly infected persons as soon as possible, the great capacity to identification and tracing of RFID made the system itself great helpful to the hospitals. So TMUH planed on building a hospital-wide RFID-based system called Location-based Medicare Service to achieve the real time identification and tracing of tagged persons both inside and outside the hospital (Wang et al 2006). After working, testing and adjusting for a long time with lots of other organizations like IT firms, advisory group and even government office, the hospital finally built up a hospital-wide RFID infrastructure including different modules like tag control and sensor gateway, medical monitoring, and application (Wang et al 2006). Now the RFID system can generate great value to the hospital. TMUH could effectively use RFID to contain SARS while other hospitals only can close for some weeks. According to the data collecting system, the hospital can forecast events, and both efficiency and effectiveness can be achieved. Patients can also get benefits, this system can reduce medical error, improve safety and provide better service (Wang et al 2006). Furthermore, the RFID can bring a sustainable competitive advantage to the hospital. Although the RFID system is not difficult to duplicate, other hospitals can invest to build their own, TMUH is still dominant. That is because the system "required expertise and professional knowledge form different domains including medicine, RFID technology, information systems development, telecommunications and system integration (Wang et al 2006)." It needs a long period to build system, solve problems, and improve system. At the same time, the staffs of hospital also need time to learn and control this advanced technology. TMUH already build up a more perfect database when other hospitals only begin their plans. And the RFID system still has great potential, as mentioned in this case, TMUH want to keep on developing the system in fields including "precious equipment tracking, in-patient medicine auditing, newborn and mother identification, and legitimate drug control (Wang et al 2006)" which may bring the firm more competitive advantage and profit.

2.2 ERP

The second case is about how Rolls-Royce successfully implemented the enterprise resource planning system.

Enterprise resource planning (ERP) system is "a business management system that comprises integrated sets of comprehensive software, which can be used, when