Information Systems Essay Example | Topics and Well Written Essays - 2000 words - 2

Information Systems - Essay Example It makes switching cost or consideration of an alternative costly that it discourages customers to switch to another system. The classic example we can cite is SAP procurement system. The program is being used by many big businesses across the globe that includes industry leaders such as BMW, Ericsson, BASF Corp., Audi, Burger King, just to name a few. SAP markets its product to its customers by stating that it could â€Å"boost contract spending and and enforce compliance with procurement guidelines† (SAP, 2012). The â€Å"contract boost spending† just meant that its potential customers will have more business because it will lock in their clients to their business and will make it extremely costly for them to find an alternative because the present system (using SAP) reduces procurement cost by â€Å"automating, simplifying and accelerate the business’ procure to pay process for goods and services (SAP, 2012). It thus emphasize operational efficiency that the consideration of an alternative would be prohibitive in terms of cost, human resource and time spent looking for another supplier because SAP will already streamline the purchase of goods and services. In other words, the system (SAP) will make the products and services exchanged between suppliers and customers to be cost effective or cheap as long as the customer will buy solely from the supplier that uses SAP. To further simplify how informational technology lock in the relationship between the supplier of goods, services or information and its customer, we can further cite the popular computer tablet of Amazon which is the Kindle Fire. Kindle Fire makes a good case of how a supplier locks in or lures its customer it uses this to differentiate itself from its dominant competitor, iPad of Apple. Amazon knows that it has the advantage of deep informational database over Apple which is its online bookstore Amazon and would like to capitalize on this advantage to take away Apple iPadà ¢â‚¬â„¢s market share on the computer tablet business. Instead of offering numerous apps and competing with the technical features of iPad which Amazon knows it cannot measure up, Amazon instead offered numerous books and magazines for free with their Kindle Fire and will sell the same if a customer will purchase them using the iPad. It is short of saying that many books and magazines are free if you buy Kindle Fire and it will cost you a lot if you buy iPad. In addition, Amazon also offer their Kindle Fire way cheaper than Apple’s iPad and market it more as a book and magazine reader to differentiate from iPad. Above all, Amazon also offers unlimited cloud storage for books and magazines for free that was procured from Amazon. In the same vein, the same services of cloud storage will cost a lot if customers will buy it from their iPads because they have to buy the books at premium prices from Amazon which were free with Kindle and they have to pay again if they want to save it in Amazon’s cloud storage. In the examples stated, it showed that informational technology is not just used to make business efficient, but also made as a tool to keep existing customers and make the alternative costly for them. Information technology will not only make switching costs expensive but could also be used as a strategic capability that would serve as a barrier to new entrants into its markets. The classic example we can use to illustrate how companies make