Evolution of Information Resources

Evolution of Information Resources
The Eras model (Figure 2.1) summarizes the evolution of information resources over the past six decades. To think
strategically about how to use information resources now and in the future within the firm, a manager must understand how the company arrived at where it is today. This model provides a good overview of trends and uses that
have gotten the company from simple automation of tasks to extending relationships and managing their business
ecosystems to where it is today.
IS strategy from the 1960s to the 1990s was driven by internal organizational needs. First came the need to
lower existing transaction costs. Next was the need to provide support for managers by collecting and distributing
information followed by the need to redesign business processes. As competitors built similar systems, organizations lost any advantages they had derived from their IS, and competition within a given industry once again
was driven by forces that existed prior to the new technology. Most recently, enterprises have found that social IT
platforms and capabilities drive a new evolution of applications, processes, and strategic opportunities that often
involve an ecosystems of partners rather than a list of suppliers. Business ecosystems are collections of interacting
participants, including vendors, customers, and other related parties, acting in concert to do business.3
In Eras I through III, the value of information was tied to physical delivery mechanisms. In these eras, value was
derived from scarcity reflected in the cost to produce the information. Information, like diamonds, gold, and MBA
degrees, was more valuable because it was found in limited quantities. However, the networked economy beginning
in Era IV drove a new model of value—value from plenitude. Network effects offered a reason for value derived
from plenitude; the value of a network node to a person or organization in the network increased when others joined
the network. For example, an e‐mail account has no value without at least one other e‐mail account with which to
communicate. As e‐mail accounts become relatively ubiquitous, the value of having an e‐mail account increases
as its potential for use increases. Further, copying additional people on an e‐mail is done at a very low cost (virtually zero), and the information does not wear out (although it can become obsolete). As the cost of producing an
Shenay Kentish, Zara (October 18, 2011), http://unilifemagazine.com.au/special‐interest/zara/ (accessed April 10, 2012).
For further discussion of business ecosystems, please refer to Nicholas Vitalari and Hayden Shaughnessy, The Elastic Enterprise (Longboat Key, FL:
Telemachus Press, 2012).
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Copyright © 2016 John Wiley & Sons, Inc.
35 Evolution of Information Resources
additional copy of an information product within a network becomes trivial, the value of that network increases.
Therefore, rather than using production costs to guide the determination of price, information products might be
priced to reflect their value to the buyer.4
As each era begins, organizations adopt a strategic role for IS to address not only the firm’s internal circumstances but also its external circumstances. Thus, in the value‐creation era (Era V), companies seek those applications that again provide them an advantage over their competition and keep them from being outgunned by
start‐ups with innovative business models or traditional companies entering new markets. For example, companies
like Microsoft, Google, Apple, and Facebook have created and maintained a competitive advantage by building
technical platforms and organizational competencies that allow them to bring in partners as necessary to create
new products and services for their customers. Their business ecosystems give them agility as well as access to
talent and knowledge, extending the capabilities of their internal staff. Other firms simply try to solve all customer
requests themselves