When you are starting your business, very likely you will just be interested in substituting computer-based information systems for keeping the basic records of your business and preparing the reports you need to be an effective decision-maker. As your business grows, however, you should start to think of the potential benefit of going beyond the basics, as larger companies do, and look for ways to use information systems for competitive advantage. Many people use the term “technology-enabled innovation” to describe this process. Since it is never too early for you to start thinking about such innovation, we will cover the topic now.
Just about all businesses have competitors and customers have choices as to which businesses they decide to patronize. For example, you, as a customer, may have several restaurants to choose from if you want to buy a meal. Each restaurant, therefore, has other restaurants as competitors. A restaurant will try to offer its customers a better meal at a better price so that their business is successful in comparison with the competition. This is what is meant by gaining a competitive advantage. Of course, if a restaurant is the only one in a small town, its owner does not have to worry so much about competition (unless someone else decides to open a restaurant and compete for its customers. Businesses that can gain an advantage over their competitors are the ones who will be successful and, as we saw in How to organize and lead an entrepreneurial venture, most small businesses that start up are doomed to fail. So, competitive advantage is important.