Amazon’s Information Technology (IT) Strategy (Term Paper Sample)

Amazon’s Information Technology (IT) Strategy
Student’s Name
Course Name: Course Code
Department: Institution
Professor’s Name
Date of Submission
Amazon’s Information Technology (IT) Strategy
Declining revenues and increasing competition require business organizations to maintain competitiveness in the market. Information technology (IT) or information system is one platform that helps organizations have competitive edge over others. The use of IT helps organizations influence competition in various ways. For instance, it changes the business configurations, thus altering competition direction. Moreover, IT offers organizations a platform for innovation, hence generating competitive advantage to outdo rivals. The use of IT also aids in establishing new companies. Such benefits have seen significant use of internet and computers globally.
The growth in internet informed the idea of Jeff Bezos to found Amazon as an online business. The start and success of Amazon are hugely attributed to internet. In addition, business model, marketing strategy, and technological innovation made Amazon an innovative hub to date. The strategies have transformed the company from a book-selling website to cloud computing, consumer technology, media and entertainment, and logistics organization. Amazon employs a business strategy that compiles technological research, innovations, ideas, and partnerships that have propelled the company to current heights.
One notable business strategy of Amazon is the utilization of IT which identifies strategic capabilities to maintain the company’s competitive edge. The IT features have enabled Amazon to outdo physical bookstores in terms of revenues. Further, IT has enabled the company to provide undefeated logistics, thus enhancing its competitive advantage. The IT features has enabled Amazon to liaise virtually with numerous global distribution channels that offer quick, safe, and efficient delivery. As a result, Amazon has improved consumer confidence and minimized the risks of competitors accessing their suppliers. Thus, for companies such as Amazon to thrive and become competitive, investing in IT infrastructure, such as “Ernie” and “Bert”, that allows innovations would enable organizations to effectively and efficiently drive their businesses forward.
Overview of Amazon and its IT Strategic Plan
Jeff Bezos founded Amazon in 1995 as a virtual shopping place for books. Singh (2018) notes that Bezos found the 2300 percent growth of internet astounding, and this led him to contemplate establishing an online business. Interestingly, when he shared the idea with the parents, his father’s response was “What is the internet?”. Thus, people did not know much about the internet and its business potential at the time.
Since its inception, Amazon has grown tremendously, leading to collapse of competitors and acquisition of others. In 1997, three years after launching and soon after the initial public offer (IPO), Amazon was worth $438 million (Singh, 2018). The company then evolved to become a multinational corporation, and in 2018, it was worth $1.6 trillion. The e-commerce company is the second U.S. organization to reach a trillion-dollar valuation after Apple. Internet has played a significant growth in Amazon’s growth as the company diversified from book-selling platform to consumer technology, logistics, entertainment and media, and cloud computing services. The company’s growth strategy include acquisition of organizations, including Zoox which could not predict the acquisition as they failed to follow the trend of patents that Amazon had established.
Management information systems (MISs) help organizations and their operations to integrate in an efficient and effective manner to cause positive relationships between the interactions of information systems and people. According to Demir (2017), MIS aids in management decisions at the operational and strategic levels of a company. Amazon demonstrates successful integration of information systems to the organizational strategic goals. The company has been streamlining its E strategy through maintaining unique website systems which are separate from the order systems. Management information system has played significant role in the company development on international context. The company has succeeded in deploying MIS as a vibrant strategy to streamline the management activities and ensuring that customers are provided with diversified services using MIS.
Amazon used order fulfilment system and website system separately to enhance security in 1995. The company had acquired Digital Alpha Servers with huge database by 1995, and had renovated the entire system by 2000 (Imran, 2014). In 2000, Amazon spent $200 million to acquire a new system which incorporated logistics, new database management system (DBMS), and analysis software from “manugistics, Oracle, and “Epiphany” respectively. To enable seamless communication with suppliers, Amazon struck a deal with Excelon for business-to-business (B2B) integration system. The company also developed simple storage service (SS) and Amazon Web Service (AWS) as its main system. The AWS and SS have enabled the company to maintain millions of customers and huge number of products.
Amazon web service is an international platform for retailers and individuals to sell their products. The robustness, scalability, and reliability of Amazon web service have propelled the company to global presence (Imran, 2014). Thousands of customers are using Amazon web service every second. Therefore, ordering products should be reliable, secured, and fast. Further, the customer relation management (CRM) system takes customer information every second using data mining, customer searching, and wish list, among others. The system has a capability to provide information about customers whether they buy products or not. The system is smart enough to analyze data and provide a service accordingly.
Investment required for IT Infrastructure
Amazon continues to improve its IT infrastructure to maintain its position as the leading online market platform. According to the Amazon Staff (2022), the company is establishing a $1 billion investment program dubbed the Amazon Industrial Innovation Fund (AIIF) to support and improve innovation in logistics, the supply chain, and customer fulfillment. The number of people shopping online and the need for faster delivery have informed Amazon’s decision to improve on employee and customer experience while collaborating with partners on those fields. As a result, Amazon innovated and invested heavily over the last 20 years in next-generation technology that will inform its operations. For instance, the company has initiated many initiatives, including hosting annual MARS and re:MARS conferences. Such conferences allow innovative minds to share experiences on automation, machine learning, and robotics, among others.
The AIIF’s first phase of investment concentrates on wearable technology that improves safety in robotics and fulfillment buildings made to coexist and complement with other people’s lives. Amazon Staff (2022) lists companies and innovations informing AIIF’s first phase, including Modjoul, Vimaan, Agility Robotics, BioniHIVE, and Mantis Robotics. Modjoul was established in Greenville, South Carolina in 2016 to design wearable safety technology that allows personalized alerts, recommendations, and real time alerts for minimizing injuries, such as musculoskeletal issues. On the other hand, Amazon has partnered with Vimaan which was founded in Santa Clara, California in 2017 to develop artificial intelligence and computer vision solutions to enhance inventory management. The company also seeks to partner with Agility Robotics, Oregon-based Company which was established in 2015 to develop bi-pedal walking robot to solve traditional robots’ mobility limitations to allow machines assist customers wherever they are. Amazon also has interest in BioniHIVE, Israeli based company which develops independent robotic solutions that can address existing limitations in shelving boxes and racks and allow floor to ceiling capability. Mantis Robotis is also San Francisco-based Company which develops tactile robotic arm deploying sensor technology to work in harmony with people.
Reasons for Information Technology (IT) Investments
Resource based theory posits that firms should establish competitive advantage to attain better results and outdo their competitors. The sufficient use of tangible and intangible firm assets can establish competitive advantage (Malaquias & Albertin, 2018). Investments in IT have a significant role for organizational performance, especially when organizations explore, keep, and foresee organizational learning and relationship infrastructure. However, becoming successful does guarantee sustainability in the future. In this regard, investing in IT does not automatically translate to realizing better outcomes, but allowing innovation in IT will present competitive advantage.
Big corporations such as Amazon depend on IT for their business strategies’ implementation and for everyday operations. Malaguias and Albertin (2018) note that IT contributes to value addition, especially through combining internal resources and their sufficient management as a valuable resource. Based on the resource based theory, companies should utilize IT capabilities to realize competitive advantage, especially for resources that competitors could not imitate. Normally, IT capabilities’ effects on the company’s performance a...