Business Information Technology – UBER

Keywords: Resource based view and firm performance, Resource based view and information technology, Information Technology Resources and firm performance, Information Technology capabilities and Value creation, Information Technology and competitive advantage, Balancing IT investment and business opportunities, Research journey, Research skills develop during business research case study, IT and IS assignment writing services

Preface

Eliasson (2014) highlighted that information technology (IT) has completely transformed the business process and practices. However, businesses using Information technology without acquiring insight into business processes fail to ripe the expected benefits from IT. The organisational need of the IT is shaped by the goals and objectives of the business but has influenced of the internal and external factors which constrain the capacity of the organisation to configure the information technology (Porter & Kramer, 2016).

Therefore, strategic application of IT based business vision and practices are essential because it would enable to create value and achieve competitive advantage (Davenport, 2015).

The purpose of this report is to analyse and evaluate the need and role of information technology at UBER. The objective is to understand the information technology problems at the organisation through analysing the IT problems and constraints in the light of literature to configure the IT processes in the organisation. Moreover, the goal is to propose solution and recommendations which fulfil the long-term IT needs of the organisation, create value as well as sustain its competitive advantage.

Problem statement

Uber was launched in 2009 and manage its operation using the smartphone application which enable to schedule and arrange the transportation services. The company has grown rapidly and its IT infrastructure continuously keeps evolving. In addition, the company uses two systems to manage the processes one for the drivers dispatch and second for the backend systems (McAlone, 2015).

Nevertheless, it is estimated that every three months the current peak user activity become normal traffic for its smartphone application. The rapid growth has resulted in technical issues and on numerous occasions its computer systems halt the operations of the business. Therefore, the objective of this case study is to analyse and evaluate the IT system at Uber and make recommendations for operational improvements (Kosoff, 2015).

Company Profile – Uber

Uber is a technology venture which develops and offers free smartphone application which seeks to match the passenger with the driver. Moreover, it is a transportation network company which helps to connect the passenger with drivers using the smartphone ride-sharing services. The company develop and operate the smartphone app and have operations in more than 58 countries (Hill, 2015).

Efrati (2015) highlighted that company head office is located in the California but does not employ any taxi drivers. Moreover, the company have engineering team of 1200 staff as well as its host its app on the third party servers. For user, no cash is exchanged and customers are charged through the app. On the other hand, for drivers Uber is a source of revenues through utilizing their downtime (Braithwaite & Christopher, 2015).

The diagram below shows the app functionality of the Uber

Uber App - information systems analysis

Hoff (2015) discussed that Uber uses different the systems to manage its services and operations. It uses the node system for dispatches management as well as a back-end system to manage the customer email and calculation based on the pythons. The strength of the company business model is that it has responsive systems with minimum glitches which offer user-friendly services. The challenges faced by the company include information technology alignment, application development as well as hosting app with minimum downtime (Hausman, 2014).

Moreover, the company needs to adapt to increasing demand of the customers through minimising glitches in the application, new hosting servers and overcome technological difficulties through adopting information technology which suits the processes and practices of the business (Chae, Koh, & Prybutok, 2014).

Literature review

According to Babafemi (2015) the focus of the strategic management research is to identify the factors which contribute to the performance of the firm. The performance of the firm is linked with a number of sources such as creativity, responsiveness and redefining the expectations of the customers.

Johnson et al (2016) stated that corporate strategy is an endogenous source of the firm performance of the company. Corporate strategy is distinct from the operational and competitive strategies because it defines the strategic intent as well as highlight how business should structure and its resources aligned.

Rothaermel (2015) argued that success of the firm is summarized and attributed consolidating a perspective which prepared and positioned the firm for the better future. The frameworks which support the performance of the firm is based on the internal strength and weakness of firm (endogenous factors) or based on the external threat and opportunities of the firm (exogenous factors).

Resource based view and firm performance

According to Barney et al (2014) the resource-based perspective has shifted the focus of firm performance towards the firm specific factors and development of sustainable competitive advantage based on resources and capabilities of the firm. (Endogenous factors) The resource-based view (RBV) is based on the business policy, combination of economics and organisation theory which focus on the growth of the firm rather considering it as equilibrium.

Lockett & Wild (2014) assess that In the light of the resource based view firm looks inside to examine the factor market conditions and search possible elements which could deliver competitive advantage. The efficient utilization, processing and alignment of resources can attribute to the performance of the firm which deliver competitive advantage and costly to imitate. The inward approach is success and influential in order to conduct an analysis of many strategic issues faced by the organisation (Baker, 2014).

Resource based view and information technology

According to Galliers & Leidner (2014) RBV defines information technology as set of the resource attributes and they are useful to provide specification for a set of mutually exclusive and exhaustive information technology (asset and capabilities).

The empirical research of RBV and IT is proposed by (Ross, Beath, & Goodhue, 1997) which IT asserts would added value to business. The categories defined IT includes asset as ‘human assets’ (business understanding, technical skills and problem solving), ‘technology assets’ (Physical IT assets, database and technical platforms) as well as ‘relationship asset’ (client relationship, network and shared relation).

Benitez-Amado & Walczuch (2013) analysed that Information technology knowledge is known as the technical knowledge processes by the organisation about the IT systems and the experience of the organisation to convert these competencies to create value for the organisation.

Mithas et al (2012) added that Information technology operations reflect the capabilities of the organisation to develop and deliver the It infrastructure and platform for the organisation. The information technology knowledge and operations reflect the capability and ability of the organisation to acquire develop and implement IT infrastructure in combination with human capital to shape the business processes in the value added ways.

Information Technology Resources and firm performance

According to Benitez-Amado & Walczuch (2012) the linkage between the information technology resources and performance of firm is examined by various researchers. Resources are likely to increase the capacity of the firm to deliver better service and meet customer expectations which contribute towards the performance of the firm.

Mithas et al (2016) stated that resource based view accept that there is strong linkage between the performance of the firm and strategic resources. Moreover, performance of the firm is examined with RBV logic and emphasized that IT investment might increase the cost in short-term and deliver the benefit in the long-term. Furthermore, it added that evaluating the performance of IT could lead to misleading conclusions.

Mithas et al (2014) suggested that to overcome the confounding firm should adopt process-oriented approach. The studies have shown positive relationship between the IT spending and performance of the firms. The excessive return on the IT investment is associated with labour, capital and production and it is examined that higher investment on IT result in lower cost for the organisation. IT investment affects the factor of production in an organisation which increase the profitability and productivity of the firm (Davenport, 2015).

The literature on IT resources shows that it positively contributes towards the performance of the organisation. The IT resources act as unique organisational resources which are unique, costly to imitate and other companies cannot copy it fast and i.e. IT resources are source of competitive advantage for the companies. The unique resources of the firms which are VRIN (valuable, rare, non-imitate as well as non-substitutable) can help the organisation achieve the long-term performance (Chae, Koh, & Prybutok, 2014).

Information Technology capabilities and Value creation

According to Wang et al (2014), IT resources which are difficult to copy and protected with the isolating mechanism using the diseconomies, uniqueness, as well as embeddedness, are important value drivers for the organisation. Moreover, like human capital and intellectual rights, IT infrastructure is an important source of value creation for an organisation.

Likewise, Tafti et al (2013) The IT systems are strategic assets which create value in all aspect and operations of the organisation through improving quality of the information, better control of the operations as well as cost are better monitor and managed in an appropriate manner.

Drnevich & Croson (2016) proposed that the IT capabilities of the organisation enable the organisation to launch multiple competitive actions which in return generate value for the organisation, increase performance and become an important source of competitive advantage. The important benefits achieved by the organisation from the IT investment is the integration of the resources, economies of scale, better control of the operations, minimise the downtime, maximise the operational efficiency as well as reduced cost per unit (De Haes & Grembergen, 2015).

Information Technology and competitive advantage

According to Kirchmer (2012) Competitive advantage is a condition which put the firm in better position than competitors. Moreover, it gives company an edge over its competitors and ability to generate better value for the shareholders. When a company have sustainable competitive advantage it is difficult for the competitors to counteract the advantage of the company.

The competitive advantage is based on the core competences which are based on the resources and capabilities. Resources are tangibles (equipment, building and IT) and intangibles (brand, reputation and technical knowledge); whereas, capabilities highlight the ability of the organisation to implement these assets strategically (Willcocks, 2015).

Research Framework - Business Information Technology – UBER
Research Framework – Business Information Technology – UBER

Source: Adapted from Barney, Ketchen, & Wright (2016)

Wagner & Hollenbeck (2014) argued that the unique resources and capabilities build the superior capability system and structure which helps the organisation to generate value which cannot be match by the rivals. Competitive advantage of the firms requires resources which are VRIN and capabilities which manage and control these resources in efficient manner. The combination of the VRIN resources and capabilities are deployed to create and achieved sustainable competitive advantages (Hinterhuber, 2015).

Balancing IT investment and business opportunities

The organisation making the investment in the IT should consider the business enable activities which transform and improve the business processes and operations. The business enabled IT infrastructure will help to improve the processes, give better control of resources as well as facilitate and develop new ways of doing business. The IT aligned with business strategy will support the business and improved the business (Mithas, Ramasubbu, & Sambamurthy, 2016).

Wang, Zhong, Xue, & Xiao (2012) added that the most important type of the IT investment is the operationalized or prototypes. The introduction and development of the strategic technology would enable to tap the new business opportunities and maintain the strategic competitive advantage. The infrastructure investment which includes hardware, software and communication technologies have direct affect the capacity of the organisation to build new capabilities as well as respond to changes. The infrastructure facilitates and designs the processes of the operation and legacy infrastructure impediment the organisation capacity to develop the competencies.

Conclusion

In this section, information technology dimensions to create value, relationship with firm performance and its role in order to create competitive advantage is discussed. The IT investment of the organisation has direct relationship with performance of the firm in order to manage and control the processes, improve operations as well as provide better information for decision making.

Information systems play an important role in the success of the organisation through generating value for the organisation and develop sustainable competitive advantage for the organisation. The IT investment is critical for long-term performance of the company, generate better value and develop sustainable competitive advantage which is difficult to imitate and improve performance of the organisation.

Critical evaluation of problems at UBER

UBER is a successful company which offers transport services based on the smartphone application. The company uses two systems which are backend system as well as drivers dispatch system. The company has grown rapidly and it is estimated that every three months company existing system become out dated and fail to support the growth of the business. The technical issues and problem in App, as well as the cloud, have halted the company operation because of an operational problem.

According to Babafemi (2015), the focus of the strategic management research is to identify the factors which contribute to the performance of the firm. However, it is evident from the problem that the lack of IT development has affected the performance of the company. The continuous problems at the UBER IT systems have halted the operations and customers have struggled to reach the company services.

Rothaermel (2016) argued that success of the firm is summarized and attributed consolidating a perspective which prepared and positioned the firm for the better future. The short-term perspective of the company has resulted in poor performance of the company. The IT development has failed to support the short term rather taking a long-term perspective. UBER IT strategy needs to be reviewed and IT investment should be based on the internal capacity as well as the external environment of the organisation.

According to Barney et al (2011) the resource-based perspective has shifted the focus of firm performance towards the firm specific factors and development of sustainable competitive advantage based on resources and capabilities of the firm. The information technology is an important resource for the UBER and it does contribute toward the company performance. In fact, company services are based on the App and it is the core competencies of the company. IT infrastructure needs to develop from the long-term perspective to maintain its competitive advantage.

Lockett & Wild (2014) assess that In the light of the resource based view firm looks inside to examine the factor market conditions and search possible elements which could deliver competitive advantage. The efficient utilization, processing and alignment of resources can attribute to the performance of the firm which deliver competitive advantage and costly to imitate. The app and the support system are vital for the UBER in order to offer services to the customer as well as remain operation in the long-term.

The survival of the business is attached with the IT systems and i.e. it is important that company invest in IT to support the operations of the company. The strength of the company business model is that it has responsive systems with minimum glitches which offer user-friendly services and in order to maintain its competitive advantage in the market and achieve customer satisfaction, UBER IT investment should be aligned with vision and support the processes of the company. It is important that UBER overcome the technological difficulties through adopting information technology which suits the processes and practices of the business (Hoff, 2015).

Benitez-Amado & Walczuch (2012) analysed that Information technology knowledge is known as the technical knowledge processes by the organisation about the IT systems and the experience of the organisation to convert these competencies to create value for the organisation. The challenges faced by the company include information technology alignment, application development as well as hosting app with minimum downtime.

The company needs to make IT investment which improve its infrastructure align its resources to support the process and operations as well as minimise the disruption to the operations. An important area which UBER should develop is information technology knowledge which will help the organisation to make IT investment and improve its IT infrastructure (Mithas, Tafti, Bardhan, & Goh, 2016).

Mithas et al (2015) added that Information technology operations reflect the capabilities of the organisation to develop and deliver the It infrastructure and platform for the organisation. UBER needs to adapt to increasing demand of the customers through minimising glitches in the application, new hosting servers and overcome technological difficulties through adopting information technology which suits the processes and practices of the business. The critical element is the IT infrastructure developments which support the operations of the operation through maximising the uptime, minimising the glitches and implementing the new servers.

Wang et al (2014) stated that resource based view accept that there is a strong linkage between the performance of the firm and strategic resources. Moreover, the performance of the firm is examined with RBV logic and emphasised that IT investment might increase the cost in short-term and deliver the benefit in the long-term.

UBER IT systems become out-dated every three months which result in operational problems for the company. The IT investment of the company is based on the short-term perspective which has created operation problems. The company needs to make an investment in the information technology which will increase the cost of the company in the short-term but in the long-term it will deliver a number of benefits for the company such as minimum downtime, better profitability, avoid the operational halt as well as increased the customer’s satisfaction (De Haes & Grembergen, 2015).

Davenport (2017) assessed that IT investment affects the factor of production in an organisation which increase the profitability and productivity of the firm. UBER is experiencing IT problems and its operational capacity fails to support the processes which have lower the company profitability and productivity. The IT investment will increase the productivity of the company through improves process control and efficiency. For example, it drivers dispatch system will have minimum downtime and inter-linkage with backend system will help to reduce the transaction processing cost.

According to Wang et al (2014) like human capital and intellectual rights, IT infrastructure is an important source of value creation for an organisation. The investment in the IT would enable the UBER to generate long-term value for the organisation. The benefit company is likely to receive is improved processes and control which will reduce the cost and improve the profitability of the business. This would allow to the company to deliver a return and increase the value of the company.

Moreover, IT new system would support the quick expansion of the business and without halt company will remain operational and generate long-term benefits for the business.

Drnevich & Croson (2013) proposed that the IT capabilities of the organisation enable the organisation to launch multiple competitive actions. The important paybacks attained by UBER from the IT investment is the combination of the resources, economies of scale, improved control, reduce the interruption, exploit the operational efficiency as well as reduced transaction and processing cost.

According to Kirchmer (2014) Competitive advantage is a condition which put the firm in a better position than competitors. UBER is the market leader in the App transport services and have a competitive edge in the market. The competitors of the company have failed to achieve the success like UBER. However, the IT problems have reduced the edge of the company and competitors have entered the market. The downtime and operational problems halt the company operations which have provided competitor the opportunity to capture the market share.

The investment in the IT systems will enhance and maintain the competitive advantage for the company. The competitive advantage is based on the core competencies which are based on the resources and capabilities. The IT will act as the resources whereas the technical knowledge would allow improving the performance of the organisation. IT infrastructure improvement will help the company activities which transform and improve the business processes and operations (Braithwaite & Christopher, 2015).

Wagner & Hollenbeck (2014) argued that the unique resources and capabilities build the superior capability system and structure which helps the organisation to generate value which cannot be match by the rivals. The new IT systems would enhance the capabilities and process of the UBER to deliver operational improvements. The IT investment will generate long-term value for the company which is less likely to copy and IT capabilities which manage and control these resources in efficient manner.

Wang et al (2012) argued that the infrastructure investment which includes hardware, software and communication technologies have direct affected the capacity of the organisation to build new capabilities as well as respond to changes. The IT investment is critical for the UBER for better performance and increased value for the company.

The short-term cost of the company may increase but in the long-term IT investment IT investment of the organisation has a direct relationship with the performance of the firm in order to manage and control the processes, improve operations as well as provide better information for decision making (Wagner & Hollenbeck, 2014).

To summarise, the information technology for the company needs investment which may increase the cost for the company but, in the long run, it address the number of operational problems for a company such as operational improvement, cost efficiency, minimise the downtime and better customer satisfaction.

Recommendations for improvement

The critical analysis of the UBER IT systems has highlighted number problems which are affecting the performing and competitive advantage of the company. Therefore, this chapter enclosed the recommendation for the company

  • IT investment should be based on IT infrastructure from the long-term perspective and company should develop IT systems which support the operations and processes as well as aligned with the vision of the company.
  • The IT investment should not evaluate based on the increased short-term cost but rather viewed as a long-term benefit for the company. The long-term perspective will reduce the downtime and increase customer satisfaction.
  • The focus of the IT investments should be to develop the resources and capabilities in order to maintain the competitive advantage. The focus of firm IT development should be towards the firm specific factors and development of sustainable competitive.
  • The IT investment should support the business strategy and operations to ensure IT systems are responsive with minimum glitches and offer user-friendly services. It is important to implement information technology which suits the processes and practices of the business
  • UBER should build Information technology knowledge to support the technical problems through the efficient manner in order to ensure that IT systems and the experience of the organisation to convert these competencies to create value for the organisation.
  • The company must improve and enhance its information technology capabilities in order to improve its infrastructure align its resources to support the process and operations as well as minimise the disruption to the operations.
  • The IT infrastructure should be aligned with business strategy to meet the demand of the customers, minimise the system glitches and downtime as well as improve the processes.
  • The IT investment should be focused to support and improve the processes. The IT should be appraised and evaluated over the long-term horizon along with benefits such as improved return and increase the value of the company.
  • The backend dispatch system of the company, as well as driver dispatch system, should be integrated to minimise the operation problem, reduce the interruption, and exploit the operational efficiency as well as reduced transaction and processing cost.
  • The IT resources and capabilities are the VRIN for the company and therefore, it is important that company it efficient manner which develop information technology knowledge and capabilities. IT will act as the resources whereas the technical knowledge would allow improving the performance.
  • The IT investment and infrastructure development should be evaluated against the internal and external environment of the company. The information technology should be used as strategic tool to manage the change in the market and increase the customer satisfaction
  • The Information technology should support the collaboration and provide the timely information sharing across the supply chain network. The IT should support the processes and operations in order to enable information sharing for timely decision making.
  • The hardware, software and communication technologies should meet the long-term demand of the business and align the IT with business strategy. The cost of IT should be viewed as a long-term investment rather a short expense. Moreover, it should understand the IT delivers the benefits and improvement in the long-term.

 

Reflective Journal

Research journey

The research journey has provided me unique and valuable experiences. Been inexperienced researcher it offered me the opportunity to develop researcher capability which allows identifying, evaluating and proposing a solution to the problems. The starting point of the research was identification and evaluation of the problems which offers opportunities to bring improvements in real life scenario.

Therefore, I was looking for real life business problems which have affected the business. In the time of the global revolution, with smartphones and internet has transformed the world and everything is connected using the communication technologies.

The social media has connected the people; organisations are using IT to enhance their operation as well as commercial activities are performed using Information technology. The reliability of the systems has become critical factors in order to be successful in the market.

The rationale behind the selection of the UBER as a case study is personal as well as commercial purpose. The personal reason is that I am using UBER for transportation service for some time but during this period I have found that it have some technical issues which in the crash of App and left me stuck without the ride.

Moreover, as a student of business and information technology it made me wonder how the technical problems affect the company. The surprising fact is that in the modern era, there are organisations that are struggling with their IT capabilities and perhaps has not been able to identify the true potential of the IT. Therefore, I decided to explore the IT problem and its impact on UBER.

To start my research, I read the books on the strategic management by Hitt et al (2014) and David (2012) which help to understand the importance of the organisation resources, strategy as well as the implementation of the goals to achieve the competitive advantage. This helped to understand the linkage of the strategic resource and competitive advantage for the company.

This exercise helped to understand the problem UBER is facing and its implication on the business. The next stage was searching information and examining problem at the company using a range of the secondary data sources. This helped to develop rigorous understanding about the company.

Moreover, to examine and evaluate the problem at the company range of literature such as (Barney et al., 2011; Benitez-Amado & Walczuch, 2012; Hinterhuber, 2013; Kirchmer, 2012; Ross et al., 2014; Mithas et al., 2012; Wang et al., 2012) helped to develop the understanding on the resource-based view, performance of the firm, IT role to create the value in the firm and how these interact in holistic perspective to develop competitive advantage for the companies.

The literature was further used to analyse the current position and strategic problem and how they are affecting the company. This helped to propose the recommendation to improve the operation of the company. The research has helped me to understand the value of the resources and capabilities a company process and how it is used by the company for its advantage.

The problems associated with poor IT planning was understood. The IT role to create value and develop sustainable advantage for success in the market is a valuable experience.

Research skills develop during business research case study

The skill, I have developed the cases study is ‘thinking skills’. The ability to analyse the information and putting in proper context was very important. This case study has helped to improve the thinking skills which include how to effective manage the large report as well as  managing different components of information and drawing positive conclusion from it. The skills developed such as problem solving and decision making, evaluating and organising the informational as well as creating the objects.

The cognitive thinking skills are improved based on the three categories which are information and data collection (storing, sensing and retrieving), understanding and solving the problem (forming object and ideas and linkages the various concepts) as well as producing thinking skills is enhanced (understanding, analysing and evaluating the information).

The critical thinking skills developed during the case study can be better explained through the following area. The first important area was an analysis of the information to discover and develop relationships. The next step helped to develop the skills was to understand the information collection and exploration and applying logical reasoning to it.

The development of the relationship among the variables in the information as well as drawing inference was a critical aspect of the thinking skills development. The information logical analysis draws the result, but it is important to effectively communicate the result to relevant stakeholders. Therefore, transferring the knowledge was enhanced by making the recommendation for the business.

The research in information technology will help to develop and improve my future. The case study helped to develop the communication and thinking skills which have positive impact on my interpersonal skills. The organising and presentation of the large information which help to effective manage the IT projects during my job. The knowledge and skill developed from the academic course will improve my future career.

The study of the problem in the real life scenario (UBER) helped me to go beyond the theoretical framework and develop the practice capabilities. The analysis of the real life problem and apply the theory the theory would help to improve my career. The relevance of the IT study is also very important in the career development. Researcher has experience of working in the organisation who have poor IT system and unable to realise the true potential from IT.

Therefore, IT study would allow exploiting the true potential and opportunities as well as the development of the competitive for the company. The range of the skills developed during the report which includes identification and evaluation of the problem, information seeking and logical problem and transfer of the knowledge will help me to range number of project and problem and achieve success in my career.

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