Examination on the Strategic Use of Information Technology in Tanzania Service Industries Essay

Businesses can attain sustainable competitive advantage by utilizing Information Technology (IT) in responding to the changing customers’ needs and changing business environment. (Talebnejad, 2008). This demands the organization to know how to apply this technology, and also devise appropriate and cost effective method for successful implementation. For example in 2004, the study of the relation between investment in IT and sales performance found out that they are positively related. Moreover in the same study, more than 79% of managers believed that IT has a vital role in business success (Talebnejad, 2008). On the same perspective, Tanzania service industry is on the road to great success if the companies and organizations adopt and use IT effectively in transforming their organizations. Service Industry defined Services industry is characterized by the intangible nature of their products. It covers a very wide spectrum of intangible tradable products such as banking, money transfers, insurance, telecommunications, business consultancy, health care, transportation, air travel, distribution services, hotels accommodation, recreational, tour operations, and many others. Tanzania Service Industry Since 1990s, Tanzania government embarked on major economic reforms that aimed at creating competitive financial and market system that that operate on market-oriented economic principles (Mtatifikilo, 1995). Since then, there has been a significant increase in the SMEs operating in different areas of the economy namely services, industry and agriculture. In the 2011 estimates, Tanzania economic growth is services dominated. Growth across Tanzania’s service sector has increased in the last few years relative to agriculture and industry. Agriculture, industry, and service s sectors contribute 27.8, 24.2, and 48 percent of GDP respectively1. Tourism, real estate and business services2 helped the broader service sector growth to an estimated 48 percent of Tanzania’s GDP in 2011. Information Technology (IT) â€Å"Information and Communications Technology (IT) is one of the most potent forces in shaping the twenty-first century. Its revolutionary impact affects the way people live, learn and work and the way government interacts with civil society †¦ The essence of the IT driven economic and social transformation is its power to help individuals and societies to use knowledge and ideas. Our vision of an information society is one that better enables people to fulfill their potential and realize their aspirations. To this end we must ensure that IT serves the mutually supportive goals of creating sustainable economic growth, enhancing the public welfare, and fostering social cohesion, and work to fully realize its potential to strengthen democracy, increase transparency and accountability in governance, promote human rights, enhance cultural diversity, and to foster international peace and stability. Meeting these goals and addressing emerging challenges will require effective national and international strategies† (G8 Okinawa Charter on Global Information Society, 2000) Information Technology (IT) refers to various hardware, software, networking, and data management components necessary for a system to operate. Communication needs are growing at a faster rate than any previous times. Functions such as e-mail, instant messaging, weblogs, video steaming and mobile data communications are some areas which have witnessed dramatic changes. The demand has been the key for rapid growth of big global IT companies such as Google, Apple, Samsung and Microsoft among many others. Tanzania has also witnessed significant growth if the communication sector. One area of interest is mobile communication, with number of subscribers approaching 15 million in 2010 (Behitsa & Diyamett, 2010). Consumer IT Penetration and Proficiency The growth of IT proficiency in Tanzania is encouraging. IT use among young generation is rapidly growing, thanks to many training institutes on ICT skills. The computer market has also grown rapidly. Many consumers have computers or mobile devices with internet access capability. The Tanzania Communications Regulatory Authority (TCRA) estimates 11% of internet penetration countrywide in 2010 consumer survey3. The Tanzania government in collaboration with development partners has also taken some initiatives to improve ICT usage level (Behitsa & Diyamett, 2010). These initiatives include eschools and ICT policy for basic education. The policy is aimed at expanding the reach of ICT skills down to primary schools4. Enterprise IT Adoption To measure IT adoption, we first have to understand why companies decide to adopt IT. The model below gives the factors that influence the adoption of IT in the company. There are factors which are internally driven while others are externally driven (Nguyen, 2009).Studies on IT adoption show that firms adopt IT as a means of survival and/or growth, ability to stay competitive in the market, and/or as innovation ability of the firm. The adoption process may be considered as customer driven (Winter, 2003), a reaction to an outside event, or as business selfinitiative as it focuses on improving efficiency (Corso, Martini, Pellegrini, & Paolucc, 2003). (Siggelkow & Levinthal, 2005) found out that firms go through changes within certain stages of their life cycle or in response to changes of their external environment. (Andries & Debackere, 2006) confirmed this view by pointing out that firms seek IT adoption in response to changes, both internal and external. Inte rnal changes include the life cycle or maturity of the firm and external changes are survival or stability in the market.