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Using IT as a Competitive Weapon

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Title: Using IT as a Competitive Weapon


1
Using IT as a Competitive Weapon
  • November 5, 2004
  • Mohammed Haque
  • Kirk Garten
  • Tom Webb

2
Using IT as a Competitive Weapon Agenda
  • Theories of the tools or Levers for
    Competitive
  • Advantage that are afforded by IT
  • Case Studies of IT Applications Weapons that
    hit
  • their targets!
  • How is the weapon transformed? Are silicon
  • chips and system analysts sufficient as
    weapons?

3
Using IT as a Competitive Weapon
  • Weapons are tools for winning wars.
  • Business is a war.
  • Therefore, business needs weapons to WIN.
  • (With sincere apologies to Plato and his theory
    of logic.)

4
Using IT as a Competitive Weapon
  • Is it fair to compare warriors to managers?
  • Terminology of War Battles, strategies, tactics,
  • resources, alliances, costs, and weaponry.
  • Winning or Losing Outcomes matter, with
    terminology measuring the escalation to victory,
    defeat, destruction, dynasty, even failure or
    death.

5
Using IT as a Competitive Weapon
  • We have two purposes
  • Review theories of IT that bear on its important
    role in business to help create competitive
    advantage, perhaps even sustained CA. We will
    support these with four case studies from recent
    publications.
  • Analyze more fully how IT actually becomes a
    weapon. That is, what must happen to transform
    the resources into weapons? Under what
    circumstances can competitive advantages be
    gained by the use of IT?

6
Using IT as a Competitive Weapon
  • Theories of IT
  • The Resource Based View1
  • Attributes
  • Value Imitability
  • Rarity Substitutability
  • Appropriability Mobility
  • 1 Wade, Michael, and Hulland, J., The Resource
    Based View and IS Systems Research Review,
    Extension, and
  • Suggestions, MIS Quarterly, Vol. 28, 1,
    March 2004.

7
Using IT as a Competitive Weapon
  • Theories of IT2
  • Transaction Cost Theory
  • Economic model that assists managers in
    determining the most effective strategies for
    maximizing profits.
  • What should we make? vs. What should we buy?
  • 2 Williamson, O., Comparative economic
    organization The analysis of discrete structural
    alternatives, Administrative Science Quarterly,
    36 1991, pp. 269-296.

8
Using IT as a Competitive Weapon
  • Theories of IT
  • Core IS Capabilities for Exploiting IT3
  • Flexible Arrangements are Key
  • IS functions best when a relatively small
    number of people with core capabilities protect
    and maintain the businesss ability to exploit
    new developments in IT.
  • 3 Feeny, D. and Willcocks, L., Core IS
    Capabilities for Exploiting Information
    Technology, Sloan Management Review, Vol. 39,
    Spring, 1998, p. 20.

9
Using IT as a Competitive Weapon
  • Theories of IT
  • Porters Theory of Competitive Advantage4
  • Information technology affects competition
    when it
  • Changes industry structure and alters the rules
    of competition.
  • Creates competitive advantage by creating new
    ways to outperform rivals.
  • Generates whole new businesses often from within
    a firms
  • existing operations.
  • 4 Porter, Michael E. and Millar, Victor E., How
    Information Gives You Competitive Advantage,
    Harvard Business Review, July-August, 1985, pp.
    1-3.

10
Using IT as a Competitive Weapon
  • Theories of IT
  • Porters Key Concepts - IT Leading to CA5
  • First, Porter identifies value activities, the
    distinct elements of work involved that are
    either technologically or economically
    distinctive in performing its business
    activities.
  • Then he shows that Information Technology can
    lower the costs in every one of the nine Primary
    and Support Activities of the value chain.
  • 5 Porter, Michael E. and Millar, Victor E., How
    Information Gives You Competitive Advantage,
    Harvard Business Review, July-August, 1985, pp.
    3-6.

11
Using IT as a Competitive Weapon
  • Theories of IT
  • Porters Theory of Competitive Advantage6
  • Information technology affects competitive
    advantage
  • By lowering costs within the value chain,
    thereby enhancing the companys competitive
    position within its industry, and
  • By expanding the companys ability to
    differentiate its products or services from its
    rivals.
  • 6 Porter, Michael E. and Millar, Victor E., How
    Information Gives You Competitive Advantage,
    Harvard Business
  • Review, July-August, 1985, pp. 9-10.

12
Using IT as a Competitive Weapon
  • Four Recent Case Studies
  • in which IT has produced competitive advantages.
  • Avnet Corp. Vanguard Group
  • Smurfit-Stone Walgreens Corp.

13
Using IT as a Competitive Weapon
  • Critical Differentiation
  • The defining characteristic of a competitive
    weapon
  • In each case study, the company uses IT to
    provide a distinct advantage that appeals to its
    customers.
  • By applying IT solutions to its business
    processes, each company separates itself from its
    rivals.
  • Target hit! Advantage our side!

14
Using IT as a Competitive Weapon
  • Avnet is a distributor of electronic components
    and computer products to industrial customers
    worldwide. The Company also distributes a variety
    of computer products to both end users
    resellers. For the FY ended 7/03/04, sales were
    10.24B.7
  • __________________________________________________
    __________________________________
  • Erased multiple ERP systems within its divisions,
    ridding itself of an information-management and
    propagation problem, said Bill Chapman (CTO).
    New software layer allows supply chain management
    to flow at a pace that gives customers order
    pricing within 20 minutes instead of up to half a
    day. Linking its ERP to the ERPs of key business
    partners, especially some smaller players without
    internal IT resources, increased transaction
    speeds to long dreamed-of levels.
  • 7 http//personal.fidelity.com/research/stocks/con
    tent/stocksindex.shtml, viewed November 1, 2004.

15
Using IT as a Competitive Weapon
  • Avnet
  • __________________________________________________
    _
  • CRITICAL DIFFERENTIATOR/BENEFIT TO CUSTOMERS
  • Contribution is CRITICAL because the
    painstakingly redesigned IT architecture allows
    faster business processes that enable
    collaboration with customers. Additionally, by
    providing entrée to Avnets own ERP, its
    customers dont have to change their business
    processes and systems to communicate with us,
    says Bill Chapman. Its about doing business
    their way.8
  • 8 Foley, John, Avnet Greases Supply Chain,
    Information Week, September 20,
  • 2004, p. 38, p. 90.

16
Using IT as a Competitive Weapon
  • Vanguard is the number two mutual fund company
    behind Fidelity, but is closing the gap, claiming
    over 725 billion in assets under management.
    Vanguards fund options include over 100 stock,
    bond, mixed and international offerings. Its 2003
    sales are estimated at 2.044 billion, a growth
    of over 30 from the year before. 9
  • __________________________________________________
    ____________________________________
  • Innovative Vanguard uses IT to stay one step
    ahead of the competition by
  • Making the jump years ago to herd inquiries to
    its strengthened Web site and away
  • from its call centers. A large IT investment
    in Wave client-service desktop, allows
  • customer-service associates to quickly assist
    phone-in clients.
  • Creating the on-line One Step program, which
    promotes increasing additional
  • contributions by individuals as long as
    possible. Vanguard has enrolled nearly 11,000
  • new clients in the past 6 months.
  • IT brought deeper assistance to Vanguards
    business processes by enabling changes
  • to applications in Web access, financial
    advising, CRM, and payroll software.
  • 9 http//www.hoovers.com/vanguard-group/--ID__433
    21--/free-co-factsheet.xhtml, viewed November 19,
    2004.

17
Using IT as a Competitive Weapon
  • Vanguard
  • __________________________________________________
    _____________
  • CRITICAL DIFFERENTIATOR/BENEFIT TO CUSTOMERS
  • Vanguards IT investments have helped create a
    most user-friendly website with notable
    revenue-enhancing capabilities. Putting
    easy-to-use tools in the hands of its customers
    helps them analyze their own needs and
    risk-tolerance, shift funds to more appropriate
    categories, and convert non-Vanguard 401-K funds
    into Vanguard IRAs. These unique customer-focused
    approaches are all IT-driven and support the
    companys basic success strategy Low cost funds,
    high customer satisfaction, revenue-enhancing
    products all aimed at the retirement goals of
    Americans. 10
  • 10 Information Week 500, Banking Financial
    Services, Information Week, September 20, 2004,
    pp. 67-68.

18
Using IT as a Competitive Weapon
  • Smurfit-Stone Container Corp. is the industry's
    leading integrated manufacturer of paperboard and
    paper-based packaging. Smurfit-Stone is the
    leading producer of containerboard, including
    white top linerboard corrugated containers and
    more. Annual sales are 7.7 billion. 11
  • __________________________________________________
    _______________________________
  • Among many IT driven innovations, SSCC broke a
    century old hindrance, the plant-centric model
    of operating. This meant that the sales force
    and plant manager/capabilities determined how the
    market was served. Plants never shared jobs. Now
    they work as a network to produce the variety and
    quality and volume of items needed by a larger
    purchaser. The CIO showed how IT could allow
    plants in a region, or a metroplex, to share
    major jobs. Data management and new programs
    were required to allow inter-plant information to
    be shared, allowing sales reps to make the output
    potential of all plants in one region appear to
    be one single source to help the client. Smoothed
    and sped customer ordering, thus benefiting SSCC.
  • 11 http//personal.fidelity.com/research/stocks/co
    ntent/stocksindex.shtml, viewed October 29, 2004.

19
Using IT as a Competitive Weapon
  • Smurfit-Stone Container Corp.
  • __________________________________________________
    ____________________
  • CRITICAL DIFFERENTIATOR/BENEFIT TO CUSTOMERS
  • IT helps Smurfit build a better relationship
    with its clients, says CIO Burdiss. By
    pioneering a regional approach to the
    sales/production process, Smurfit was able to
    satisfy large customers orders with one sales
    call. For over a century prior to this
    IT-enabled breakthrough, the Plant-centric
    model dominated the packaging materials industry.
    That is, each separate factory had its own sales
    force, specialty lines, and production schedules.
    IT demonstrated innovative capabilities that
    permitted data management coordinate inter-plant
    information to be shared, thus enabling SSCC to
    be seen as critically different and more
    appealing to large clients.12
  • 12 Jim Burdiss, CIO, Smurfit-Stone Container
    Corporation, interviewed by phone by Thomas Webb,
    October 28, 2004.

20
Using IT as a Competitive Weapon
  • Walgreens is principally engaged in the retail
    drug-
  • store business. As of 8/03, Walgreens operated
    4,224 retail drug-
  • stores and three mail service facilities in 44
    states Puerto Rico.
  • For the FY ended 8/31/04, net sales were
    37.51B.13
  • __________________________________________________
    ______________________
  • Walgreens identified convenience and high profit
    per customer transaction as its core strategy for
    success in the early 1970s. With a substantial
    investment of over 400 million for a satellite
    communication system, called Intercom, it built
    a true corner drugstore that is still unique.14
    When confronted with the opportunity to compete
    with Drugstore.com via internet sales, Walgreens
    sat back and did nothing Until it could do it
    better. The result even more convenience for
    customers with no loss of professional service.
  • 13 http//personal.fidelity.com/research/stocks/co
    ntent/stocksindex.shtml, viewed October 29, 2004.
  • 14 Collins, Jim, Good to Great, HarperCollins,
    New York, 2001.

21
Using IT as a Competitive Weapon
  • Walgreens
  • __________________________________________________
    ____________________
  • CRITICAL DIFFERENTIATOR/BENEFIT TO CUSTOMERS
  • By investing heavily in IT, Walgreens became even
    more convenient to its customers. If, while on
    vacation in Boise, you need your prescription
    refilled, the corner Walgreens there will have
    your records from Sheboygan in seconds. How? By
    using the power of its enormous database together
    with the speed of its sophisticated satellite
    data delivery system, working together as
    Intercom Plus. This customer-focused
    differentiator is unmatched by any other company
    of its kind in the world.15
  • 15 Collins, Jim, Good to Great, HarperCollins,
    New York, 2001.

22
Using IT as a Competitive Weapon
  • Allowing for the probability that Porter,
    Willcocks, Wade, et. al. provide well-conceived
    analyses that describe ITs basis as a
    Competitive Weapon,
  • We nevertheless conclude that
  • Information Technology is NOT a competitive
    weapon.

23
Using IT as a Competitive Weapon
  • Let us quickly add some definitions and some
    qualifiers to that!
  • What is a weapon?
  • Definition 1. device designed to injure or kill,
    2. something used as a way of getting an
    advantage in a situation16
  • 16 http//encarta.msn.com/dictionary_/weapon.html,
    viewed October 27, 2004.

24
Using IT as a Competitive Weapon
  • Is a 50 caliber machine gun a weapon?
  • Under the first definition it is, however
  • It is merely an asset of questionable value if it
    is lying in the mud, sitting broken on a shelf,
    or put into the wrong hands.

25
Using IT as a Competitive Weapon
  • Q How does that gun become a weapon?
  • A When it is used in combination with
  • Skilled human talent, trained to use it
  • Proper maintenance
  • A well-conceived strategy, one aimed at success

26
Using IT as a Competitive Weapon
  • IT, by itself, is like that machine gun
  • It is an asset. Granted, it is an elegant,
    complex network of silicon, software and wiring,
    supported by professionals
  • But IT alone is not a weapon!
  • Unless it is

27
Using IT as a Competitive Weapon
  • used precisely and intelligently in support of
    an enterprises strategy of successful business
    processes.
  • We believe Information Technology arguably can be
    the most effective modern business weapon, when
    used to support well-executed business processes.

28
Using IT as a Competitive Weapon
  • Today IT is an indispensable element of
    business weaponry.
  • CEOs (Generals) direct the business and employ
  • Strategy the broad set of plans and directions
    that guide the business
  • toward its goals.
  • Creativity the ability to innovate and
    willingness to commit to finding new
  • ways of achieving advantages over competitors.
  • Discipline The strength to stick to rational
    methods, to conserve resources,
  • and to enforce the execution of these concepts.

29
Using IT as a Competitive Weapon
  • The CIO, the chief IT strategist, must manage,
    train, and motivate the human talent - the troops
    using
  • Training The right knowledge imparted to the
    right people in the
  • right roles.
  • Intelligent Innovation A culture of continual
    process innovation and
  • strategic creativity.
  • Resource deployment Efficient use of the right
    resources put into
  • play in support of the fundamental business
    processes.

30
Using IT as a Competitive Weapon
  • Whether resources are examined using the Resource
    Based View, the Transaction Cost Theory, or any
    other framework of IT analysis,
  • the key to gaining competitive advantage using
  • IT resources is simply this
  • Put them to effective use in support
  • of the businesss strategy for success.

31
Using IT as a Competitive Weapon
  • KEY SUCCESS FACTORS17
  • Top Executive Engagement
  • IT and Business Strategy Alignment
  • IT Governance
  • Application Delivery and Management
  • Selective Outsourcing
  • Vendor Management
  • Talent Management
  • Business Enablement
  • 17 Key Attributes of the World-Class Information
    Technology Organization, A Competency Diagnostic
    Tool, from the Working Council for Chief
    Information Officers, of the Corporate Executive
    Board, distributed by Jim Burdiss of
    Smurfit-Stone Container Corporaton.

32
Using IT as a Competitive Weapon
  • Top Executive Enthusiasm
  • Studies show that unless the leadership of the
    organization are fully committed, enthusiastic,
    and engaged in the IT process, and especially in
    major projects, the organization will likely not
    benefit from the investment in IT. The
    commitment has to be seen by the entire
    organization as important and worthy of the extra
    effort and sacrifice to make it work.
  • Support from senior non-IT Executives, third in
    2003, was ranked number one by both IT and non-IT
    executives in 1993-1997.18 This highlights the
    need for business executives to be aware of, and
    supportive of, technology innovations. Support
    means that business executives
  • Recognize the value of information technology,
  • Define and communicate the vision and strategies
    that include a role for IT, and
  • Serve as active sponsors and champions for IT
    projects (provide leadership and funding).
  • 18 Luftman, J., and McLean, E., Key Issues for
    Executives, MIS Quarterly Executive, Vol. 3, 2,
    2004, pp. 99-100.

33
Using IT as a Competitive Weapon
  • Top Executive Commitment
  • Clearly, the CIO needs to seek solid support
    from the CEO and others in the C-suite. More and
    more, business executives recognize that they
    need to be more engaged in IT projects. Its the
    only way that IT can be taken seriously, from top
    to bottom. 19
  • 19 Jim Burdiss, CIO, Smurfit-Stone Container
    Corporation, interviewed by phone by Thomas Webb,
    October 28, 2004.

34
Using IT as a Competitive Weapon
  • Top Executive Engagement
  • Clear indication that the elite performing
    companies in the good-to-great study attach the
    highest priority to top executive engagement in
    support of initiatives
  • Indeed, one of the crucial elements in taking a
    company from good to great is somewhat
    paradoxical. You need executives, on the one
    hand, who argue and debate sometimes violently
    in pursuit of the best answers, yet, on the
    other hand, who unify fully behind a decision,
    regardless of parochial interests.20
  • 20 Collins, Jim, Good to Great, HarperCollins,
    New York, 2001.

35
Using IT as a Competitive Weapon
  • Collins research into good-to-great companies
    reveals what high performers think about
    technology in general and about IT
    specifically...
  • Technology used as accelerator of momentum
  • A core finding was that the Good to Great
    companies used technology as an accelerator, or
    enabler, of momentum, of increasing performance.
    While all of the good-to-great companies
    possessed technological sophistication, it was
    never any technology per se, that was responsible
    for their excellent performance. Rather, it was
    the pioneering application of carefully selected
    technologies that made the difference.
  • Use of Technology, specifically IT, useful only
    when strategically used
  • A fundamental concept discovered in all
    eleven companies was called the Hedgehog
    Concept by Collins and his researchers. By this,
    they mean a single organizing idea, a basic
    principle or concept that unifies and guides
    everything. By taking one simple concept and
    doing it with excellence and imagination, these
    companies succeeded brilliantly in a world made
    far too complex by faddists, futurists, and fear
    mongers.

36
Using IT as a Competitive Weapon
  • IT as Enabler via IT/Business Strategy Alignment
  • The 3rd-ranked of the eleven Good To Great
    companies is Walgreens, which
  • developed SCA and maintained from 1975 through
    today. How did it proceed?
  • First, re-defined business success strategy.
    Most convenient drugstore in its markets with
    high profit per customer visit Simple concept
    and doable.
  • With fanatical consistency it set about to put
    stores in every conceivable convenient location,
    sometimes moving stores a half-block to get a
    corner lot, other times, putting in up to six
    stores in a square mile in a downtown population
    center.
  • Walgreens also went about revamping its product
    lines to provide high-convenience/high-profit
    services (one-hour photos) and products (food
    items, cosmetics).

37
Using IT as a Competitive Weapon
  • IT and Business Strategy Alignment
  • The most important element in the transformation
    of IT into a competitive weapon is the alignment
    of IT with the business strategy. While simple
    in concept, it is really very hard to
    accomplish. 21
  • 21 Jim Burdiss, CIO, Smurfit-Stone Container
    Corporation, interviewed by phone by Thomas Webb,
    October 28, 2004.

38
Using IT as a Competitive Weapon
  • IT and Business Strategy Alignment
  • IT plans linked to business plans, ranked
    fourth in importance in a major study of
    IT/business alignment enablers and inhibitors.
    This finding demands that IT participate in
    creating business strategies and that the
    business participate in creating IT strategies.
    Both IT and non-IT executives need to see the
    benefits of mutual cooperation and of a close
    working relationship in the strategy formulation
    process But the participation needs to be
    frequent and both IT and the business need to
    listen to each other, communicate clearly, and
    learn to leverage IT resources to build
    competitive advantage.22 Having linked plans
    include
  • Defining and supporting an effective IT
    governance process,
  • Establishing binding IT-business partnership,
    relationship trust,
  • Effective marketing of the value of IT,
  • Sharing of knowledge to get the job done,
  • Having access to appropriate people, and
  • Effective use of IT to business liaisons.
  • 22 Luftman, J., and McLean, E., Key Issues for
    Executives, MIS Quarterly Executive, Vol. 3, 2,
    2004, p. 100.

39
Using IT as a Competitive Weapon
  • IT Governance
  • How does Governance enforce alignment with
    strategy?
  • IT Governance establishes basic ground rules
  • Who provides input regarding decision-making?
  • Who makes the decision?
  • Who pays for the project?
  • Who does the implementation?

40
Using IT as a Competitive Weapon
  • IT Governance
  • How does Governance impact an organization?
  • IT Governance is the responsibility of senior
    management and business unit leaders to insure
    that
  • ITs projects and investments are aligned with
    the business strategy that IT delivers the
    functionality and services in line with the
    organizations needs.
  • IT brings new technologies that will enable the
    organization to do new things that were never
  • before possible.
  • IT-related services and functionality are
    delivered at the maximum economical value and in
  • the most efficient manner. In short, the
    firms resources are used responsibly.
  • All risks related to IT are known and managed,
    and that ITs core resources are secured.

41
Using IT as a Competitive Weapon
  • IT Governance
  • Critical Success Factors from Control Objectives
    for IT (COBIT) from the IT Governance Institute
    illustrates how governance provides discipline
    and supports business/IT alignment23
  • IT governance activities are integrated into
    the enterprise governance process and leadership
  • behaviors
  • IT governance focuses on the enterprise goals,
    strategic initiatives, the use of technology to
  • enhance the business, and on the availability
    of sufficient resources and capabilities to keep
  • up with the business demands
  • IT governance activities are defined with a
    clear purpose, documented, and implemented,
  • based on enterprise needs and with unambiguous
    accountabilities
  • Management practices are implemented to
    increase efficient and optimal use of resources
    and
  • increase the effectiveness of IT processes
  • Organizational practices are established to
    enable sound oversight a control environment/
  • culture risk assessment as a standard
    practice degree of adherence to established
  • standards monitoring and follow up of control
    deficiencies and risks
  • Control practices are defined to avoid
    breakdown in internal control and oversight
  • There is integration and smooth
    interoperability of the more complex IT processes
    as problem,
  • change, and configuration management

42
Using IT as a Competitive Weapon
  • Application Delivery Management
  • IT organizations benefit by basing project
    management and application delivery/management
    processes on best in class standards. High
    quality, cost-effective applications result when
    standards are based upon
  • Software Engineering Institutes Capability
    Maturity Model (CMM)
  • Project Management Institutes Project
    Management Book of
  • Knowledge (PMBOK)
  • ISO 900X processes and other quality management
    methodologies

43
IT as a Competitive Weapon Application Delivery
ManagementProcess improvements will result
from use of SEI CMM standards.24
24 Rifkin, Stan, Founder and Principal, Master
Systems, Inc., Climbing the SEI maturity model
makes a difference on software projects,
presented at the International Conference of the
Israel Society for Quality, Jerusalem, November
1996.
44
IT as a Competitive Weapon Application Delivery
ManagementProcess improvements will result
from use of SEI CMM standards.25
25 Rifkin, Stan, Founder and Principal, Master
Systems, Inc., Climbing the SEI maturity model
makes a difference on software projects,
presented at the International Conference of the
Israel Society for Quality, Jerusalem, November
1996.
45
IT as a Competitive Weapon Selective Outsourcing
  • A competitive, effective IT organization
  • knows its strengths and weaknesses,
  • plays them to its advantage through selective
    outsourcing.
  • Leadership must identify its core IT
    capabilities, which include
  • IS/IT leadership business systems
    thinking relationship building
  • architecture planning informed buying
    vendor management
  • contract facilitation contract
    monitoring ability to make it work
  • These nine core IS Capabilities are required to
    underpin the pursuit of high-value-added
    applications of IT and to
  • capitalize on the external markets
    ability to deliver cost-effective IT services.26
  • Once an IT organization has determined its core
    IT capabilities, its leadership must face the
    challenges of deciding what
  • to outsource and what to keep in-house.
    These decisions are based on proprietary business
    and/or technical
  • knowledge, the current IT organizations
    business and technical knowledge, and total cost
    of the project.

46
Using IT as a Competitive Weapon
  • Selective Outsourcing
  • The analysis of whether to outsource is about
    value. Will the company realize significant
    value from the decision to outsource? And will
    it be able to manage and leverage that value to
    maintain or improve its competitive position?
  • If the decision will not result in increased
    value or cost reductions, or if it will not
    provide some other significant benefit, then
    outsourcing is not a good choice.

47
Using IT as a Competitive Weapon
  • Vendor Management
  • When an IT organization decides to outsource, it
    must effectively manage the vendor relationship
    to insure it receives value for its investment.
    It is through
  • Informed Buying
  • Contract Facilitation
  • Contract Monitoring
  • Service Level Agreements and
  • Vendor Development
  • that the IT organization holds its vendors
    accountable, and assures that it will receive
    value from the outsourcing agreement.27
  • 27 Feeny, D. and Willcocks, L., Core IS
    Capabilities for Exploiting Information
    Technology, Sloan Management Review, Vol. 39,
    Spring, 1998, pp. 14-15.

48
Using IT as a Competitive Weapon
  • Talent Management
  • Retention of its core IT knowledge base is
    critical, in the long run, for the business it
    must protect its assets first, and then build
    upon the business core IT capabilities.
  • IT Staff Development (IDPs, PIPs, training)
  • IT Leadership Development
  • IT Performance Management (incentives tied to
  • fulfillment of strategic goals)
  • Selective use of vendor expertise to sharpen
  • existing staffs skills and to obtain new
    skill sets

49
Using IT as a Competitive Weapon
  • Business Enablement
  • The fundamental role of IT is to efficiently
    provide the business with required information
    that is both accurate and timely.
  • Further, well managed and designed IT should
  • Facilitate collaboration among distributed
    staff, across
  • geographical or business units
  • Enable improvements to enhance and/or automate
    business
  • processes
  • Proactively scan for and exploit new
    technologies in support
  • of the business

50
Using IT as a Competitive Weapon
  • Business Innovation to Aim for
  • Sustained Competitive Advantage
  • Erik Brynjolfsson of MITs Sloan School of
    Management, says that the roots of Americas
    productivity surge lie in a genuine revolution
    in how American companies are using information
    technology.28 Good companies are using IT to
    reinvent their business processes from top to
    bottom.
  • To firms that reinvent, or even simply try to
    improve, their business processes, there are
    surprising benefits. The software that runs
    many business processes has become an important
    competitive weapon.
  • Strategic innovation may not require any new
    products or new technologies. Operational
    innovation, in Michael Hammers words from the
    April 2004 HBR, can add to shareholder value,
    meaning competitive weaponry focused on producing
    competitive advantage. Both process innovation
    and strategic innovation will often account for
    more competitive advantages than entirely new
    products or technologies.
  • Innovation and invention have to take place
    continually and systematically. No single
    innovation can convey lasting competitive
    advantage.
  • 28 Special Report on Business Innovation, The
    Economist, April 24-30, 2004.

51
Using IT as a Competitive WeaponConclusion
  • Businesses succeed only to the extent that they
    fill customers needs better than their
    competitors. The success of a business
    enterprise does not hinge on any one leader, any
    single product, or any unique process. It is
    primarily the result of an unwavering attention
    to the execution of its core success strategy.
    Everything that the leadership directs must be
    aimed at fulfilling that strategy.
  • Therefore, to claim that IT by itself is a
    weapon, is false.
  • IT, when used in support of a business core
    strategies for success, can be the enabler, the
    accelerator of momentum to achieve competitive
    advantage. IT provides the critical spark that
    transforms business processes into competitive
    weapons. Innovation, invention, and re-invention
    must take place continually and systematically to
    enable competitive advantage to endure.

52
Using IT as a Competitive WeaponConclusion
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