Title: IT as a Competitive Advantage
1IT as a Competitive Advantage
- Presented by
- Grant Epstein
- Erin Miltenberger
- Darren Van Booven
2The Importance of IT in an Organization
- Understanding IT and its Role can
- Gain a competitive advantage
- Improve efficiency of business processes
- Expand/revolutionize markets
- Not Understanding IT and its Role can
- Lead to Wasted IT budget
- Lead to Business Failure
3IT as a Competitive Advantage
- the ability to maintain an initial gain in
business performance from strategic IT - Concept that has grown in importance and
acceptance.
Kettinger, Grover, Guha, and Segars. Strategic
Information Systems Revisted A Study in
Sustainability and Performance MIS Quarterly
1994, page 32
4IT as a Competitive Advantage
- Systems that can lead to a competitive advantage
in the short or long run have a high value to the
initiating company - Systems that cannot maintain the advantage will
lead to the initiating company being surpassed by
the competition.
Kettinger, Grover, Guha, and Segars. Strategic
Information Systems Revisted A Study in
Sustainability and Performance MIS Quarterly
1994, page 32
5IT as a Competitive Advantage
- Federal Express Package tracking system
- Mitek Computerized roofing design system
- Baxter Healthcare Hospital supply ordering
system
Firms That Have Made it Work
6Aligning IT Strategy with Business Strategy
Contributions Commodity Differentiator
Critical Aircraft maint. software Baxter Healthcare ordering software
Useful Personal productivity software ICI Paints
7IT as a Competitive Advantage - Framework
- Three Pillars of Sustainable Competitive
Advantage - Project Life Cycle Analysis How long until a
response? - Competitor Analysis Who can respond?
- Supply Chain Analysis How effective will
response be?
Feeny, David Ives, Blake, IT as a basis for
sustainable competitive advantage in Managing IT
as a Strategic Resource, Willcocks, Leslie,
Feeny, David. McGraw-Hill Education-Europe,
1997, pp 43-61.
8Pillar 1 Project Life Cycle
- Focuses on the idea that when a company uses IT
to gain a competitive advantage, it can expect
competitors to respond. - Project life cycle is the time between release of
the new system and competitor response. - Awakening
- Win approval
- Project Build
- Project Launch
Feeny, David Ives, Blake, IT as a basis for
sustainable competitive advantage in Managing IT
as a Strategic Resource, Willcocks,
Leslie, Feeny, David. McGraw-Hill
Education-Europe, 1997, pp 43-61.
9Pillar 2 Competitor Response
- What Competitors Can Respond?
- Three Components
- Competitive Scope
- Geographic, Segment, Vertical, Industry
- Organizational Base
- Structure, Culture, and Physical Assets
- Information Resources
- Technology Infrastructure, Application Inventory,
Data bases, Knowledge bases
Feeny, David Ives, Blake, IT as a basis for
sustainable competitive advantage in Managing IT
as a Strategic Resource, Willcocks, Leslie,
Feeny, David. McGraw-Hill Education-Europe,
1997, pp 43-61.
10Pillar 3 Supply Chain AnalysisWill a Response
Work?
- Steps to Insure a Response Will Not be Effective.
- Find exploitable link Find a point in the
supply chain where resources are limited and few
participants control the link. - Secure the pole position Create a unique
relationship with the market. - Increased value will result in a more secure
relationship and prevent loss to competition.
Feeny, David Ives, Blake, IT as a basis for
sustainable competitive advantage in Managing IT
as a Strategic Resource, Willcocks, Leslie,
Feeny, David. McGraw-Hill Education-Europe,
1997, pp 43-61.
11Pillar 3 Supply Chain Analysis
- Keep the Gate Closed Create a perception
amongst users of tangible and intangible
switching costs. This is the basis for
maintaining a competitive advantage. - Applications Users will have to learn a new
system - Database Loss of stored information during a
switch - Community Switching may have an adverse effect
on the way the user does business IT has become
a part of its infrastructure.
12Case Study Analysis
- Progressive
- Sabre
- Celera Genomics
13Progressive
14Why Choose Progressive?
- Pioneering efforts in the use of IT in the auto
insurance industry - Leading the way in the use of the Internet to
improve communication with customers, independent
agents, and prospects.
15History and Background
- Founded in 1937 by Jack Lewis and Joseph Green.
www.progressive.com/progressive/history.asp,
viewed February 9, 2003
16History and Background
- Early innovations
- 1990 first insurance provider to provide 24
hour claims service at the accident site - 1992 first insurance provider to offer
competitor quotes as well as its own. - 1994 launched Immediate Response Vehicles
(IRVs) allowing claims agents to settle many
claims at the accident site. - 1995 first major insurance provider with a
presence on the Internet
www.progressive.com/progressive/history.asp,
viewed February 9, 2003
17History on the Internet
- Prior to 1995, no major insurance providers were
on the Internet. - Progressive launched its site in 1995.
- Site had mostly a brochure look
-
- It was a matter of getting to know the
technology to get something up and see what we
can do. CEO Glenn Renwick (Glenn Renwick, CEO
of Progressive, interviewed by - phone by Grant Epstein, March 14, 2003)
- www.progressive.com
- In 1996, Progressive allowed customers to get
competitive bids online.
www.progressive.com/progressive/prg_firsts.asp,
viewed February 9, 2003
18History on the Internet
- First insurance company to let customers buy
online (1997) - We see the trend moving more and more to online
buying (Glenn Renwick, CEO oof - Progressive, interviewed by phone by Grant
Epstein, March 14, 2003) - First insurance company to let customers access
their account online in 1998. - Launched agent site, ForAgentsOnly.com in 1998.
www.progressive.com/progressive/prg_honors.asp,
viewed February 9, 2003. and information provided
by Progressives PR Department
19Insurance Products
- Auto, commercial vehicle, motorcycle, personal
watercraft, ATV, and RV insurance. - Primary target range is drivers aged 18 34.
- Also provide information about insurance to teens
and driving issues they face on progressive.com
Progressive Facts, provided by Progressives PR
Department, February 2003
20Insurance Products
- Progressive writes insurance in 48 states and the
District of Columbia. - Currently not doing business in MA or NJ.
- Drivers can buy over the phone, online, or from
one of Progressives 30,000 agents.
Progressive Facts, provided by Progressives PR
Department, February 2003
21ITs Importance at Progressive
- CEO Glenn Renwick believes in the philosophy that
technology and business alignment are key. - Ray (Voelker) is an integral part of the
decision process. The organization builds
technology into the business decision process.
- Our business plan and IT are inextricably
linked because their job objectives are. - Glenn Renwick, CEO of Progressive, interviewed by
phone by Grant Epstein, March 14, - 2003
- Gallagher, Julie, Business-savvy CIO turns
tech-savvy CEO Insurance and Technology, - July 2001.
22Importance of IT
- Information on Progressives employee count in
the IT Department not currently available. - Has averaged around 2000 over the last five years
- Information on Progressives IT annual budget
also not available.
- Information Week.com, 2000.
- Gallagher, Julie, Business-savvy CIO turns
tech-savvy CEO Insurance and Technology, - July 2001.
23Progressives Growth and Market Share
- Since 1993, growth rate has far exceeded that of
the industry - Growth rate has ranged between 13.6 and 36.
- Industry growth rate has ranged between 2.6 and
5.9 - Exception is 2000, when the entire industry
experienced minimal growth.
Progressive Facts, Provided by Progressives PR
Department, February 2003
24Progressives Growth and Market Share
- Industry rank has increase from No. 34 to No. 3
in the last 20 years - Rank has gone from No. 15 to No. 3 since it began
offering competitor rates and developed a web
presence. - State Farm and Allstate are 1 and 2
respectively. - Market share
- Increased 1 over the last three years (2000
2002).
Progressive Facts, Provided by Progressives PR
Department, February 2003
25Progressives Critical Differentiator
- The insurance companies that are most likely to
develop a competitive advantage in the industry
are those that employ technology in a manner that
more effectively delivers their business model. - -Ted Devine, Principal of McKinsey and Company
Erlanger, Enhance web site value, carriers told
National Underwriter Vol 16 July 2002. Pp 15-16
26Progressives Critical Differentiator
- Progressives critical differentiator is not that
it allows customers to shop and buy online. - Now we dont think, Boy, were the only one
that allows customers to buy policies online.
Its just part and parcel of our entire strategy
that focuses on the Internet and putting the
information back into the clients hands. - MacSweeney, Greg Progressive, inside and out
Insurance and Technology, Vol 24 - Sept. 30, 1999. Pp 13-14.
27Progressives Critical Differentiator
- This attitude carries on down the line of
Renwicks management team. - Our guiding principal is to provide customers
with a well-developed, easy-to-use Web-site that
meets the spectrum of their needs. Toby
Alfred, Internet Site Manager - MacSweeney, Greg Progressive, inside and out
Insurance and Technology, Vol 24 - Sept. 30, 1999. Pp 13-14.
28Critical Differentiator Where it all began
- Progressives critical differentiator is that it
has fully integrated technology into it business
process decisions and its interaction with
prospects, customers, and agents
29Critical DifferentiatorWhere it all Began
- Began in 1990 with the launch of Immediate
Response and continued in 1994 with its IRVs and
in 1997 with its Claims Workbench software. - Allows claims agents to cut checks for policy
holders at the site of the accident. - Former CEO Peter Lewis
- Progressive is leading a wave of change.
- Salter, Chuck, Progressive Makes Big Claims
Fast Company Issue 19, Nov. 1998 pp - 176.
30History of Progressives Internet and IT Advantage
- At the time progressive.com was launched, no
other major providers had an online presence. - Progressive was not even sure what the reaction
in the market would be. - we figured the Internet would be a good thing
for us to get into we wanted to get out there
and see how people would respond. Alan Bauer,
President of Direct Group - Alan Bauer, President Direct Group of
Progressive, interviewed by phone by Grant - Epstein, March 3, 2003
31History of Progressives Internet and IT Advantage
- After strong initial response, Progressive
decided to take its website from informational to
functional. - There are people who like to buy online and we
are an option for them. - Alan Bauer. - Progressive was in a great position to take its
website to a more functional level and allow
customers to buy online. - Call center already set up to sell directly
- Automated approval process(no need to interact
with an agent) - Necessary technology was already in place.
Alan Bauer, President Direct Group of
Progressive, interviewed by phone by Grant
Epstein, March 3, 2003
32What does the future hold?
- CIO Ray Voelker says his vision is to see the
true, Internet-only insurance policy. - If you buy a policy today, youre still
- going to get a paper policy in the mail.
- Its rare, if it is happening at all, for a
- completely paperless process.
Hulme, George, Premium Put on Web Initiatives
Information Week, September 11, 2000
33Does Progressive Have a Sustainable Competitive
Advantage?
- Pillar 1 Life Cycle analysis Time to competitor
response - Awakening, Approval, Building the System, Product
Launch - While it would not take substantial time to build
a - brochure website, most competitors did not see
the web - as a viable channel for communicating with the
market. - Unlike its competitors, Progressives business
model - made the transition very easy and logical.
34Does Progressive Have a Sustainable Competitive
Advantage?
- Pillar 2 Competitor analysis Who can respond?
- Competitive Scope
- Organizational Base
- Information Resources
- Could competition respond?
- Limited website content
- Increased fucntionality required changes in
competitor - business process.
- By the time competitors reached Progressives
benchmark, it had already moved it further out.
35Does Progressive Have a Sustainable Competitive
Advantage?
- Pillar 3 Supply Chain Analysis Will Copying
Help? - Find Exploitable Link
- Capture Pole Position
- Keep the Gate Closed
- Competitors have followed suit in part or whole.
- Though churn is an issue in the industry, whether
or not competitors following suit will erode its
competitive advantage remains to be seen. - Progressive has maintained its lead through
continued innovation. - Progressive displays continued growth that far
exceeds that of the industry and continues to
climb the market share ladder.
36Conclusion
- Progressives self-assumed role of
- innovator and change agent in the
- auto insurance industry has led to a
- distinct competitive advantage and
- has maintained that advantage
- through continued innovation.
37Sabre
38Sabre Company Background
- Provider of technology and distribution and
marketing services for travel industry - Leadership position in every travel marketing and
distribution channel - Travel Agency
- Online Consumer
- Online Corporations
- Known for its notable firsts and bests
Sabre Annual Report Pg 2
39Sabre Company Background
- Headquarters South Lake, Texas
- 6,500 employees located in 45 countries
- Carol Kelly Senior Vice President and CIO
- Reports to CEO
http//www.sabre.com/about/index2.html?b1ahisto
ry/index.html, viewed on March 5, 2003
40Sabre Customers
- Airlines
- Car Rental Agencies
- Corporate Travel
- Cruise Lines
- Hotels
- Tour Operators
- Travel Agents
- On Line Travel Consumers
www.sabre.com/products/index.html, viewed March
12, 2003
41Sabre Financials
- Total 2001 Revenue
- 2.1 billion, 8 increase from 2000
Get There 2
Airline Solutions 9
Travelocity 11
Travel Marketing and Distribution 78
Sabre Annual Report Summary Page
42Sabre Financials
- 2001 was a difficult year due to Sep 11 but Sabre
has seen a gradual improvement.
Sabre Annual Report Pg 16
43Sabre Bookings Share
Sabres global booking share is 38. Sabre has
the number one booking share in 3 regions.
Sabre Annual Report Summary Page
44History of Sabre System
- 1960 IBM and American Airlines had a plan to
automate the process of reserving airline seats. - Booking process involved 12 people, 15 procedural
steps and up to 3 hours. - Created Sabre Semi-Automatic Business Research
Environment - Processed 84,000 telephone calls per day
- Development cost was almost 40 million
www.sabre.com/about/history/index.html, viewed on
March 6, 2003 Scheier, Robert, 35 years of IT
Leadership Technology takes Flight
Computerworld, Vol 36, 40, 2002, pp. 34-36.
45History of Sabre System
- 1964 Final Sabre system cutover is complete
- Network extends coast to coast
- Largest, private real-time data processing system
- Internal inventory system owned by airline
- Installed only at airports and airline ticket
offices - Used to track airlines seats, flights and
operational information
www.sabre.com/about/history/index.html, viewed on
March 6, 2003 Scheier, Robert, 35 years of IT
Leadership Technology takes Flight
Computerworld, Vol 36, 40, 2002, pp. 34-36.
46History of Sabre System
- Benefits of Sabre
- Manage inventory and seats faster and more
accurately - Get paid quicker for tickets purchased
- Saves American 30 on investments in staff alone
- Error rate of less than 1
www.sabre.com/about/history/index.html, viewed on
March 6, 2003
47Competition
- Competitive Edge lasts for 5 to 7 years
- Uniteds Apollo System
- Amadeus European Airlines
www.sabre.com/about/history/index.html, viewed on
March 6, 2003
48Sabre The Next Step
- 1976 Sabre moves to travel agencies
- By the end of the year it is installed in 130
locations. - 86 of top agencies in competitive markets use
Sabre. - American began to co-host other airlines on
Sabre for a fee - Helped airlines compete against United where
American had no routes - Gave Sabre competitive edge with travel agencies
- One stop shopping
- Evolved into Global Distribution System (GDS)
www.sabre.com/about/history/index.html, viewed on
March 6, 2003 Scheier, Robert, 35 years of IT
Leadership Technology takes Flight
Computerworld, Vol 36, 40, 2002, pp. 34-36.
49Sabre 1980s
- 1986 Sabre installs first automated yield
management system - Prices airline seats to yield maximum revenue for
each flight - 1988 Sabre stores 36 million fares which can be
combined to create over 1 billion fare options
http//www.sabre.com/about/index2.html?b1ahisto
ry/index.html, viewed on March 25, 2003
50Is the competitive advantage to great?
- November 1984 11 airlines file an anti-trust
suit against Sabre - Claimed reservation system restraining
competition - American had advantage because their system was
on travel agents desks and their flights were
shown first - American decided to end preferential treatment
for their own flights.
http//www.pcma.org/resources/convene/archives/dis
playArticle.asp?ARTICLE_ID3392 , viewed on March
25, 2003
51Sabre GDS Today
- Connects over 60,000 travel agencies with
- 400 airlines
- 58,000 hotel properties
- 53 car rental companies
- 9 cruise lines
- 33 railroads
- 232 travel operators
http//www.sabre.com/about/index2.html?b1atechn
ology/index.html, viewed March 25, 2003
52The Web A New Threat
- The web bypasses GDS directly links customer to
airline - Self service web-based sites allow travel
industry to take advantage of less costly
systems. - Offers ease of use and ease of operations
How can Sabre compete?
Scheier, Robert, 35 years of IT Leadership
Technology takes Flight Computerworld, Vol 36,
40, 2002, pp. 34-36. McCarthy, Jack, Troubled
Travels InfoWorld, Vol 24, 35, 2002, pp. 44-45.
53New Innovations for Sabre
- www.Travelocity.com
- First site to offer travel reservations and
comprehensive destination and event information
on the Internet - Leading on-line consumer travel website
www.sabre.com/about/history/index.html, viewed on
March 6, 2003 Sabre Annual Report Pg 3
54New Innovations for Sabre
- Get There
- Leading provider of web-based corporate travel
procurement - Helps companies to track and control travel costs
- Signed up two largest travel agencies
- Customers build own travel booking sites
- Privately negotiated fares
- Travel policies
- Preferred suppliers
- Solidified position in business to business
market
Sabre Annual Report Pg 3 Rosen, Cheryl, Sabre
thinks big for booking and reporting system
Informationweek, Issue 808, 2000, pp 172.
55New Innovations for Sabre
- Sabre Pass Touch
- Self service kiosk to check in using credit card
or frequent flyer card - Sabre Wireless Check in System
- Allows travelers to check in using wireless phone
- Receive automatic flight notification
- Sabre Roving Agent
- Hand held device to make seat assignments, print
boarding passes and bag tags and issue vouchers
www.sabre.com/about/history/index.html, viewed on
March 6, 2003 Sabre Annual Report Pg 3 Meehan,
Michael, Sabre launches wireless flight
check-in Computerworld, Vol 34, 44, 2000, pg 72.
56Changes for Sabre
- Transition from GDS to open platform
- Allows for greater access, availability, content
- Greater integration and increased speed to market
- Only non-stop capability in industry
- For pricing, reservations and ticketing
- Outsourcing to EDS
- Sold airline infrastructure technology business
to EDS - Sabre will focus on its core areas and higher
margin, faster growing business - EDS will manage Sabre information systems
- EDS will contribute 20 million for Sabre product
development
Sabre Annual Report Pg 12 Hickey, Kathleen,
Outsourcing in a big way Traffic World, Vol
265, 13, pp 40.
57Does Sabre Have a Sustainable Competitive
Advantage?
- Pillar 1
- Project Life Cycle Analysis - How long until a
response? - Awakening
- Approval
- Building the System
- Project Launch
- The original Sabre system had a competitive
advantage for 5 to 7 years. Other airlines were
able to create similar systems, however - Sabre has continued to keep a competitive
advantage by using information technology to
create new products.
58Does Sabre Have a Sustainable Competitive
Advantage?
- Pillar 2 Competitor Analysis Who can respond?
- Competitive Scope
- Organizational Base
- Information Resources
- Sabre products face competition from many
different sources they have to be continuously
updating and creating new value for their
products - For example, they were the first to co-host on
their system so they became the preferred
provider for travel agents.
59Does Sabre Have a Sustainable Competitive
Advantage?
- Pillar 3 Supply Chain Analysis Will Copying
Help? - Find Exploitable Link
- Capture Pole Position
- Keep the Gate Closed
- Other companies have been able to copy Sabres
systems - The key has been to be first to market and to
continuously innovate
60Sabre Conclusion
Sabre has maintained a competitive advantage in
its industry by continuously working to create
the next best thing It may not be possible to
maintain a competitive advantage over a long
period of time for one product but it is possible
to by continuously improving your products.
61Celera Genomics, Inc.
62Human Genome Project Cracking the Code
- Begun in 1990, the Human Genome Project (HGP) is
an effort by the DOE and NIH with the primary
goal of discovering all of the 80,000 human
genes and rendering for study. - Originally planned to last 15 years, but Celera
said in 1998 it could finish the job in a third
of the time, and announced April 4, 2000 that it
had indeed finished. - Bicycle Example (billions of parts).
http//www.pbs.org/newshour/extra/features/jan-jun
e00/genome.html, viewed March 01, 2003
. http//www.ornl.gov/TechResources/Human_Genome/,
viewed March 20, 2003.
63Celera - Origins
- Dr. Craig Venter began working on the human
genome at the NIH, a major backer of the project,
with Dr. Francis Collins, Director of the NIH. - Frustrated with Collins and his slow pace, Venter
left and started his own team. - Heavily criticized and doubted by other
scientists about his claim. - We knew it would either work spectacularly or
be the biggest flameout in history. Craig
Venter
Craig Venter, Ph.D
Francis Collins, Ph.D
http//www.pbs.org/newshour/extra/features/jan-jun
e00/genome.html, viewed March 01, 2003
64Celera - Background
- Established in 1998 by Applera Inc., and Craig
Venter. Main offices in Rockville, MD and San
Francisco, CA. - Celera is engaged principally in integrating
advanced technologies to discover and develop new
therapeutics by leveraging capabilities in
bioinformatics and genomics. - Celera Genomics and the Applied Biosystems Group
are the two operating groups that comprise
Applera Corporation.
http//www.celera.com/company/home.cfm?ppageoverv
iewcpagebackground, viewed March 05, 2003.
65Celera Executive Management
David S. Block, M.D. VP - Celera
Genomics Robert F.G. Booth, Ph.D. VP - Celera
Genomics Samuel E. Broder, M.D. VP - Celera
Genomics
Applera Corporation 2002 Annual Report
66Size of Celera GenomicsFinancial Overview - 2002
(Amounts in Millions ) 2001
2002 Increase/(Decrease) Revenues
89.4 120.9 35.2 Cost of
Sales 43.0 51.9
20.7 RD 164.7 132.7
(19.4) Net Loss (186.2) (211.8)
13.7 Cash Cash Equivalents
995.6 888.9
(10.7) Total Debt 0.0
18.0 -
Applera Corporation 2002 Annual Report
67Celera - Stock Price History
- Celera Five-year Stock Price (NYSECRA)
http//finance.yahoo.com, Yahoo! Inc., viewed
March 16, 2003.
68Celera Primary Products
- Revenues come from two primary sources
-
-
- An online information and discovery system
through which users can access Celeras genomic
and related biological and medical information.
Customers pay for subscription access to CDS. - Service Revenues
- Customized datasets and proprietary mapping.
- Customized analysis and algorithm development.
- Database design and implementation.
http//www.celera.com/company/home.cfm?ppageoverv
iewcpagefaq, viewed March 01,
2003. http//www.celeradiscoverysystem.com/contact
/home.cfm?ppagecontact_services, viewed March
28, 2003.
69Celera - Customers
Users 250 Commercial, Academic Institutional
Organizations Sample of Commercial
Customers Sample of Academic/Institutional
Customers - Harvard University - Oxford
University - California Institute of Technology -
National Cancer Institute
http//www.celera.com/genomics/home.cfm?ppageover
viewcpagecustomers, Viewed March 03,
2003. http//www.celeradiscoverysystem.com/testimo
nials/home.cfm. Viewed March 28, 2003.
70Celera - Annual IT Budget
- IT budget is not disclosed.
- Celera IT department contains roughly 50
employees. - RD spending was 132 million in 2002.
Jamie Lacey, Celera Communications, e-mail to
Darren Van Booven, March 03, 2003. Applera
Corporation 2002 Annual Report http//www.celera.c
om/company/home.cfm?ppageoverviewcpageplatforms
, Viewed March 03, 2003
71Celera - Annual IT Budget
- Celera has built one of the most powerful
non-government supercomputing facilities in the
world with 800 interconnected computers.
Celeras Main Data Center
Applera Corporation 2002 Annual
Report http//www.celera.com/company/home.cfm?ppag
eoverviewcpageplatforms, Viewed March 03, 2003
72Origins of Celera Systems
- Systems originate with the formation of the
company. Venter claimed in 1998 he could beat
NIH by by relying heavily on robots and
computers. - Venter and Applied Biosystems, Inc. built the
first commercial-grade DNA sequencing robots. - Celera now has over 200 ABI PRISM 3700 DNA
Analyzers (shown). The PRISM 3700 is the first
DNA sequencer designed for production-scale
sequencing.
http//www.pbs.org/newshour/extra/features/jan-jun
e00/genome.html, viewed March 01,
2003 http//www.appliedbiosystems.com/products/pro
ductdetail.cfm?prod_id40
73Critical Differentiator
- The key to Celera's unprecedented sequencing
speed and productivity is its whole genome
"shotgun" sequencing approach and sequencing them
with brute force. Billions of base pairs to
sequence! - Celeras approach is much faster than previous
mapping methods and dramatically increases the
amount of genomic and data available to
researchers.
Base Pairs
http//www.celera.com/company/home.cfm?ppageoverv
iewcpageplatforms, Viewed March 03, 2003.
74Critical Differentiator
- Celera developed supercomputing facility for
processing DNA sequencing data produced by its
Celeras robots. - With its robots and supercomputers, Celera was
able to sequence and assemble the human genome in
just nine months. - Celera Discovery System was initialized and
embodied Celeras Competitive Advantage.
http//www.celera.com/company/home.cfm?ppageoverv
iewcpageplatforms, Viewed March 03, 2003.
75How CDS is Used
http//www.celera.com/company/home.cfm?ppageoverv
iewcpagefaq, viewed March 01, 2003.
76Online Demo
- http//www.celeradiscoverysystem.com/index.cfm
77Does Celera Have a Sustainable Competitive
Advantage?
- Pillar 1
- Project Life Cycle Analysis - How long until a
response? - Awakening
- Approval
- Building the System
- Project Launch
- Celeras information delivery system and data are
patented and trademarked. - Significant technology start-up cost in a
low-margin industry and rough economy. - Celeras competitive advantage is supported by
the first pillar.
Applera Corporation 2002 Annual Report
78Does Celera Have a Sustainable Competitive
Advantage?
- Pillar 2 Competitor Analysis Who can respond?
- Competitive Scope
- Organizational Base
- Information Resources
- Only large international governments are capable
of duplicating Celeras supercomputing platform,
but they have no competitive need to do so. - Content and delivery system pioneered by Celera.
- Access to cheap industrial-grade equipment via
Applied Biosystems - Well-skilled experts in bioinformatics.
- Celeras competitive advantage is supported by
the second pillar.
Applera Corporation 2002 Annual Report
79Does Celera Have a Sustainable Competitive
Advantage?
- Pillar 3 Supply Chain Analysis Will Copying
Help? - Find Exploitable Link
- Capture Pole Position
- Keep the Gate Closed
- Most powerful gene sequencing center in the
world. - Celeras information delivery system and data are
patented and trademarked. - Brand recognition.
- Celeras competitive advantage is supported by
the third pillar.
Applera Corporation 2002 Annual Report
80Celera - Conclusion
Celeras systems provide a sustainable
competitive advantage that is supported by the
three pillar model. -but- Sometimes it isnt
enough. There is a high degree of uncertainty
that the Celera Genomics group will be able to
achieve profitable operations Celera Executive
Management
Applera Corporation 2002 Annual Report
81Overall Summary
82Overall Summary Contd.
- Obstacles to competitive advantage
- - Capital Costs
- - Intellectual Property Rights
- - Switching Costs
- - Skills
- - Management Buy-In
MIS Quarterly, 1995 IT and sustained competitive
advantage by Francisco Mata
83Conclusion
- IT can be used to create a sustainable
competitive advantage for the business! - A competitive advantage leads to a significant
edge over rivals, which usually leads to greater
market share and profits. - Some competitive advantages are sustainable,
while others are not.
84Lessons for the CIO
- Must do things better, more efficiently, or
special in the eyes of your customers. - Patent methodologies and innovation so that
competitors cannot use them. - A system can be the best, but without coupling it
to business strategy it may not offer any benefit
to the bottom line. - Continuous innovation is needed to remain
competitive.
85IT as Competitive Advantage