Few topics get more attention in our industry than the relationship between IT and competitive advantage. Does IT help drive revenues, gain market share or improve margins? That's what ultimately matters. My firm's research shows that a little more than a quarter of business executives believe that their use of IT gives them these sorts of direct advantages in their markets.
But while competitive advantage should be discussed primarily in business terms, IT organizations can also benefit by examining their own operations to identify where competitive differentiation is being sought and delivered. In working with our clients, we have found the 2-by-2 diagram shown here to be of significant help in determining the relative importance of technology and industry-specific capabilities.
As the figure suggests, there are four main ways that IT organizations can seek to differentiate themselves:
Edge in efficiency. Corporate IT can seek to deliver the necessary table stakes for the industry in which the company competes, at lower costs than competitors. If this is the overriding aim, the other three quadrants don't really matter.
Edge in adoption. Many IT organizations are naturally inclined to emphasize this quadrant, since it gives them license to work with the latest tools of their profession. But what is needed is a truly objective analysis of which new technologies should be adopted and at what rate.
Edge in industry. One IT organization can be more effective than another by simply being better in tune with the needs of the company and its industry sector, but this tends to run against the grain of many IT staffers, who see themselves less as industry specialists and more as masters of largely general-purpose skills and technologies.
Edge in sophistication. Every industry has its leading edge of advanced usage, and it typically lies at the intersection of IT and emerging business opportunities. Think advanced simulations, the trading of derivatives or affinity marketing. Does your company compete in these realms, and if it does, what role, if any, does IT play?
While many IT organizations will have strategies for all four quadrants, we have found that the relative priorities are rarely agreed upon explicitly with the business and that corporate IT often leans too much toward the left side of the diagram. There is a real opportunity for IT organizations to raise their profile by articulating how well aligned they are with their company's overall competitive positioning. It's not a difficult exercise, but when was the last time you really did it?
David Moschella is global research director at the Leading Edge Forum, a Computer Sciences Corp. company. Contact him at email@example.com.