Investing in IT for competitive advantage

This presents the market with a dynamic competitive trend; today's leader can be outpaced by an innovation from a little known rival. The growth in market share and value depends on the processes that can be rolled out to gain market share in various geographical markets and product lines with speed.

We all have seen Google outdo Yahoo in the search engine market and Twitter may also do the same to Google due its real time data search capability. Yet, customers shift to where more ease and immediateness of transactions are. If a company runs a salon business it could digitalise its appointment making, payment and even hairstyle choices to enable its clients conduct all the processes online and just visit for the service.

The HBR notes the following three cases of investment in IT that made a difference on the competitive edge of these firms. Otis, a 149 year old company in the US, replaced its old software used in its core processes with a new technology platform the company called e*Logistics. It was designed to connect sales, factory, and field operations worldwide through the internet.

It identified the main four processes, sales, order fulfillment, field installation, and job closing. The e*logistics was designed to ensure improvements in each process was carried out uniformly, every time, everywhere. It saw a shorter sales-cycle and higher revenues.

Tesco, One of UK's leading retailers uses customer reward cards to collect data about individual purchases, to categorise customers, and tailor offers accordingly. Web 2.0 applications offer also a platform to engage employees in the innovation process.

Rite-Solutions, a technology firm has a ‘Mutual Fun' market where employees can invest in three indices. Savings Bond is for ideas on saving costs; Bow Jones is for ideas on extending existing ideas and Spazdaq for new ideas or concepts. Any employee can participate in coming up with new innovations.

The main components of successful IT innovations include wide span coverage, immediate results, precision, consistency, easy monitoring and enforceability.

For example, a furniture company can have its software able to be used in all stores, factories and showrooms. When it goes live all processes change immediately with immediate results and the guidelines e.g., delivery and order taking are precise.

Consistency is displayed by every show room using same ways to quote or deliver. Since activities can be tracked in real time, monitoring becomes easy. Enforceability comes in when the real time data is used to make immediate changes on processes.