Sustainable Competitive Advantage from Information Technology

The strategic benefit of IT (information technology) in supporting business functions is often seen as the basis for competitive advantage that is sustainable. The value chain concept has been a handy tool widely utilized in business strategy analysis to match firm competency in performing business activities with the achievement of sustainable marketplace advantage. When it comes to the assessment of the competitive value of information technology, the value chain concept seems to either categorize IT as a support activity or to overly narrow the scope of IT’s role in achieving sustainable competitive advantage. This chapter reviews the concepts of the value chain and sustainable competitive advantage. Short case studies from a number of industries are presented in order to illustrate the limitations of using the value chain to describe information technology’s role in achieving sustainable competitive advantage. These examples demonstrate the subtle and often complex relationship between information technology and competitive advantage.

Competitive Force/Marketing Mix (CF/MM) Framework

Information systems researchers continue to grapple with the development of frameworks to aid managers in the identification of opportunities for the strategic use of information technology. Many of the current frameworks have been proposed to guide the systems development process, but few have successfully dealt with the underlying business issues that drive the need to develop an information system in the first place. Because the difficulties that a particular business must cope with arise from the distinctive characteristics of the firm, its product and the particular niche in which the firm operates, this chapter presents a two-dimensional Competitive Force/Marketing Mix (CF/MM) framework that can be used to recognize opportunities for strategic information systems within the firm’s niche. The CF/MM framework is based on a combination of Porter’s view of strategy as a response to the unique mix of the five competitive forces faced by a firm, and the firm’s marketing strategy. By using the CF/MM framework, managers and researchers can identify opportunities to use emerging information technologies as part of front-line competitive strategy. After presentation of the CF/MM framework, the chapter presents a summary of the results of a CF/MM-based analysis of 150 articles related to the competitive use of information technology that have been published in both the popular press and scholarly press. Organizations that are successful in creatively focusing the use of the expanding array of modern information technologies on their particular business niche will increase their ability to survive in the dynamic business environment of the year 2000 and beyond. The CF/MM framework can also be used by IS managers to orchestrate the mix of applications held by a firm in order to maximize the strategic impact of IT investments.

The Changing Roles of IT Leaders

Information technology (IT) leadership has undergone fundamental changes over the past decade. Despite increased interest in recent years, little empirical research on IS/IT leadership has been done. To better understand the changes, this study compares leadership roles, individual characteristics and position characteristics of newly appointed IS/IT executives (who have been in their position for two years or less) with established IS/IT executives based on a survey in Norway. Survey results indicate that new leaders spent more time in the informational role and in the change leader role than established leaders. New leaders had worked shorter in the organization and shorter in IS/IT than established leaders. New leaders had less responsibility for computer operations, communication networks and technical infrastructure than established leaders. New leaders had more responsibility for strategic alignment between IT and business.

Sustainable Competitive Advantage from Information Technology

The strategic benefit of IT (information technology) in supporting business functions is often seen as the basis for competitive advantage that is sustainable. The value chain concept has been a handy tool widely utilized in business strategy analysis to match firm competency in performing business activities with the achievement of sustainable marketplace advantage. When it comes to the assessment of the competitive value of information technology, the value chain concept seems to either categorize IT as a support activity or to overly narrow the scope of ITs role in achieving sustainable competitive advantage. This chapter reviews the concepts of the value chain and sustainable competitive advantage. Short case studies from a number of industries are presented in order to illustrate the limitations of using the value chain to describe information technologys role in achieving sustainable competitive advantage. These examples demonstrate the subtle and often complex relationship between information technology and competitive advantage.

Introduction to Strategic Alignment

The concept of strategic alignment is more than two decades old (McLean and Soden, 1977; IBM, 1981; Earl, 1983; Mills, 1986; Brancheau and Wetherbe, 1987; Parker and Benson, 1988; Henderson and Venkatraman, 1990; Dixon and John, 1991; Niederman, et. al., 1991; Watson and Brancheau, 1991; Liebs, 1992; Luftman, Lewis and Oldach, 1993; Goff, 1993), however it has never been more timely than in today’s fast-paced, dynamic business environment (Papp, 1998; Rogers, 1997). The original alignment model was a largely theoretical construct that studied only a single industry (Henderson & Venkatraman, 1990; Henderson & Thomas, 1992) but has since been adapted for use by virtually any industry looking to integrate their business strategies with their information technology strategies (Papp, 1995; Luftman, Papp, & Brier, 1995).

Strategic Human Resource Forecasting for an Internal Labor Market

Every organization needs a staff appropriate for its tasks in order to accomplish its business objectives, both now and in the future. To gain insight in the quality and number of staff needed in the future, human resource forecasting models are being used. This chapter addresses the design of a simulation model for human resources forecasting, which is being developed for the Chief of Naval Personnel at the Royal Netherlands Navy. The aim is to provide their Director of Naval Manpower Planning with tools that give insight into the effects of strategic decisions on personnel build-up, and the effects of changes in personnel on reaching the organization’s business objectives. This chapter introduces the major aspects of human resource forecasting. After that, the kinds of models that have been developed so far are presented, together with their merits and shortcomings. It is shown that a new way to investigate the future needs of manpower in an organization might be more effective than the current practice. The new models rely heavily on the use of simulation, and actually try to imitate the internal labor market and the external influences.

Communicating Strategic IT Vision to Organization Members

The development, communication, use, and benefits of organizational strategic visions have been well documented. Visions focus the enterprise on achieving their strategic goals. Little research has been done to date on the development, communication, and benefits of strategic visions for information technology. Based on a review of the strategic management, information systems, organizational theory, and change management literature, we present a conceptual framework for the development, communication, and potential benefits of a strategic vision for information technology and its alignment with the overall organizational strategic vision.

Strategic Alignment for Electronic Commerce

The dynamic nature and flexibility of electronic commerce increases the importance of the alignment of business strategy and information technology further. This chapter presents an extension of the strategic alignment model with an integration of the external domains of business and information technology strategy, thus keeping the focus on the competitive environment and shifting the responsibility for information technology to top management level. The application of the proposed hypothesis through a framework of the competitive environment is demonstrated within the context of the retail banking industry.

The Importance of the IT-End User Relationship Paradigm in Obtaining Alignment Between IT and the Business

Sound relationships between IT professionals and their business counterparts (end users) could be regarded as one of many important factors playing a role during the alignment process between IT and the business. Research has, for example, shown that aligning with anything other than the customer leads to only momentary success. The chapter describes IT-end user relationships as intriguing and complex. These relationships should be seen and managed as multidimensional entities. Two such dimensions, the physical and abstract dimensions, form the basis of IT-end user relationships. These two dimensions enable one to fully describe the holistic nature of such relationships and to encapsulate the important elements of a support-oriented organization, namely mutuality, belonging and connection. The chapter describes how sound relationships can enhance alignment between the business and IT. A conceptual model for maintaining alignment is also introduced.

Outsourcing Decisions

It is no longer questioned that the management of information systems (MIS) is an important variable when studying organizational effectiveness and competitiveness. There have been numerous studies on how information systems (IS) can be used by organizations for strategic purposes, yet actual experiences of an organization’s use of IS have often been less than satisfactory. Problems with cost, quality, and IS performance, as well as unfavorable end-user—IS relations are frequently reported. Partially because of these problems, the outsourcing of IS functions has become increasingly common. Outsourcing IS functions provides advantages to an organization but it may also create a new set of problems if the impact of the outsourcing decision to the organization as a whole is not fully considered. This chapter reviews the strategic use of IS in organizations, discusses the growing popularity of outsourcing IS functions, and uses Porter’s model of five competitive forces to provide a different viewpoint on the decision to outsource.