The Digital Competitive Advantage Of Organizations

Posted on November 11, 2009

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globePositioning strategically IT within the Enterprise is at the heart of many CIOs concerns. In these turbulent times, it is not uncommon to see  IT relegated to its sole cost element. Conversely, strong signals exist to prepare companies for growth. Here is the opportunity for CIOs to reap the benefits from the situation and identify the Digital Competitive Advantage for their organizations.

Making a board acknowledge the value of IT has always been a difficult exercise for CIOs. Current economic pressures and global uncertainty makes it even harder. The current cash flow focus challenges any investment with a short term view, potentially exposing  the company to future risks. Conversely, we need to admit that this systematic questioning of where we spend has value and lead to a critical Quest : “What are these Strategic/Core Resources we should be protecting?”

Time To Change

For many reasons, most of IT organizations elude this question and focus on the cost/quality service ratio. It is now time to challenge our approach and offer our business different perspectives. “What are our core IT resources that will provide a sustainable competitive advantage? ” – “What type of resources should we leverage: Organizational, Process, Technology” – “How do we define Core?” These issues should be fully integrated in the screening process of any IT related investment process and spend analysis.

Defining Core/Strategic Resources

It fits in with the “Resource Based View of the Firm” introduced by Wernerfelt B. in 1984 and how Valuable, Rare, Inimitable and Organized (VRIO) a resource can be. A core resource should meet all of these criteria.

A resource is Valuable if it helps the organization to address an external threat or exploit an opportunity. Rare if it is not widely owned by other competitors. Inimitable if it is difficult for another firm to acquire it or a substitute something else in its place. Organized if the firm is able to actually use it.

What is it about IT?

Most IT organizations have articulated their strategy (see “Is There Such Thing as IT Strategy Anymore?“)around the value of IT which fulfill the first criteria of (V)RIO, but let the others on the side. Value is driven at the pace of economics, and objectives like efficiency, quality, customer responsiveness, and innovation are inevitably calibrate on the expected Return on Investment. However criteria like Rare & Inimitable required a focus on long term.

The Digital Competitive Advantage (DCA)

DCA is the ability of organization to grow and exploit the IT resources that fulfill the CRIO criteria. Think about your next strategic workshop and identify what part of your IT culture, leadership, solution portfolio, reputation, organizational expertise make you deliver this Digital Competitive Advantage and make your business outperform the competition.