Data processing and competitive advantage, is the divorce consumed?

Concentration moves and streamline of processes pull outsourcing of big chunks of production, in particular information systems.  Technologies of grid computing and virtualisation fuel an increase of the trend.  The idea of IT being a basic service as supply of energy, and no longer being a source of competitive advantage for business, is spreading (cf IT does not matter, N Carr).  At the moment, a common strategy  is to hold on, being ready to adopt as quick as possible innovations. It supports the idea that winning a few months on a competitor is a win of  investment capacity for further business development.

Is this an inexorable tendency?

Yet, business cases like Amazon, Google, and Microsoft have showed durable competitive advantage due to IT : 

* Amazon and his system of sales coupled with his supply-chain allowed to obtain and to preserve the leadership on ist activity.
* Google with a specific architecture that opens  a level of unequaled performance,
* like Microsoft on its type of service

In these three cases, even if it is a necessary condition, technology was not sufficient, it has been associated with an organisational and cultural capability  for an effective usage.  This is the latter point that open the way of sustainable competitive advantage. 

In fact, this type of competence is very hard to acquire for established corporations, while it is natural for winning start-ups. 

In 2000, the idea circulated in France that no matters to be among the leaders of software industry  (cf Report of the CAE – Cohen, Debonneuil) because the value laid in the usage.  Others noticed that conversely there is a strong relationship between leadership and usage capability.  Moreover,  performing a technological awareness activity is a factor of success for an effective usage.  (cf Report of the CAE – Arthus and Cette)

Therefore, this is not so a lack of sustainable competitive advantage that drives IT decision-makers, but the idea that it could not be reached  without a big transformation of organizations and culture.  Thus, priority swept on giving capacity to the businesses to transform itself instead of capacity to implement a technology. 

In this new paradigm,  information systems remain a strategic resource because they host organizations neuronal connections : communication systems, collaborations systems, knowledge management, which shapes  business culture of companies and business ecosystems, like customers, suppliers, partners, employees, … 

The ability of information systems to help “tacit workers” of business knowledge world to perform complex transactions, remains a way of sustainable value and a  research target for CIO.

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Wishes 2008 and global IS outlook

I wish all IT managers an happy new year. Health and wealth for you and your families. I hope for all of you many IT businesses in 2008. This is just what i discuss in the short outlook below. Feel free to put your feed-back.

With credit crunch crisis, the rich world fears to slow-down. It expects that buoyant emerging markets will buy its exports and help to recapitalise. As companies are struggling for their bottomline, they use to invest on projects which streamline their business process. This means budget increase for IT Divisions. Moreover, in many cases this kind of ROI rely on IT efficiency.
Then, this new year appears to start in a good shape for IT people, at least in Europe, for the bulk of companies.

Regarding the market,
Consolidation in Business Intelligence solutions put pressure on prices. Customers are almost captive and have poor ways to challenge offers. On the other side, editors are able to cater for integrated solutions. Oracle with AIA provides a full fledged built-in SOA system when a building blocks approach did not succeed to fuel valuable services development.
Virtualization solutions are more mature and show real opportunities of streamlining IT process.
Open-Source solutions become more credible option for big companies. They may be a serious strategic option for challenging giants of software.
Saas services develop, but are often bought by Business divisions. It is not a so good news, since it weakens IT divisions role and make Companies less able to roll out a strong IT policy.
Web 2.0 knocked the door of companies but it did not get in by now.

In conclusion,
2008 starts with good outlooks for IT. Streamlining tendency give to IT Division a more strategic role which may help to improve IT perception. Challenge for CIO’s will be to balance the job to do with budgets. Slow projects will result in slow ROI which impacts directly the bottomlines.

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