AIR, the key to strategic competitive advantage

“Strategy used to be about protecting existing competitive advantage, but not anymore. Today it is about finding the next advantage.” Vijay Govindarajan

Having a long term IT strategy helps not only with finding the next advantage but also alleviates a lot of pain associated with integration of systems and business units. This not only facilitates the synergies between the various business units but also leads to realizing economies of scale by providing better system rationalization as the enterprises drive benefits from prior and future acquisitions.

Over the years businesses have benefitted from the evolving role of Information Technology. IT today is seen as a strategic weapon to ensure efficient and quality controlled processes in order to improve the capacity of product innovation and customer service. The role of IT is no longer marginal. In order to reinterpret the relationship between IT and competitive advantage businesses have to focus on three key aspects:

• Automation
• Innovation
• Responsiveness

AIR as we can put it is the key to strategic competitive advantage.

Automation

ISA (International Society of Automation) defines automation as:

“The creation and application of technology to monitor and control the production and delivery of products and services.”

Business Process automation increases the need for more advanced systems with the ability to handle high volumes of information eliminating the need of intermediate controls and adjustment. It should however be noted that automation is not an end in itself but a means to increase:

• Customer satisfaction
• Business reliability
• Cost Reductions

Innovation

Strategic innovation is not necessarily the same as the technological or product innovation. A lot of technological innovations do not always result in successful businesses similarly a lot of companies like Southwest Airlines, Threadless, Pepsi drive their success through strategies without much technological innovation. On top of it innovation is also very subjective in nature and not an easy phenomenon to fully grasp and agree upon. With this in mind we would probably focus the least on this aspect, not to overlook its importance but to concentrate on the maturity framework itself.

Responsiveness

Greater responsiveness can deliver competitive advantages such as time to market and customer satisfaction. Responsiveness is however not synonymous to performance. While a business can have poor responsiveness on state of the art hardware, even slow hardware can run a responsive system. The key is process optimization. The less silo’ed and segmented the business units are the easier it is to develop a consistent view of the overall business and be more responsive with an increased efficiency and reduced costs.