IT and Competitive Performance

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The enhanced capabilities of IT already help organizations to provide product/
service features that are valued by customers:
● Lower prices (through reduced costs) – particularly where the product is
information, such as in financial services.
● Improved pre-purchase information (for example, website browsing, customer
bulletin boards).
● Easier and faster purchasing processes (for example, online ordering) and
delivery. This can allow customers to move closer to just-in-time with their
business processes.
● Shorter development times for new features. These, in turn, might give pur-
chasers advantage with their customers.
● Product or service reliability and diagnostics are being improved (for example,
engine management systems in cars).
● Personalised products or services without price premium (for example, cus-
tomising computer architecture for each purchaser).
● Improved after-sales service, for example automatic service reminders.
One of the most important implications for organisations producing or dis-
tributing physical products has been that competitive advantage is more likely to
be achieved through service performance (for example, speed and reliability of
delivery or maintenance) than in product features per se. So managers need to
conceive of their business not as a product company with support services but
as a service company which supplies a product. This has required a profound
mindset shift for some managers when considering which competences are most
crucial to competitive performance.


If customers value some or all of these features listed above then competitors are
likely to learn quickly how to provide those features. Therefore the threshold
standards that need to be achieved to survive in a market will rise rapidly. So
providers who are unable to deliver these higher standards will fall out of the
market.  competitiveness and standards
of performance are determined not just within a particular industry or sector.
Customer expectations of service standards, for example on speed or reliability,
become the universal benchmarks crossing all industries and public services.

The importance of market knowledge to competitiveness applies in all sectors
of industry, commerce and the public services. This knowledge results from
competences in analysing the subtle differences between customer needs in dif-
ferent parts of the market and building product or service features to meet these
needs. Most organisations have colossal
amounts of raw data about these issues and the IT processing capacity to analyse
the data (both of which are necessary). But they are not good at this data-mining
process, which will convert data into market knowledge. Data mining18is the pro-
cess of finding trends, patterns and connections in data in order to inform and
improve competitive performance. For example, building up individual customer
purchasing history as a basis for targeting promotional offers; identifying connected
purchases (for instance, readers of particular newspapers or magazines have sim-
ilar purchasing patterns for other goods and services); or simply finding under-
lying drivers of demand.
Data mining can also help with profitability analysis as a basis for creating
priorities for customer retention. In financial services data mining can also help
with credit risk assessment, customer attrition forecasts and detection of fraud.

The strategic role of information in organizations will need to be different
depending on the way in which the organisation is positioning its products or
services in the market:
● Routinisation (positions 1 and 2 on the strategy clock) – where the role of infor-
mation (usually IT systems) is to reduce drastically the cost of transactions
with customers, suppliers or channels. For example, by moving the customer
towards self-service (such as websites replacing face-to-face selling).
● Mass customisation (position 3 on the strategy clock) – where information sys-
tems can create more product features that customers value (as discussed
above) at the same or lower price. This is a major battleground in many sec-
tors at the present time – such as consumer electronics.
● Customisation (positions 4 and 5 on the strategy clock) – where information
can be provided to customers in advance of any face-to-face or telephone con-
tact (for example, through websites). Personal contact is then reserved for
advising a much more knowledgeable potential customer.
It should be remembered that significant parts of the market in most sectors con-
sist of customers who do not value the features that IT-based systems can offer.
So targeting these IT laggards provides a continuing opportunity for those
providers who are especially good at providing information in more traditional
ways, for example personal face-to-face service.

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