INFORMATION TECHNOLOGY
AS A WEAPON FOR COMPETITIVE
ADVANTAGE
IT’s Influence Within An
Organization
IT effects revenues and profits in terms of:



Helps market segmentation
Helpful in increasing market share
Allows fast design of new products
Better Management Control
Better Asset & Liability Management
OR
Don’t forget IT is also expensive
Information Technology as
Competitive Advantage
Concept Emerged in 1980.
Slowly been accepted as valid.
Research has shown that very few companies
are able to generate a competitive advantage
through information technology
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Studies Involving IT as CA
How a number of companies successfully
deployed their IT weapon for strategic
advantage
Ex. Eric K. Clemons , Michael Row, “McKesson Drug
Company: a case study of Economist—a strategic information
system”, Journal of Management Information Systems, v.5
n.1, p.36-50, July 1988
Which are the frameworks that can help
managers identify applications that can bring
competitive advantage to their own business
and the use of such frameworks within the
organization
Ex. Ives, Blake, Learmonth, Gordon, "The Information System as a
Competitive Weapon," Communications of the ACM, Vol. 27, No. 12,
December 1984, pp. 1193-1201
Prime question of using IT as CA
Can pioneers achieve rewards
substantial enough to justify the costs
and risks of being prime mover?
Subsequent entrants come at much
lower costs. This is why you must
create switching costs.
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Information Technology as CA
Study of Thirty Major Companies



Including GE, Xerox, FedEx, P&G
15 firms were able to sustain a competitive
advantage in terms of market share or
profitability
Only 6 were able to sustain both
Companies are more likely to fail
Kettinger, William, “Strategic Information Systems Revisited: A study in Sustainability
and Performance”, MIS Quarterly, vol.18 n.1, pg 31-58, 1994
Examples of Firms That
Successfully Used IT
American Airlines: SABRE System
Baxter: Hospital Supply Systems
Mitek: Roofing System
UK Telecom: Detailed Customer Billing
Fed Ex: Real Time Package Tracking
Aligning IT With Business Strategy
Contributions
Commodity Differentiator
Critical
Oil Refining
SABRE System
Useful
Payroll
ICI Paints
The Framework
From Feeny And Ives “IT as a Basis for Sustainable C.A.”
Sustainable advantage
First Pillar
How long until
Response?
Second Pillar
Who can
Respond?
Project Life Cycle
Analysis
Third Pillar
How effective
will response
Be?
Competitor Analysis
Supply Chain Analysis
Pioneer
First Pillar
Vision/idea
Win approval
Project Life
Cycle
Built
•Technology
• Application
• Database
• Knowledge base
Discovery
Followers
Awakening
•Awareness
•Perceive
significance
•Accept/assign
responsibility
Win approval
Build
Project launch
•Enhance
Vision/idea
Win approval
Build
etc.
•Technology
•Applications
•Database
•Knowledge base
Project launch
Feeny, David & Ives, Blake, “IT as a basis for sustainable
competitive advantage” in Managing IT as a Strategic
Resource, Willcocks, Leslie, Feeny, David (eds). McGraw-Hill
Education-Europe, 1997, pp. 43-61
First Pillar
Project Development Life Cycle
Can also be viewed as a sustainability
analysis
For sustainability, an expensive hard to
duplicate system can provide uneven
playing field for years of profitability
and market growth.
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
First Pillar
Project Life Cycle
Deals with the concept of lead
time (Time from launch until
substantive response).
Anytime you use IT to generate
CA, you can expect a response.
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
First Pillar
Project Life Cycle
Four variables of lead time:

Awakening
 Larger the CA, quicker the awakening

Win Approval
 Followers easier to win approval

Project Build
 Does not require vision of prime mover

Project launch
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Second Pillar:
Competitor Analysis
Who Can Respond?
Generic lead-time can be made up easily. May
even leap frog original system.
Therefore a new application that leverages
dissimilarities between the prime mover and
followers makes it more difficult to mount a
response.
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Three Major Areas
of Second Pillar
1. Competitive Scope
Geographical scope
The geographical area that a firm chooses to compete in or locate particular
types of work.
Segment Scope
The breadth of products sold and the buyers served
Vertical scope
The extend to which the firm has elected to pursue backwards or forward
integration strategies
Industry scope
The range of related industries in which the firm competes with a coordinated
strategy.
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive advantage” in Managing
IT as a Strategic Resource, Willcocks, Leslie, Feeny, David (eds). McGraw-Hill EducationEurope, 1997, pp. 43-61
Three Major Areas
Of Second Pillar
2. Organizational Base
Structure
Culture
Physical Assets
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive advantage” in
Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny, David (eds). McGraw-Hill
Education-Europe, 1997, pp. 43-61
Three Major areas
of Second Pillar
3. Information Resources
Technological infrastructure
Application inventory
Databases
Knowledge bases
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Third Pillar:
Supply Chain Analysis
Will A Response Be Effective?
1.) Find exploitable link- Find point in chain where
resources are finite and a limited number of
participants control the link.
2.) Capture Pole Position- Create unique relationships
•
Seek out applications which create unique
relationships with that group
•
In return for benefits, user will put mover in position
of preferred partner
•
Movers continued position is secured against any
equivalent offering only superior will justify switching
costs.
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Third Pillar:
Supply Chain Analysis
3. Keep the gate Closed- Users perceive a
significant tangible/intangible cost of
switching systems. This is the base for
maintaining an advantage
•
•
•
Applications- people have to learn interface
Database- switching can cause loss of all data
gathered and learning of new system
Community- A community may form that leads IT
to be a part of infrastructure, switching loses this
advantage
Feeny, David & Ives, Blake, “IT as a basis for sustainable competitive
advantage” in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny,
David (eds). McGraw-Hill Education-Europe, 1997, pp. 43-61
Case Studies
1. Celera Genomics Group
Presented by: Matt Brickel
2. Dell Computer Corporation
Presented by: Kevin Shipley
Celera Genomics Group
Achievement of Sustainable Competitive Advantage
Through the Use of IT?
Why Choose Celera Genomics
AS A Case Study?
In 1998 the principles of the Applera
Corporation decided to sequence the Human
Genome.
At that time the Scientific Community
thought it would take 3,000 scientists 15 to
20 years.
Celera Genomics did it in 2 years using IT.
www.pbs.org/wgbh/nova/genome/deco_venter.html
Viewed September 11, 2002
Company Background
Established in May 1998
by the PE Corporation and
J. Craig Venter, Ph.D
Formed to generate and
commercialize genomic
information.
Celera Genomics Group is
an operating company of
the Applera Corporation,
F.K.A. the PE Corp.
Dr. Craig Venter Ph.D
www.celera.com/company/home.cfm?ppage=overview&cpage=background
Viewed October 12, 1992
Size of Celera
In Terms of Sales and Profits
Celera Genomics Group:
Net Revenue 2001:
Loss Before Taxes 2001:
Net Loss:
$ 89,385,000
$232,662,000
$186,229,000
Source: Applera Corporation Annual Report 2001
http://media.corporate-ir.net/media_files/NYS/CRA/reports/2001report.pdf
Viewed September23, 2002
Major Products Sold by Celera
Celera Discovery System (CDS)
CDS is a subscription based web enabled system that allows
users access to Celera databases and applications
Moving Into Therapeutics
Celera plans to begin developing and marketing novel
therapeutic drugs identified through its genomic research.
www.findarticles.com/cf_bzwr/m0EIN/2000_April_6/61343200/print.jhtml
Viewed October 12, 2002
Major Characteristics of Celera
Customers
250 International Academic and
Commercial Customers Now Use
Celera’s Celera Discovery System
Some Notable Customers:
1.
2.
3.
4.
5.
Pfizer
Yamanouchi Pharmaceuticals
National Cancer Institute
Harvard University
University of California System
www.celera.com/genomics/home.cfm?ppage=overview&cpage=customers
Viewed September23, 2002
Who Does the CIO Report
To?
Tony White
Chairman, President and CEO of Applera Corporation
Tama Oliver
CIO of Applera Corporation
John Reynders, Ph.D
Vice President, Information Systems, Celera Corp.
Jamie Lacey, Celera Genomics Corporate Communications, interviewed
via e-mail by Matt Brickel, September 24, 2002.
Celera Executive Management
Kathy Ordoñez
President, Celera Genomics
Mark Adams, Ph.D.
Vice President, Genome
Programs
Werten Bellamy, Jr., J.D.
Group Counsel
David Block, M.D.
Executive Vice President, Celera
and Chief Operating Officer,
Celera Therapeutics
Robert Booth, Ph.D.
Senior Vice President, Research
& Development
Samuel Broder, M.D.
Chief Medical Officer
Ugo DeBlasi, CPA
Vice President, Finance
Jason Mollé
Senior Vice President, General Manager,
Online Business
Gene Myers, Ph.D.
Vice President, Informatics Research
Scott Patterson, Ph.D.
Vice President, Proteomics
John Reynders, Ph.D.
Vice President, Information Systems
Bridgette Robinson, A.B.D.
Vice President, Human Resources
Michael Venuti, Ph.D.
Senior Vice President, Research and
General Manager
http://media.corporate-ir.net/media_files/NYS/CRA/reports/2001report.pdf
Viewed September23, 2002
How Many IT Personnel?
50 people are
The most recent count shows that
employed in an IT capacity at Celera.
Jamie Lacey, Celera Genomics Corporate Communications, interviewed
via e-mail by Matt Brickel, September 24, 2002.
What is Celera’s Annual IT
Budget?
Celera does not disclose information
pertaining to IT budget.
In 2001 Celera Spent $164,693,000 on
research and development.
http://media.corporate-ir.net/media_files/NYS/CRA/reports/2001report.pdf
Viewed September23, 2002
Description of the Critical
Differentiator
Celera’s process uses robots that conduct polymerase chain reaction
PCR processes to magnify and read DNA chains.
http://allserv.rug.ac.be/~avierstr/principles/pcrani.html
300 robots @ $300,000 each =
$90,000,000
Each rung on the DNA chain contains 2
out of 4 possible letters; A, G, C or T
Human Genome is 3 billion letters
www.pbs.org/wgbh/nova/genome/deco_venter.html
Viewed September 11, 2002
Description of the Critical
Differentiator
Celera’s computer’s hard drive has 100
terabytes of data
1 terabyte = 1,000 gigabytes
1 gigabyte = 1,000 megabytes
Perspective, my new Dell computer has
a 40 gigabyte hard drive
X 2,500 = Celera Hard
Drive Capacity
www.pbs.org/wgbh/nova/genome/deco_venter.html Viewed September 11, 2002
Description of the Critical
Differentiator
Celera uses a network of computers to
process the data from the hard drive
Each computer has 4 alpha chips in it
20,000 CPU hours to decode the Human
Genome
One CPU hour = Use of 1 Alpha Chip for 1
Hour
Celera decoded Human Genome in one shift!
www.pbs.org/wgbh/nova/genome/deco_venter.html Viewed September 11, 2002
Celera Discovery System
Overview
“The Celera Discovery System is an integrated,
easy to use, web-based discovery platform that
combines the most comprehensive set of genomic
and biological data along with powerful
visualization and analysis tools. It allows
researchers to search, analyze, interpret and
manage their genomic information in one place
thus saving valuable time, reducing costs and
accelerating their research.”
www.celera.com/genomics/academic/home.cfm?ppage=cds&cpage=default
Viewed October 12, 2002
History of the system:
• In 1998 the principals of Applera Corporation decided to
sequence the human genome.
• The thinking at the time, by people outside of Applera Corp.,
was that it would take 3,000 scientists 15 to 20 years to
sequence the human genome.
• The people at Applera thought that it could be done by 2002
using information technology.
• They formed Celera Genomics group to begin the process.
• They had an idea that they could use Robots to automatically
conduct PCR processes but they had to build them first.
• Applied Biosystems, Celera’s sister company, built the robots
from scratch.
www.pbs.org/wgbh/nova/genome/deco_venter.html Viewed September 11, 2002
History of the system:
• The building of these robots was the impetus for the genome
race.
• Once the robots were built to perform and read the information
derived from the PCR processes, Celera had to find computers
to store the data and then process it (sequence the Genome).
• Once the system was assembled Celera started out by
sequencing the genome of simple organisms that had already
been sequenced so that they could verify that it worked.
• They then sequenced the mouse genome, and then they
sequenced the human genome in 2000.
• Shortly thereafter the Celera Discovery System was launched
and in 2001 the current advanced version was launched.
www.pbs.org/wgbh/nova/genome/deco_venter.html Viewed September 11, 2002
Was the System Designed for
Competitive Advantage Or Was It
a Surprise?
The people at Celera had the idea that they could sequence the
human genome faster than was thought possible at the time.
Nobody new for certain that it was going to work.
Dr. Craig Venter was quoted as saying: “I am not afraid to take risks. I
mean I said at the beginning that either this would be one of the most
spectacular success stories in history or the biggest flame-out in
history. There was clearly a risk element to this. In fact, when I look at
all the things that could have failed and could have gone wrong, its
stunning perhaps that it did work as well as it did.”
www.pbs.org/wgbh/nova/genome/deco_venter.html Viewed September 11, 2002
Was the System Designed for
Competitive Advantage Or Was It
a Surprise?
Essentially Celera is not worried about others replicating what they
have done because there is really no need to do so. Celera willingly
shares the information that they have for a subscription fee.
In the case of Pharmaceutical companies the fee is negotiated and is in
the millions of dollars.
For academic researchers there is a pricing schedule:
www.pbs.org/wgbh/nova/genome/deco_venter.html Viewed September 11, 2002
Was the System Designed for
Competitive Advantage Or Was
It a Surprise?
CDS pricing schedule:
Number of User(s) (1 year term)
Additional Cumulative Annual User Fee Per User+
Per User
$30,000 each
Number of User(s) (3 year term)
Additional Cumulative Annual User Fee Per User*
1-5 Users
$17,000 each
6 - 10 Users
$15,000 each
11 - 25 Users
$12,000 each
26 - 55 Users
$11,000 each
56 - 75 Users
$10,000 each
76 - 100 Users
$ 8,500 each
101 - 250 Users
$ 7,000 each
+Basic subscription (Human Reference SNP Database not included)
*All fees should be calculated based on a 3-year term (Human Reference SNP Database not included).
www.celera.com/genomics/academic/home.cfm?ppage=pricelist&cpage=default, Viewed Oct. 12, 2002
How Do Customers Interact
With the System?
The Celera Discovery System (CDS) is a web based tool
that is accessed through www.celera.com. They can
use the information available there to conduct their own
research which can be saved on the customers computers
behind their own firewall.
Does Celera’s Use of IT Give Them a
Sustainable Competitive Advantage?
Pillar 1: Project Life Cycle analysis: How long until a
response?
•
•
•
•
Awakening
Approval
Building the System
Project Launch
The time it would take the government to respond would likely be
substantial and its effectiveness uncertain. Celera’s competitive
advantage is supported by the first pillar.
Does Celera’s Use of IT Give Them a
Sustainable Competitive Advantage?
Pillar 2: Competitor Analysis: Who can respond?
•Competitive Scope
•Organizational Base
•Information Resources
As stated previously the most likely competitive response would come
from the US Government. The government does not have the
competitive scope that Celera has. They do not have the necessary
organizational base. They do not have the necessary information
resources assembled. Celera’s competitive advantage is supported by
the second pillar.
Does Celera’s Use of IT Give Them a
Sustainable Competitive Advantage?
Pillar 3: Supply Chain Analysis: Will Copying Help?
Supply Chain Analysis: Will Copying Help?
•Find Exploitable Link
•Capture Pole Position
•Keep the Gate Closed
Even if the government copies what Celera has done it is
unlikely that Celera’s customer base will switch.
Overall Conclusion
Celera’s systems provide a sustainable
competitive advantage that is supported by
the three pillar model.
Dell Computer Corporation
Enabling business processes through information
technology?
Company Background
Founded in 1984 by Michael Dell
Started selling computers out of his dorm room
Started by building computers with components
made by other companies to meet customers needs.
This became the basis for Dell’s direct-model
Today, Dell is valued at over 26 billion dollars
Size of Dell
In terms of Sales and Profits
Dell Computer Company:
Net Revenue
February
2002
2001
2000
$31,168
$31,888
$25,265
2002
2001
2000
$1,246
$1,777
$1,666
Net Income
February
Dell Annual Report February 2002
Major Products Sold by Dell
Enterprise Systems servers and storage
Network switches and workstations
Notebook and Desktop computers
Peripheral Products
Various services and technical support
Major Characteristics of Dell’s
Customers
The companies customer’s range from large corporations,
government agencies, healthcare institutions, small
businesses, and individual consumers
No customer represents more than 10% of business
Range from relational to transactional
More than $3 million a day in internet sales
Most sales to business or government(>70%)

Shell, Exxon, MCI, Ford, Toyota, Boeing
Greater than 30% of sales from foreign customers
www.mhhe.com/business/management/thompson/11e/case/dell5.
html
Dell’s Chief Information Officer
Randy Mott, former CIO of Wal-Mart





Reports To Michael Dell
Oversees more than 20 strategic and over 100
other major projects at any given time
Consults with executive team and oversees eight
direct subordinates
Constantly meets with customers to understand
customer and sales force needs
Challenge is to make sure department uses the
right systems to support Dell’s model.
Worthen, Ben.: “Travelin’ Man.” CIO Magazine. Mar1, 2002
Dell’s IT Department
More than 2,500 IT personnel
Uses Cross-Functional Teams

Global Matrix Team
 250 members
 Ensure that Dell website functions correctly
 Find enterprise solutions to help
 Improve Productivity
Worthen, Ben.: “Travelin’ Man.” CIO Magazine. Mar1, 2002
What is Dell’s IT Budget?
Not Available
Research Development and Engineering Costs
February 2002
$452
February 2001
$482
February 2000
$374
Dell Annual Report February 1, 2002
Description of the Critical
Differentiator
Dell’s Direct Model
Manufacture
of
Components
by suppliers
Purchase
by Users
Customized
Assembly
Service
And
Support
Critical Differentiator
Advantages of Dell’s Direct Model
Eliminated time and costs of distributing through
independent retailers.
Eliminated need for various computer models
No longer need to discount slow selling PC’s before
new models are introduced
Eliminated Mark-Ups.
www.mhhe.com/business/management/thompson/11e/case/dell5.html, October
16 2002
Critical Differentiator
Supply Chain Management
Dell manages the relationships from the original
supplier to the end customer.
‘Supply chain management shortens the cycle
between the component, the manufacturer and the
end customer. We are allowing them to almost touch
each other.’ –Michael Chong, Tech. Mgr.
Dell looks for opportunities to cut costs throughout
the process.

Shaving .1% off materials costs has a bigger impact than a
Ten percent raise in manufacturing productivity
---. “How Dell Keeps from stumbling”. Business Week. May 14, 2001, page 38b
ITAC online Dell case study, see reference
Critical Differentiator
IT’s Role in the Supply Chain
Dell uses information technology to continually refine
the supply-chain to remain the low cost producer.
Key Components:
 i2 suite software
 Valuechain.dell.com
 Dell.com
 XelusPlan
Critical Differentiator
i2 Suite Software
Implemented in 1999
Planning
 i2 TradeMatrix Supply Chain Planner
 i2 TradeMatrix Buy Solution
Execution
 i2 TradeMatrix Factory Planner
 Rhythm Collaboration Planner
Critical Differentiator
i2 Suite Software
“On the planning side, we decided to use the i2
TradeMatrix Supply Chain Planner and i2 TradeMatrix
Buy Solution software to communicate our materials
requirements to suppliers. On the execution side,
we're deploying the i2 TradeMatrix Factory
Planner and Rhythm Collaboration Planner to
schedule our factories and communicate materials
requirements to the supplier hubs,"
- Eric Michlowitz, Dell’s director of Supply Chain
http://www.dell.com/us/en/gen/casestudies/casestudy_dell_i2.htm,
October 16, 2002
Critical Differentiator
i2 Suite Software Advantages
Enhances efficiency of the pull system

Only .05% of costs to obsolete inventory
Precise delivery of components

Can specify what door and what time components
arrive
Orders arrive exactly when needed

Factory has five to six hours worth of inventory
Allows for order prioritization

Three times the number of units per square foot
---. “How Dell Keeps from stumbling”. Business Week. May 14, 2001,
page 38b
Critical Differentiator
i2 Suite Software Advantages
“It was important for us to have a global view
of Dell's entire supply chain. We wanted to be
able to see - on a real-time basis - what
materials are available at the supplier hubs,
what suppliers have committed to worldwide
and what demands they haven't been able to
support." Michlowitz
http://www.dell.com/us/en/gen/casestudies/casestudy_dell_i2.h
tm October 16, 2002
Critical Differentiator
ValueChain.Dell.Com
Secure extranet that allows suppliers to
collaborate in managing the supply
chain


Provides suppliers with the ability to drop
off invoices, check engineering change
orders, cost reports, and overall
performance.
Allows suppliers to more accurately
forecast future demand.
ITAC online Dell case study, see reference
Critical Differentiator
ValueChain.Dell.Com
Enhances Supplier relations



Number of Suppliers has dropped from
1,000 to 100
90 percent of Material Supplies purchased
online
Suppliers are more likely to collaborate
 Color of monitor example
Critical Differentiator
Dell.com
Converted to XML in 1999

Uses eXcelon
Redesign uses customerization




Takes into account local factors
Remembers product purchased
Reaches 80 countries with 22 different languages
Maintains 20,000 pages in service section alone
http://www.wdvl.com/Authoring/Languages/XML/Conferences/XML99/
dell.html October 16, 2002
Critical Differentiator
XelusPlan
Service logistics program

“XelusPlan allows us to forecast, plan, and track
forecast accuracy against actual demand. It
provides us with a single, centralized database
and standard planning procedures.”
–Don Smith, business analyst
Focuses on service organization

More than 6,000 orders a day
http://www.xelus.com/CaseStudies/cs_dell.asp, October 16, 2002
Critical Differentiator
XelusPlan Advantages
Quickly process orders
Use scenario analysis
Appropriately adjust inventory levels to
maintain proper service levels
In continuously changing environment
allows Dell to forecast demand for both
new and old components
http://www.xelus.com/CaseStudies/cs_dell.asp October 16, 2002
Reasons IT generates a
Competitive Advantage
Cuts materials costs
 Materials cost account for greater than $21
billion
 More than 70% of revenue spent on
materials
Reduces inventory levels and cycle time
 Very little obsolete products
Reduces transaction costs

Most transactions occur online
Shah, Jennifer. “Dell writes the book on efficiency.”
EBN. Dec 17,2001. pg32
Reasons IT generates a
Competitive Advantage
“Putting Technology behind the Supply Chain
process has also provided a gateway for
greater efficiencies, facilitated
Communications with suppliers, and improved
operations between internal groups”

Jennifer Shah, EBN
Shah, Jennifer. “Dell writes the book on efficiency.”
EBN. Dec 17,2001. pg32
Does Dell’s use of IT Give Them a
Sustainable Competitive Advantage?
Pillar 1: Project Life Cycle: How Long Until Response?
Awakening
Approval
Building the System
Project Launch

Dell’s system is largely internal and complex. This makes it
hard for the competition to build and introduce a similar
product.
Does Dell’s use of IT Give Them a
Sustainable Competitive Advantage?
Pillar 2: Competitor Analysis: Who can respond?
Competitive Scope
Organizational Base
Information Resources



Competitors were too vertical and had too many products.
Structure, cultures, and physical assets were geared toward
other system
Competitors had investments in current inventory methods
and technological infrastructures
www.mhhe.com/business/management/thompson/11e/case/dell7.html October
16, 2002
Does Dell’s use of IT Give Them a
Sustainable Competitive Advantage?
Pillar 3; Supply Chain Analysis: Will Copying Help?
Find Exploitable Link
Capture Pole Position
Keep the Gates Closed

Found points in supply chain where participants control the
link, created unique applications that encourage strong
relationships with suppliers and customers, found ways to
ensure that suppliers and customers will continue to be loyal
to Dell.
Dell Conclusion
Dell uses IT to:


Enable its business model
Create a sustainable competitive
advantage over its competitors.
Conclusion
IT is important to an organization
because it effects profits, revenues, and
a company’s business systems
IT can be used to create a sustainable
competitive advantage
Companies can succeed by following
certain rules regarding the use of IT
More companies fail than succeed
Effective Use of IT
Celera’s System Meets the Criteria Set
Forth by the Three Pillars Model
 Project Life Cycle Analysis
 Competitor Analysis
 Supply System Analysis
Effective Use of IT
Celera Genomics Group

Celera Genomics Group Used IT To:
 Develop a ground breaking system enabling users to
perform accelerated genome research



Research institutions do not have to invest the vast
amounts of capital required to perform this type of
research
The genome of any organism can be mapped
Will aid in the discovery of new medicines and
therapies
 Create a new business niche

Automated genome mapping and research at
previously impossible speed
Effective Use of IT
Dell’s System Meets the Criteria Set
Forth by the Three Pillars Model
 Project Life Cycle Analysis
 Competitor Analysis
 Supply System Analysis
Effective Use of IT
Dell Computer

Dell used IT to:
 enable its business model
 enhance business processes
 Manage its supply chain





Better supplier relations
Real-time management
Forecast and respond to demand
Reduce Inventories
Improve customer relations
Lessons for the CIO
Factors in the Success of IT





Complexity of system
Switching costs
Dissimilarities between prime mover and
competition
Use of exploitable link
Customers understand system
Lessons for the CIO
Make a complex system that is hard to
replicate
Companies had CIO’s that were valued
by their organization
Companies viewed IT as an important
part of creating a competitive
advantage
Lessons for the CIO
Used weaknesses of their competitors
to leverage dissimilarities
Captured the Pole Position
Found ways to deter customers from
switching to a competitor
Used the right system
Information Technology as
Competitive Advantage
Questions
http://www.itac.ca/client/ITAC/ITAC_UW_MainEngine.
nsf/cd0bbbe7b8237e1e85256482005b6998/6baed26b
b718c58f85256a23004d7688!OpenDocument
10/17/02
Additional References
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http://www.itac.ca/client/ITAC/ITAC_UW_MainEngine.nsf/cd0bbbe7b8237e1e85256482005b6998/6
baed26bb718c58f85256a23004d7688!OpenDocument 10/17/02
Blau, John, “E.U mulls How To Boost Its R&D” Research Technology Management, Vol. 45,
Sept./Oct. 2002, pp. 5-6.
Thackray, John, “Bioinformatics Grows Legs” Electronic Business; Highlands Ranch, Vol. 27, July
2001, pp. 76-82
Mearian, Lucas and Weiss, Todd R., “HP User Defects; EMC, IBM Score” Computerworld;
Framingham, Vol. 36, Sept. 30, 2002, pp. 1,16
Anonymous, “Tech Quarterly: Microchips In the Blood” The Economist, Vol. 364, Sept. 21, 2002, pp.
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