We all want to grow our business, right? And for most of us, growing means we need to leverage our competitive advantage. Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. And so it’s important to understand exactly what your business’ competitive advantage is and how you can wield it to win customers.
Information technology can play a significant role in augmenting your competitive advantage, but businesses must ensure that the time, money, and energy they spend on IT is properly placed.
When I think of a business’ technology and how it relates to supporting competitive advantage, I think of the layers of a pyramid. (And yes, it sort of maps to Maslow’s hierarchy for you Psychology buffs). The higher you move on the pyramid, the more likely it is that technology increases your competitive advantage.
Table Stakes Layers:
The bottom two layers of the pyramid are “table stakes” layers. Table stakes are the minimum requirements to be in business or to enter a market. In poker, table stakes are the minimum bet before you can join the game. You can’t come to the table without the table stakes.
- Infrastructure: At the bottom of the pyramid lies your company’s infrastructure: servers, switches, computers, routers, networking, etc. Practically every one of your competitors has a system that is “enough” to run their business. So, unless you have something profoundly better or totally different, infrastructure typically does not add to your competitive advantage.
- Compliancy, Security, Disaster Recovery: These systems are another table stakes layer. It doesn’t make you better or different to be compliant, it just allows you to legally play in the game. Security and Disaster Recovery aren’t significant competitive advantages, either. Clients expect you to keep the data you have about them secure. They expect your systems to be up and running even in the face of disaster. If you can’t do that, you shouldn’t be at the table.
Competitive Advantages Layers:
Your company is unique. The services and products you offer make the businesses and lives of your customers better. Technologies that help you amplify that uniqueness will strengthen your competitive advantage. These technologies are typically software solutions that increase productivity, improve business insight, or mitigate risk.
- Business Productivity and Communication: Most companies have business productivity and communications software. If you use Microsoft Office, Exchange, Lync or something similar, you use business productivity technology. Since most businesses have this technology, adoption and proficiency is key. Investing in employee training in these technologies can really give you an edge.
- Line-of Business Applications (LOB): It’s likely that you own an application that was designed to support the specific needs of your industry. It could be a “mission-critical” system that your business depends on to function. Oddly enough, some studies suggest that on average, 40% of features and functions in software are never used and an additional 20% are rarely used. While it may not make sense for you to use all the bells and whistles within your LOB application, it’s possible that your software has some functionality that could give you a competitive advantage if you simply utilized it. When was the last time you spent some focused time re-evaluating the software you already own? There’s gold in them thar LOBs!
- Custom Applications: There’s a pretty good chance that the LOB software you are using was developed as a custom application by someone in your industry. Perhaps one of your competitors or a supplier was trying to address the challenges and opportunities facing your industry. Custom applications are the pinnacle of The Technology Competitive Advantage Pyramid because these applications can give you tools and offerings that no one else in your industry has!
Businesses who seek to grow should be asking themselves, “Where is my IT time and energy being spent?” If most of their resources lie in maintaining the table stakes layers of their technology, it’s possible they may be missing out on the significant benefits that Information Technology can bring them. One strategy many businesses are embracing is the outsourcing of table stakes technologies (infrastructure and network support, DR, security, etc.) to Managed Network Services providers. There are some great Managed Network Service providers out there and choosing the right one is key. I will write about some things you should consider before selecting a MNS partner in my next post.