Reference no: EM13667774

Elizabeth George
IT alignment and competitive advantagesIT alignment and competitive advantages
COLLAPSE
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How IT could still create competitive advantage for a company in current business environment? How to avoid IT alignment trap as mentioned in the Sloan paper?



Sloan paper start discussing about how lack of alignment can doom IT either to irrelevance or failure by quoting an example of Charles Shwab & Co.

The three critical principle that helps an organization to move into high effectiveness is:

Emphasizing simplicity - A company can reduce it complexity by implementing company wide standard and replacing legacy system.Such an approach require a greater investment of time and money and lead to lower cost only later. Standardized wide variety of application generate information faster than ever before.

Rightsourcing capability: Company began to chose right source of capability while maximizing effectiveness and minimizing cost thorough outsourcing. But each company need a deep understanding about the project to be outsourced.

Creating End to end Accoutability: Companies can build effectiveness by holding IT and business accountable for delivering expected result on time and on budget. A good governance structure may need to set firm parameters and keep IT on track . Enforcing a strict policy like no more than four new technology a year by T-mobile may help organization to maintain its effectiveness.

Company is effective and aligned , where IT spending is less than the average and growth is higher and where IT appears to be enabling growth rather than inhibiting it.

I am explaining this with an example of how FedEx use IT implementation to gain competitive advantage. FedEx runs the second-largest civilian air fleet in the world, with some 700 aircraft and 700,000 vehicles shipping packages and freight around the world

The Cosmos Tracking system in FedEx help to create a competitive advantage through differentiation for FedEx. It took years for DHL, UPS to create such a tracking system like FedEx.FedEx.com bought a strategic differentiation for FedEx in nineties. FedEx was the first in industry to do anything with true functionality on dotcom when it got tremendous leverage on that. FedEx Powerpad is another technology rolling out to thousands of FedEx Express couriers.

Strategic alignment between IT and business is most important objective that FedEx has in IT, beyond making correct technical decision and doing its job efficiently and effectively. . Keeping Fedex operation inline it has to be tightly integrate with business. FedEx puts its IT staff through a program and process to make sure they understand business strategy. The program is named - Partner with the Business

Partner with the Business is built on four main tenet

Collaboration
Governance
Communication
Innovation.
One of the barrier for FedEx is the rising competitors like UPS that have similar services. So differentiation boils down to the experience customers have on the Web and the different options available. So both FedEx and UPS is trying to deploy technology that allows to introduce new services, provide customers with total information about shipments, and provide training so that all employees clearly understand its services and the technologies that make them possible so they can leverage and communicate that information for the customer.