On-the-job Hazards: Competition

Quickly recognizing customer needs and using existing technologies to meet them helps these Premier 100 IT Leaders stay a step ahead of rivals.

One of the more difficult and risky jobs of an IT leader is to use technology to create a competitive edge. A wrong move can cost a company money, its reputation and market share if a rival gets it right first.

To minimize such risks, top CIOs develop processes for nurturing new ideas in their companies and recognizing the good ones. They look for technologies they can leverage across the organization. They investigate the latest whiz-bang software and hardware but usually place their bets on extending and improving existing systems.

At Gap Inc., for example, leveraging technology means using existing technology -- fast networks and Web access -- and applying it to point-of-sale systems to improve the retailer's customer service.

American Express Co. also operates on the principle that the best new technologies are those that take advantage of existing systems. For instance, the company is linking an express payment system to a device that attaches to a customer's key chain. The system is built, in a Lego-block fashion, atop Amex's existing infrastructure.

At Bank One Corp., having a competitive edge means understanding that near-perfect IT service delivery, as in the case of Web site availability, isn't good enough. The key is to keep focused on customer impact.

Tune In to Customers

As important as technology deployment is in gaining a competitive edge, CIOs say that having a good process in place for identifying customer needs early and then developing technological solutions to meet those needs is at least as important.

Technology "has to have a clear and compelling business value for us," says Dave Ruby, senior vice president of information resources shared services at Marriott International Inc. in Washington. "We don't want to be testing a lot of bleeding-edge technology with our guests."

For Marriott, competitive advantage means identifying customer needs early. That's accomplished in part by a technology steering committee made up of all the key business units.

Today, broadband access may seem like a standard amenity to offer hotel guests, but it wasn't obvious when Marriott began investigating it more than four years ago. Among the questions it faced was whether customers would need PCs in their rooms or would bring their own laptops. Marriott decided against offering PCs, a choice that turned out to mesh with the habits of its laptop-toting customers. And because it identified the need for broadband early, Marriott got a jump on offering high-speed Internet access.

The chain has already installed high-speed access in more than 1,000 of its 2,600 hotels. "We are significantly ahead of our competition," says Ruby.

"I think timing and speed are very important -- extremely important," says Ken Harris, senior vice president and CIO at San Francisco-based Gap. IT managers can't wait for business units to bring them their problems. "You've got to be out there, on the front lines all the time, talking with your business partners and understanding what their needs are," Harris says.

And competitive advantage is gained not simply from having a particular technology but by the the way the technology is used, he says.

"You may have two different companies using the same technology, but using them in different ways, [with] one getting much more benefit and value out of it," Harris says.

CIOs say that acting quickly is crucial to gaining so-called first-mover advantage. New point-of-sale technologies that allow retailers to immediately let a customer buy a product via the Web if it isn't available in the store are available to all retailers. But while many competitors have hedged and delayed, Gap has moved forward, says Harris.

Know the Business Inside and Out

Moving quickly also means that IT has to understand the business.

Austin A. Adams, CIO at Chicago-based Bank One, says his company offers extensive training to its IT staff on business operations. Companies that can respond best to competitive challenges "are those that best know and understand the business," he says.

For example, even though the company's Web availability, at 99.7%, is nearly perfect, Adams says any downtime is viewed in terms of the number of customers affected rather than IT performance levels. Improving service is key to establishing a competitive advantage, he says.

"We report our performance in terms of negative customer impact," says Adams. "That's what the business people feel -- they don't care whether we're 99.7% [available]."

American Express Executive Vice President and CIO Glen Salow says he believes the best solutions take existing capabilities and put them together in a new fashion. For instance, New York-based Amex has developed a travel card that works just like its 100-year-old traveler's check, except that it's reloadable. It has the potential to be a real "game changer" in the industry, Salow says. But the new product is built on existing capabilities. "It's not like we had to go out and create a new traveler's check capability," says Salow.

The point, he says, is that any technology -- old or new -- may lead to competitive advantage. Although he does concede, "I never found a new use for punch cards."

Copyright © 2004 IDG Communications, Inc.

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