Using Information Technology for Competitive Advantage
Jolanta Zadlo & Gary Gray
MIS 480 GROUP PRESENTATION
IT and Competitive Advantage
Sustainability of Competitive Advantage
Case Studies Sabre GE
Conclusion
IT as a Competitive Weapon
Definition:Information Technology
Information Technology (IT) is the amalgamation of hardware, software, data, people and procedures that enables or inhibits business objectives depending on management’s involvement in IT.
Source: Why General Managers Need to Understand Information Technology, lecture notes, Lacity, 2002
How the information revolution affects competition
Changes industry structure thereby altering the rules of competition
Creates competitive advantage by giving new ways to outperform rivals
Spawns whole new businesses
Source: How information gives you competitive advantage, Porter and Millar, 1985
How IT creates a competitive advantage
Differentiate a product or service
Improve business processes (lower costs)
Change a business structure
Create new business
Source: IS 480 lecture notes, Lacity, 2002
Competitive advantage comes from critical differentiators
Source: IS 480 lecture notes, Lacity, 2002
CriticalCommodities
Critical Differentiators
Useful Commodities
Eliminate/Migrate
Critical
Useful
Commodity Differentiator
IT as a Competitive Weapon -Sustainability
Very few companies sustain their competitive edge over the long term
Sustainability occurs when it is difficult or impossible for the competition to respond
“IT as a Basis for Sustainable Competitive Advantage,” Feeny & Ives
IT as a Competitive Weapon -Sustainability
IT Resources-Easily Duplicated
• Capital for investment
• Proprietary technology
• Technical Skills
“IT as a Basis for Sustainable Competitive Advantage,” Feeny & Ives
IT as a Competitive Weapon -Sustainability
IT Resources-NOT Easily Duplicated
Managerial IT Skills
• Understanding business needs
• Collaborating with colleagues
• Managing market & technical risk of innovation
“IT as a Basis for Sustainable Competitive Advantage,” Feeny & Ives
IT as a Competitive Weapon -Sustainability
Sustainable Advantage
Lead Time Competitive Asymmetry
Pre-emption Potential
“IT as a Basis for Sustainable Competitive Advantage,” Feeny & Ives
Supply System Analysis
Competitor Analysis
Project Life-cycle Analysis
1. How long before a competitor responds?2. Which competitors can/will respond?3. Will the response be effective?
IT as a Competitive Weapon -Sustainability
3 Pillars Supporting Sustainable Advantage
• Lead Time• Information leaks• Followers take short cuts• Followers implement better solutions
• Competitor Analysis(Difficulty of competitor to respond or copy application)
• Supply system analysis• Market capture• Switching costs
Case studies selected:
AmericanAirlines
General Electric Company
Sabre Holdings Corporation Current Company
Background
S&P Fortune 500 Company $2.1B in revenues in 2001
TSG – “The Sabre Group”Traded on the NYSE – 1996Current Price – about $21
Headquarters – Dallas/Fort Worth, TX
Source: www.sabre.com
Sabre Holdings CorporationCurrent Company Background
7,000 employees in 45 countries
Sabre connects more than 60,000travel agency locations worldwide, providing content for 400 airlines (complete flight data, seat maps, etc) , 55,000 hotel properties (room availability, type, price), 52 car rental companies, nine cruise lines, 33 railroads and 229 tour operators.
Source: www.sabre.com
Sabre Holdings CorporationFinancial Data
Revenues from operations declined 19% in 2001 due to 9/11 events and lower US and worldwide travel volumes, but were more than compensated for by revenue from outsourcing to EDS, profits did not fare as well.
Source: Sabre’s 2001 Summary Annual Report
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
1997 1998 1999 2000 2001
Revenues in Billions
$0
$50
$100
$150$200
$250
$300
$350
1997 1998 1999 2000 2001
Earnings in Millions
Sabre Holdings CorporationFinancial Picture
Source: Sabre’s 2001 Summary Annual Report
2001 Revenues by Business
Travel Marketing & Distribution
78%
AirlineSolutions
9%
Travelocity11%
GetThere2%
Sabre Holdings CorporationInformation Technology
Both Carol Kelly, Senior VP and CIO, and Craig Murphy, Senior VP and CTO report to the CEO
Sabre outsourced its mainframe and data center to EDS. However, Sabre has retained a sizeable investment in IT.
Source: Interview of Jim Menge, VP Technology Sales, Sabre
Semi-
Automatic
Business
Research
Environment
What is Sabre
Source: Computerworld, Technology Takes Flight, Sep 2002
Source: Computerworld, Technology Takes Flight, 9/02
American Airlines developed Sabre to automate the process of reserving airline seats.
IT to Improve Business Processes:
American Airlines: improves a business process
1959 – American Airlines (AA) and IBM sign a contract for the joint development of a real-time reservation system that combines in a centralized electronic unit, 2 basic reservation records – the passenger name record (PNR) and the seat inventory. AA spends $150M on the development of the system. Sabre was based upon technology created by MIT for DOD.
Source: Data Management, Sep 1981 & Computerworld Mar 1999
American Airlines: improves a business process
AA’s reservation process used a system based on computer cards and teletypes and required the efforts of 12 people, at least 15 steps and up to 3 hours to record
a roundtrip reservation. The error rate was 8%.
Sabre reduced costs and the error rate.
Source: www.sabre.com
1960 – American Airlines (AA) installed the first Sabre system, a computer reservation system (CRS). Represented state-of-the-art technology and processed 84,000 calls per day. Research, development and installation cost $40 million with an investment of 400 man-years of effort.
Source: www.sabre.com
American Airlines: improves a business process
1964 – AA completes cutover to Sabre with a coast to coast network in the US.
Sabre is the largest, private real-time data processing system.
Source: www.sabre.com
American Airlines: improves a business process
Competitive Edge
Competitive advantage from process change
Source: www.sabre.com
Competitive Edge
AA saved 30% of its investment in staff alone
Sabre delivers an error rate of less than 1%
Sabre creates a competitive edge that lasts for 5 to 7 years
Source: www.sabre.com
Competitive Edge
Other CRS providers today: Apollo – rolled out by United in 1976 Worldspan – Delta, Northwest and TWA Amadeus – largest foreign owned CRS
Sabre continues as the industry leader today
Worldspan is the only airline owned CRS
Source: www.sabre.com and BTMC records
Sabre System History – 1970s
1972 – Sabre system upgraded to IBM 360s
1976 – Sabre system first installation
in a travel agency – by year end 130 locations
and captured about 86% of the market
United Airlines introduces Apollo
1978 – Sabre stores 1M fares
Source: www.sabre.com
Sabre System History – 1980s
1981 – Sabre has a slight market share advantage over Apollo
The competitive edge has all but disappeared 1981 – AA introduces the first airline frequent flyer program
1984 – Sabre introduces low-fare search engine – a service unmatched in the industry
Sources: Business Week, Aug 1982, Direct Marketing, Jul 1983 and www.sabre.com
Sabre System History – 1980s
1985 – AA allows travel agencies to use personal computers to tap into the Sabre system via computer online services to access airline, hotel and car rental reservations
1986 – AA/Sabre installs the industry’s first automated yield management system
1988 – Sabre system stores 36 million fares
Source: www.sabre.com
Sabre System History – 1980s
1987 – With airlines in their 8th year of deregulation, information and transaction processing has become more profitable than selling seats. AA’s Sabre System produced pretax margins of 30% vs. 5.2% percent from tickets.
Source: Business Week, 1987
Sabre System History – 1980s
1988 – Sabre system stores 36 million fares
1989 – A computer foul-up shut down AA’s Sabre ticketing system for 12 hours, apparently the result of a glitch written into the system. The system failure left 14,000 travel agencies and a large part of AA without flight information.
Lesson ?
Sources: New York Times and Business Week, 1989
Sabre System History – 1990s
1995 – Sabre begins to prepare for Y2K – software is distributed to 40,000 travel agents in 1998. Y2K costs estimated at $78M.
1996 – Sabre names its first CIO
Source: www.sabre.com & Computerworld, May 1996 and Computerworld, Mar 1998
The Web Threat
Airlines begin to focus on the Web as a means to further reduce their
distribution costs
Source: www.sabre.com
A New Way to Cut Costs
1995 – AA and all major US carriers reduce travel agency commissions on domestic flights. Commission is capped at $50.
Additional reductions are made in 1997 (% decreased from 10% to 8%), 1998 (international commissions capped at $100), 1999 (% decreased to 5%), 2001 (domestic caps reduced to $20) and 2002 (commissions eliminated)
Source: www.sabre.com and BTMC records
Sabre System History – 1990s
1996 – Sabre becomes a separate subsidiary of AMR and AMR releases 18% to be publicly traded (total spin-off in 2000)
Source: www.sabre.com
Sabre System History – 1990s
1996 –– Travelocity.com, currently the industry’s leading online consumer travel website is launched.
Source: www.sabre.com
Sabre System History – 1990s
By 1998 Sabre had evolved into a global distribution system (GDS) for travel reservations connecting more than 30,000 travel agents and 3 million online customers with 400 airlines, 50 car rental companies, 35,000 hotels and dozens of railways, tour companies and cruise lines. About 1% of all airline tickets are purchased on the web in early 1998.
Source: Computerworld, Sep 2002 & Forbes, Apr 1998
Sabre System History – 1990s
1999 – Sabre®Virtually There™, a web based system that provides travelers itinerary and destination info via the internet
Source: www.sabre.com
The Web Threat
1995 – Sabre considers development of the first corporate online booking tool – BTS. The project is incubated for 2 to 3 years.
1997 – Development of the BTS begins.
1998 – BTMC agrees to beta test Sabre’s BTS for Boeing travelers.
Source: interview and BTMC records
Online Booking
1998 – Sabre is unable to expand BTS to be a multi-CRS system.
1999 – BTMC terminates agreement with Sabre and signs with small startup firm – Internet Travel Network for a multi-CRS system.
BTS is available today in a Spanish version which is still in use today.
Source: BTMC interview and BTMC records
Online Booking
2000 – Sabre acquires GetThere.com, formerly Internet Travel Network for $757M. GetThere’s online product is currently the leading provider of online booking solutions. Purchase completed to gain customer base and keep competitors from purchasing.
Sources: www.sabre.com, interview & Computerworld, Aug 2000
The Web Threat
Sabre’s recent response to the web which threatens its core business model
- Sabre signs deals with Hotwire.com and Priceline.com to provide key technology – both companies are also competitors of Sabre’s Travelocity.com
Source: Computerworld, Aug 2000
The Initial Outsourcing
In August 1996, Sabre signed a 7 year outsourcing deal which transferred responsibility for its travel reservations network. A partnership of Paris-based airline network SITA and Atlanta-based Equant essentially purchased the network for $450M for 7 years. Sabre transferred 80% of its network engineers to SITA.
Source: Computerworld, December 1997
Outsourcing a mature product
In July 2001, Sabre signed a 10 year, $2.2B outsourcing contract with EDS. EDS purchased Sabre’s IT infrastructure assets and data centers and Sabre’s airline technology outsourcing business. Over 4,000 Sabre employees transferred to EDS. This transaction represented $600M in revenue to Sabre.
Source: Computerworld July 2001 and interview
The Future
Sabre continues to develop and release new products on an ever increasing pace.
Continued change required to maintain customer satisfaction. Revenues from the traditional CRS/GDS model must be replaced by new lines of business.
1980’s: Killer Application• AA/UA-Reservation Systems• American Hospital Supply-Online ordering system• Frito-Lay-Handheld devices for sales
Early 1990’s: Re-engineering
• Redesigning business processes around technology
Mid 1990’s: Information Management• Knowledge Management• ERP• CRM
Success with IT: Strategies
http://www.cio.com/archive/050101/davenport_content.html
Late 1990’s: e-Commerce
Today• e-Commerce is not enough• IT investment in the business core (touches customer)• Business commitment• Commitment to change (continually re-invent and never rest)• Using multiple technologies and management approaches (not
just one)• Company must excel in front office(e-commerce, CRM) , back
office (ERP), and data warehousing, mining, and KM• Information focus (to make smart decisions)
Success with IT: Strategies
http://www.cio.com/archive/050101/davenport_content.html
It’s All About “E”
Overview Strategy e@GE Summary
Case Study:General Electric
• Company Overview• Digitization Strategy• Examples
• Buy Side• Plastics• Appliances• Power Systems• Aircraft Engines
• Sell Side• Make Side
• Summary
e-business Is Business Just Simpler, Faster, and Better
• Formed in 1892• Only company part of the Dow Jones's Industrial Index since the
Index’s debut• 67,588 patents, 2 Nobel Prizes and numerous other honors• Operates in more than 100 countries and employs 313,000 people
worldwide • GE is considered to be one of the largest and most diversified
industrial corporations in the world
General Electric:Company Overview
www.ge.com
General Electric:Company Overview
• Short-cycle businesses contributed approximately 20% of GE's net earnings in 2001• Consumer Products (Lighting & Appliances) • Plastics • Industrial Systems• NBC• Specialty Materials
• Long-cycle businesses contributed approximately 40% of GE's net earnings in 2001• Medical Systems• Power Systems • Transportation Systems• Aircraft Engines
• Financial services contributed approximately 40% of GE's net earnings in 2001
• Before 1999 - IT at GE was non existent
GE – Digitization Strategy
• 1999 - Jack Welch orders each business to “Destroy your business/ Grow your business”
• Use information technology to “create a leaner, faster, more customer focused company, accelerate high margin, capital efficient growth.”, Jeff Immelt, CEO
• 2001- GE Top e-business innovator (eweek)
www.ge.com
IT Spending
2000 - $2.5 billion2001 - $3.0 billion2002 - $3.5 billion
GE – Digitization Strategy
"You won't see one ounce of slowdown in tech spending.” Jack Welch 1/2001
Gary Reiner, CIO
http://www.eweek.com/article2/0,3959,94717,00.asp
GE – Digitization Strategy
• Negotiate
– e-Auctions
–Deflation
• Transact –
Productivity – eTransactions – Control
Buy
• Eliminate Intermediaries–Speed– Unit Cost
Reduction –Streamline processes
Make
• Make the Customer More Productive– Comparative
Performance Data– Customized Service (Availability/Order Service)
• Transaction Productivity
Sell
Productivity (“Workflow”)
More Share/HigherMargin
GE Internal Presentation
Buy smarterProcess more efficiently
Sell more
GE ValueCustomer ValueBuy smarter
Process more efficientlySell more
e-Business Value
Digitization provides ways to improve our customer interface and work on our own internal productivity at the same time. It is just beginning. Our investments in information technology will grow about 15% this year. It is really going to help us transform the cost base of GE. Its going to help us buy better. Its going to help us interface with customers better. But primarily its going to help us in terms of the inner workings of GE make us more efficient, leaner, and closer to the customer."
-- Jeff Immelt, Chairman and CEOCustomer City Swings, April 2001
e@GE
CEO
BDLeader
MarketingLeader
CIO
• External or Internal• Internet Generation• Creative,
Entrepreneurial• Start Up Experience• Marketing/IT
Background
• High Level Leader• Knows the Business• Track Record of Delivering• Well Respected - Great Team
Player/Influencer• Understands Commercial &
Operations• Has or Can Play on Business
Leader Staff
e-BusinessLeader
• External Hire• e-Commerce Industry
Experience• Business Savvy• Technical Expertise
DYB.com/GYB.com LeaderFocus: Destroy Your
Business/ Grow Your Business
CWC.com LeaderFocus: Enhance & Build
Your Customer Web Center
Marketing SalesOperation
s
Cross Functional Team
Marketing Sales Operations
Cross Functional TeamTechnical
FunctionalityBack End
Infrastructure
Chief Architect.Com Technical Team
Buy Sidee-Commerce
Leader
Other e-Business Functional
Leaders
e-Business Organizational Approach
e-Business Steering Committee
• CEO• e-Business Leader• CIO• Marketing Leader• BD Leader
GE Internal Presentation
e@GE Statistics Sell
0
20
40
60
80
100
120
140
1999 2000 2001 2002
Dol
lars
(bill
ions
)
On Line Revenue
Overall Revenue
Profit (overall)
Online Revenue as a percentage of total revenue
02468
10121416
1999 2000 2001 2002
%
After a year of trying web sales, “it really hadn’t changed the world.” Gary Reiner, CIO GE, Forbes 4/30/2001
GE Annual Reports
e@GE - SellPlastics-Overview
Company• Leading global manufacturer and distributor of plastics resins
and plastics, including polycarbonate, ABS, SAN, ASA, PPE, PC/ABS, PBT and PEI resins.
• 10K employees• $5.3 Billion in sales
CustomersAutomotive (i.e. Ford), computers (i.e. Dell), telecommunications, appliances, optical media, packaging, and building and construction
www.geplastics.com
• 1994 - 1,500 pages of corporate literature, product information, press announcements, photographs, and design guides on the Net
• 1997 - First to sell resins on the web
• Today• industry's leading e-Commerce Web site• speeding up and simplifying the whole range of customer services• Voted best of the web (Forbes 9/18/2002)• Full service portal • 200,000 registered users, 20K visits/week, 2,000 pages of online material
e@GE - SellPlastics-Overview
gepolymerland.com
• Web site designed to give an easy, super-fast way to manage a resin business
• Provides information needed to stay on top of your business• Available 24 hours a day, seven days a week.
“it's all about speed, efficiency and making every minute count”www.gepolymerland.com
e@GE - SellPlastics-Overview
• Interact• Discussion groups• Chats• Career center• Calendar• Yellow Pages
• Research• Material selection database• Technical Tips and case studies• Problem solving guidelines• Technical inquiries• Literature online
• Buy• Real time orders online FAST• Shipping confirmation in minutes• Track and trace shipments• MSDS and Certifications online• secure Company information
• Design Services• Part/toll design assistance• Computer-aided engineering services• Design questions
e@GE - Sellgepolymerland.com
www.gepolymerland.com“it's all about speed, efficiency and making every minute count”
0
1
2
3
4
5
6
7
8
9
1995 1996 1997 1998 1999 2000 2001 2002
Reve
nue
$ (B
illio
ns)
Online Revenue
Overall Revenue
Profit (overall)
-35-30-25-20-15-10-505
101520
1996 1997 1998 1999 2000 2001%
% Revenue Growth% Profit Growth
e@GE - SellPlastics-Performance
14% growth primarily attributed to e-business initiatives
2001 GE Annual Report & http://www.line56.com/articles/default.asp?ArticleID=4086&ml=3
• Information on the net helps customers operate more productively and save money• product information• warehouse inventory• shipment status
• 24x7 convenience
Chemical Week 5/10/2000
e@GE - SellPlastics-Summary
• Beyond transactions-long term value creation• Aim to draw in engineers, plant managers, and others
• ColorXpress: allows customers to match and order color chips;• Vendor Managed Inventory (VMI): uses a proprietary online monitoring technology to monitor
storage silos and stabilize order patterns for customers• Design Solution Center:offers a full range of online technical software tools to aid in application
development.
• Content encourages repeat visits• Customer support/technical assistance• Educational offerings (online seminars)
• 500 events in 2001• multilingual• reached 15,000 customers
• Continually broadening its interactive base of knowledge
www.geplastics.com
e@GE - SellPlastics-Summary
e@GE - SellAppliances-Overview
Company
• GEA is nearly a $6 billion business in North America, Europe, Asia and South America.
• Each year GEA sells more than 15 million appliances in 150 world markets under the Monogram®, GE Profile™, GE®, and Hotpoint® brand names.
www.geappliances.com
e@GE - SellAppliances-Overview
• refrigerators• freezers• ranges• dishwashers• washing machines
• dryers• microwave ovens• speed cooking ovens• room air conditioners• water filtration• softening and heating systems
Products
Customers
RetailersIndividuals
e@GE - SellAppliances-Overview
Kiosk based virtual inventory model
• Program allows customers to walk into a Home Depot or Wal-Mart store, buy an appliance online at a kiosk, and select a delivery date/time
• Web based systems at GE warehouses help coordinate fulfillment and promise deliveries within 15 minutes of customer specification
• Manufacturer assumes all warehousing, delivery, and installation duties
• Goal: Making channel partners more successful“direct ship is going to be the differentiating factor for competition in the future. There is too much redundancy in the way that business is conducted.”
Larry Johnston, CEO GE Appliances Wolf, Alan, “GE’s Johnston: Why the Web is Imperative,” Twice 10/23/2000
e@GE - SellAppliances-Performance
0
1
2
3
4
5
6
7
1995 1996 1997 1998 1999 2000 2001
Dolla
rs (b
illio
ns)
Overall Revenue
Profit (overall)
-20
-15
-10
-5
0
5
10
15
1996 1997 1998 1999 2000 2001%% Revenue Growth
% Profit Growth
GE Annual Reports
e@GE - SellAppliances-Summary
• Retail Win• No capital commitment by merchant• Registering sales of products that are not physically there• Elimination of inventory and delivery costs
• Customer Win • Precision fulfillment system
• GE Win• Increase revenue
“Something as un-sexy as logistics has become the game changer.” GE Spokesperson
Wolf, Alan, “Wal-mart Enters Majap Program with GE Appliance Pilot Program,” Twice 9/4/2000
e@GE - SellAircraft Engines
• B2B web center that enables real-time transactions with 300 customers 24x7• Catalog of 250,000 parts• Order entry• Inventory status• Order/shipping status• Account information
• Value added services• Enhancing customer productivity• Saved parts list• Configuration histories• Advanced search tools• On-line troubleshooting using fiber optic video
http://www.cio.com/sponsors/050100_ebiz_story2_side5.html & http://www.forbes.com/best/2000/0717/038s01.htmlCompetitors Pratt & Whitney or Rolls Royce have yet to develop anywhere near as effective a Web Strategy as GE.
e@GE - SellPower Systems
Turbine Optimizer• Web based tool• Compares turbine performance with same models across the world• Shows dollar value of improvement• Ability to schedule service call for improvement
“It used to take 2 weeks to analyze a problem, now it only takes an hour.”
http://www.forbes.com/best/2000/0717/038s01.html
e@GE – MakeInternal Processes Overview
• Eliminate manual processes
• Eliminate paper generating processes
• Increases volume per sales rep
• Reduce back office processes and increase front office face time with customer
GE Internal Presentation
“Every process we can digitize will help reduce our costs and further increase our speed -- both key competitive advantages in today's marketplace.”
e@GE – MakeInternal Processes Overview
• Finance • HR
• Employee Evaluations• Employee Applications
• Sales• invoicing• reconciling
e@GE – MakeInternal Processes Overview
• Travel• Booking• Expensing• 2001 savings: $200 million in improved
efficiencies and reduced travel• Support Central• Education
GE Internal Presentation
e@GE – MakeInternal Processes
Stakeholders• Employees
• Management
• Stockholders
• Customers
e@GE – MakeInternal Processes
2000 - $1.5 billion savings on streamlined internal processes
Future - ~$10 billion in savings
e-Make is about streamlining processes and reducing unit costshttp://www.pcmag.com/article2/0,4149,33527,00.asp
e@GE – Buy
Stakeholders• Management
• Stockholders
Negotiate e-Auction “Everything”
GE Internal Presentation
e@GE – Buy
• real-time online purchasing auction for both incumbent and non-incumbent GE suppliers
• reverse auction • allows GE purchasing managers to monitor competitive
pricing and drive down total costs• $3 billion worth of goods and services on auction (2000)• businesses achieved 10-20% price deflation across the board
e@GE – Buy
GE Internal Presentation
TransactCapture Digitally Capture All PO’s, Invoices, Payments
• easier to obtain current data• fewer errors in purchase orders• quicker turnaround reconciling bills
Date % Date % Date %NBC J an-01 100% Dec-01 85% Sep-01 93%APPLIANCES Mar-01 100% May-01 100% Dec-01 100%LIGHTING May-01 95% J un-01 90% J un-01 100%AIRCRAFT J un-01 100% J un-01 100% J un-01 100%TRANS J un-01 100% Dec-01 100% Dec-01 100%PLASTICS Dec-01 100% Dec-01 100% Sep-01 100%INDUSTRIAL Dec-01 95% Dec-01 90% Dec-01 90%MEDICAL Dec-01 95% Dec-01 95% Dec-01 95%CAPITAL Dec-01 85% Dec-01 90% Dec-01 75%SUPPLY Dec-01 80% Dec-01 90% Oct-01 100%POWER Dec-01 65% Dec-01 80% Dec-01 70%
e-P0 e-Inv e-Pay
GE Internal Presentation
e@GE – BuySupplier Workflow
– Implement Automated Workflow Approvals– 5% on $20B = $1B
Contract Adherence– Establish One Data Source for Pre-Negotiated
Contracts– 3% on $20B = $600M
Productivity – Streamline Sourcing Process– 5% of 3000 people = $20M
Constrict Usage
e@GE – Buy
GE Internal Presentation
e@GE – BuySummary
• Savings2001: Anticipated $600 million in savings
• Transactions2000: $6 billion transactions
2001: $15 billion transactions Future: $30 billion transactions
e-Buy is about buying smarter and processing more efficientlyhttp://www.pcmag.com/article2/0,4149,33527,00.asp
Buy smarterProcess more efficiently
Sell more
GE ValueCustomer ValueBuy smarter
Process more efficientlySell more
e-Business Value
Competitive Advantage through differentiation (value added customer services) and cost reduction
e-Business strategy continues to build on the business model that has enabled the company to outpace S&P 500 earnings growth through every cycle
http://www.ge.com
e@GE
e@GE
Digitization mandate - Straight from the top
IT – leveraged to cut costs and differentiate
Differentiation • Online tools and services• Increased front office operations
“Digitization is changing our relationship with our customer. At the customer for the customer (ACFC)-the way that we differentiate.”
http://www.ge.com
IT as a Competitive Weapon -Sustainability
Sustainable Advantage
Lead Time Competitive Asymmetry
Pre-emption Potential
“IT as a Basis for Sustainable Competitive Advantage,” Feeny & Ives
Supply System Analysis
Competitor Analysis
Project Life-cycle Analysis
Do our case studies have sustainable advantage ?
SabreGE (Plastics, Appliances)
Web BusinessStaying Power
• Simplicity• Applying traditional business thinking to a new channel• Use web to improve business and create valuable services• Awareness of customer needs• e-Business is a constantly moving target• Need for sound relationships
http://www.cio.com/archive/120101/power_content.htmlDavidson, Stephen, “B2B Exchaanges:Lessons from the Trading Pit,” Journal of Internet Law, 4/2002, v5 i10 p1(10)
IT as a Competitive Weapon -Summary
IT can be used as a competitive weapon through cost reduction and differentiation
Very few companies sustain competitive advantage using IT
IT projects need to be evaluated for “sustainability’ in addition to traditional risk
e-Business is a constantly moving target
Future of IT
Competitive Advantage?
Competitive Necessity?
or
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