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3.2 ICT contribution to competitive advantage

The study examined the extent to which non-ICT manufacturing firms can gain competitive advantage from ICT. It found that the key factors include the way ICT is used in combination with other technologies and the way in which it is applied and managed. The study’s findings support management literature that investment in ICT does not , of itself , yield competitive advantage or enhanced business performance (Briggs 2004; Laartz, Monnoyer, et al. 2003).

Simplot

Simplot does not see ICT as providing competitive advantage: the role of ICT is to assist innovation and least cost manufacturing. Ensuring that the sales force has access to automated processes, for example , is a market place imperative and a priority that may provide short term advantage. But it is in essence a necessity for survival rather than a differentiator. On the other hand, Class A operational excellence (a manufacturing quality certification) , underpinned by ICT/IS , does provide a competitive advantage. Intrinsically this is an opportunity available to everyone in the industry but the reality is that not all companies pursue it. The key is therefore the company’s desire and ability to adapt the available technology better than its competitors.

The impact of ICT varies across manufacturing industry sectors and among businesses. For example , this study indicates that:

  • In fast moving consumer goods industries , ICT has enabled companies to move from a product focus to a customer focus by being able to manufacture more closely to customer preferences/requirements rather than to production possibilities.
  • In globally oriented and highly competitive industries where Australian–based companies are essentially price takers , businesses need to keep up with the technological change and developments in order to stay in the market.
  • In monopoly–oriented industries , companies choose carefully those technologies that are going to impact on bottom line performance and create shareholder value – for example , Australian newspapers have moved slowly in their on-line and multi-media offerings.

For some commodity producers , such as in clothing manufacture , ICT has enabled transformation from a staple commodity business to a fast moving consumer good category. Underwear for example , is now merchandised like a grocery line rather than retail clothing.

Acquisition and ownership of technology assets does not of itself bestow any market place advantage: advantage is created in the way assets are utilised , and in ways that create distinctiveness , or a distinctive capability.

A company has a distinctive capability when it has something that other companies find difficult , if not impossible , to replicate. Distinctive capabilities are reflected in a company’s brand , image and reputation , its governance , management team and staff , its internal and external relationships and networks , and in its commitment to innovation (Kay 1994, 1995) .

This study found that ICT plays an important role in assisting companies to develop their distinctive capabilities in these areas. Drawing on the interviews , it is apparent that:

  • ICT has been instrumental in enabling companies to merchandise high profile brands at the required volumes , at accessible locations , with acceptable margins and to a high product standard.
  • ICT can increase the quality, quantity and availability of information shared between suppliers and customers reinforcing information flows that inform decisions on production and processes.
  • ICT assists companies in innovation and new product development through simulation techniques and flows of knowledge, information and ideas across and within industry sectors.
  • ICT enables companies to undertake product development on a continuous, real time, global basis.

In many of these areas , the main source of ICT–related competitive advantage derives from the computer programs (software) that are acquired , developed and applied in specific business situations.

Proteome Systems

Proteome Systems , a pioneering business in the growing field of proteomics relies upon ICT to build its distinctive competencies. A strategic alliance with IBM has provided much of the wherewithal to do this.

The company reflects the ‘classic’ innovation trajectory – using existing technologies in new and creative combinations to make products and services that customers need and will pay for.

In effect, Proteome Systems is a value-added re-seller of IBM equipment and ‘middleware’ (databases and data storage systems). The distinctiveness of the company, and its capacity to create value, is based upon its highly talented scientists coupled with the capacity to develop in-house software that integrates a range of different instruments.

Proteome has also used existing ICT technology in its design and development of new chemical analysis medical instruments and devices. ICT components and software have been embedded into protein analysis equipment and Proteome is innovatively using existing ICT nano-tech printing technology to change how chemical analysis of proteins is done – by ‘printing’ the chemicals needed for the analysis onto the proteins (instead of the traditional method of taking the proteins to the chemicals).

Alliances with ICT companies such as IBM allow the company to focus on what it can do well that competitors can do less well, whilst avoiding the need to develop all of the necessary technological capabilities and systems.

Proteomics is the study and cataloguing of proteins in the human body. Knowledge of proteins and how they interact with each other is a key element in drug development.

 

 

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Document ID: 29079 | Last modified: 2 October 2013, 11:44pm