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Foreword |
Turning information into value is a CIO's basic charter. Turning information into competitive advantage is a CIO's dream.
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Enterprises invest heavily in information systems to increase competitiveness by improving operations and decision making. But in most cases, investments in operational and higher-level information systems, like business intelligence (BI), result in competitive parity, not sustained advantage.
How should the CIO create and sustain competitive advantage through information?
This research report, From Value to Advantage: Exploiting Information, was led by Richard Hunter (Gartner EXP vice president, research director and Gartner fellow) and Dave Aron (Gartner EXP research director). Many organizations and individuals contributed to the research, including:
- Our interviewees and Gartner EXP members: Jeff Chasney, executive vice president and CIO, CKE Restaurants; Ed Forman, CTO, Targetbase; Mark Griesbaum, CIO, Career Education Corporation; Thomas Hiew, CIO, City of Perth; Butch Leonardson, CIO, Boeing Employees Credit Union; Paul Martin, CIO, Rexam; Richard Ross, CIO, Amerada Hess; Masatsuna Seki, director, information system division, FamilyMart; and Magdalena Wheatland, national quality and systems manager, Australian Red Cross Blood Service.
- Dr. Donald Marchand, professor, IMD International (www.imd.ch), chairman and president, enterpriseIQ (www.enterpriseIQ.com), and co-author with Professor William Kettinger and John Rollins of Making the Invisible Visible: How Companies Win with the Right Information, People and IT (John Wiley and Sons, 2001), and Information Orientation: The Link to Business Performance (Oxford University Press, 2001).
- Colleagues from Gartner Research: Steve Bittinger, Betsy Burton, French Caldwell, Regina Casonato, Howard Dresner, Kathy Harris, Debra Logan, Michael Smith and Kevin Strange.
- Other members of the Gartner EXP research team: Marcus Blosch, Mark McDonald, Patrick Meehan, Andrew Rowsell-Jones, Chuck Tucker and adjunct researcher, Barbara McNurlin.
- Other colleagues from Gartner EXP: Kris Barondess, Judy Carr, Ione de Almeida Coco, Heather Munoz and Ellen Whitin.
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Executive summary |
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To create sustained competitive advantage via information, the enterprise must value information in new ways. Building acceptance of a new information orientation is the CIO's role.
Competitive advantage is more than better information
Our case studies show that CIOs are building systems that improve operations and decision making.
According to Gartner research, nearly 80 percent of organizations in the U.S. and 53 percent in Europe use business intelligence (BI) software. But most (over 70 percent) use it for strictly tactical, usually departmental, purposes, such as simple "data mart" reporting systems. And even when successful, these BI systems usually result in competitive parity, not sustained competitive advantage.
Competitive advantage is the result of asymmetry: a capability that customers value and competitors can't match. Because technology can, in most cases, be matched, it rarely creates asymmetry.
Sources of competitive advantage
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An enterprise management team that values information and systematically uses it as a competitive weapon creates business asymmetry. The information capabilities of such enterprises—IT practices, information management, and values and behaviors—are collectively known as "information orientation." Information orientation, more difficult to duplicate than technology, correlates strongly with improved business performance.
To promote competitive advantage through information, the CIO must do more than deliver solid technology. He or she must influence the enterprise toward a higher information orientation.
Information orientation correlates to business performance
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Section 1: Competitive value requires information
To produce competitive value, CIOs are delivering better information, targeted to the right audiences.
- CIOs are improving their data architectures and adding business intelligence (BI) to increase the value of information.
- Successful CIOs focus on information that drives actions and decisions.
- CIOs use different approaches to create an agile data environment that enables actions and decisions.
Section 2: Competitive advantage requires asymmetry
Better information creates lasting competitive advantage only when an enterprise is ready to use the information to support a winning strategy. Most enterprises are not.
- Competitive advantage is based on asymmetry: a capability that customers value and competitors can't match.
- Most IT systems—including data warehouses and BI—by themselves don't create asymmetry.
- Lasting competitive advantage results when IT reinforces a business strategy that creates and exploits asymmetry.
Section 3: Information orientation: The gap between competitive value and competitive advantage
Information orientation includes IT practices, information management, and information values and behaviors. All three combined are critical to sustained improvements in business performance.
- IT practices, which CIOs strongly influence, create the foundation for information delivery.
- Information management is the mechanism for identifying and leveraging critical business information.
- Values and behaviors determine how information will be used.
- The combination of solid IT practices, information management, and values and behaviors improves business performance.
- Few companies have a high information orientation. The ones that do use information as a competitive weapon.
Section 4: Influence your enterprise's information asymmetry
The CIO has many opportunities to "lead from the back" in moving the enterprise toward using information as a competitive weapon.
- Help clarify and strengthen corporate strategies.
- Ensure that IT practices are solid.
- Focus on the information needs of influential users.
- Model the right information management, values and behaviors in IS.
- Look for opportunities to implement information management outside IS.
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