iQ MAGAZINE

Not so long ago, technology was the best competitive advantage for running an efficient organization. By installing computers and connecting them through networks, and then digitizing paper-based processes, a company of any size could move with greater agility and efficiency. But now, technology is the baseline, a basic cost of doing business; you have it, your competitors have it.

So what's the next competitive advantage? According to analysts, consultants, and midmarket IT executives, it's an elusive—but not impossible—goal: Apply technological solutions to business problems so diligently and strategically that the result becomes exponentially more efficient.

That's challenging, because it encompasses both business and technology know-how and requires a keen sense of how those two areas work together. It demands that IT teams, whether in-house staff or outsourced consultants, take on the role of both teacher and student, not only guiding business-operations colleagues through the shoals of technology, but also seeking a clear understanding of how business processes work. There's no question that this is difficult, but this is one area where smaller companies have an advantage over their larger competitors.

The Size Advantage

Bigger companies may have greater financial and human resources, but small and medium-sized businesses (SMBs) are often more agile, with fewer internal communications challenges and greater intimacy with external customers and suppliers. That can give smaller companies an edge for improving efficiency. They may also be driven by a hunger and ambition to succeed that can be lacking in larger companies accustomed to playing it safe.

Why improve operational efficiency at all? Simply put, the world is increasingly Darwinian. Efficiency itself is a competitive advantage. Look how quickly a thriving business model can be imperiled," says Laurie McCabe, vice president for SMB Solutions at AMI-Partners. For example, the online DVD movie-rental site Netflix made a serious dent in Blockbuster's retail market, only to face a threat from Comcast's increasingly common on-demand movie downloads. "The cycles of success and failure are more condensed than they used to be," says McCabe.

Even if the competitive opportunity is there, good follow-through is rare. "In a lot of cases, the IT solutions may not map to what business process needs and metrics are. That's where a lot of companies fall down," says McCabe. To create a competitive advantage today, says McCabe, you have to take an honest look at what technology you're deploying and how well it's really performing for you, not from an IT perspective but from a business perspective.

For instance, as a company, you may have created a telecommuting policy that allows more people to work from home, but subsequent assessments show that people aren't as productive as they'd like to be. Is it a question of remote connectivity? Of bandwidth? Of security policies hampering users' ability to access files? That's a definitive situation where a business-oriented desire needs technological underpinnings, and both the business and IT functions need to be aligned.

Or you may have deployed customer relationship management software that tracks customers and prospects, but there's no synchronization with the company's billing system—and the billing system is usually the most accurate when it comes to customer data, because it's the one that brings in the money. Integrating the two systems will increase accuracy for the business side, but you need to collaborate with the IT team to make sure it understands why you're doing it, so they can select and implement technology to meet the objective.

What You Need

One of the biggest barriers to agility is systems that don't talk to each other, so you need to deploy standard and consistent technologies as much as possible, whether on the desktop or in the network.

Consistency helps with technical-support issues too, because support staffers don't have to master a multitude of platforms. The same goes for applications. It's important to make sure that information in databases can be consolidated or at least exchanged easily, or that you have as few database and application vendors as possible, to keep maintenance and support costs down. Many more independent software vendors are addressing the SMB market compared to five years ago, so look at your application portfolio to see if you can make efficiency-promoting changes.

Take a step back and ask yourself what you need to do to modernize or run more efficiently. What legacy applications can you get rid of? What application functionality is now available that wasn't in the past? You don't have to tear everything out and start again. In fact, start small so as not to disrupt the organization.

But be cognizant of future growth and business plans. Plan ahead and build in flexibility for the future. For example, if you are deploying voice over Internet Protocol (VoIP) technology, there are work-arounds to force a traditional PBX system to accommodate both VoIP and standard phones at the same time. But it isn't a scalable solution, and if your business grows it may save money to pay a bit more to deploy a complete VoIP system.

How to Achieve Your Advantage

The ability to integrate systems and derive more and better information from them can make companies more agile. Once you connect the isolated segments of information, it's easier to share information. But you'll still need to ensure that standardization and consistency remain in place and, having done that, to translate that consistency into agility. That's where metrics come in. The old saying is: If you can't measure it, you can't manage it. In a newly competitive world, if you can't measure it, you can't figure out where to focus your efforts.

Integrated information can translate directly into operational efficiency, which then creates competitive advantage.

Clearly, a focused, innovative company, cognizant of the way it can integrate IT resources with its business rather than have the two at cross-purposes, can achieve operational and competitive advantages. The big challenge is doing two things at once—maintaining the company while capitalizing on future opportunities and preparing for the next change on the horizon.

By the time integrated, consistent systems become basic necessity, there'll be a new challenge to meet: Operational efficiency becomes the requisite for all businesses. When that happens, you'll really see exponential efficiency.

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About the Author

Based in Silicon Valley, freelancer Howard Baldwin firmly believes we are in the Model-T stage of connectivity.

iQ Magazine, First Quarter 2006