In addition to taking a hard look at its value chain, a company should consider how information technology might allow a change in competitive scope. Can information technology help the company serve new segments? Will the flexibility of information technology allow broad-line competitors to invade areas that were once the province of niche competitors? Will
information technology provide the leverage to expand the business globally? Can managers harness information technology to exploit interrelationships with other industries? Or, can the technology help a company create competitive advantage by narrowing its scope?
A fresh look at the company’s product may also be in order:
Can the company bundle more information with the product?
Can the company embed information technology in it?
4 Investigate how information technology might spawn new businesses. Managers should consider opportunities to create new businesses from existing ones. Information technology is an increasingly important avenue for corporate diversification. Lockheed, for example, entered the data base business by perceiving an opportunity to use its spare computer capacity.
Identifying opportunities to spawn new businesses requires answering questions such as:
What information generated (or potentially generated) in the business could the company sell?
What information-processing capacity exists internally to start a new business?
Does information technology make it feasible to produce new items related to the company’s product?
5 Develop a plan for taking advantage of information technology. The first four steps should lead to an action plan to capitalize on the information revolution. This action plan should rank the strategic investments necessary in hardware and software, and in new product development activities that reflect the increasing information content in products. Organizational changes that reflect the role that the technology plays in linking activities inside and outside the company are likely to be necessary.
The management of information technology can no longer be the sole province of the EDP department. Increasingly, companies must employ information technology with a sophisticated understanding of the requirements for competitive advantage. Organizations need to distribute the responsibility for systems development more widely in the organization. At the same time, general managers must be involved to ensure that cross-functional linkages, more possible to achieve with information technology, are exploited.
These changes do not mean that a central information-technology function should play an insignificant