A core competency model for aligning information technology with business objectives

Abstract

Advances in Information Technology and Information Systems delivery over the past decades have restructured industries and created enormous value. Interestingly however, research shows companies traditionally have a very difficult time capturing the value from their investment. Any surplus created by these improvements is often competed away and given back to customers. Wall Street's irrational exuberance of the late 1990's has given way to a far more conservative and critical view concerning IT investment. Decision makers are focused on demonstrating that Information Technology expenditures result in positive net returns to the company. IT managers are faced with a fundamental question: How does the organization use Information Technology to create sustainable competitive advantage and capture value in its industry? This thesis proposes a framework, the Core Competency Model, to help companies think about Information Services strategy and Information Technology deployment. Instead of seeking to create competitive advantage through IT investment alone, it introduces the concept of core competencies. IT resources can be quickly duplicated by competitors, as has been shown in the research.

(cont.) Core competencies, the complex blending of unique resources and capabilities, are much more difficult to duplicate and form the basis for true sustainable competitive advantage. At its heart, the Core Competency Model suggests that the role of the IS group is to support the formation and enhancement of the organization's core competencies. It further identifies several capabilities and resources that the IS group must possess to fully support the core competencies of the enterprise. This model, if truly utilized, would change the nature of a company's internal dialog on IT spending. Debate over which business units should get which IT resources would be replaced with discussion of the strategic direction and core competencies of the company. Decisions concerning IS resource allocation and IT spending would follow very naturally from this discussion. The Core Competency Model provides a framework for this dialog, beginning with the strategic identification of core competencies, and ending with the tactical analysis of the Information Systems group's capabilities and resources. The final chapter presents some recommendations aimed at helping BMC West successfully develop a set of core competencies, the first step toward creating sustainable competitive advantage in their industry.