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Using tech to gain a competitive advantage: The new CIO benchmark?
George L. Reed II has a staff member who does nothing but read the LinkedIn, Twitter and Facebook pages of people who work in the insurance industry: who's hiring, who's leaving, customer complaints."You can get a tremendous amount of information on your competitors from social media, and we use it," said Reed, CIO at Seven Corners Inc., a privately held global travel insurance provider in Carmel, Ind. "I get monthly reports. If a hot one pops up, I get it the day it comes in."
Idle gossip it's not. For Reed, who was hired two years ago by a new CEO to transform the company's technology "from good to great," reconnaissance on competitor information is just part of his strategy to gain a competitive advantage in IT -- and for the business.
Public filings also are mined for such information, Reed said. Vendors are another gold mine. At conferences like VMworld and Cisco Live, he plies vendors with questions about their other customers. "You learn who's taking risks," he said. A big data cleanup project, for instance, often points to an acquisition in the offing, according to Reed, a West Point graduate with two decades in IT management as an employee and consultant at Fortune 500 companies.
Propelled by his CEO's desire that the 19-year-old Seven Corners become "the heavyweight of the specialty insurance business," Reed views his relentless focus on the competition as a requirement of the CIO job. He's not alone. Recent research and interviews with IT consultants -- from headhunters to academicians -- suggest that interest has risen sharply among business leaders in the ways rival companies are using technology to gain a competitive advantage. CIOs who give their competitors short shrift might be putting their careers at risk.
This intense interest in competitive advantage starts at the top of the enterprise, said Jorge Lopez, an analyst at Gartner Inc. who focuses on CEO concerns. In Gartner's most recent CEO survey, for example, maintaining competitive advantage came out as the top concern of 52% of board members, outpacing 26 other board issues including cost-cutting, restructuring the business and replacing the CEO. "Nothing else came close," Lopez told CIOs at the 2012 Gartner CIO Leadership Forum. When they're asked, most business leaders are able to name a competitor whose use of technology they admire. CIOs need to be on top of what the competition is doing with technology to gain a competitive advantage, he said, because they will certainly be asked. And this surveillance should extend to other CIOs (see sidebar).
Defining, measuring and sustaining a competitive advantage
For companies in the market for CIOs and other IT executive positions, sustaining a competitive advantage is a huge concern, said Judy Homer, president of New York placement firm JB Homer Associates Inc. Recent client job searches -- from CIO and chief technology officer (CTO) to chief architect positions -- all zero in on how the candidate can work with various business leaders to gain competitive advantage. Legal and marketing are two big areas where CIOs are called on to help. "It is not about having a seat at the table," she said, referring the old mantra of CIO searches. "It's about being able to get there faster, cheaper and quicker."
Homer points to a current search for a CTO at a major stock exchange. It calls for someone who not only can work with business people to assess "present and future-state" competitive advantage, but also comes with a track record for partnering with the vendors that will help the company hold on to its edge. "So, this company is No. 1. Their question is how do they stay that way? They're looking to the CTO to answer that," she said.
CIO collegiality and competitive advantage
Resourceful CIOs don't just look to industry competitors to gain a competitive advantage, but more importantly, to "technology exemplars" in other industries as well, says Jerry Luftman, managing director at the Global Institute for IT Management, who also conducts annual CIO research studies for the Society for Information Management. Paradoxically, a CIO's best weapon in helping companies gain a competitive advantage might well be a strong network of CIO peers, he said.
That point gets a strong second from Jim Noble, CIO at Talisman Energy Inc., a Canadian petroleum producer based in Calgary, Alberta, and chairman of the World BPO Forum Inc. He advises CIOs to spend an hour a day networking. "Having been a CIO in many sectors, there are very few instances where IT can deliver a sustainable competitive advantage," he said. "Being a crusader is not a good place for a CIO to be! Strong peer networking allows you to rise up the learning curve quickly, and leverage the experience and unique perspectives of peers. I did that with BYOD [bring your own device], and we got it right the first time by building on the failings described by others."
Gartner defines competitive advantage as an asymmetry or difference between the company and its competitors that matters to customers, Lopez said. It's not a new business priority, but the recent U.S. recession and chronic global economic concerns have lent it urgency, he said. When companies lose ground during a recession, the loss tends to be permanent, at least until another major financial crisis comes along to alter the playing field, he added, citing Gartner and other industry research. Increasingly, business leaders see IT as a meaningful differentiator. "Fortunately, we find there is an enormous amount that IT can do to sustain and foster competitive advantage."
No one has to tell that to Seven Corners' Reed, who has used his research on competitors to build a cloud-based claims processing system that he's marketing to competitors inside and outside the insurance industry.
"I got to walk into the meeting we have with owners and the business every week and say, 'By the way, we are in line for a sole-sourced contract worth $6.7 million,'" Reed said. "And then I heard my business peers say, 'Wow, IT has just become a revenue stream.'"
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