In the course of writing an article for another title last month, I was heartened to hear the person I was interviewing, Roy Allkin, director at Wolfestone Translation, inject a welcome dose of reality into an issue that has, for far too long, been given far too much respect. I refer to the phrase ‘competitive advantage’.
In my opinion, these two words have been treated with undue reverence, almost to the point of illogicality, by people in the IT industry (and its customers). I once asked a reseller selling a particular piece of software how he could guarantee he was providing ‘competitive advantage’ to any customer when he was selling exactly the same thing to all and sundry.
It was patently obvious, or so I thought, that any competitive advantage bestowed by IT would be brief if other companies adopted the same solution as well. So, in very many cases, competitive advantage, such as it was, would come down to whatever was in place before the latest software or hardware was installed.
While I have never run a business of my own, I suspect that any enduring competitive advantage comes from the people, culture and processes within a company. After all, technology changes all the time so any advantage a particular product supposedly confers on a business is fairly swiftly negated by a newer one.
Anyway, in the course of my conversation with Allkin, he explained that Wolfestone Translation had opted to pay a premium to its existing supplier to customise its off the shelf product. He explained this was a cheaper course of action than for the company to develop its own software inhouse and a better option than buying something off the shelf and customising it.
Some people think that’s giving away a competitive advantage but once it’s out there, somebody’s going to copy it anyway"
Of course, there was an issue with the fact that the customised version of the software would be attractive to other translation companies. "A lot of the stuff we wanted them to do, we knew other translation companies would want once they’d seen it," Allkin said. "Some people think that’s giving away a competitive advantage but once it’s out there, somebody’s going to copy it anyway."
In other words, competitive advantage isn’t in the software, or at least if it is it isn’t going to be there for long. Competitive advantage is in the business that runs it. And the irony is that as more and more business adopt software, hardware or services to gain a competitive advantage over their rivals and end up creating a level playing field in terms of their IT, it merely serves to reinforce the point that competitive advantage comes from factors outside of IT.
Allkin’s comments also put the whole issue of customisation into a different perspective. Just how much should customers spend on customising a product to suit their requirements and what kind of trade-off do they need to make between what they’re prepared to spend and what they want? In Wolfestone’s case, it took the smart option of customising an off the shelf product to suit its needs. As a quid pro quo for paying less than doing the work itself, the company accepted that some of the customisation would be made available to other businesses operating in its market.
This contrasts with the many businesses that have paid large sums to customise software or create bespoke software on an exclusive basis in the belief that this gives them significant competitive advantage. Does it? Who knows? Possibly, possibly not. But it seems a big price to pay to be held hostage by one supplier.
It’s not good for the supplier either if its product plans and strategies are distorted by having to cater to the needs, wants and whims of a select group of customers. The people paying big bucks to have products adapted to suit them aren’t going to be happy to let the software or hardware supplier include those features in future more general releases, but the reality is that if they don’t, they may run the risk of hobbling the capabilities of those future products.
Personally, I think the IT industry is becoming more realistic in explaining what technology can do for a customer. We’re hearing a lot more about people making the business case for IT. That’s a good thing. The language is more grounded. Yes, we still hear words like ‘revolutionary’ and ‘leading edge’ thrown about but with nowhere near the abandon they used to be. In the current climate, when money is tight, customers are demanding more from their IT suppliers. They need to know something will work from the get-go and do what they want it to do. In many instances, channel partners are talking to customers in precisely those terms. For many, that could well turn out to be a very real competitive advantage.
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