Competitive edge is hard
to hold"> Traditional competitive analysis and forecasting wont suffice in multinational service-sector scenarios, warned John Sargent, a senior adviser to the assistant secretary for technology policy at the U.S. Department of Commerce, in Washington. "Nations that traditionally had to develop a lot of infrastructure to grow their economies can now bypass many of the steps of national economic development and jump right to the top part of the value chain," Sargent said. Season goods with services"We sell a worldwide correction signal for GPS that lets farmers position their equipment within 3 centimeters," said Tom Hein, Deeres manager of technology, during an Almaden conference session on services in the manufacturing sector. By reducing the waste of costly fertilizers and other chemicals, that precision translates to increased profit per acre more cost-effectively than by trying to get the same improvement out of other steps in the process. Deeres leveraging of the base-line, freely available GPS technology should call attention not just to the power but also to the pitfalls of building service offerings on platforms provided by others. The edge that comes from using an outside providers best-of-breed platform can be blunted by two hazards that the forward-looking IT architect must be prepared to address. The first risk is losing competitive differentiation as ones competitors adopt the same sold-to-all-comers services. The second risk is that one will give away high-value knowledge to the service provider in the process of fine-tuning the service relationship, which the service provider will then be in a position to sell to ones competitors in the consulting role that many such providers are taking on. "The issue of trust comes up again and again," said conference speaker Robert Johansen, president and CEO of the nonprofit Institute for the Future, in Palo Alto, Calif., "and I almost get tired of it because it always seems like a surprise." The challenge of choice Many enterprise developers will also find more than one viable supplier for key services, unlike the case with GPS, which is pretty much the only player in its game. In competitive situations, an enterprise team must strike a careful balance: It can try to make the most of a cultivated relationship with its service provider of choice, but it should maintain flexibility by confining itself, where possible, to common-subset and standards-based services. This preserves a competitive market for service provision. Next Page: Seeing service consumers in different roles.
Industry practitioners are enriching their basic business models with service-based enhancements. At Deere & Co., the Moline, Ill., maker of John Deere agricultural equipment, the effective performance of the companys essentially mature farming technology is dramatically improved by the companys provision of differential GPS (Global Positioning System) services.