Showing posts with label Technological Differentiation. Show all posts
Showing posts with label Technological Differentiation. Show all posts

September 19, 2007

Competitive Advantage and Enterprise Architecture

Competitive Advantage—“When a firm sustains profits that exceed the average for its industry, the firm is said to posses a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.”

“Michael Porter identified two basic types of competitive advantage:

  • Cost advantage
  • Differentiation advantage”


“A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiating advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.”

Cost and differentiation advantages are known as positional advantages since they describe the firm’s position in the industry as a leader in either cost or differentiation.” (quickmba.com)

In User-centric EA, the target state and transition plan in a for-profit, private sector company should be one that develops competitive advantage for the organization and thereby superior profitability. This is done either through business process reengineering/improvement or through technological differentiation. In technological differentiation, information technology solutions are adopted that align to business needs and help it to create either cost or differentiation advantage. IT is used to create cost efficiencies through automation or to developing differentiation advantage through the development of products that are more technologically advanced than its competitors. In essence, the organization employs cutting-edge technology to leap over its competitors in terms of cost or product.

In not-for-profit organizations or government, EA target state and transition plan does not set the stage for competitive advantage in terms of delivering superior profits, but rather in terms of delivering superior value to its stakeholders. Again, either business process or technology enhancements can help the enterprise develop the superior value. Additionally, there is not the same notion (if any) of competition (i.e. so ‘competitive advantage’ should really be more just ‘advantage’—to the enterprise and stakeholders—without the ‘competitive’ in it).

In any case, competitive advantage in terms of continuous improvement vis-a-vis efficiency and effectiveness of mission execution, and performing better, faster, and cheaper on behalf of stakeholders is the end game.


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