1. Competitive Advantage
Competitive Advantage (CA) requires the following characteristics:
Rare
Valuable
Inimitable
Grounded in the “Resource Based View” RBV of the Firm
CA depends on the context

2. Competitive Advantage
Firm Resources can only provide a CA for a limited time.
CA can only be sustainable for a certain period of time
Firms need to capitalize on the window of opportunity
The degree of sustainability defines the extent to which a CA exists

3. Some Carr Comments
“Best practices are built into software and replicated”
“IT-transformations have all happened”
“IT’s power is outstripping most of the business needs it fulfills”
Ubiquity makes IT irrelevant
Comparison between electricity and IT
“There is no consistent correlation with IT spending and Firm Performance”
Does this assertion support Carr’s basic argument or contradict it?

4. Retort from McFarlan & Nolan (regarding Carr)
No idea what he doesn’t know
Pretended to know what he didn’t
Made up fuzzy logic

5. Generating Premium Returns on IT Investments (Weill and Aral)
Portfolio Approach
Successful IT portfolio techniques change the conversation from technical to strategic considerations by applying a commercial lens to IT investments
The result is an allocation of IT assets that is appropriate for the company's circumstances.
Underscores the importance of how organizations use technology (rather than focusing on the technology)

6. Generating Premium Returns on IT Investments (Weill and Aral)
4 Asset Classes
Infrastructure
hardware (often shared by multiple applications)
Transactional
cut costs and increase throughput (brokerage firm’s trading system
Informational
accounting, reporting, business intelligence
Strategic
designed for competitive advantage (enter new markets or develop, services, processes)

7. Generating Premium Returns on IT Investments (Weill and Aral)
4 Asset Classes
Informational (17%) / Strategic (11%)
Transactional (26%)
Infrastructure (46%)
Each Asset Class is linked to different types of Business Value
Differences in specific industries are striking
Financial Services:
IT is mature
Infrastructure/Transaction IT boosts innovation via improved efficiency
Retail and Transport Industries
Portfolios weight more heavily on informational assets
Advantage resides in the effective use of information

8. IT Investments as a Portfolio (Weill and Aral)

9. Generating Premium Returns on IT Investments (Weill and Aral)
IT Savvy
Practices (Use)
IT for Internal and External Communication
Internet Use
Digital Transactions
Competencies
Companywide IT Skills
Top Management Involvement