Industrial Evolution

Though debate raged for months after the 2003 publication of Carr's essay, there's little doubt now that Carr's fundamental premise about the rise of the utility-like delivery of it services over the Internet, which has taken off for everything from storage and security to once-strategic applications such as erp and crm, was spot on. Research firm Gartner Inc. predicts hosted applications known as "software as a service" will account for 25 percent of new business software deployed by 2011.

"More and more basic IT services really look like utilities supplied over the Internet," Carr observes. "And by definition, a utility, even though it can be extremely important, isn't going to provide you with a competitive advantage because the whole idea is that it's being offered to everybody."

His overall observations may be sound, yet Carr's advice doesn't take into account the number of individual companies still gaining competitive advantage from innovative use of IT, technology advocates argue.

And, according to CIO Insight's most recent annual survey, CIOS expect to focus more on strategy and innovation—in the form of new technologies and new ways to exploit information—in the years ahead, as they step back from overseeing day-to-day operations, process improvement, data quality, projects, standards and architecture issues.

Harrah's cio Tim Stanley is a case in point. Recently added to his duties was responsibility for the company's gaming operations worldwide. "That, I think, probably sends a pretty clear message that the confluence of technology is a key innovation element and something we compete on," he says.

The company's Total Rewards program, for example, uses smart cards that plug into readers in slot machines and gaming table kiosks and lets gamblers rack up points redeemable for free drinks, hotel rooms and other rewards. But not only does the system offer incentives for spending, it keeps customers satisfied and coming back for more by intervening in real time if, say, it detects an overly precipitous losing streak, by deploying a restaurant coupon that expires within the hour.

"The act and the approach to gaming itself is at a pretty interesting technology inflection point right now," Stanley says, describing the advent of server-based gaming systems. Harrah's is rolling out new high-definition touch-screen systems designed to customize the casino experience for its guests, attracting and retaining customers. Video-based machines let Harrah's adjust availability of slot-machine games based on variables including day of week, time of day and game popularity. New systems will soon allow similar personalization of the customer experience at table games. "We're pushing that envelope and advancing it forward as fast as we can," Stanley says.

Harrah's is not among the last survivors of a dying breed of forward-looking enterprises, but part of a broad class of competitors across virtually all industries that still wield information for competitive advantage, according to Accenture's Harris. The company is typical of a growing cadre of organizations that compete not by deploying unique IT systems but by using IT resources better than competitors.

"Harrah's is a wonderful example of a company that on the surface did a lot of things everyone else does," says Harris. Its Total Rewards loyalty program—a derivation of frequent-flyer programs pioneered by the airlines decades ago—has been widely copied by other casino companies, and its use of statistics to determine the odds and configurations of its games is fundamental to the gaming industry. "Why then are they so successful—why does their loyalty card have so much more penetration than everybody else's?" Harris asks. "The answer is that they simply use analytics better. And they view analytics not just as something that's done in one place or another place in the organization, but it's kind of an overall capability."

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