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How IT Matters at

By Rob Garretson  |  Posted 05-07-2007 Print

And though it lags industry leader Marriott by 51 spots on the Fortune 500, Harrah's aggressive deployment of technology throughout its casino and resort empire helped it grow revenue 32 percent last year to nearly $9.8 billion--nearly six times faster than Marriott's growth. Harrah's has been a pioneer in using technology to gain an edge, having earned both acclaim and patents on its Total Rewards frequent gambler database, and its Fast Cash program that offers real-time incentives to casino guests based on their ongoing game play. The company, which earlier this year attracted a $17-billion buyout offer from a group of private equity firms, uses information technology for everything from determining the placement and configuration of slot machines for maximizing intake to dynamically setting hotel room rates to attract guests who are more inclined to gamble.

Indeed, everyone from Internet companies and manufacturers to energy producers, consumer goods makers and sports teams is using IT as a competitive weapon.

In manufacturing, Toyota Motor Corp. has used world-renowned just-in-time supply-chain management and business-process management technology to eliminate waste, limit inventory buildup and continually improve production. Its technology leadership finally helped the Japanese manufacturer topple General Motors as the world's No. 1 automaker, with first-quarter sales of 2.35 million vehicles, compared with gm's 2.26 million.

Oil and gas giant Exxon Mobile Corp., the nation's most profitable company, with 2006 earnings of $39.5 billion, has more than soaring oil prices to thank. It invests heavily in applications that give it an edge in finding increasingly harder-to-reach oil and gas deposits, while at the same time squeezing costs out of its refinery operations, chemicals businesses and distribution outlets.

Consumer goods leaders Proctor & Gamble Co. and Anheuser-Busch Companies, Inc. have a long history of pioneering analytical software and data mining to track and adjust sales and promotions in relative real time, and they continue to push the envelope. At P&G, the nation's largest maker of household and personal products, with more than $68 billion in 2006 revenue, cio Philippo Passerini is so committed to the company's analytical applications that he recently moved the most advanced and sophisticated analysts from the its operating units into a central organization reporting to him. The reorganization is designed to ensure that the best analytical skills are applied to the most strategic problems.

Anheuser-Busch, the nation's largest brewer, recently added mobile technology to its BudNet system, allowing company-owned and independent distributors to use handheld devices to update sales and inventory data, providing better insight into its distribution chain and helping sales grow, compared with flat or declining sales at some competitors.

Professional sports teams, including baseball's Oakland Athletics and Boston Red Sox, are famous for applying sophisticated data analysis to remain competitive against the rival New York Yankees, who spend millions of dollars more each year on player salaries.

Even the cement business, among the most prosaic and non-analytical of industries, includes a company Mexico's Cemex that uses IT to gain a leg up on competitors.

Whether building on industry dominance or challenging entrenched leadership, all these companies wield information technology as a competitive weapon to keep or gain their edge.

Though Carr's observation that IT infrastructure has become commoditized may be accurate in aggregate, critics say his argument that technology is no longer a source of competitive advantage is an oversimplification that doesn't factor in the implementation of IT at the organization level.

"Some organizations get almost no value from IT, and others get a lot and when you average it all out, it comes out to be not so much," says Jeanne G. Harris, director of research at Accenture's Institute for High Performance Business and author of Competing on Analytics, The New Science of Winning, who takes issue with Carr's assertion that IT has become a commodity, and with his analogy between IT and electric utilities. "If it were a commodity, then half of all IT projects wouldn't fail," she notes, referring to oft-cited reports such as the Standish Group's chaos study, which show how frequently software and other IT projects come in late, over budget or simply don't succeed. "Certainly, half of all electric outlets you plug into don't fail."

Harris, however, credits Carr's essay with helping to refocus management on IT's strategic role. "Personally, I think it was the best thing that could have happened to the it field, because it reignited debate about the role of it within the business organization," she says. "It got people talking about IT and focused on what really matters."


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