Building Competitiveness and Business Performance with ICT

DefinitionHigh Performers• Introduction of new methods ofThe research focused on 20 performanceindicators, representing three general aspectsof business performance: agility; businessprocess performance, and organizationalchange and performance. What follows is amore detailed explanation of each aspect.AgilityAgility refers to how quickly and effectively anorganization responds to local opportunitiesor threats. Agility is driven by technology – interms of improving relations with customers,sensing opportunities or threats, and creating,delivering and supporting a solution toan opportunity or threat. For example, anICT solution could arise out of the needto quickly add functionality to critical ITapplications based on local end-user requests.Executives are under great pressure to maketheir organizations more agile with use oftechnology. Part of the pressure comesfrom local business units taking at face valueexpectations that often accompany newtechnology investments, including claims thattechnology will enable them to get thingsdone faster, easier, cheaper, and better. As aresult, local business units put pressure ontheir IT groups to draw on the most recenttechnology to quickly develop new productsand services specific to their customers in aparticular sector and geographic area. WhileIT groups want to draw on the latest andmost relevant technology to quickly developsolutions to local demand, they also try andavoid repeating the mistakes of the past, suchas creating “infrastructure spaghetti”, whichcan lead to a high rate of project failure.The most significant results that wereidentified during the analysis of the surveydata were regarding firm agility. By studyingthe investments in technology and the keybusiness enablers, INSEAD eLab was able tocompare and contrast those firms havinga high degree of agility against those firmshaving a low degree of agility. As a result,and given the prime importance of agility tobusiness leaders, this report focuses on resultslargely related to agility.The most significant results that wereidentified during the analysis of the surveydata were regarding firm agility. By studyingthe investments in technology and the keybusiness enablers, INSEAD eLab was able tocompare and contrast those firms having ahigh degree of agility from those firms havinga low degree of agility. As a result, and giventhe prime importance of agility to businessleaders, this report focuses largely on resultsrelated to agility.Business Process PerformanceSurvey participants were asked to rate theirorganization’s performance in each of thefollowing business processes as compared tothe industry average (1=well below industryaverage ... 5=well above industry average). 5• Supplier Relations (inbound logistics):Forge closer links with suppliers; monitorquality; monitor delivery times; gainleverage over suppliers; negotiate pricing;• Customer Relations (outbound logistics):Respond to customer needs; provideafter-sales service and support; improvedistribution; create customer loyalty;• Production/Operations (includingprocesses such as IT, HR, finance, andlegal): Improve throughput; boost laborproductivity; reduce costs; improveflexibility and equipment utilization;streamline operations;• New Product and Service Development:Embed IT in products; increase paceof development and R&D; monitordesign costs; improve quality; supportinnovation;• Sales and Marketing Support: Spotmarket trends; anticipate customerneeds; build market share; improveforecasting accuracy; evaluate pricingoptions.Organizational change andperformanceSurvey participants were asked to rate theirorganization’s performance in the followingaspects of organizational change:• Introduction of new methods oforganizing work responsibilitiesand decision making, team work,decentralization, integration or deintegrationof departments, educationand training systems;organizing external relations with otherfirms or public institutions to include firstuse of alliances, partnerships, outsourcingor sub-contracting.Survey participants were also asked to ratetheir organization’s performance usingthe following metrics of organizationalperformance.• Capabilities to anticipate market changes;• Return on Investments (ROI);• Return on Assets (ROA) (i.e., ratio of profitto total assets);• Ratio of operating income to assets(OI/A);• Net margin.5 Adapted from Tallon, P. and Pinsonneault, A. (2011).“Competing perspectives on the link between strategicinformation technology alignment and organizationalagility: Insights from a mediation model.” MISQuarterly Vol. 35 No. 2 pp. 463-486/June 201110 INSEAD eLab ICT Report