According to Wikipedia, competitive advantage is a position a firm occupies against its competitors, allowing it to earn revenues higher than costs. So let us ask the question again: Is now the time to position your business in its industry as a leader in either superior service or lowest costs? If the answer is yes, then you need to understand how to achieve these benefits, and ITIL is the pathway to your success.
Setting the Agenda
Pursuit of a worthy goal that you realize through ITIL however, is an entirely different prospect. Competitive advantage is an advantage one business enjoys over its competitors. A business achieves competitive advantage by offering consumers greater value by lowering prices (cost advantage) or providing higher quality products and services that demand a premium (differentiation advantage.)
ITIL version 3 (v3) indicates that the creation of value arises through the most effective use of a company resources. Resources are organizational assets that include people, processes, patents, knowledge, customers, staff, brand equity, etc. Using resources effectively requires capabilities. At the company level, capabilities include, for example, being able to outperform a competitor, creating innovative new products, bringing new products to market sooner, etc. At the IT level, capabilities include being able to support customers and users reliably; delivering projects on time, on budget and with the promised features; finding and fixing outages fast and permanently; and, perhaps most importantly, being able to make changes in one area without inducing failures in other areas.
The combination of resources and capabilities presents a set of distinctive organizational competencies and can result in competitive advantage―if managed correctly. And, since ITIL is at the heart of IT service management, this is precisely the value that ITIL brings.
Today, virtually every business process relies upon IT activities. Improvements in the underlying IT activities remove constraints that impede the capabilities of resources and thus the creation of value and competitive advantage. Improving IT capabilities results in improved business performance, which can result in competitive advantage. Yes, IT still matters and IT can still deliver competitive advantage.
Examples of ITIL Value
Concepts of competitive advantage can seem a bit lofty with the sharks circling. So, here are a couple of real example organizations that improved IT efficiency and effectiveness while controlling costs and improving quality. These are not the nebulous, global-unlimited-budget-mega-case studies (usually funded by huge software companies) everyone finds doing a Google search, and which mean nothing since they dont explain exactly how the benefits were achieved. These example are all based on real organizations or companies with which I have worked. Youll notice I removed their names for privacys sake.
Major East Coast City- A major east coast city was able to:
- Identify more than $180,000.00 per month potential cost savings.
- Implement PeopleSoft with guaranteed SLAs to business units.
- Provide City Government with an IT report card.
- Take-on additional responsibility without significant additional costs and avoid a $600,000 equipment purchase.
- Manage IT as a business and improve service quality.
What ITIL Had to Do With It - The city was in the midst of a large ERP roll-out and wanted to understand potential issues before live deployment. The checklist included understanding bandwidth, projected loads and any potential business impact; verifying supplier and infrastructure availability through benchmarking; understanding and identifying assets in order to rationalize future purchases; and implementing service level management to improve IT service quality.