Progressive Insurance

Progressive Insurance

IT as a Competitive Advantage Presented by: Grant Epstein Erin Miltenberger Darren Van Booven The Importance of IT in an Organization Understanding IT and its Role can

Gain a competitive advantage Improve efficiency of business processes Expand/revolutionize markets Not Understanding IT and its Role can Lead to Wasted IT budget Lead to Business Failure IT as a Competitive Advantage the ability to maintain an initial gain in business performance from strategic IT Concept

that has grown in importance and acceptance. Kettinger, Grover, Guha, and Segars. Strategic Information Systems Revisted: A Study in Sustainability and Performance MIS Quarterly 1994, page 32 IT as a Competitive Advantage Systems that can lead to a competitive advantage in the short or long run have a high value to the initiating company Systems that cannot maintain the

advantage will lead to the initiating company being surpassed by the competition. Kettinger, Grover, Guha, and Segars. Strategic Information Systems Revisted: A Study in Sustainability and Performance MIS Quarterly 1994, page 32 IT as a Competitive Advantage Firms That Have Made it Work Federal Express: Package tracking system Mitek: Computerized roofing design system Baxter Healthcare: Hospital supply ordering system

Aligning IT Strategy with Business Strategy Contributions Commodity Differentiator Critical Aircraft maint. software Baxter Healthcare ordering software Useful

Personal productivity software ICI Paints IT as a Competitive Advantage - Framework Three Pillars of Sustainable Competitive Advantage Project Life Cycle Analysis How long until a response? Competitor Analysis Who can

respond? Supply Chain Analysis How effective will response be? Feeny, David & Ives, Blake, IT as a basis for sustainable competitive advantage in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny, David. McGraw-Hill Education-Europe, 1997, pp 43-61. Pillar 1: Project Life Cycle Focuses on the idea that when a company uses IT to gain a competitive advantage, it can expect competitors to respond. Project life cycle is the time between release of the new system and competitor response.

Awakening Win approval Project Build Project Launch Feeny, David & Ives, Blake, IT as a basis for sustainable competitive advantage in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny, David. McGraw-Hill Education-Europe, 1997, pp 43-61. Pillar 2: Competitor Response

What Competitors Can Respond? Three Components Competitive Scope Organizational Base Geographic, Segment, Vertical, Industry Structure, Culture, and Physical Assets Information Resources

Technology Infrastructure, Application Inventory, Data bases, Knowledge bases Feeny, David & Ives, Blake, IT as a basis for sustainable competitive advantage in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny, David. McGraw-Hill Education-Europe, 1997, pp 43-61. Pillar 3: Supply Chain Analysis Will a Response Work? Steps to Insure a Response Will Not be Effective. Find exploitable link Find a point in the

supply chain where resources are limited and few participants control the link. Secure the pole position Create a unique relationship with the market. Increased value will result in a more secure relationship and prevent loss to competition. Feeny, David & Ives, Blake, IT as a basis for sustainable competitive advantage in Managing IT as a Strategic Resource, Willcocks, Leslie, Feeny, David. McGraw-Hill Education-Europe, 1997, pp 43-61. Pillar 3: Supply Chain Analysis Keep the Gate Closed Create a perception amongst users of tangible and intangible switching costs. This is the basis for maintaining

a competitive advantage. Applications Users will have to learn a new system Database Loss of stored information during a switch Community Switching may have an adverse effect on the way the user does business IT has become a part of its infrastructure. Case Study Analysis Progressive Sabre Celera Genomics

Progressive Why Choose Progressive? Pioneering efforts in the use of IT in the auto insurance industry Leading the way in the use of the Internet to improve communication with customers, independent agents, and prospects. History and Background

Founded in 1937 by Jack Lewis and Joseph Green. www.progressive.com/progressive/history.asp, viewed February 9, 2003 History and Background Early innovations 1990 first insurance provider to provide 24 hour claims service at the accident site 1992 first insurance provider to offer competitor quotes as well as its own. 1994 launched Immediate Response Vehicles (IRVs) allowing claims agents to settle many claims at the accident site. 1995 first major insurance provider with a presence on the Internet

www.progressive.com/progressive/history.asp, viewed February 9, 2003 History on the Internet Prior to 1995, no major insurance providers were on the Internet. Progressive launched its site in 1995. Site had mostly a brochure look It was a matter of getting to know the technology to get something up and see what we can do. CEO Glenn Renwick (Glenn Renwick, CEO of Progressive, interviewed by phone by Grant Epstein, March 14, 2003) www.progressive.com

In 1996, Progressive allowed customers to get competitive bids online. www.progressive.com/progressive/prg_firsts.asp, viewed February 9, 2003 History on the Internet First insurance company to let customers buy online (1997) We see the trend moving more and more to online buying (Glenn Renwick, CEO oof Progressive, interviewed by phone by Grant Epstein, March 14, 2003)

First insurance company to let customers access their account online in 1998. Launched agent site, ForAgentsOnly.com in 1998. www.progressive.com/progressive/prg_honors.asp, viewed February 9, 2003. and information provided by Progressives PR Department Insurance Products Auto, commercial vehicle, motorcycle, personal watercraft, ATV, and RV insurance.

Primary target range is drivers aged 18 34. Also provide information about insurance to teens and driving issues they face on progressive.com Progressive Facts, provided by Progressives PR Department, February 2003 Insurance Products Progressive writes insurance in 48 states and the District of Columbia. Currently not doing business in MA or NJ. Drivers can buy over the phone, online, or

from one of Progressives 30,000 agents. Progressive Facts, provided by Progressives PR Department, February 2003 ITs Importance at Progressive CEO Glenn Renwick believes in the philosophy that technology and business alignment are key. Ray (Voelker) is an integral part of the decision process. The organization builds technology into the business decision process. Our business plan and IT are inextricably linked because their job objectives are. Glenn Renwick, CEO of Progressive, interviewed by phone by Grant Epstein, March 14,

2003 Gallagher, Julie, Business-savvy CIO turns tech-savvy CEO Insurance and Technology, July 2001. Importance of IT Information on Progressives employee count in the IT Department not currently available. Has averaged around 2000 over the last five years Information on Progressives IT annual budget also not available. Information Week.com, 2000.

Gallagher, Julie, Business-savvy CIO turns tech-savvy CEO Insurance and Technology, July 2001. Progressives Growth and Market Share Since 1993, growth rate has far exceeded that of the industry Growth rate has ranged between 13.6% and 36%. Industry growth rate has ranged between 2.6% and 5.9% Exception is 2000, when the entire industry experienced minimal growth. Progressive Facts, Provided by Progressives PR Department, February 2003

Progressives Growth and Market Share Industry rank has increase from No. 34 to No. 3 in the last 20 years Rank has gone from No. 15 to No. 3 since it began offering competitor rates and developed a web presence. State Farm and Allstate are #1 and #2 respectively. Market share Increased 1% over the last three years (2000 2002). Progressive Facts, Provided by Progressives PR Department, February 2003

Progressives Critical Differentiator The insurance companies that are most likely to develop a competitive advantage in the industry are those that employ technology in a manner that more effectively delivers their business model. -Ted Devine, Principal of McKinsey and Company Erlanger, Enhance web site value, carriers told National Underwriter Vol 16 July 2002. Pp 15-16 Progressives Critical Differentiator

Progressives critical differentiator is not that it allows customers to shop and buy online. Now we dont think, Boy, were the only one that allows customers to buy policies online. Its just part and parcel of our entire strategy that focuses on the Internet and putting the information back into the clients hands. MacSweeney, Greg Progressive, inside and out Insurance and Technology, Vol 24 Sept. 30, 1999. Pp 13-14. Progressives Critical Differentiator This attitude carries on down the line of Renwicks management team. Our guiding principal is to provide customers with a welldeveloped, easy-to-use Web-site that meets the spectrum of their

needs. Toby Alfred, Internet Site Manager MacSweeney, Greg Progressive, inside and out Insurance and Technology, Vol 24 Sept. 30, 1999. Pp 13-14. Critical Differentiator Where it all began Progressives critical differentiator is that it has fully integrated technology into it business process decisions and its interaction with prospects, customers, and agents Critical Differentiator Where it all Began

Began in 1990 with the launch of Immediate Response and continued in 1994 with its IRVs and in 1997 with its Claims Workbench software. Allows claims agents to cut checks for policy holders at the site of the accident. Former CEO Peter Lewis Progressive is leading a wave of change. Salter, Chuck, Progressive Makes Big Claims Fast Company Issue 19, Nov. 1998 pp 176. History of Progressives Internet and IT Advantage

At the time progressive.com was launched, no other major providers had an online presence. Progressive was not even sure what the reaction in the market would be. we figured the Internet would be a good thing for us to get into we wanted to get out there and see how people would respond. Alan Bauer, President of Direct Group Alan Bauer, President Direct Group of Progressive, interviewed by phone by Grant Epstein, March 3, 2003 History of Progressives

Internet and IT Advantage After strong initial response, Progressive decided to take its website from informational to functional. There are people who like to buy online and we are an option for them. - Alan Bauer. Progressive was in a great position to take its website to a more functional level and allow customers to buy online. Call center already set up to sell directly Automated approval process(no need to interact with an agent) Necessary technology was already in place.

Alan Bauer, President Direct Group of Progressive, interviewed by phone by Grant Epstein, March 3, 2003 What does the future hold? CIO Ray Voelker says his vision is to see the true, Internet-only insurance policy. If you buy a policy today, youre still going to get a paper policy in the mail. Its rare, if it is happening at all, for a completely paperless process. Hulme, George, Premium Put on Web Initiatives Information Week, September 11, 2000 Does Progressive Have a Sustainable Competitive Advantage?

Pillar 1: Life Cycle analysis: Time to competitor response Awakening, Approval, Building the System, Product Launch While it would not take substantial time to build a brochure website, most competitors did not see the web as a viable channel for communicating with the market. Unlike its competitors, Progressives business model made the transition very easy and logical. Does Progressive Have a Sustainable Competitive Advantage? Pillar 2: Competitor analysis: Who can

respond? Competitive Scope Organizational Base Information Resources Could competition respond? Limited website content Increased fucntionality required changes in competitor business process.

By the time competitors reached Progressives benchmark, it had already moved it further out. Does Progressive Have a Sustainable Competitive Advantage? Pillar 3: Supply Chain Analysis: Will Copying Help? Find Exploitable Link Capture Pole Position Keep the Gate Closed Competitors have followed suit in part or whole. Though churn is an issue in the industry, whether or not competitors following suit will erode its competitive advantage remains to be seen. Progressive has maintained its lead through continued innovation. Progressive displays continued growth that far exceeds that of the industry and continues to climb the market share ladder.

Conclusion Progressives self-assumed role of innovator and change agent in the auto insurance industry has led to a distinct competitive advantage and has maintained that advantage through continued innovation. Sabre Sabre Company Background Provider of technology and distribution and marketing services for travel industry

Leadership position in every travel marketing and distribution channel Travel Agency Online Consumer Online Corporations Known for its notable firsts and bests Sabre Annual Report Pg 2 Sabre Company Background

Headquarters: South Lake, Texas 6,500 employees located in 45 countries Carol Kelly Senior Vice President and CIO Reports to CEO http://www.sabre.com/about/index2.html?b=1&a=history/index.html, viewed on March 5, 2003 Sabre Customers

Airlines Car Rental Agencies Corporate Travel Cruise Lines Hotels Tour Operators Travel Agents On Line Travel Consumers

www.sabre.com/products/index.html, viewed March 12, 2003 Sabre Financials Total 2001 Revenue $2.1 billion, 8% increase from 2000 Airline Solutions 9% Get There 2% Travelocity 11% Travel Marketing and Distribution 78%

Sabre Annual Report Summary Page Sabre Financials 2001 was a difficult year due to Sep 11 but Sabre has seen a gradual improvement. 350 2500 300 2000 250 1500

200 1000 150 100 500 50 0 0 1998 1999

Revenue Sabre Annual Report Pg 16 2000 Net Earnings 2001 Sabre Bookings Share Sabres global booking share is 38%. Sabre has the number one booking share in 3 regions. 48% U.S./ Canada 50%

Latin America Europe Asia/ Pacific Sabre Annual Report Summary Page 14% 57% History of Sabre System 1960 IBM and American Airlines had a plan to automate the process of reserving airline seats.

Booking process involved 12 people, 15 procedural steps and up to 3 hours. Created Sabre Semi-Automatic Business Research Environment Processed 84,000 telephone calls per day Development cost was almost $40 million www.sabre.com/about/history/index.html, viewed on March 6, 2003; Scheier, Robert, 35 years of IT Leadership: Technology takes Flight Computerworld, Vol 36, 40, 2002, pp. 34-36. History of Sabre System

1964 Final Sabre system cutover is complete Network extends coast to coast Largest, private real-time data processing system Internal inventory system owned by airline Installed only at airports and airline ticket offices Used to track airlines seats, flights and operational information www.sabre.com/about/history/index.html, viewed on March 6, 2003; Scheier, Robert, 35 years of IT Leadership: Technology takes Flight Computerworld, Vol 36, 40, 2002, pp. 34-36.

History of Sabre System Benefits of Sabre Manage inventory and seats faster and more accurately Get paid quicker for tickets purchased Saves American 30% on investments in staff alone Error rate of less than 1%

www.sabre.com/about/history/index.html, viewed on March 6, 2003 Competition Competitive Edge lasts for 5 to 7 years Uniteds Apollo System Amadeus European Airlines www.sabre.com/about/history/index.html, viewed on March 6, 2003 Sabre The Next Step

1976 Sabre moves to travel agencies By the end of the year it is installed in 130 locations. 86% of top agencies in competitive markets use Sabre. American began to co-host other airlines on Sabre for a fee Helped airlines compete against United where American had no routes

Gave Sabre competitive edge with travel agencies One stop shopping Evolved into Global Distribution System (GDS) www.sabre.com/about/history/index.html, viewed on March 6, 2003; Scheier, Robert, 35 years of IT Leadership: Technology takes Flight Computerworld, Vol 36, 40, 2002, pp. 34-36. Sabre 1980s 1986 Sabre installs first automated yield management system Prices airline seats to yield maximum revenue for each flight

1988 Sabre stores 36 million fares which can be combined to create over 1 billion fare options http://www.sabre.com/about/index2.html?b=1&a=history/index.html, viewed on March 25, 2003 Is the competitive advantage to great? November 1984 11 airlines file an anti-trust suit against Sabre

Claimed reservation system restraining competition American had advantage because their system was on travel agents desks and their flights were shown first American decided to end preferential treatment for their own flights. http://www.pcma.org/resources/convene/archives/displayArticle.asp?ARTICLE_ID=3392 , viewed on March 25, 2003 Sabre GDS Today Connects over 60,000 travel agencies with 400 airlines

58,000 hotel properties 53 car rental companies 9 cruise lines 33 railroads 232 travel operators http://www.sabre.com/about/index2.html?b=1&a=technology/index.html, viewed March 25, 2003 The Web A New Threat The web bypasses GDS directly links customer to airline Self service web-based sites allow travel industry to take advantage of less costly systems.

Offers ease of use and ease of operations How can Sabre compete? Scheier, Robert, 35 years of IT Leadership: Technology takes Flight Computerworld, Vol 36, 40, 2002, pp. 34-36.; McCarthy, Jack, Troubled Travels InfoWorld, Vol 24, 35, 2002, pp. 44-45. New Innovations for Sabre www.Travelocity.com First site to offer travel reservations and comprehensive destination and event information on the Internet

Leading on-line consumer travel website www.sabre.com/about/history/index.html, viewed on March 6, 2003; Sabre Annual Report Pg 3 New Innovations for Sabre Get There Leading provider of web-based corporate travel procurement Helps companies to track and control travel costs Signed up two largest travel agencies Customers build own travel booking sites Privately negotiated fares Travel policies Preferred suppliers Solidified position in business to business market

Sabre Annual Report Pg 3; Rosen, Cheryl, Sabre thinks big for booking and reporting system Informationweek, Issue 808, 2000, pp 172. New Innovations for Sabre Sabre Pass Touch Sabre Wireless Check in System Self service kiosk to check in using credit card or

frequent flyer card Allows travelers to check in using wireless phone Receive automatic flight notification Sabre Roving Agent Hand held device to make seat assignments, print boarding passes and bag tags and issue vouchers www.sabre.com/about/history/index.html, viewed on March 6, 2003; Sabre Annual Report Pg 3; Meehan, Michael, Sabre launches wireless flight check-in Computerworld, Vol 34, 44, 2000, pg 72. Changes for Sabre Transition from GDS to open platform

Allows for greater access, availability, content Greater integration and increased speed to market Only non-stop capability in industry For pricing, reservations and ticketing Outsourcing to EDS Sold airline infrastructure technology business to EDS

Sabre will focus on its core areas and higher margin, faster growing business EDS will manage Sabre information systems EDS will contribute $20 million for Sabre product development Sabre Annual Report Pg 12; Hickey, Kathleen, Outsourcing in a big way Traffic World, Vol 265, 13, pp 40. Does Sabre Have a Sustainable Competitive Advantage? Pillar 1: Project Life Cycle Analysis - How long until a response?

Awakening Approval Building the System Project Launch The original Sabre system had a competitive advantage for 5 to 7 years. Other airlines were able to create similar systems, however Sabre has continued to keep a competitive advantage by using information technology to create new products. Does Sabre Have a Sustainable Competitive Advantage? Pillar 2: Competitor Analysis: Who can respond? Competitive Scope Organizational Base Information Resources Sabre products face competition from many different

sources they have to be continuously updating and creating new value for their products For example, they were the first to co-host on their system so they became the preferred provider for travel agents. Does Sabre Have a Sustainable Competitive Advantage? Pillar 3: Supply Chain Analysis: Will Copying Help? Find Exploitable Link Capture Pole Position Keep the Gate Closed Other companies have been able to copy Sabres systems The key has been to be first to market and to continuously innovate Sabre Conclusion

Sabre has maintained a competitive advantage in its industry by continuously working to create the next best thing It may not be possible to maintain a competitive advantage over a long period of time for one product but it is possible to by continuously improving your products. Celera Genomics, Inc. Discovery Cant Wait TM Human Genome Project Cracking the Code

Begun in 1990, the Human Genome Project (HGP) is an effort by the DOE and NIH with the primary goal of discovering all of the 80,000+ human genes and rendering for study. Originally planned to last 15 years, but Celera said in 1998 it could finish the job in a third of the time, and announced April 4, 2000 that it had indeed finished. Bicycle Example (billions of parts). http://www.pbs.org/newshour/extra/features/jan-june00/genome.html, viewed March 01, 2003 . http://www.ornl.gov/TechResources/Human_Genome/, viewed March 20, 2003. Celera - Origins

Dr. Craig Venter began working on the human genome at the NIH, a major backer of the project, with Dr. Francis Collins, Director of the NIH. Frustrated with Collins and his slow pace, Venter left and started his own team. Heavily criticized and doubted by other scientists about his claim. Craig Venter, Ph.D

We knew it would either work spectacularly Francis Collins, Ph.D or be the biggest flameout in history. Craig Venter http://www.pbs.org/newshour/extra/features/jan-june00/genome.html, viewed March 01, 2003 Celera - Background Established in 1998 by Applera Inc., and Craig Venter. Main offices in Rockville, MD and San Francisco, CA. Celera is engaged principally in integrating advanced technologies to discover and develop new therapeutics by leveraging capabilities in bioinformatics and genomics.

Celera Genomics and the Applied Biosystems Group are the two operating groups that comprise Applera Corporation. http://www.celera.com/company/home.cfm?ppage=overview&cpage=background, viewed March 05, 2003. Celera Executive Management Tony L. White Chairman, President, CEO Dennis L. Winger Sr. VP, CFO William B. Sawch Sr. VP, General Counsel

David S. Block, M.D. Robert F.G. Booth, Ph.D. Samuel E. Broder, M.D. Applera Corporation 2002 Annual Report John S. Ostaszewski Treasurer VP - Celera Genomics VP - Celera Genomics VP - Celera Genomics Tama Olver VP, CIO Size of Celera Genomics Financial Overview - 2002

(Amounts in Millions $) Revenues: Cost of Sales: R&D: Net Loss: Cash & Cash Equivalents: Total Debt: Applera Corporation 2002 Annual Report 2001 2002 % Increase/(Decrease) $ 89.4

43.0 164.7 (186.2) $120.9 51.9 132.7 (211.8) 35.2% 20.7% (19.4%) 13.7% 995.6 0.0 888.9

18.0 (10.7%) - Celera - Stock Price History Celera Five-year Stock Price (NYSE:CRA) http://finance.yahoo.com, Yahoo! Inc., viewed March 16, 2003. Celera Primary Products Revenues come from two primary sources: An online information and discovery system through which users can access Celeras genomic and related biological and medical information. Customers pay for subscription access to CDS.

Service Revenues Customized datasets and proprietary mapping. Customized analysis and algorithm development. Database design and implementation. http://www.celera.com/company/home.cfm?ppage=overview&cpage=faq, viewed March 01, 2003. http://www.celeradiscoverysystem.com/contact/home.cfm?ppage=contact_services, viewed March 28, 2003.

Celera - Customers Users: 250+ Commercial, Academic & Institutional Organizations Sample of Commercial Customers: Sample of Academic/Institutional Customers: - Harvard University - Oxford University - California Institute of Technology - National Cancer Institute http://www.celera.com/genomics/home.cfm?ppage=overview&cpage=customers, Viewed March 03, 2003. http://www.celeradiscoverysystem.com/testimonials/home.cfm. Viewed March 28, 2003. Celera - Annual IT Budget IT budget is not disclosed.

Celera IT department contains roughly 50 employees. R&D spending was $132 million in 2002. Jamie Lacey, Celera Communications, e-mail to Darren Van Booven, March 03, 2003. Applera Corporation 2002 Annual Report http://www.celera.com/company/home.cfm?ppage=overview&cpage=platforms, Viewed March 03, 2003 Celera - Annual IT Budget Celera has built one of the most powerful non-government supercomputing facilities

in the world with 800+ interconnected computers. Celeras Main Data Center: Applera Corporation 2002 Annual Report http://www.celera.com/company/home.cfm?ppage=overview&cpage=platforms, Viewed March 03, 2003 Origins of Celera Systems Systems originate

with the formation of the company. Venter claimed in 1998 he could beat NIH by by relying heavily on robots and computers. Venter and Applied Biosystems, Inc. built the first commercial-grade DNA sequencing robots. Celera now has over 200 ABI PRISM 3700 DNA Analyzers (shown). The PRISM 3700 is the first DNA sequencer designed for production-scale sequencing.

http://www.pbs.org/newshour/extra/features/jan-june00/genome.html, viewed March 01, 2003 http://www.appliedbiosystems.com/products/productdetail.cfm?prod_id=40 Critical Differentiator The key to Celera's unprecedented sequencing speed and productivity is its whole genome "shotgun" sequencing approach and sequencing them with brute force. Billions of base pairs to sequence! Celeras approach is much faster than previous mapping methods and dramatically increases the amount of genomic and data available to researchers. Base Pairs:

http://www.celera.com/company/home.cfm?ppage=overview&cpage=platforms, Viewed March 03, 2003. Critical Differentiator Celera developed supercomputing facility for processing DNA sequencing data produced by its Celeras robots. With its robots and supercomputers, Celera was able to sequence and assemble the human genome in just nine months. Celera Discovery System was initialized and embodied Celeras Competitive

Advantage. http://www.celera.com/company/home.cfm? ppage=overview&cpage=platforms, Viewed March 03, 2003. How CDS is Used http://www.celera.com/company/home.cfm?ppage=overview&cpage=faq, viewed March 01, 2003. Online Demo http://www.celeradiscoverysystem.com/index.cfm Does Celera Have a Sustainable Competitive Advantage? Pillar 1:

Project Life Cycle Analysis - How long until a response? Awakening Approval Building the System Project Launch 1. Celeras information delivery system and data are patented and trademarked. 2. Significant technology start-up cost in a low-margin industry and rough economy. Celeras competitive advantage is supported by the first pillar. Applera Corporation 2002 Annual Report

Does Celera Have a Sustainable Competitive Advantage? Pillar 2: Competitor Analysis: Who can respond? 1. 2. 3. 4. Competitive Scope Organizational Base Information Resources Only large international governments are capable of duplicating Celeras supercomputing platform, but they have no competitive

need to do so. Content and delivery system pioneered by Celera. Access to cheap industrial-grade equipment via Applied Biosystems Well-skilled experts in bioinformatics. Celeras competitive advantage is supported by the second pillar. Applera Corporation 2002 Annual Report Does Celera Have a Sustainable Competitive Advantage? Pillar 3: Supply Chain Analysis: Will Copying Help? Find Exploitable Link Capture Pole Position

Keep the Gate Closed 1. Most powerful gene sequencing center in the world. 2. Celeras information delivery system and data are patented and trademarked. 3. Brand recognition. Celeras competitive advantage is supported by the third pillar. Applera Corporation 2002 Annual Report Celera - Conclusion Celeras systems provide a sustainable competitive advantage that is supported by the three pillar model. -butSometimes it isnt enough. There is a high degree of uncertainty that the Celera Genomics group will be able to achieve profitable operations Celera Executive Management Applera Corporation 2002 Annual Report

Overall Summary Overall Summary Contd. Obstacles to competitive advantage: - Capital Costs - Intellectual Property Rights - Switching Costs - Skills - Management Buy-In MIS Quarterly, 1995 IT and sustained competitive advantage by Francisco Mata Conclusion

IT can be used to create a sustainable competitive advantage for the business! A competitive advantage leads to a significant edge over rivals, which usually leads to greater market share and profits. Some competitive advantages are sustainable, while others are not. Lessons for the CIO

Must do things better, more efficiently, or special in the eyes of your customers. Patent methodologies and innovation so that competitors cannot use them. A system can be the best, but without coupling it to business strategy it may not offer any benefit to the bottom line. Continuous innovation is needed to remain competitive. IT as Competitive Advantage Questions?

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