We live in a world where technology is no longer a luxury but a standard business tool, making it very difficult for companies to experience the gains of competitive advantage.

The price of essential IT functionality has reached the point where it is more or less affordable to all, the capacity of the Internet has caught up with demand, IT vendors are rushing to position themselves as commodity suppliers or even as utilities, and the investment bubble has burst. Technology has enveloped all of the advantages that markets need to operate and has made the speed of doing business as fast as users require.

Technology is no longer the tool to get ahead of your competition, rather the tool required to be competitive.

That being said, companies now need to focus on how to optimize the technology that they possess, manage costs and forgo the risks associated with trying to gain a competitive advantage through technology, when market conditions have evolved due to its increasing availability.

The advantage that companies gain from the technology itself depends on the implementation and, equally, the users employed to extract those gains. Technology provides a stable platform upon which to build and offers new ways of differentiating, either by cost, structure, product or service. The value that technology provides to businesses does not reside solely in the technology itself, but also in the creation of strategic advantage by extending competitive scope, partnerships, the rules of competition, and the provision of new IT-based services to extend the customer value proposition. The most successful companies will find new ways to adapt the technology that is available to them to change the existing market conditions; turning competition in their favor by creating an advantage where one had never previously existed. Computers have evolved so quickly over the past fifty years, but the capacity of a business to extract that information and use it to gain a competitive advantage is the true challenge. It can be argued that technological innovation is not the limit of competitive advantage, but the ability of the end user to adapt that technology to best serve a company’s competitive position in the coming years.

Possessing the technology is the first step. Understanding how to use it in such a way that you optimize your business’ potential is the next. Information technology offers more knowledge than users often have the capacity to absorb or interpret. IT is a promising source of productivity growth, but in order to make an optimal contribution to the overall performance of a company, it needs to be combined with complementary investments in work practices, human capital, and organizational restructuring. Possessing the technology for growth gives little advantage to firms unless they also possess the tools to interpret and therefore optimize the resources from that technology; hence the existence of consulting firms, such as Renaissance Associates, to help to optimize the operations of a firm with the use of the most modern technologies and resources within any given industry.

The key is to treat IT efforts as opportunities to define and deploy new ways of working, rather than just projects to install, configure or systems to integrate. The true value in technology exists in how your human capital is able to utilize it to innovate. The possibilities are endless for developing new applications and usages for the existing technologies within the context of a business. In order for companies to use them to become successful, they need to create a working environment where knowledge is free flowing. Managers need to foster innovation by encouraging experimentation, collaboration, dialogue and all of the other activities that generate good ideas. Managers also need to be cognizant of how their employees are using the technology provided to them. The “winners” of tomorrow will be the companies who are able to innovate ahead of their competitors, beyond the increasing uniformity of the IT “tool box” available to all market players. The most value comes from investments in IT that give you an edge that your competitors can not copy.