Competitive Forces that Shape IT Strategy in Business

Competitive Forces

The introduction of information technology (IT) systems has changed how companies conduct business, and also how they compete in their respective markets. There are a number of risks and advantages to implementing an IT system, which can be managed with the correct mix of technologies as an integrated platform. The purpose of this paper is to review the competitive forces that shape IT strategy in business.

IT Risk to Competitive Advantage

One of the primary risks to a company’s competitive advantages is systems availability. The computer has become a key tool in the art of conducting business, which means that they must be reliable and provide the resources necessary for a person to meet or exceed the expectation of their role. From an IT perspective, system failure is something that should be proactively monitored across the enterprise so that downtime is as minimal as possible in nearly all potential scenarios. The loss of revenues from being offline can be multiples higher with companies that provide 24/7 services to their clients, where revenues are calculated by the minute.

Another risk to competitive advantage is the disclosure of sensitive or proprietary data that is the source of the company’s advantage. A sales agencies value to a manufacturer, for example, derives from its industry contacts and distribution network. Therefore, their contact databases become their most valuable asset. A risk is espionage, an insider could provide these details to a competitor, or to a manufacturer looking to cause disruption in the market by selling online or via direct sales. Another risk in the disclosure of sensitive data that represents customer’s private information, including contact information and financial transaction data. For example, the healthcare industry has HIPPA regulations which stipulate what data is to be protected, how it is protected, and under what circumstances it can be disseminated. These are regulations put in place to protect the consumer, and stabilize competition between market providers.

A third area where IT represents a risk to a company’s competitive advantage is ineffective IT governance. According to Gartner (2013), “IT governance is defined as the processes that ensure the effective and efficient use of IT in enabling an organization to achieve its goals.” Throughout the past 30 years, companies struggled to define the role of IT as it related to business goals, many still do. IT was seen as a necessary evil, a means to an end, or another tool to automate certain tasks within a company, but not a way to achieve strategic advantage over a competitor or a method to dominate a market. As business goals evolve, formal IT governance will ensure that resource allocations remain dynamic and scalable to meet these changing needs.

A fourth risk area would be slow adoption, in that a company does respond to the challenges presented by direct competitors by updating or upgrading its technological capabilities. Many companies across all industries are slow to adopt new technologies, even if they offer clear advantages over current systems, due to user resistance to change or the excessive costs of redesigning proprietary applications to be compatible with modern systems. By not adopting new technologies, capabilities become limited, workers become unable to respond to customer demands in a timely manner, and systems can become overwhelmed to the point of system failure.

A final risk where IT represents a risk to a company’s competitive advantage is in cyber security. Any deficiency in a network’s security model presents a vulnerability that, if attacked with the correct vector, could represent a complete defacing of a company. The single most important aspect of any cyber security plan should be user education. There are a number of hardware and software solutions available to centralize and manage cyber security across an enterprise which provide comprehensive methods to thwart a direct attack from an outside entity, however they can only do so much. Half of all data breaches occur through phishing attacks, “in which unsuspecting users are tricked into downloading malware or handing over personal and business information” (IT Governance Ltd, 2015). These usually come in the form of a legitimate looking email and once the user initiates the connection, the system becomes infected and performs whatever it was programmed to do via the installed malware. The result of a breach could be catastrophic to an organization because of the importance of the actual data lost, and potentially the legal ramifications in the way of lawsuits from divulging protected data, whether inadvertent or on purpose.

IT Support of Competitive Advantage

A clear competitive advantage provided by IT is systems availability. With mission critical systems, redundancy is designed into the system model in an effort to eliminate the risk of system downtime and create 100% availability. While the expense of such a design can reduce net profits, it becomes a strategic advantage because a company is able to provide 24/7 services to their customers, regardless of geographic location. There are many companies moving their customer facing systems into cloud services to provide just that, availability. From online shopping, to financial institutions, to educational facilities, many companies have to provide a 24/7 model in order to meet customer demand and IT is the only way to ensure continuity and consistency across all communication methods.

IT provides a unique benefit for protecting sensitive and proprietary data in that the data can be encrypted to ensure only authorized users can gain access. Some regulations, such as HIPPA and PCI-DSS, stipulate not only data encryption but also low-level, whole drive encryption, using specific algorithms such as AES256 and a shared key pair. Encrypting data, and data communication channels, ensures that no outside party can view the information contained in these data files.

Proper implementation of IT governance can support a company’s competitive advantage because it ensures that all processes designed provide effective and efficient use of company resources using IT as the common thread. Over the past few years, as the value of IT proves its worth to companies looking to remain relevant in an ever changing consumer model, organizations have come to realize how important it is to bring IT goals in alignment with business goals. As an organization grows to meet market conditions, it becomes essential to align these two areas to ensure stability throughout the process. This provides the foundation necessary to ensure continuity as the company evolves.

A fourth way that IT supports a company’s competitive advantage is by enabling the company to be able to adapt quickly to changing markets. When implemented in an elastic model, such as the facilities provided with cloud solutions, companies can respond instantly to spikes in consumer demand with a few clicks of a mouse. By leveraging this model, companies can improve efficiencies, improve worker output, and lower operating costs, thereby increasing revenues and profits. A number of companies have adopted the agile model of development for their products, where concepts are quickly moved from the drawing board, to prototype, to final concept in a short time frame. Issues are fixed as they are found through use in a production environment. IT is the only way that this can be possible because of how the cloud model of scalability provides these resources in a dynamic way, as demanded.

A final way that IT supports an organization’s competitive advantage is through the implementation of a cohesive user education program and the implementation of an information security management system, which is a comprehensive approach to managing cyber security risks that takes into account not only people, but also processes, and technology. Security should be built into every process that any user takes to manipulate data in an information system. Once the physical perimeter of an infrastructure is also secured, users need to be trained to identify phishing attacks and social engineering tactics so they can become a weapon against these attack vectors rather than the weak link. Part of that training should include what cyber security systems are in place, how they protect users and corporate data, and why it is important for users to know this information.

IT Risk Scenario: System Availability

In the course of the author’s career, there was an instance where a major system outage resulted in the company losing a multi-million opportunity to a competitor. The root cause of the system outage was later found to be a misconfigured operating system update, provided by the software manufacturer as a critical update to patch a well-known vulnerability. This misconfigured system update caused every service hosted on the domain servers to reject every all queries from all systems. Since the update was automatically deployed to all servers in the forest, failover switching was not an option. It took over 6 hours to troubleshoot and eventually rebuild the primary server and supporting services to bring the network back online. In that time frame, a bid deadline expired for a major project and the author’s company was removed from consideration. Since they were one of only two companies that services this specific product group, from different factories, the contract was awarded to the competition. It represented a $20 million opportunity that spanned three years across five large developments. Had they been able to submit their bid, they would have saved the client 8% in costs, and over a month in lead-times.

IT Advantage Scenario: Data Privacy and Protection

Data security has become a major consideration for companies of all sizes, and for certain market segments it is a federal edict. Previous to the introduction if HIPPA regulations, the privacy of people’s health records were being mishandled. Data was stored in proprietary formats which increased administrative costs, and was shared with nearly anyone who had a seemingly legitimate need for it, whether that be for patient treatment or insurance carrier marketing purposes. Once public outcry reached critical mass, the Health Insurance Portability and Accountability (HIPPA) act of 1996 was created. HIPPA protects the confidentiality and security of healthcare information, and helps the healthcare industry control administrative costs (TN Department of Health, n.d.).

Conclusion

The implementation of IT systems comes with many risks and rewards for any entity, whether it be a company or a person. The main purpose of IT is to make a company more effective and efficient across all operational parameters. The proper management of the risks and advantages provided by an integrated IT platform can ensure that a business is able to meet the demand of its customers while being in a position to evolve as rapidly as their market does. Once systems and software are setup, security models implemented, and data secured, user education becomes the key component to ensuring that IT provides a secure platform for improved efficiencies and increased effectiveness expected across all job roles.





References
Garnter. (2013). IT Governance. Retrieved from http://www.gartner.com/it-glossary/it-governance

IT Governance Ltd. (2015). Federal IT professionals: insiders the greatest cybersecurity threat. Retrieved from http://www.itgovernanceusa.com/blog/federal-it-professionals-insiders-the-greatest-cybersecurity-threat/

TN Department of Health. (n.d.). HIPAA: Health Insurance Portability and Accountability Act. Retrieved from http://health.state.tn.us/hipaa/

I have decided to post some of my papers from class in hopes that my knowledge can be passed on to those of you looking to learn more about the world I am a part of.  This...is my passion ~Geek

Design Patterns

Abstract

            The purpose of this paper is to define, compare and contrast three software architecture design patterns, considering how or when they could be implemented, and why one method might be favored over another.  The Adapter, Factory Method, and Façade will be reviewed.  Before discussing these design patterns, structural patterns and creational patterns must be defined for clarity.

Structural Patterns

            Structural patterns define the make up of objects and manage access control to subsystems of objects.  In contrast to the architectural patterns that define an entire solution of subsystem, there are usually a number of structural-design patterns in a single framework (Hofstader, 2006).

Creational Patterns

            Creational patterns are concerned with the instantiation of objects.  The creational patterns focus on the composition of complex objects and the encapsulation of creational behavior (Hofstader, 2006).

Adapter

            The Adapter, a structural design pattern, converts the interface of a class into another interface clients expect ("Adapter Design Pattern In C# And Vb .net", 2012).  Functionally, the Adapter acts as the bridge for classes with incompatible interfaces to work together.  The four participants in this pattern are, the Target defines the domain-specific interface that Client uses, the Adapter which adapts the interface Adaptee to the Target interface, the Adaptee defines a existing interface that needs adapting, and the Client which collaborates with objects confirming to the Target interface.  The brilliance behind the Adapter pattern is that it can take incompatible classes from different libraries or frameworks and act as a translator between the two, morphing the data so it can be manipulated by the Client.  The Adapter design pattern could be an ideal solution when connecting legacy databases to newly created objects, such as in the aerospace industry where databases may be decades old and the data has to be accessed through a modern workstation.  The Adapter acts as the translator between the two frameworks so the Client can interact with the data and manipulate as necessary. 

Factory Method

            The Factory Method, a creational design pattern, defines an interface for creating an object, but let subclasses decide which class to instantiate.  Factory method lets a class defer instantiation to subclasses ("Factory Design Method Pattern In C# And Vb .net", 2012).    This pattern attempts to standardize the architectural model for a range of applications by creating a superclass, and delegating details to subclasses that are Client supplied, such as the case with assigning values to variables by way of user prompts ("Factory Method Design Pattern", n.d.).   According to "Factory Design Method Pattern In C# And Vb .net" (2012), there are four participating classes and/or objects participating in this pattern; the Product defines the interface of objects the factory method creates; the ConcreteProduct implements the Product interface; the Creator declares the factory method, which returns an object of type Product; and the ConcreteCreator which overrides the factory method to return an instance of a ConcreteProduct.  The Factory method can aid in design customization with minimal increase in complexity to the overall product.  Where other design patterns require new classes, the Factory Method only requires a new operation to introduce the new subclass into the superclass.  The Factory Method design pattern could be used to offer flexibility in creating documents of different classes but with the same basic properties as all documents.  The default template offered in word processing programs is an example of this superclass ideal where elements such as margins and fonts are predefined, which the user can further classify into a report or letter based on the values input into the subclass interfaces

Façade

The Façade Method, another structural design pattern, provides a unified interface to a set of interfaces in a subsystem.  Façade defines a higher-level interface that makes the subsystem easier to use ("Facade Design Pattern In C# And Vb .net", 2012).  This pattern attempts to provide a simple and uniform interface to a large subsystem of classes.  According to "Factory Design Method Pattern In C# And Vb .net" (2012), there are two participants in this pattern; the Façade knows which subsystem classes are responsible for a request and delegates client requests to the appropriate subsystem objects, and the Subsystem classes which implement subsystem functionality, handle work assigned by the Façade object, and have no knowledge of the façade and keep no reference to it.  An interface designed to access random segments of a complex subsystem, such as a relational database, could be created using the Façade Method to bring together all the details that need to be viewed in a singular interface, such as with an automobile manufacturer.  The factory floor must bring together the thousands of dissimilar components to construct a vehicle and developing a unified interface for all workers to access can make managing the production process, as well as the quality assurance process, easier because each subsystem (factory worker or robot in this case) can see what components have already been assembled to determine which subsystem is next in the manufacturing processes.  Accessing subsystems through a remote server could also lend itself to the Façade Method since there are a number of subsystems being utilized in the background that the user is unaware of.

Conclusion

            Design patterns exist to attempt to simplify the architecture process and assist developers in creating architectures that are easy to maintain or adapt.  The three methods discussed here are useful in their own way, and could all be used within the scope of a larger, more complex solution to achieve a cohesive system that can dynamically respond to users’ needs while minimizing administrative overhead and system complexity.  To say that one design method is preferred over another is a paradox because any design method could arguably be used in most situations, or they could all be used in certain situations and if implemented intelligently could result in a stable system architecture.

 References

Adapter Design Pattern in C# and VB .NET. (2012). Retrieved from http://www.dofactory.com/Patterns/PatternAdapter.aspx#inten

Facade Design Pattern in C# and VB .NET. (2012). Retrieved from http://www.dofactory.com/Patterns/PatternFacade.aspx#intent

Factory Design Method Pattern in C# and VB .NET. (2012). Retrieved from http://www.dofactory.com/Patterns/PatternFactory.aspx

Factory Method Design Pattern. (n.d.). Retrieved from http://sourcemaking.com/design_patterns/factory_method

Hofstader, J. (2006). Using Patterns to Define a Software Solution. Retrieved from http://msdn.microsoft.com/en-us/library/bb190165.aspx#sysptrn_topic2

instantiation. (n.d.). The Free On-line Dictionary of Computing. Retrieved May 28, 2012, from Dictionary.com website: http://dictionary.reference.com/browse/instantiation

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