Current Strategic situation

2.  Current Strategic situation

Information technology (IT) industry has become of the most robust industries in the world. IT, more than any other industry or economic facet, has an increased productivity, particularly in the developed world, and therefore is a key driver of global economic growth.[7]

Market figures show that in Western Europe in 2009, IT infrastructure outsourcing increased by 3 per cent and is expected to increase by 4 per cent in 2010.[8]

IT is one of the most rapidly evolving, widely used, and pervasive high technologies in the world today. Understanding the general trends in the IT industry is important when giving advice on which technology to invest in. The invention, creation and widespread application of IT effectively spurs the integration of hardware manufacturing with software development, goods production with service management, and the real with virtual economy.

Although the IT industry has been faring better than others sectors, it is by no means immune to the current downturn.[9] See Appendix 1 worldwide spending on IT.

IT-industry analysis (Porter’s Five Forces)

Porter’s Five Forces can be used to understand how profitable a target industry might be and to understand the forces impacting upon the current industry’s profitability.[10]

Appendix 2 shows us the main power of suppliers and buyers, threat of substitute, new entrant threats and supply market rivalry. Comprehending the forces that shape IT-industry competition is the starting point for creating strategy. Every organization should know what the average income of its industry is and how that may change over time.

The key to growth and survival, according to Porter, is to use your knowledge of these five forces to «stake out a position that is less vulnerable to attack from head – to – head opponents, whether established or new, and less vulnerable to erosion from the direction of buyers, suppliers, and substitute goods.»[11]

External macro-environment analysis (PEST analysis)

To analyze current situation we can use PEST analysis. The PEST analysis is a framework that strategy consultants use to scan the external-macro-environment in which a firm operates.

PEST is an acronym for the following factors: Political, Economic, Social, Technological. PEST factors play an important role in the value creation opportunities of a strategy. However they are usually outside the control of the corporation and must normally be considered as both threats and opportunities. We should take in mind that macro-economical factors can be differ per continent, country or even region, so normally a PEST analysis should be performed per country.

v  Political

International regulations

Concerns about environmental issues

Concerns about energy utilization

The government view the IT sector as an important engine of economic growth

The market may be impacted by lower Government spending on new infrastructure

v  Economic

Currency Fluctuation

Unemployment Rates

Increase of Interest rates

The market is expected to remain highly competitive

Exchange rate movement

Economies of scale for the information technology industry are high

v  Social

Lifestyle changes

Concerns about ‘disposal society’

IT user population are becoming ever more sophisticated and demanding in their use of IT technology

Availability and quality of IT talent

v  Technological

Change in hardware

Server virtualization

Innovation

Broadband networks are becoming increasingly essential

Competitive advantage of Computacenter

When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage. According to the Competitive Advantage model of Michael Porter, a competitive strategy takes offensive position in an industry, in order to cope successfully with competitive forces and generate a superior Return on Investment.

In keeping with M. Porter, the basic of above-average performance within an industry is sustainable competitive advantage. There are two basic types of competitive advantage: cost advantage and differentiation advantage. Cost advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost. And this is also one of most important competitive advantages for Computacenter.

Cost leadership is perhaps the clearest of the generic strategies. The sources of cost advantage are varied and depend on the structure of the industry. Computacenter drives down cost as low as possible to ensure that price are the most attractive to their customers. And in order to achieve this advantage, the company combines services and solutions to best practice processes. In the other words, Computacenter helps their clients make business sharper by removing cost, complexity and barriers, using over 25 years’ of practical IT ‘know how’. The company is an above-average performer in its industry, at equivalent or lower prices than its rivals.

Appendix 3 illustrates how the company positioning themselves.

Competitive advantage of Computacenter:

ü  Delivers the right solution for consolidation. has considerable track in delivering consolidation projects.

ü  Can implement migration projects at lower cost, with less risk and more quickly than competitors

ü  Has consultants accredited to the highest level with all major datacentre vendors such as IBM, SUN, Oracle, HP, Redhat, SuSE, Veritas, VMware, EMC, NetApp and HDS[12].

ü  Knowledge, experience of deploying infrastructure management, skills and flexible methodology

ü  Vendor-independent organisation

ü  Consultancy capabilities cover all leading software and infrastructure vendors in the field of data

ü  Direct relationships with over 1,100 software vendors

ü  Hold more than 200 accreditations.

For several years the Group’s strategy remains unchanged. The group’s success is the direct result of a strategy founded of high investment in the development of the services capability over a number of years. Ongoing investment in staff reflects commitment to their goal – maintaining the position of market leader.

Computacenter sticks strategy that is stable and flexible, and can respond to the changing needs of the market. The company is continuing to pursue a strategy of growth in their activities to achieve economies of scale.

A leading presence in each of the major European markets for IT products and services, Extending presence in markets that offer greatest growth opportunity remains a core priority of Computacenter’s strategy.