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Brandix Lanka -IT Competitive Advantage

Brandix Lanka -IT Competitive Advantage

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09/22/2014

Faculty of Graduate Studies, University of Colombo

UNIVERSITY OF COLOMBO
FACULTY OF GRADUATE STUDIES

Brandix Lanka: How it used
Information Technology as a means of Achieving and Sustaining Competitive Advantage

Submitted for the fulfillment of requirements as Group Assignment for the module Strategic Information Systems and Management

By Evan Pathiratne

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

Abstract
In today‟s business context the concepts of „Sustainability‟ and „Competitive Advantage‟ are major focal points in modern strategy. Properly formed corporate strategies will improve market positioning enabling enterprises to survive against competition longer and achieve greater growth and profitability.

Competitive advantage can be viewed in terms of an advantage over competitors gained by offering customers superior value, by means of either by low prices or by greater benefits. To offer such values organizations should work smarter and stay competitive to provide response for dynamic customer demands, offering new and better products. Working smarter means that the business needs to be „agile’ to take advantage of new opportunities and counteract competitive threats.

In his controversial publication Nick G. Carr (2003) suggested that in most cases IT doesn‟t deliver competitive advantage, simply because everyone accesses the same technology and its is being used the same way. Now IT is just a commodity or utility, a scenario fit as in a off the shelf purchase.

The purpose of this research and analysis paper is to asses the degree at which Brandix Lanka ltd has achieved competitive advantage through IT. After interviewing CIO (Manoj Pilimatalawwe)and CTO (Vivek Agarwal) level representatives from Brandix and by through analysis of research done by industry experts we believe IT can be used as means of gaining competitive advantage. This study further extends to how Brandix achieved competitive advantage and how it has built standards to sustain it over a long period of time.

Our main argument base for this work is that organizations must articulate business and IT strategies to form an ideal fit. IT usage as was in the 1990‟s is over, IT/IS process management represents the next era of corporate computing.

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

1.0 INTRODUCTION
1.1 Brandix in a Business Perspective
Brandix Lanka Limited is the single largest exporter of apparels in Sri Lanka for the last five years with an annual turnover exceeding US$ 360 million. The company supported by over 27 manufacturing facilities in Sri Lanka and strategically located international sourcing offices. Brandix and making positive distributional impact emanating from export led industrialization. It has contributed to increase the local value addition of manufactured garments through the supply of raw materials and other inputs where it has been estimated that over 50 percent of value addition in garments is provided through backward linkages. Brandix is manufacturing worlds leading brands such as GAP, Victoria‟s Secret, Tommy Hilfiger, Pink etc. Brandix have strong competencies in manufacturing, product development, and marketing are complemented by our most significant advantage in textiles. Brandix group-wide initiatives to achieve manufacturing and supply chain excellence, closer collaboration with their suppliers and sales offices at the customer‟s doorstep all guarantee fast and flexible solutions from the source to stores. Some best practices and standards in Brandix are ISO 9000: 2001, 5S, ISO 14001 and Six Sigma. According to Mr. Manoj Pilimatalawwe currently Brandix is competing against MAS Holdings and Hidramani group for similar target markets.

1.2 Early Trends in IT
After careful consideration of IT portfolio and modern dynamic market trends the use of IT now formed a strategic role within Brandix. This was not clearly the case before, as with most organizations in Brandix the culture was set on reducing operational cost via IT usage. According to Mr. Pilimatalawwe company had invested heavily on automation of processes related to accounting and designing, especially information systems using CAD software. At that time an IT infrastructure and communication network based on ad-hoc investments was built to support the needs of customers and partners.

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Faculty of Graduate Studies, University of Colombo

It was at this time according to Mr. Pilimatalawwe Brandix management thought when comparing other organizations which comprises of the same IT resources (Computers, Servers, Software, Experts) which perform the same function in the same ways, to achieve competitive advantage something‟s has to change otherwise Brandix should do something different than the standard norm.

1.3 Change in Focus
Brandix CEO and board level representatives‟ requirement was that it needed to insulate itself from business environment changes, and also Brandix aimed to be the pioneer in the industry in terms of its IT use within the Asian garment manufacturing sector. It hoped to become the go-to brand for other foreign garment designers. Brandix was focusing on getting deals from exquisite brands such as Armani, Gucci, and Prada. To reach such a standard top executives turned to their IT, in how it can play a major part in the company rejuvenation. The company CIO and board level IT executives responded, the organization had to be shaped to become more competent at responding to change. It was decided Brandix cooperate IT infrastructure needed to be more agile.

2.0 CREATING THE COMPETITIVE ADVANTAGE
2.1 Cooperate Strategy – Top Management Level
According to Gartner (2008) “The question to ask is, „Can IT delivery organizations close the gap on business expectations by working harder in the way they have done in the past?‟ The answer is a resounding „No.‟ to meet business demands for higher levels of performance and availability while adding services and reducing costs, IT has to modernize.” Gartner (2008) further explains that IT modernization is a complete overhaul of the culture of IT with the specific goal of developing a portfolio of processes that will enable IT to reduce the gap on increasing business demands. There must exist a set of processes that will support service assurance.

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Faculty of Graduate Studies, University of Colombo

In comparison with other company‟s Brandix board level non-IT executives according to Mr. Pilimatalawwe are very tech savvy. Mr. Pilimatalawwe further explained that in his personal experience it was easy for him to get more funding for future tech enhancements because of this. CEO had a major take on decision making on company‟s future IT endeavors, and therefore the company business plan got more aligned to the IT plans the CIO was projecting. According to Weill and Ross (2002) in their research article on “Six IT decision you IT people should make” they had mentioned it was up to the CEO to decide which processes should be company wide. In Brandix it was clearly the case, in 2007 according to Mr. Pilimatalawwe CEO made the decision to standardize all individual mail services running on each different SBU‟s within Brandix into on centrally stored mal server. This made a sudden improvement in order processing and reduced customer complaints of mails getting lost and purchase orders getting delayed. The integration of all mail accounts proved to be a very complex project but it paved the way for a more effective business process. Hidramani and MAS later followed in Brandix foot steps in deploying such a solution. The second instance is when the board level advisors took the initiative to standardize company’s accounting functions to a centralized shared services center (SSC) – named Brandix Mercury. This center as of now is a self sufficient SBU within the Brandix group, providing services for other SBU‟s within Brandix. This is a perfect example of in-sourcing put to use. Brandix two main competitors still have not initiated such projects. Understanding the needs for a SSC and running it smoothly required the careful coordination of company CIO and board level executives as consolidation and standardization of business processes should be handled very efficiently to avoid major failures that would result in disastrous outcomes. This was a major reason why Brandix had stayed ahead from MAS and Hidramani in the past. When aiming for total market domination initially what Brandix focused on was their IT sector and changes in its IT governance structure. When other companies IT departments were overburdened with the complexities of operational issues added with the risks associated with making investment decisions, Brandix adopted a strategy where
the CEO and board level representatives took major decisions. Decisions that lead to greater long term benefits whilst lessening the responsibilities on the IT departments

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

2.1 Operational Strategies – Middle Management Level
Brandix Lanka Ltd is competing against MAS and Hidramani for similar target markets. From the beginning Brandix has used IT investments as a means for achieving targeted short term operational efficacies as well as long term strategic advantages. When faced with the task of restructuring the total cooperate IT landscape Brandix middle management, for that time made groundbreaking implementation in the Sri Lankan IT sector.

Need for the Change Arises

Cooperate Strategy to get Board Executives Involved in IT

IT Infrastructure Changes aligned to New Business Plan

The Change Flow within Brandix

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According to CIO, Brandix was the first in the country to develop an employee performance evaluation system via Microsoft Performance Point server 2007

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Has a comprehensive collaboration environment within the company via deployment of Microsoft SharePoint 2007. IT infrastructure supporting mission critical applications (ex- Gerber cutting equipment, CAD equipment) is replicated on DR sites. The preparation of an on-demand „hot site‟ has formed an integral part of the disaster recovery and business continuity plans of the organization. Synchronization happens in real time between both sites to totally mirror data and applications running on the original site, Brandix can easily relocate its main operation following a disaster with minimum coast and time delays; such a state of IT infrastructure was first developed at a larger scale in Brandix among the leading garment factories in Sri Lanka.

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Faculty of Graduate Studies, University of Colombo

3.0 SUSTAINING THE GAINED ADVANTAGE
Above chapters illustrated how cooperate reforms brought about changes in IT that made Brandix a frontrunner in local and also the garment export sector in south Asia. But the difficult part was yet to come. Achieving competitive advantage is far easier than sustaining that over a long period of time. This was the challenge the firm faced when moving forward. Brandix had an advantage though, this is because most of the changes were mandated and overseen according to the vision of the company board of directors. This was a crucial factor that lead to Brandix being a stable company in the years to come. Enterprise agility was the main area under focus when it came to keeping the edge company achieved. According to Weill, Subramani and Broadbent (2002) in a research paper titled „Building IT Infrastructure for Strategic Agility’ they highlighted an integrated IT infrastructure with ten capability clusters that a company should focus on to increase enterprise agility. It was the responsibility of the company CIO to enforce these tasks to ensure Brandix sustains its competitive superiority over others.

Infrastructure Service Model by Weill, Subramani and Broadbent (2002)

The ten clusters are highlighted above. This model was derived from study done on enterprises (89 to be exact on 180 business initiatives over a period of 10 years) all of which were among the top three in their industry by market share and performance. Application of this model to Brandix is very realistic, since it too is also a top performer in the industry at this time.

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

3.1 In-depth Look at the Ten Service Clusters within Brandix
Cluster 1 & 3: Channel Management and Communication - This is the communication link between customers and business partners through electronic channels. Brandix has developed a special system (Brandix E-Market) which allows effective communication between both parties.

Stage 1
• Customers have secure access to a system to check the online Catalog for company products (Fabric, Printed Fabric, Thread, Buttons, and Hangers & Finishing Services) and request a price quote for listed products, or they can inquire for customized product.

Stage 2
• After customer receives online price quote, they check and confirm the artwork for Fabric printing and designs for Buttons & Hangers. Once they done they can enter the sample or bulk order on the system.

Stage 3
• Once order shown on the system it’s acknowledged by the Brandix Marketing team and they reserve the production plan. Once delivery is confirmed order is automatically sent to the Customers end.

Stage 4
• Systems also support production monitoring, where customers can provide feedback when the design is being made.

Brandix System for Order Channel Management

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And the earlier described Brandix Mercury SSC with its focus on accounts management have made the account payable and revivable functions much easier to manage, because the customers now have to liaise with one party. This means less redundant work for company staff. This brings about a cumulative benefit of operational efficiency within the company. Shared Services Centers (SSC) has not been implemented among any garment firms locally. Brandix IT staff as of now is constantly working on improving the SSC by consolidating more accounting processes and SBU‟s to it to stay ahead from the competition.

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Cluster 2: Security and Risk Management - This aspect is valuable in terms of competitive advantage when you look at it from an angle of „providing uninterrupted service to the customer‟. A firm must have the vital infrastructure capabilities that allow it to be protected from attacks from internal or external sources to its brand, reputation, data or equipment because this will inadvertently has an effect on the company revenue stream.

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

- At Brandix even the risk of sudden resignation of an IT staff employee is managed by managing an in-house IT teams with a redundant pool of skill sets. So if one valuable employee leaves, the company operation would have a less impact due to the existing replaceable human resources.

Human Resources
Disaster Recovery

• Building IT skills with redundancy and Keeping diverse skill sets in the team • Ready to use Hot Site in case of disaster situation • Automated daily backups of data on mission critical systems • Internal physical security measures to prevent unauthorized personnel breach

Backups
Other

Brandix Security and Risk Management Measures

- The company network is guarded with the latest model CISCO ASA firewall. And according to Mr. Vivek Agarwal who manages the infrastructure security, Brandix consults third party firms to perform bi-annual penetration testing to identify any existing weaknesses in the network and to initiate any remedial actions to see fit. Cluster 4: Data Management - According to Weill, Subramani and Broadbent (2002) enterprises which strive for market dominance manage data independently of its applications, making them available company wide to promote initiatives such as new product development and cross-selling initiatives. - The earlier mentioned order channel management system is linked to a central database. From this reports on monthly progress on items purchased, trends, which customer segment made the purchase can be generated. This will help Brandix CMO to target more effective marketing campaigns for the future. Also company board directors can retrieve this information to get a summarized view of what is happening at the operational levels in Brandix, if necessary.

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

Clusters 5-8: Related to Overall IT Management  These clusters (namely application infrastructure services, IT facilities management services, IT management services and IT architecture and standards services) fall into overall IT management within the firm, the applications in use and the standards used within it. Application Infrastructure Services – These are application that supports the infrastructure services.  Effective performance management had emerged as a strategic imperative within Brandix. For each sewing operator in Brandix there is a special barcode reader that tracks project deadlines, attendance, arrival times etc. This is built on a performance monitoring system (Leadteck) that will update each supervisor on the progress of projects, who is doing better, who is lagging behind, and who needs more training /guidance. Companies must be agile and smart to compete with other rivals, when it comes to this, finding greater efficiencies and saving time and money are always key requirements.  The other clusters IT facilities management services, IT management services and IT architecture and standards services puts focus on services which brings agility by reducing operational cost and time involved in projects. The challenge is containing operational costs without compromising service quality. This is where the performance monitoring aids Brandix.

Cluster 9 -IT Educational Service  According to Weill, Subramani and Broadbent (2002) enterprises that spent a higher percentage of their budgets than industry average on training had lower total costs per workstation and superior business-process performance. Brandix top level executives are technically competent (according to Mr. Pilimatalawwe). “And even the mere fact that board members are making IT decisions within Brandix has urged non IT managers (CFO ,CMO) within Brandix to be quite conversant at IT” says Mr. Pilimatalawwe. Most of the company top and middle management are IT oriented, as in they consider that to be a part of their business.  Apart from this Brandix enables its IT administrators are up-to-date with the latest technologies by providing them the latest training made available. (ExVMware, Windows Azure)

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Faculty of Graduate Studies, University of Colombo

Cluster 10 –R & D Services  This is the most important cluster when it comes to „Sustaining Competitive Advantage‟. With most of the other clusters it had to do with driving operational efficiencies through achieving low cost faster processes than the competitors. When we had the interview with Mr. Pilimatalawwe his team of IT administrators was testing the latest VMware products on a test environment. (VMware ESXi 4). Their aim is to completely virtualize the company infrastructure by the next two years. After which they will migrate to a partially cloud computer architecture.  Brandix is a firm relying on IT to bring business benefits. So far the growth and success they have achieved is due to the fact they were the first in a highly competitive market segment to deploy mission critical backend IT services to match its business processes. And from the feedback we got from Mr.

Pilimatalawwe it seems the trend will continue into the future as well.

4.0 CONCLUSION AND FINAL THOUGHTS
Looking at the ten cluster model Brandix has a large amount of IT services running in each cluster. This and the broadness of each implementation is a statement to how Brandix has become business agile, and how it has built its cooperate infrastructure to be agile to fulfill dynamic business needs. This added with the involvement of the senior board members in making important IT decisions Brandix has the necessary steps in place to keep its competitive advantage in the years to come as well.

-----End of Project-----

Brandix Lanka : Achieving and Sustaining Competitive Advantage

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Faculty of Graduate Studies, University of Colombo

ACKNOWLEDGEMENT
My group appreciates the guidance and tutoring provided by the module lecturer Dr. Ruwan Wickramarachchi, who aided us in understanding a link between business and IT in today‟s industry. And we thank him for providing us research articles that made us more eager to know about this hybrid filed of IT and business. Secondly, Brandix senior executives Mr. Manoj Pilimatalawwe and Mr. Vivek Agarwal for the time given and information provided for this research project.

REFERENCES
1. Vecchio,D (2008) IT Modernization: The Changing of the Guard, Gartner Research 2. Weill, P, Subramani, M & Broadbent, M (2002) ,Building IT Infrastructure for Strategic Agility , MIT Slogan Management Review 3. Weill, P and Ross, J.W (2002) Six IT decisions your IT people shouldn’t make, Harvard Business Review The following online documents have been used indirectly in the compilation of this guide and further information can be obtained from them. 4. MIT Slogan Management Review (2009) Getting an Edge From IT An interview with Peter Weill [Online] http://sloanreview.mit.edu/businessinsight/articles/2009/5/5159/getting-an-edge-from-it/ [Accessed 29th April 2010] 5. ZDnet, (2010) Dell's challenge: Can it keep up with HP? [Online] http://blogs.zdnet.com/BTL/?p=30912&tag=nl.e539 [Accessed 24th April 2010] 6. ZDnet, (2010) How HP thinks about R&D: It's about new products not spending [Online] http://blogs.zdnet.com/BTL/?p=30924 [Accessed 24th April 2010]

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