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How IT Creates Competitive Advantage through Business Model Innovation in

The Facility Management Industry


Muhammad Afif, Alifiannisa Lawami Diar, Muhammad Rifki Shihab, Benny Ranti
Faculty of Computer Science
Universitas Indonesia
Jakarta, Indonesia
muhammad.afif91@ui.ac.id, alifiannisa.lawami91@ui.ac.id, shihab@cs.ui.ac.id, ranti@ui.ac.id

Abstract— In the last sixty years, many disciplines have In a firm which business in the facility management
found out how firms have interacted with an information industry, the integration of business processes with
systems or information technology (IS/IT) and how the technology expected to result in achieving a firm’s business
technology crucially important to a firm’s business model goals, deciding the future plan with cost efficiency objective,
innovation. The technology advances also created the urges in
the facility management (FM) industry, which the business
and improving knowledge and employee development. The
process is heavily operation management. It has been decades realization of those objectives and fit the business strategy in
for the facility owners to spend huge quantities of data with little an era full of technology advancement, business model audit
means to harness the value. To maintain the survivability of the proposed. It seeks if the firms have adapted to current facility
firm in this digital era, the firms in the facility management management industry needs aligning with their existing IT
industry expected to innovate. Relationship with customers is adoption. In fact, even before the high capability technology
extremely important, in the middle of an integrated facility emerges, the number of business model research has been
service trend which threaten the existence of the firm. published since the 1990s and rising exponentially in the
Therefore, there are needs to analyze how business models and 2000s [11].
IT capability in the facility management industry evolved and
adapt to the most updated technology adoption in the industry,
Applegate, Austin, and Soule also share their opinions on
in order to maintain its competitive advantage. This research how new business models radically changing how firms create
exists to evaluate and discover the advancement of IS/IT in the value within and across industry boundaries [2]. One of the
facility management industry, through a single case study in approaches to view and evaluate the current firm’s business
Indonesia. The firm evaluated is PT. Bumi Daya Plaza (BDP). model is a business model audit. Although, Massa et al. (2017)
To do so, a business model audit (strategy, capability, and value) recently summarized all business model definitions to three
and IT adoption analysis in five facility management basic areas major interpretations: 1) as attributes of real firms having a
were conducted. In the end, the distinct business strategy and direct real impact on business operations; 2) as cognitive or
IS/IT implementation of both firms will show how they provide linguistic schema, and; 3) as formal conceptual
a competitive advantage to the customers.
representations of how an organization functions. By a similar
Keywords— Business model audit, competitive advantage, perspective about what is essential to a business model, [2]
facility management, Indonesia, its adoption. considers three components: strategy, capabilities, and value
of the firm.
I. INTRODUCTION Considering previous needs and urgency for the firms in the
Nowadays, the firm uses technology not only to support facility management industry, supported by the lack of
fewer areas in their business. Technology is the business itself. research about how the facility management industry in
Nonetheless, not every business industry have prioritized Indonesia adapts to the digital economy era. Hence, this
technology exploitation in their organization. This research by research will discover how IT creates a competitive advantage
[3] resulted in the digital distortion that has caused facility to each basic area of facility management and the evolvement
management to consider digital services to realize excellent of a business models in the firms. As the firm observed has
service as part of their strategy. Facility management (FM) is never analyzed and define how the business and IT correlated
a business area related to business infrastructure and asset that it creates a competitive advantage to the firm. The
management for buildings and employs 3 percent of the analysis will directly involve an FM firm that actively runs
national workforce in the UK [5]. FM industry business in Indonesia, PT. Bumi Daya Plaza
FM industry is about reducing efforts, achieving high levels (BDP).
of space utilization, outsourcing service delivery, designing II. LITERATURE STUDY
low-energy buildings, and connecting the business strategy
and operations [5, 8]. The main concerns involve energy A. Theoretical Background
efficiency, productivity, and resource management. Cost Referring to the research objective used, there are three
efficiency is the key issue at the operational stage in the topics to be researched, facility management industry,
facility management industry, which requires an business model concept, and IT adoption, and competitive
interdisciplinary approach [3]. advantage.
1) Facility Management Industry creating, and capturing value within a value network [16].
In 2000, [14] analyze the four competing futures for facility The conceptualization of the business model comprises
management there are Financial, business, physical and differently, but the ones created and improved regularly is a
knowledge resource trail. The author defines the primary business model framework and definition by [2]. A business
function of the facility management is resource management, model forms the foundation for how executives make
at strategic and operational levels of support. At a national decisions about opportunities to pursue, business to launch or
level, its strategic objective is to serve better infrastructure buy, activities to perform, talent to hire, and ways to organize
and logistic support to business and public endeavors of and value to stakeholders [2].
across all sectors [14]. Nutt defined there are four generic The business model categorized into three drivers: strategy,
trails of future facility management, which can be seen in capability, and value. The business model categorized
Figure 1. Not so different from previous research, FM has linkages of strategy, capability, and value to business
also been known as asset management for buildings, business performance. The following description will discuss more the
infrastructure management, or the invisible service [5]. FM three drivers in the business model [2],
tends to have either a strong operational bias or a strategic • Strategy
outlook, as it is shown in previous researches about The Strategy is choices that determine opportunities the
operational improvement. business pursues and it is market potential. From a business
The operational improvement include energy efficiency model perspective, decisions concerning the company’s
and other environmental imperatives, relate to the internal strategy that define the revenue drivers of the business and
environment, end-user experiences, worker productivity, potential growth over time. There are four key areas to
performance measurement, and management [5]. business model strategy audit, 1) Assess business context; 2)
Technology involvement in facility management has also Analyze customers; 3) Analyze competitors and substitutes;
been researched such as regarding intelligent buildings [4], and 4) Assess business network. Traditionally, Michal Porter
and information and communication technology [3]. The termed a value chain, consists of processes how the business
baseline which been used widely to measure performance function that help the firm define the strategy for each
management as a part of FM is key performance indicators activity.
(KPIs) for understanding the progress of work in hand [5]. • Capabilities
The two kinds of research give us different understandings After the strategy defined and there is an idea of what the
with the same fundamentals in facility management, it is the firm is pursuing, the next step is to convene about the
operation management where the four aspects (business, resources and to build capabilities of the firm and achieve the
people, property, information) coordinated. Today, as the goals. The four areas to be assessed and evaluated are, a)
third generation of FM developed (from condition Processes and infrastructure; b) People and partners; c)
monitoring to teamwork), the complexity of building Organization and culture; d) Leadership and governance. The
management requires a minimum down time, cost - capabilities are about streamlined synchronized process, the
effectiveness, and higher quality. Digital techniques have expertise needed, the culture and organization implemented,
been using by the firms lately, Araszkiewicz stated the and how the leaders balance the creativity and vision through
linkage between available facilities quality and active cost governance structures and systems.
control will increase FM efficiency and the employed people • Value
[3]. The five basic areas for FM The third driver values, the financial returns for business
owners and investors, or simply as profit expected to be
received for each stakeholder. The values are divided into
three areas to identify: 1) Internal and external stakeholder’s
interests and expectations; 2) Business model drivers and
alignment; 3) Develop the financial model and determine
financing needs. As for the last area, financial ratios often
used to compare financial analysis amongst other firms.
3) IT Adoption and Competitive Advantage
Competitive advantage is when the products or services you
offer to are chosen by customers than the ones owned by
competitors. Specifically, it means that your products and
Fig. 1. Five Basic Areas of Facility Management
services can be provided in ways that deliver more sales,
2) Business Model Concept higher profitability and greater cash flow than would occur
Business model, largely popular with its definition as to for any competitor, if they supplied the same customers [12].
how an organization interacts with its environment to create In the creation of a competitive advantage for the business,
a unique value to all stakeholders. Historically, the definition some companies use the strategy and business model for
changes over time, eleven years ago, it defines as how a decades. The indicators of competitive advantage parted to
company makes money [6]. The definition becomes more five: price/cost, quality, delivery dependability, product
detailed detail and refers to the way firms do business, innovation, time to market [10, 17].
Information technology adoption believed to create a network executed in the firm. It occurs with a business model
competitive advantage of business for the firms. Researches framework consists of strategy, capability, and value [2].
from a variety of perspectives published deliberately to find 1) Strategy
the initiation, impact, or determination of IT adoption. The The kind of business that is executed by BDP is facility
process of creating a competitive advantage started by management.
defining the internal and external business environments, • Business context and customers
which result in the information needs by the firms [15]. Generally, BDP has three core businesses: human resource
Observing the gaps of trend, capabilities, and business outsourcing, construction & property, and building
process over time enables the firm to grasp opportunities and management. FM strategy focusues on the decision to
turn it to competitive advantages of the business. determine how FM business and operation best support the
B. Previous Studies core operation and business strategy. It is said that FM needs
to choose the most efficient and maintaining and preventing
Research about the analysis of the business model and the facilities and avoid risk and create value for the costumer to
impact of technology on organization have been done get service excellence [8]. The realization of service
previously with different approaches and case studies [1, 7, excellence value brought BDP, is by targeting different
9]. Chege and Wang review the literature on the role of customers. BDP has a historical story about being internally
technology innovation in job creation through small developed (the three cores mentioned before) by Bank Bumi
businesses in developing countries. The results showed that it Daya, which today became Bank Mandiri with another 3
gives an impact on their competitiveness and access to banks. This strengthens and create opportunities for the firm
international markets. Meanwhile, [1] utilize an business to realize work agreement with public institution or
model framework to analyze the impact of IT on Jenius government.
Business Model Changes. Using various theories are adopted The main problem faced by customers who need FM
in the way [9] created their research, to assess the support of services is the requirement to have human resources (i.e.,
IT for the business model, based on the blue ocean strategy. cleaning service, security) to support their business
environment and manage the building where they stay in, but
III. RESEARCH METHODOLOGY it will need more costs if they handle it internally. Also, they
In doing the research, two main process are the collection of usually have no capability in providing their own human
data, then the data analysis will be discussed below. resource or building management, since it requires more
A. Data Collection specialized business area (as shown in Figure 1).
The Qualitative methodology will be used in this research, • Competitors and substitutes
with the purpose of exploring and answering the research The needs between customers of a public institution or
objectives. The confirmatory technique in quantitative private firm usually differ from the level of information detail
methodology will not be used. The data will be collected that FM firm could give. The principle of deliberation that
through in-depth interviews, observation and literatur study trust and relationship to FM business owners involved
for the primary data. Also, there will be a BDP, BDP’s annual between a firm and public institutions. The lack of innovation
report, BDP website and other documents to be analyzed as is not seen as a problem, as long the firm provides resources
secondary data. This research focused on a single case study, or services they need. Even though so, compared to the global
involving a facility management firm based in Indonesia, FM firm, BDP did have several competitors, one of which is
BDP. IT Manager, Senior Executive Vice President and Head Colliers International.
of Business Unit that uses IT 8 interviewees who have Private firms as clients of FM entrusted the services through
authority about how the business functions and changes. the innovation that allows them to get lots of information
B. Data Analysis about the services they have paid. It is because private firm
The two theories that guide the analysis of research data is manage their own finances and their survivability could be at
the business model framework and alignment of IT adoption stake at any time. Public institutions get funded annually and
to FM areas from each firm. Applegate’s business model there is no specific regulation about managing human
framework seen as the fittest to analyze holistic views of resources or buildings that critically define how long the
business in the FM industry. The three drivers in the business institution will survive.
model will be evaluated: strategy, capability, and value. The • Business network
uses of the FM area framework (in Figure 1) are to validate In facilitating human resource outsourcing and building
the adoption of IT in each area. Finally, the alignment between management, BDP needs to cooperate with the outsource
the business model and adoption of IT in the FM industry will company type of business partner in realizing business
be stated clearly as the gained competitive advantages. networks for the firm. There are several partners, helping
BDP conduct their business. First, PT. Daya Karsa Abadi, its
IV. ANALYSIS AND RESULTS
subsidiary firm for procurement outsourcing purpose.
A. Business Model of Facility Management Firm Second, for regulation compliance purposes, BDP is getting
As discussed in the previous section, the business model helped by ISO consultant, Electrical & Mechanical vendor,
defined as the interaction between the business process and Indonesian Ministry of Labor, Indonesian Ministry of Health,
and Indonesian National Board for Disaster Management.
Third, third party partners that provide the internet service overtime records, procurement project applications, but the
and ERP to the firm (i.e., Prime PSI) and external integration to the firm’s financial system has just started in
stakeholders (i.e., customers). 2019. Within the same year, BDP also developed an
• Business innovation strategy application for its engineering and client area, to manage any
BDP started to digitalize its process business in 2009, information about client and electricity, water, and overtime
through the implementation of an information system for its air conditioning bill. A year later in 2016, the BDP website
finance business area. It changes the entire business model officially released that it allows the firm to market the firm
from traditional to the digitized business processes. This more widely to the public. Following the urge of another
innovation results in BDP to calculate their cost-benefit three business unit, three applications have been created to
control. Recently, the main strategy hold by BDP facing the support processes in each business unit, in 2017.
era is to have pilot integration with existing IS/IT and After the discussion of BDP system development, the fact
collaboration to its third-party partners of fiber optic behind the development is the firm lacks its IT resources
networking project. Each IT strategy must include the capability. It causes the IT area in the firm unable to fix the
objective of capital and operational expenditure efficiency obsolete cabling system between internal firm and client.
(CAPEX and OPEX). As for the IS/IT strategic plan in the Also, the variety of internet service provider (ISP) used by
firm, the IT business unit focuses on a short term plans to add clients complicates the centralization of network system
new application feature and increase internal IS/IT firm’s managed by BDP. The existing ISP services provide by BDP
capability. Unfortunately, IS/IT plan has not been written on to its clients seem insufficient to meet client internet capacity
the late BDP annual report or IT master plan. needs. Therefore, in 2020, it’s expected for the fiber optic
2) Capability project to be executed seamlessly, with the support of third
The shifting of IT adoption in BDP began early 2009 when party partners that also handle the previous ISP services
system.
TABLE I. BDP CAPABILITY ANALYSIS The IT governance structure in the firm was led by the head
Processes and infrastructure
of IT in the finance and accounting unit for almost ten years,
IS/IT increase efficiency, effectiveness, availability, and integrity of until 2018. Recently, the executive management realized IT
human capital, client management, financial and accounting process unit independently, with reporting commands direct to the
Coordinate activities between internal and external stakeholders BOD. Of the least four governance systems, BDP IT leader
Limited synced coordination between finance and human capital, client has implemented the strategic (scanning the environment,
and engineering stakeholders
People and partners project and investment prioritization) and operating controls
Firm’s investment did change the system development target in core (short term project, controlling current business operations
processes, but not the culture in the entire firm and projects) dominantly. The prioritization procedure
Limited IT-enabled areas that allow a leader to promote creating accurate assumed vague, due to the unavailability of the firm’s IT
measurement and performance target
master plan.
The main focus of IS adoption is employee and client, separately
Organization and culture As for risk management, the development, and management
It does allow four core firm’s areas: human capital, finance, client of the shared values and culture still in the firm’s minimum
management, engineering, managing relevant information strongly capability. The number of IT staffs start from 4 to 6, consist
related to firm’s cost and gain of networking, developing, and supporting (or admin) role.
Clear employee responsibility recorded and professionally responsible
during the overtime and normal work time
The initiative mostly comes from the the business unit to IT,
Limited work coordination mechanisms across units, manual approaches although IT has been monitored directly by BOD. The IS/IT
still exist existence changes the procedures to the business unit that
Leadership and governance involved, but doesn’t change the backup chain of command
Firm’s leader have considered IT as an important part in the firm, by (e.g., phone call options operate by admin). Tables I and II
separating the IT business unit which first under finance and accounting
unit depict descriptive information of current BDP IT capability,
IT leader govern IS/IT corporate strategically and operationally, but refer to the Applegate capability aspect, and which FM basic
holistic streamline of business and IT has yet to be built areas have been affiliated with technology (as shown in
Figure 1).
TABLE II. IT ADOPTION ON FM BASIC AREAS
Domain 1.1 1.2 1.3 2.1 2.2 2.3 3.1 3.2 3.3 TABLE III. BUSINESS IT SHAREHOLDER RETURNS
BDP -     -   - 2016 2017 2018 2019
Domain 4.1 4.2 4.3 5.1 5.2 5.3 Profit Margin +25.6% +61% +90.74% +30%
BDP -      Asset Expenses +10% +103% -2,3% +8.1%
3) Value
the firm utilizes it for financial activities with Prime tools. Six The final aspect required in the business model values, it
years later, it began to digitalize the activities in the human reflects how strategy and capability correlated and provide a
resource and engineering area, by purchasing a tailored kind of intangible and tangible value-added for the firm. It is
enterprise resource planning (ERP) to optimize the key essential to identify value delivered to all stakeholders and
performance indicator monitoring of its human capital. The measure the economic value as financial returns for business
information system also is utilized to manage employee
owners [2]. There are three areas discussed in the auditing The previous subsection examines business model drivers
business model value, and alignment in BDP, this part will explain more about how
• Internal and external stakeholders IT gives the profit firms in three components of shareholder
The expectation of BDP IT continuance differs amongst returns [2]: profit margin, asset efficiency, and leverage.
internal (across business unit) and external (client and third- However, the early development of IT causes BDP IS/IT
party partner) stakeholders. The internal stakeholders expect asset expenses to increase, and no asset efficiency or decrease
a firm’s IT capability to minimize manual works that have found. Table III shows the shareholder returns in profit
higher human error possibility, primarily monitoring margin indirectly made by IS/IT in BDP, followed with IS/IT
employee performance, firm’s cash flow, to avoid project asset expenses in the last four years. Numbers unable to be
budget excess in the procurement process. As to external shown considering the firm’s confidentiality.
stakeholders interest toward BDP IT capability are to B. Competitive Advantage from IT Adoption
accurately inform the detail of the bill, to improve the system Competitive advantage in the FM industry is focusing on
network and facility maintenance services, and maintain operational performance improvement and active cost control
integrity amongst partners; [3]. Resulting analysis of strategy, capability, and value
• Business model drivers and alignment aspects in business model audit [2], Table IV states
The second area regards to the insights gained by BDP. The competitive advantages advanced by BDP of IT adoption in
key revenue which affected along IS/IT implementation is the the firm mapped to FM basic areas as written in Figure 1. It
saving from project budget excess, valid employee costs, and can be concluded that several competitive advantages gained
client periodic bills to BDP. The firm’s costs estimated to by BDP of it’s IS/IT implementation throughout the years
decrease by 5 percent at the end of 2019. In the perspective are:
of IT • Transparent and continual improvement of its facility
performance level and services, increase BDP credibility.
TABLE IV. IMPACT ON BDP COMPETITIVE ADVANTAGE All managed in the document management system and
Performance and quality level it’s on-premise ERP system;
1.2 Measurable and transparent facility reliability, stability and • BDP supports decisions of FM processes amongst clients,
condition level grant the firm to provide better services depending on the variation of focus, management
1.3 Level of facility operations and services information increase approach, and the client’s businesses. The negotiated
internal and external stakeholders aware of what to improve
Build brand identification in potential customer perspective
operation planning and processes data delivered and
Operating plan and process managed easily between BDP and client;
2.2 The new integration of the three main core processes in BDP ERP • BDP chose the use of internal source approach, that the
reupdate the operating procedure in the firm and effected integrity, client able to propose easier and faster project requests;
trust and customer feedback
Sourcing approach and supply chain management
• IS/IT involvement realize higher certainty of command
3.1 Efficient internal resources sourcing allow the firm to offer chain and stakeholder’s work efficiency;
competitive prices amongst FM firms to business customers • The procurement exists that the unnecessary product or
Unified and easiness of contract management sources result in service can be tracked down, affecting lower firm’s
higher customer satisfaction
expenses or customer’s budget excess.
3.2 Availability of update continuation services level in the firm
impact customers to trust its FM process to BDP, meaning more
project requests
V. DISCUSSION AND IMPLICATION
Controlling method structure and line of command The next process after synthesizing research data is to
4.2 A well-implemented controlling approach in IS/IT supports the discuss the result and provide theoretical and practical
coherent of services performed to customers
4.3 The defined method from monitoring to reporting in the client implications. First, this research states how the three drivers
management system and firm’s ERP lower the FM processes of the business model affect the competitive advantage of
uncertainty and work efficiency BDP. Theoretically, overall FM decisions needed to be
Facility asset management and replacement achieved in a strategic and dynamic in the long term [8]. In
5.1 Clear processes and structures of maintenance provide customers
real-time maintenance progress monitoring
contrast, what happened to BDP that the business model
5.2 Increase easiness of decision making within or across stakeholders innovation in IS/IT drives better firm’s competitive
throughout the process and in scope to a maintenance program advantage, but possible in the short term strategy. In IS/IT
5.3 Detail of on-going to end result improvement allow the client to capability perspective, processes and infrastructure,
maintain services controlled by BDP leadership and governance assumed to be in more
The business unit, the value is validated qualitatively. The progressing than other aspects.
business unit calculates by utilizing cost-benefit analysis. It However, as [5] said that facility asset management
drives the assets efficiently, but no specific business-IT understood as a unifying concept, capture both sense of a live
alignment measurement framework (i.e., IT balance score environment and the systems that comprise it. Other literature
card) ever been used. For the time being, IT strategy and states that the employee’s knowledge, skills, and
capability in BDP have not enabled the firm to compete with competencies are a crucial factors in ensuring the
other global FM firms, but they have improved the quality of effectiveness of IT capability implementation [13]. The
processes and cost reductions. previous understanding opposed business model innovation
• Financial model and financing needs made in BDP, IT positioning may be seen in strategic, the
unification of IT-enabled processes is limited and priority in Engineering, IC2IE 2019, Institute of Electrical and Electronics
Engineers Inc, September 2019, pp. 153-158.
its IT intellectual capital is low. The change management
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This research aims to analyze the recent improvement of of continuing business model innovation,” Journal of Business
Strategy, 2003.
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case of BDP. BDP has been innovating on its business model How IT Capability Impacts Sustainable Competitive Advantage
for about eleven years since it first started plant IS/IT in a through Business Process Management,” Business Management
firm’s business processes. After managing the data, several and Strategy, vol. 10, no. 2, pp. 250-264, 2019.
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[16] N. Room and C. Louche, “Journeying toward business models
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factory quadrant as the IS/IT has also improved processes
quality.
Furthermore, this research is limited to a single case study
in one firm and not quantify the effect of each aspect. Future
research is advised to observe wider FM industry object, as
well as the different theory of competitive advantages, can be
explored more. Last, the revalidation of this research result is
also recommended, to lessen the result interpretation bias.
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