But while competitive advantage should be discussed primarily in business terms, IT organizations can also benefit by examining their own operations to identify where competitive differentiation is being sought and delivered. In working with our clients, we have found the 2-by-2 diagram shown here to be of significant help in determining the relative importance of technology and industry-specific capabilities.

As the figure suggests, there are four main ways that IT organizations can seek to differentiate themselves:

Edge in efficiency. Corporate IT can seek to deliver the necessary table stakes for the industry in which the company competes, at lower costs than competitors. If this is the overriding aim, the other three quadrants don't really matter.

Edge in adoption. Many IT organizations are naturally inclined to emphasize this quadrant, since it gives them license to work with the latest tools of their profession. But what is needed is a truly objective analysis of which new technologies should be adopted and at what rate.

Edge in industry. One IT organization can be more effective than another by simply being better in tune with the needs of the company and its industry sector, but this tends to run against the grain of many IT staffers, who see themselves less as industry specialists and more as masters of largely general-purpose skills and technologies.