How IS Promote Synergies and Core Competencies

Synergy, Core Competency and Competitive Advantage
How information systems promote synergies and core competencies, ultimately

enhancing competitive advantage
A report by CS5251 Group 8:

Goh Chong Leng HT071109H
Veerasamy Senthil Kumar HT086373M
Su Su Maung HT086369M
Rajen Suchede HT086364E
Mahdieh Taher HT086354L
Yap Wen-Hsiang, Dennis HT086320H
31 March 2009
Synergy, Core Competency and Competitive Advantage CS5251 Group 8 1 / 32
Introduction
Information technology and business are becoming inextricably interwoven. I don't think anybody can
talk meaningfully about one without the talking about the other.
—Bill Gates, Microsoft founder and philanthropist
Modern organizational objectives focus on cohesive and improved delivery at a pace that
far outstrips any point in history. This, in turn, presents numerous challenges in
managing the intellectual wealth of the organization and driving efficiency. Synergy – the
cooperation between two parties to produce something far greater than the sum of their
individual efforts – becomes essential in this environment.
Organizations that tend to loose out on the benefits derived from synergy are those
that have deep, hierarchical organizational structures and a rigid way of doings things.
These include organizations that are unwilling to maintain lean and flexible policies,
where even events like employees going on coffee breaks are frowned upon. A very simple
yet crucial pain point is the consolidation of knowledge and experience to drive better
value to the customer. Information systems, serving front- and back-end operations, play a
definitive role in synergizing the thoughts and actions of the various stakeholders –
executives, staff, and customers.
A core competency is an activity at which an organization is an industry leader. In
general, a core competency relies on knowledge that is gained over several years of
experience and first-hand research, or the combined tacit knowledge of domain experts
within the organization. An efficient information system captures and channels this
wealth of knowledge to the right people at the right time in the right format.
Significant amount of research has been dedicated to synergy, core competency and
competitive advantage of a company, but rarely have they been considered as three inter-
linked concepts. This paper describes how information systems promote synergies and core
competencies and further delves into how synergies and core competencies help firms to
attain and sustain competitive advantage. The cornerstone of this paper is the theory that
an organization is made up of resources—rare, valuable, inimitable or otherwise.
Synergies and core competencies figure as the resources of the organization used to attain
and sustain competitive advantage. This paper also highlights the fact that information
systems can deliver synergies and core competencies as benefits to the organization, but
these are benefits that should be planned and actively managed for by the business leaders
and executives.
In the sections to follow, the points mentioned will be discussed in greater detail. To
bring the all concepts and theories to life, a case study involving the National University of
Singapore will be presented.
Definition of Key Concepts

In this section, we comprehensively define the key concepts in this article, synergy, core
competency, and competitive advantage. The definitions set the stage for the subsequent
sections to describe their inter-relationship.
Synergy
The effect which causes a firm to derive more benefits from its resources when firm
entities cooperate is called synergy. It comes from the Greek ‘synergia,’ which means joint
work and cooperative action (ZDNet Definition for Synergy). In other words, the effect
which can produce a combined return on the firm’s resources that is greater than the
sum of its parts is frequently referred to as synergy.
The symbolic synergy equation 2 + 2 = 5 suggests that a corporate portfolio of
coordinated and cooperating businesses is worth more that its businesses would be worth
as stand-alone entities. Therefore, synergy provides a rationale for a diversified company
to coordinate the efforts of its business units for its overall benefit. Not surprisingly, it
frequently underpins corporate decisions on diversification and it is often a critical
consideration in how diverse businesses should be managed.
H. Igor Ansoff is one of earliest researchers that addressed the issue of synergy. The
1960s was a time when many corporations were rapidly becoming larger and more
diversified, and Ansoff’s purpose was to help managers make better decisions on
questions of growth and diversification. He identifies four components of strategy:
product-market scope, growth vector, competitive advantage and synergy. Any, or all, of
these components could provide coherence to the firm and guidance to its managers in
their decisions on the firm’s future. Synergy, the last component, defines how company is
going to succeed in new ventures, by identifying the match between its capabilities and
the opportunities available.
Ansoff establishes the economic basis of synergy—the possibility for different
businesses to add up to more than the sum of their parts. Synergy is based in part on the
economic benefits gained through economies of scale. Synergy, however, also
encompasses more abstract benefits, which Ansoff terms ‘managerial synergy’. Ansoff’s
explanation of synergy emphasizes its economic basis, the potential for tangible as well
as intangible benefits and its close relationship to the firm’s capabilities.
A more restrictive definition of synergy divides Ansoff’s concept of synergy into a
‘complement effect’ and a ‘synergy effect’. The Japanese strategist Hiroyuki Itami is the
author of ‘Invisible Assets’. The aim of the strategist is to make the best use of the firm’s
resources and create adequate resources, and Itami views synergy as a process of making
better use of resources. In narrowing the definition of synergy to the use of invisible
assets, Itami deliberately departs from Ansoff’s view, which includes benefits gained
from economies of scale (the ‘complement effect’) as well as the sharing of intangible
assets such as expertise or image across a portfolio. His purpose in distinguishing
between them is to encourage managers to consider more explicitly the synergistic
potential of assets such as technological expertise or reputation. This approach, he
argues, is justified because a firm’s invisible assets provide the foundation for its growth
and prosperity (Campbell and Luchs 1992). Therefore, synergy does not always lead
directly to economic benefits. Benefits such as expertise or reputation are indirect, but no
less important benefits that ultimately contribute to the value and financial outcomes of
the firm. In fact, Campbell and Goold (1998) defined as many as six types of synergy:
shared-know-how, shared tangible resources, pooled negotiating power, coordinated
strategies, vertical integration, and combined new business.
Core Competency
Core competency is the combined learning in the firm. One of the most important aspects
of this learning is to know how the firm can manage and arrange different kinds of
production skills and expertise and integrate multiple streams of technologies.
Prahalad and Hamel (1990) wrote that core competency is about ‘the organization of
work and the delivery of value.’ They added that core competency is ‘communication,
involvement, and a deep commitment to working across organizational boundaries. It
involves many levels of people and functions.’ An example from the automotive industry
is Honda's expertise in engines. Honda was able to exploit this core competency to
develop a variety of quality products from lawn mowers and snow blowers to trucks and
automobiles. The commonality in all these products is the successful integration of
Honda’s engine-making expertise in their manufacture.
If we imagine that a firm is a tree, the trunk and large branch of the tree are core
products. The smaller branches are the firm’s sectors and the leaves and fruits are end
products or offered services. The roots of tree that keep it alive, stable and also supplies
nourishment are composed of its core competencies. Core competencies are thus the part
of the firm which nourish the core products and engender firm sectors. The relationship
between these parts is given in Figure 1 (Prahalad and Hamel 1990).
Figure 1: Competencies are the roots of competitiveness. Adapted from Prahalad and Hamel (1990).
A core competency can take various forms, including subject matter know-how, a
reliable process, and/or close relationships with customers and suppliers (Mascarenhas et
al. 1998). It may also include product development or culture, such as employee
dedication. Core competencies are particular strengths relative to other organizations in
the industry which provide the fundamental basis for the provision of added value. It
follows from the concept of core competencies that standardized or easily available
resources will not lead a firm to achieve a competitive advantage over rivals (Core
competency from Wikipedia). In the next section, we introduce the concept of competitive
advantage and some common strategies.
Competitive Advantage
Competitive advantage generally refers to unique and distinguishing resources that may
be durable, difficult for others to imitate and have value in the firm’s environment and
marketplace (industry) (Birkinshaw and Goddard 2009).
According to H. Igor Ansoff, competitive advantage identifies the kind of opportunity
the firm seeks, such as a dominant position in an emerging industry, or one where the
cost of entry is so high that there are only a few competitors (Campbell and Goold 1998).
Competitive advantage grows fundamentally out of the value a firm is able to create for
its customers that exceeds the firm's cost of creating it. Value is what customers are
willing to pay, and superior value stems from offering lower prices than competitors for
equivalent benefits or providing unique benefits that more than offset a higher price.
There are many well-known strategies proposed to attain competitive advantage.
Porter has proposed the generic strategies of differentiation and cost leadership. Firms
applying these strategies either distinguish their products from the competition by
offering something unique and difficult to imitate, or sell at lowest cost, attract
significantly more customers than competitors and thrive on the volume of sales
generated. According to Porter, these twin strategies also have a dimension of focus, or
competitive scope. This refers to the strategy of targeting products to compete on a
specific segment (niche) of the industry. Firms that are able to identify their niche, and
either win on differentiation or cost leadership, will have competitive advantage. The
factor of time also cannot be ignored. Firms can often secure leadership positions in a
new market by entering the market early, combined with a forward-looking approach to
pricing that places high barriers of entry for potential market entrants. This is known as
first-mover advantage. Looking inward, competitive advantage in one industry can be
strongly enhanced by interrelationships with firm units competing in related industries
(Porter 1985). We will revisit this point in subsequent sections of this article.
Many competitive advantage types are unsustainable, as competitors will eventually

attempt to catch up with the firm holding the advantage. A sustainable competitive
advantage is possible when other firms cannot duplicate what the one holding the
advantage has been able to do (Financet). It is an advantage that enables business to
survive against its competition over a long period of time.
In the sections that follow, the concepts of synergy and core competency in information
systems, and their link to competitive advantage, will be discussed in greater detail.
Synergies and Core Competencies Through IS

Organizations seeking to promote synergies and core competencies through information
systems need to pay attention to what IS they implement, as well as how they implement
them. This section focuses on demonstrating what IS can be implemented to achieve a
certain synergy or core competence, as well as describing the part played by benefits
management in ensuring that the target is met.
Organizations invest in IS in their bid to realize the benefits that are linked to their
successful implementation. Benefits are realized when the technologies implemented as
part of the IS are aligned with accompanying business changes, which are in turn linked to
the business objectives (Ward and Peppard 2002). Hence, technologies implemented in IS
projects are necessary for the benefits to be realized.
An IS promotes synergies if it supports or enables sharing of knowledge or resources,
vertical integration of business units, combined business creation or coordinated strategies
(Goold and Campbell 1998). An IS promotes core competencies if it helps to consolidate and
communicate the collective learning in the organization, especially the ways to coordinate
diverse production skills or integrate multiple streams of technologies, across
organizational boundaries (Prahalad and Hamel 1990). Commonly, organizations employ
strategic IS planning models or frameworks to aid them in better understanding their
needs, formulate their objectives and arrive at IS that can help them meet these objectives.
We shall term these as “IS planning tools”. Such tools include critical success factors (CSF)
analysis, balanced scorecard, and the value chain. In the context of synergies and core
competencies, organizations may define their objective as achieving or exploiting a certain
synergy in the organization. Equally likely, a possible objective might be to enhance a
certain core competency of the organization. Once the objectives are defined in specific,
measurable terms, the organization may then use these tools to derive their IS needs.
Concrete, real-world usage of IS that promote synergies and core competencies are
provided in Table 1 for illustration.
Information System Synergies or Core Competencies Promoted
Enterprise data warehouse Synergy: The integrated data becomes a shared, enterprise-
containing data integrated from wide resource to support common decision support, reporting
the various business units and analysis needs
Information System Synergies or Core Competencies Promoted

A global events management Synergy and Core Competence: The shared know-how and
company uses a knowledge experiences promote the synergies between the operations of
management system to share the company in various countries, allowing the collective
experiences and best practices knowledge of the company to be preserved and accessible by
any of its branches
High-capacity server Synergy: Allows sharing of computing resources within
infrastructure to be shared company, saving on costs of procuring, installing and
across business units and maintaining multiple smaller servers
functions in a company
A public bus operator deploys Core Competence: The operator uses the data to identify
satellite technology to track bus potential situations on the streets, responding to them in real-
movement time. Historical data helps in the planning of future schedules
and routes. Competencies of operations and planning are thus
promoted
A bank implements two-factor Core Competence: Strong authentication scheme that is
authentication in its Internet deployed builds user confidence and encourages usage,
banking website allowing the bank’s services to reach more customers any time
of the day, in almost any location. This promotes competence
as a trusted custodian of its customers’ wealth
A Telco deploys a customer Core Competence: The CRM system serves as a consolidated
relationship management (CRM) point of access for the details, accounts and interactions with
system any customer, allowing customer service to be more informed
and enabling a single view of the customer. This promotes its
customer service core competence.
A UK fashion label targeting Core Competence: The online shop extends the reach of the
urban professionals sets up an retailer, and serves as a channel to better understand customer
online shop catering to preferences. This promotes its core competence of designing
international customers clothes for urban professionals around the world
Table 1. Examples of synergies and core competencies promoted by IS
After the organization has decided on the IS to be implemented to meet its business
objectives (benefits), it has to ensure that, at every phase of implementation, the IS
develops in a direction that links back to its business objectives. Technologies that are
implemented in IS projects, while necessary, are insufficient for the benefits of synergies
and core competencies to be realized. Most surveys show that two-thirds of IS/IT
investments fail to deliver the expected benefits (Ward and Peppard 2002). Therefore, a
complete discussion on the promotion of synergies and core competencies using IS will
need to include IT benefits management.
IT benefits management highlights the importance of involving the business and users,
and the need to manage for beneficial outcomes as the IS is being implemented. At its core,
are the following guiding principles (Peppard, Ward and Daniel 2007):-
IT has no inherent value;
Benefits arise when IT enables people to do things differently;
Only business managers and users can release business benefits;
All IT projects have outcomes but not all outcomes are benefits;
Benefits must be actively managed for.
Organizations that intend to engage in IT benefits management may build a Business
Dependency Network (BDN) in the planning stages of the IS. This is a planning tool that
links the IS back to its intended benefits. If closely adhered to, it ensures that the IS
implementation remains rooted in the benefits that justified its existence.
Customer
Better able to
Introduce new service reps to Improved customer
understand the
CRM system workflow for learn how to satisfaction and
relationship context
for telco retrieve loyalty due to
call handling of the customer with
customer history better service
the company
in the system
Figure 2. A simple chain of benefits and dependencies linking the CRM system of a Telco to its core-
competence-related benefit and investment objective. In real life, the BDN of an IS is made of
several inter-linking chains, such as in Figure 3.
Figure 3. An example of a (partial) benefits-dependency network for a new customer relationship

management system (CRM) for a European paper manufacturer. Diagram taken from Peppard, Ward
and Daniel (2007).
From Synergies and Core Competencies to Resources

In analyzing the contribution of synergies and core competencies to enhancing competitive
advantage, it is useful to think of them as the resources in a resource-based view of the
organization.
We set out to first rationalize how IS promotes the twin benefits of synergies and core
competencies within the organization. These internally-focused benefits are then linked to
the competitive advantage brought about by their successful realization, essentially
shifting the focus from the internals of the organization to its industry and competitive
environment. This is necessarily so because competitive advantage is about the
organization’s competitive position relative to its competitors in the external environment.
The models used in the field of strategy can be classified into externally-focused (Porter’s
Five Forces), internally-focused (total quality management, competing on capabilities,
learning organizations) and balanced (resource-based view). In our context, where we need
to shift from examining internal factors to the linkages with the organization’s external
competitive environment, a balanced model such as the resource-based view of the firm
(RBV) is most suitable.
The RBV sees organizations as the sum of their strategically important resources
(Collis and Montgomery 2008). These resources may be classified as tangible assets,
intangible assets and capabilities. Not all resources owned by an organization are
strategically important. Strategically important resources need to display a reasonable
degree of value, rarity and appropriability. In our context, these important resources may
also be exploited synergies within the organization, or core competencies of the
organization.
We find that the possibility of IS supporting or enabling a strategically important
resource to be very real. These very resources may in turn be characterized by the
synergies or core competencies that are brought about by their ownership. The table below
builds upon the previous examples of IS promoting synergies and core competencies,
bringing these into the context of the RBV:
Resource Strategically Important Supporting/ Enabling Synergy or Core
Type Resource Information System Competence?
Resource Strategically Important Supporting/ Enabling Synergy or Core

Type Resource Information System Competence?
Server infrastructure for IS High-capacity server Synergy
applications running at low infrastructure to be shared
Tangible
costs across business units and
functions in a company
Knowledgeable workforce with A global events management Synergy and
a culture of knowledge sharing company uses a knowledge Core
management system to share Competency
experiences and best practices
Reputation for round-the- A bank implements two-factor Core
Intangible clock, highly-secure banking authentication in its Internet Competency
services accessible from banking website
anywhere with Internet
Customer loyalty and A Telco deploys a customer Core
recognition of excellent relationship management (CRM) Competency
customer service system
High degree of operational A public bus operator deploys Core
visibility and detailed data for satellite technology to track bus Competency
planning purposes movement
Superior and holistic Enterprise data warehouse Synergy
managerial insight and containing data integrated from
Capability
executive decision support the various business units
Access to an international A UK fashion label targeting Core
clientele and a means to track urban professionals sets up an Competency
customer preferences and online shop catering to
response to designs international customers
Table 2. Potential synergies and core competencies in resources related to IS
By looking at the promotion of synergies and core competencies through the RBV, we
are now ready to extend this discussion to the potential for organizations to attain and
sustain competitive advantage from these strategically important resources.
Attaining and Sustaining Competitive Advantage

This section delves further into how strategically important resources, such as synergies
and core competencies, enable an organization to attain competitive advantage and sustain
that advantage against competitors.
Resource-based View and Attributes of Resources

In this section, we use the resource-based view (RBV) of the organization to analyze
these resources and their attributes. Out of the extensive literature on the RBV, we base
our discussion on Wade and Hulland’s work, as they had clearly defined the attributes of
resources and have organized the attributes into two distinctive phases, that of
competitive advantage and sustainable competitive advantage.
The three attributes of resources that help an organization create or attain competitive
advantage are value, rarity and appropriability. The three attributes of resources that
limit an organization’s ability to sustain competitive advantage are imitability,
substitutability and mobility (Wade and Hulland 2004).
The following figure illustrates these attributes and their relationship with the phases
of competitive advantage.
Figure 4. Resource based view of Competitive Advantage and Sustainable Competitive Advantage
over time. Adapted from Wade and Hulland (2004).
Attaining Competitive Advantage

We analyzed the attributes of the two strategically important resources, synergy and
core competency, to understand how these attributes help an organization to attain
competitive advantage.
Table 3 shows these attributes and their relationship with synergy and core
competency. Subsequent paragraphs describe their characteristics and how
organizations attain competitive advantage with these resources.
Attribute
Resource Value Rarity Appropriability
Synergy
Core Competency
Table 3. Strategically important resources and their attributes leading to competitive advantage
Value
In RBV, a resource has value when it enables an organization to implement strategies
to improve efficiency and effectiveness (Barney 1991).
An organization achieves synergy over time, to support its strategy and its
continuous response to a changing business environment. This continuous evolution
makes synergy a valuable resource as this enables an organization to improve its
efficiency and effectiveness to respond to market faster than competitors.
For example, a company wants to introduce a new product with a short time to
market. This involves various processes such as product design, prototyping, pilot
testing and pilot launch. The company could leverage on two possible sources of
synergy—firstly, other teams in the company working on other products, and going
through the same process, could help contribute expertise that complements the
current team; secondly, processes involving work with external vendors, such as testing
and launching, could be negotiated as a package with these vendors, to achieve
economies of scale. In these ways, synergy becomes very valuable as they help the
company to respond to the market effectively.
Similarly, core competency is a resource that is central to an organization’s
strategy, competitiveness and profitability. It is valuable as this is a capability an
organization excels relative to its other capabilities. This becomes much more valuable
when an organization performs this capability better than its competitors and achieves
cost leadership or differentiation as a result.
For example, the core competency of Toyota is its rigorous and efficient (Lean)
manufacturing methodology, which enables it to manufacture low-cost, high quality
cars with a short design-to-market (Florida 2008; Laudon and Laudon 2007). This
ability is as-yet unmatched by most of its competitors. This core competency is very
valuable as it enables Toyota to stay competitive.
Rarity
Rarity refers to the condition where the resource is not simultaneously available to a
large number of firms.
Synergy is a resource internal to an organization that can be rare and unique,
as it is usually built up over a long period of time. It comes about when the
organization optimizes its processes and capabilities in response to market conditions.

As organizations typically vary in terms of size, scale, scope and diversity of business,
over a long period of time, businesses tend to derive their own synergies that are very
unique, and therefore, rare.
For example, Toyota’s Production System embraces the principle of kaizen,
meaning continuous improvement (Florida 2008). What it truly entails, is organization-
wide innovation that is done incrementally, and is a part of every worker’s daily
agenda. Instead of instituting large improvement and innovation initiatives driven by
top management, every Toyota worker is responsible for constant innovation. The
resultant synergy due to the thousands of innovating workers is immense, and is a
major contributor to Toyota’s competitive advantage over its competitors. This is rare
firstly because the kaizen principle itself is not familiar to its western competitors.
Secondly, most companies are used to having change driven by management, and
implementing Toyota’s system would run counter to their top-down management style.
Core competency is a resource that can be rare because it cannot be easily
acquired like commodity. It is complex as it embodies aspects of a company’s learning,
which can only be accumulated over time, in its own unique developmental path.
For example, Toyota is currently the world leader in terms of sales of cars
powered by hybrid petrol-electric engines, with very few peers. This can be traced to its
core competency as a centre of innovation for next-generation, green engine
technologies. This, coupled with its Lean manufacturing capabilities, has enabled it to
enjoy the rare position of selling the most hybrid cars profitably and building a
reputation as an environmentally conscious car maker (Florida 2008; Laudon and
Laudon 2007).
Appropriability
Appropriability refers to a firm’s capability to appropriate the returns accrued by its
competitive position in possessing valuable and rare resources. Resources, no matter
how valuable and rare, are only good if their benefits could be tapped, or appropriated.
Otherwise, a firm cannot be considered to have attained competitive advantage.
Synergy and core competency are usually appropriable resources, as organizations are
usually driven by a need to harness them, before they are created or enhanced.
For example, Intel’s core competency is in the manufacturing of microprocessors

for personal computers (Nesheim 2005). It reaps the benefit of having internal synergy
to respond to market faster with better and more profitable processors against its
competitor, Advanced Micro Devices. The main point of this, is that the synergies and
core competencies that Intel has, could be harnessed and exploited to secure
competitive advantage--resources such as research and development, integrated
infrastructure and integrated processes have been used by Intel in its bid to be the
leader of the microprocessor market. Intel R&D has developed its Centrino line of
processors, which were then manufactured using Intel’s integrated infrastructure and
processes, producing its most sellable, profitable and market-beating product so far.
By analyzing the attributes above, we have established that synergies and core
competencies are critical resources that enable a firm to achieve competitive advantage.
The dynamic, information-driven nature of many businesses today often makes
competitive advantage short-lived. Therefore, any gainful discussion on competitive
advantage needs to explain how it can be sustainable over business cycles. Thankfully,
the RBV can be used to address this concern. This will be the focus of the next section.
Towards Sustainable Competitive Advantage

While attaining competitive advantage is crucial, once a firm establishes a competitive
advantage through the strategic use of its resources, that advantage must be made
sustainable. In order to sustain competitive advantage, a resource must have low
imitability, substitutability and mobility (Wade and Hulland 2004). For consistency, we
express these attributes in terms of what is desirable—inimitability, non-substitutability
and immobility.
Table 4 below shows these attributes and their relation to synergy and core competency,
in sustaining competitive advantage.
Attribute
Resource Inimitability Non-substitutability Immobility
Synergy
Core Competency
Table 4. Strategically important resources and their attributes that help sustain competitive
advantage
Inimitability
Inimitability is an attribute of a resource that makes it almost impossible for other
firms to duplicate it. Resources would become very difficult to duplicate when they are
deeply integrated into a firm through its unique developmental path, such as brand
loyalty and company culture. Such resources are also characterized by social
complexity.
For example, synergy and core competency are resources that involve complex
social relationships which are hard to imitate. A firm’s relationships with customer,
supplier and its inter-organizational partnerships may not be easily obtained. The
culture it has developed, the unique past an organization has are difficult to imitate,
and may not be desirable or relevant to a competitor’s context. A firm can therefore
sustain its competitive advantage by constantly aligning and exploiting these synergies
and core competencies in accordance with market conditions.
Non-substitutability
Non-substitutability is an attribute of a resource which makes it difficult to replace
with another resource that yields equivalent benefits. When an organization is in
possession of a rare and inimitable resource, competitors may seek to match up by
acquiring a substitute resource. In ensuring that the resource is also non-substitutable,
the organization is in a competitively superior position that is not easily matched by
competitors.
For example, a logistics firm achieved synergy and focused on its core
competence by specialized product development, process and systems integration,
culture, management experience and specialized skills and abilities. Competitors are
unable to substitute these resources easily, as many of the supporting resources were
in-house and interlinked. The more these resources get integrated, the more difficult it
gets for a competitor to find a substitute for the synergies achieved by a firm. Therefore,
a firm can reap medium- to long-term benefits through these synergies.
Immobility
Immobility of a resource is the condition in which the resource cannot be obtained by
acquisition through factor markets. Immobile or imperfectly mobile resources make it
difficult for competitors to attain instant competitive advantage by attracting resources

away from rivals, purchasing them like commodities or even mergers and acquisitions
with companies possessing strategically important resources.
For example, a manufacturing firm implemented an enterprise resource
planning application to streamline and synergize its processes and operations. The
synergy it achieved also enhanced its core competency of quality control, thereby
resulting in enhanced competitive advantage. While competitors are able to easily
purchase some of the resources, such as the IT infrastructure, they will not be able to
attain the same competitive advantage if they are unable to also acquire the systems,
processes, operational practices and the people that give rise to the synergies in the
firm.
Based on our analysis of synergy and core competency as resources with some
degree of value, rarity and appropriability, an organization can attain competitive
advantage. In addition, if the organization also ensures the inimitability, non-
substitutability and immobility of these resources, competitive advantage can be
sustained.
In the next section, we demonstrate the impact that synergies and core
competencies, promoted through IS, can have on the competitive advantage of an
organization. This is demonstrated through a case study.
Centralized Module Registration in NUS – A Case Study

An enabler of NUS’ mission of providing broad-based education
The National University of Singapore (NUS) was founded in 1905 as a medical school. It
has since grown to become one of the world’s leading universities, with 14 faculties and
schools, spanning such diverse disciplines as Business, Humanities, the Sciences, Public
Policy and Music. In line with its global approach, NUS has spread its wings abroad, with
five overseas colleges at major entrepreneurial hubs. While its approach is global, its
perspectives and expertise are decidedly Asian, owing to its heritage and location. NUS’
vision is to be a “global knowledge enterprise”, as a “leading global university centred in
Asia, influencing the future” (NUS Vision, Mission & Strategy). In 2008, NUS was ranked
30th in the Times Higher Education – Quacquarelli Symonds (THE – QS) ranking of the
world’s top 200 universities (World University Rankings 2008).
NUS counts among its mission the need to provide a transformative education,
reinforced by high-impact research and service as a national university. To this end, it is
committed to providing students with a “broad-based curriculum underscored by multi-
disciplinary courses and cross-faculty enrichment, as well as special programmes which
allow students to realise their potential” (About NUS). In fact, the requirement for a
broad-based curriculum is not new. It arose in the late 1990s, when Singapore’s evolving
economy created the demand for graduates with both depth (of expertise in their areas of
specialization) and breadth (from complementary knowledge of other fields). While NUS
could draw on the diversity and expertise of its many faculties to put together a broad-
based curriculum, its systems, processes, organizations and even mindsets were still
centered on faculties as separate and distinct entities.
Module registration in the late 1990s was a largely de-centralized exercise undertaken
by each faculty before a semester. Each faculty’s administrative staff partnered with the
faculty’s Centre for Information Technology Applications (CITA) unit to administer the
registration exercise. A CITA unit operated its faculty’s own module registration system,
usually a web-based system. As the disparate faculty module registration systems shared a
common database that was under the charge of the Computer Centre (CC), an IT Manager
from the CC provided overall coordination between the managers of the CITA units and
CC.
It was under such circumstances that the Cross Faculty Module (CFM) scheme was
introduced in NUS, to address the broad-based education needs of the time. Under the
CFM scheme, undergraduates were encouraged to take a specific number of modules
outside their home faculty. Yet another web-based application system was developed to
cater to CFM registration. This application was no silver bullet. With little communication
and coordination between faculties up till that point, CFM application was manual and
problematic. A CFM system developer related the experience:
“CFM, when it was first started, was actually a very manual process. The student would
fill up forms, get signatures and enter them into the CFM system. There were a lot of
problems because it was not real time. For instance, a student might have obtained all the
signatures of approval, only to find that there were timetable clashes, after entering the
choice of module into the system”
Although the CFM system and process went through some refinement subsequently, it
remained largely disparate.
A number of systemic issues prevailed during the late 1990s:
Duplication of effort in the registration functions of all faculties – Each faculty’s
CITA unit and administrative staff worked independently of other faculties, overcoming
the same challenges in their own ways, and not sharing their knowledge, methodology and
experience. Although all registration functions had common business process and technical
challenges, there was no formal intra-faculty organization to tackle them. In short, there
was common purpose, but no synergy.
Extra-disciplinary modules may not be taught by the experts – Some mandatory
modules covering topics outside of the home faculty’s field were offered by the faculty to
add breadth to their curriculum. Such modules are referred to here as extra-disciplinary
modules. The lack of a flexible, centralized registration system and mindset resulted in a
virtual barrier, which prevented the matching of expert lecturers to the students who
needed access to their expertise. For example, all students in the School of Computing had
to read the module “Business and Technical Communication”. This was taught by
academics who may not be experts in the subject, creating doubt on the quality of teaching.
In fact, NUS had a Centre for English Language Communication (CELC) which would
have been the perfect centre to teach the module. Thus, core competence was not effectively
applied.
The systemic issues above were by no means the only ones faced by NUS during the
early days of Cross Faculty Module (CFM). . However, they underscored the nature of
those issues. Through organic growth for over a century, NUS had become a collection of
faculties. It needed to become greater than the sum of its parts if it wanted to distinguish
itself among peers and operate at the next level. NUS refined its broad-based curriculum
policy over the years, by first making CFMs mandatory. Things came to a head when
CFMs were re-structured as University Level Requirements (ULR), consisting of General
Education and Singapore Studies modules. By then, it had become clear that the existing
systems could no longer meet particular requirements of the new policy. It was then that
the idea of centralized registration was mooted. Said the then Centre for Information
Technology Applications (CITA) Director for the Faculty of Arts and Social Sciences:
“I knew that if the Vice-Provost could get the whole university to subscribe to this idea, then
it was a matter of mine to work it out. I was already at that time at my wits’ end for this
faculty, and so the centralized registration implementation came in very nicely. The
students were also becoming disquieting at that time and it wasn’t fair to them”
Centralized module registration in NUS began in July 2003, the result of a year-long
project. At the heart of centralized module registration, is a key information system that
unifies the data, process, users and policies of module registration in a university-wide
manner, known as the Centralized Online Registration System (CORS). However, more
than unifying these system entities, it requires that the disparate registration functions of
each faculty be re-organized around CORS. As such, members of CITA units, who used to
maintain individual faculty’s registration system, were integrated into a centralized
organization known as the CORS Team. The CORS Team is part of the Computer Centre,
and is charged with providing centralized IT governance for CORS. It is an organization
that finally unlocks the synergy in purpose, expertise and experience of the IT staff
working on faculty-level registration systems over the years. Significant gains from the
synergy derived in CORS are (1) More effective deployment of manpower; (2) Centralized
training budget to plan and institute training programmes; (3) Better management and
utilization of IT resources; and (4) Consistency in project management, application

development methodology and quality assurance framework.
In Centralized Online Registration System (CORS), the variety of modules offered by
faculties external to a student’s home faculty is greater than what was possible in the
Cross Faculty Module (CFM) scheme. This directly enhances each faculty’s core
competence of providing quality education in its area of specialization, addressing the
issue of extra-disciplinary modules not being taught by the experts. It also contributes
further to NUS’ broad-based education initiative, beyond what was achievable with the
CFM scheme. Within each faculty, core competence is also promoted. Some of the IT staff
in CITA units used to assume responsibility for the business process and configuration of
module registration, when these should have been handled by the faculty administrators.
The issue arose because the IT staff were either more knowledgeable from experience or
had a deep understanding of the old module registration systems. With CORS, such
responsibilities are rightfully returned to the faculty administrators, who need to
understand business processes and rules. IT staff in CORS Team can now focus on
technical and operational matters related to CORS.
While it is evident that Centralized Online Registration System (CORS) has brought
about benefits that promoted synergy and core competencies in NUS, it was certainly not
achieved by an IT development team which built the right system by chance. In fact, the
successful realization of these benefits was the result of a benefits management
approach—an actively-managed development process that was focused on extracting the
desired benefits from the project. Early in the project, the chairman of the CORS task force
sought the involvement of key stakeholders from each faculty, in order to formulate
comprehensive requirements to meet the needs of all faculties. This was followed by a
weekly consolidation and rationalization exercise between the IT project team and faculty
stakeholders throughout the implementation phase. This helped to iron out any issues
arising from difficult requirements, and was essential to ensuring that the desired benefits
were actually achieved by implementing CORS. Seeking user buy-in was also crucial to the
success of CORS, owing to its university-wide impact. The CORS task force reached out to
students to inform, inspire and involve students in the CORS project journey. Sessions
with students were held to explain to them the centralized system and its implications,
and students’ feedback were gathered and some even used as system requirements. As
well, a marketing campaign was launched to raise awareness and anticipation for CORS.
Students were also involved in designing the user interface and in trying out the system in
a mock registration exercise, to surface any potential issues. Said the CORS project
manager of the partnership with student bodies:
“When we managed to get things working in CORS, we invited NUSSU [NUS Students’
Union] to try out different simulated bidding rounds… they could win prizes for doing so.
NUSSU would in turn help us deal with the other students”.
Overall, these benefits management initiatives helped ensure that the IT implementation
remain aligned to business objectives and the desired benefits.
In the context of the resource-based view (RBV), a resource has value when it enables a
firm to implement strategies that improve efficiency and effectiveness (Barney 1991).
Centralized Online Registration System (CORS) made it possible to eliminate the admin
overhead of running several faculty-level systems. Before CORS, there were also
duplication of functionalities in module and tutorial registration. CORS has improved
efficiency in faculties and promoted synergy by removing the duplication of common
administrative tasks. The new system is also more effective that older systems in giving
students greater choices of modules in satisfying University Level Requirements (ULR).
Moreover, loop holes in previous methods of allocating modules rendered some students
out of even a single module, something which is a thing of the past with CORS. Overall, it
is a valuable resource because it increases the efficiency and effectiveness of module
registration processes, encourages students to explore their interests outside of their home
faculties and supports the faculties in the process of module planning.
Resources that are valuable cannot become sources of competitive advantage if they are
in plentiful supply. They should also be rare within the industry (Amit and Schoemaker
1993). CORS centralizes administration and IT governance for module registration across
almost all the faculties, even in the case of NUS, which has the largest number of
individual faculties among Singapore universities. This leads to the ability to select many
modules from a large number of faculties, which is rare in comparison to NUS’ competitors
in Singapore. Other universities do not have as many faculties, let alone a system that
links all of them together for centralized registration.
The appropriability of a resource relates to its rent earning potential (Wade and
Hulland 2004). NUS is able to appropriate the returns accrued from the Centralized
Online Registration System (CORS). Synergy created by the sharing of one system for
registration resulted in recovering US$2.29M investment made in developing CORS after
the third year, as a result of decommissioning the systems replaced by CORS. Not all
returns are tangible. An intangible gain from CORS is the satisfaction of students with the
system, which leads to increased satisfaction with their educational outcomes. This further
promotes NUS’ core competence of providing a well-rounded education with its wide range
of faculties and courses. In bringing about the synergies and core competencies mentioned,
CORS represents a resource that is valuable, rare and appropriable. According to the
resource-based view, this directly leads to competitive advantage. However, competitive
advantage is not sustainable, unless the resource leading to competitive advantage is also
inimitable, non-substitutable and immobile.
According to Barney (1991), one of the factors that can contribute to low imitability is
social complexity. In this case, the social complexity is the result of the close relationships
of the people in ITU who used to be from Centre for Information Technology Applications
(CITA), and its partnership with the faculties. Moreover, processes in registration are
intertwined with Centralized Online Registration System (CORS). For other universities
to imitate what NUS is doing, would be exceptionally difficult, because not only do they
need to create a system similar to CORS, but also change their business processes to fit the
system; CORS is also intertwined with the decentralized structure of the faculties and
schools across NUS. All of these were built up over three decades of unique history, and
NUS’ journey towards centralized registration. Such characteristics, when viewed as a
resource, would be difficult to imitate.
A resource has low substitutability if there are few, if any, alternatives (Wade and
Hulland 2004). In our view, Centralized Online Registration System (CORS) is at least
partially substitutable. A new university like SMU, with no historical baggage, can
actually implement their alternative to centralized module registration from the start.
With fewer faculties and schools, a smaller new university like SMU might also benefit
from reduced coordination efforts, which makes it relatively easier to implement a
centralized system for module registration. The part that is hard to substitute is the strong
IT-business partnership surrounding CORS and the large selection of modules, but the IS
itself should be substitutable. As mentioned earlier, social complexity, such as

partnerships across functions, need to be built up over the years.
Finally, resources that lead to sustainable competitive advantage need to be
imperfectly mobile or non-tradable (Wade and Hulland 2004). CORS is not mobile, because
it is a custom-built application that is not sold in the market, and thus cannot be bought
off-the-shelf.
According to the above-mentioned points, CORS is inimitable and immobile, but is
moderately substitutable. Therefore, by the resource-based view, it brings about
sustainable competitive advantage, but to a moderate extent.
In order to become truly non-substitutable, we are of the opinion that NUS needs to
continue to enhance its processes and the features in CORS, to continue extracting value
borne out of the social complexity built up over the years. For example, currently, the
brightest ‘A’ Level students have an option to be exposed to a subject at university level.
However, it is unclear how many of these students actually do so. If CORS could be
extended to serve these very bright students, and if NUS actively promotes modules to
these students on a pro-active basis, these initiatives could serve to promote the university
to these students. It is this combination of innovative IS and social outreach that will
ensure that CORS remains difficult to substitute.
In October 2004, more than one year after CORS was implemented, the Straits Times
reported in the article “’So hip’ NUS the choice for most JC students”, that almost two-
thirds of students surveyed, from a cross-section of junior colleges say they will opt for
NUS (The Straits Times 2004). Tellingly, among the top five reasons for choosing NUS are
that it offers a “wide range of courses” and “offers the course I want to take”—factors that
have been enhanced by the capabilities supported by CORS, which have translated to a
competitive edge. And indications that this competitive advantage is sustainable exist. In
April 2008, for the second year running, NUS was awarded the Reader’s Digest Trusted
Brands Platinum award, its highest brand equity award for organizations whose brand
ratings are “at least double that of its nearest competitor” (NUS awarded Reader's Digest
Platinum). Then-NUS President Shih Choon Fong summed up its broad-based education
approach best when he said:
“Seeing our students as unique individuals, we strive to offer them space to explore their
interests, discover talents, and pursue passions as well as challenges to stretch and reach
their best”.
Conclusion
In this report, we have addressed two questions, namely: (1) How do information systems
promote synergies and core competencies; and (2) How does this enhance competitive
advantage? In addressing these questions, we have built a theoretical foundation using the
resource-based view of the firm and the IT benefits management framework. Our key
concepts of synergies, core competencies and competitive advantage are then put in the
context of this firm theoretical foundation, which has also served to relate them to each
other, and to the broader issues of benefits and sustainability of competitive advantage.
Whenever possible, we have also anchored the theory to industry practice with real-life
examples, including a full-fledged case study that served to unify all the concepts discussed.
In the first part of our approach, we described how IS planning can help identify the
right IS to implement, while the IT benefits management framework ensured that IS
projects do not lose focus in realizing the business objectives of synergies and core
competencies. We then applied the resource-based view of the firm in our analysis, where
synergies and core competencies could be considered as resources. We further argued that
synergies and core competencies are strategically important to an organization because
they are valuable, rare and appropriable. Applying the resource-based view to resources
with such attributes directly leads to the attainment of competitive advantage. Next, we
demonstrated that synergies and core competencies, as strategically important resources
to organizations, would also be inimitable, non-substitutable and immobile to an extent.
Consequently, we concluded by the resource-based view, that the attained competitive
advantage is also sustainable.
With a firm theoretical foundation laid, and with the links between key concepts
established, we presented a case study that traced the evolution of centralized module
registration in the National University of Singapore (NUS). Specifically, we illustrated the
way in which the development and use of the Centralized Online Registration System
(CORS) has helped to promote the inherent synergies in the work of faculty administrators
and the core competencies of academics. We argued that the enhancements brought about
by the use of CORS contributes to the reason that NUS is able to attain and sustain its
competitive advantage over local rivals like Nanyang Technological University (NTU),
Singapore Management University (SMU) and Singapore Institute of Management (SIM).
It is our intention that, through the application of a firm theoretical foundation

illustrated by a practical case study, we have sufficiently demonstrated the way in which
an information system can support the emergence of synergies and the enhancement of
core competencies within an organization. More importantly, through our case study, we
hope we have clarified the often unclear linkage between synergies, core competencies and
competitive advantage and made obvious the indirect role of IS in helping organization
attain and sustain competitive advantage.
Afterword
We would like to end this report with a brief description of our learning journey while
working on this project. To make these descriptions relevant to this report, we would like
to describe the role of information technology (IT) in enhancing our team’s synergies and
core competencies during the preparation of this report. The development of our theoretical
foundation is the synergistic output of our project members leveraging on our collective
core competencies. For example, the resource-based view and the benefits management
framework were suggested by a PhD student in our team, while our unique case study
access and write-up was provided by another. However, this synergistic output and the
fusion of our team core competencies did not come easy. It was achieved through frequent
communication among the team members.
The team met up several times online through the use of IT and telecommunications
(such as Google Talk, IVLE community, conference call and emails) to brainstorm the way
to apply the theories and case study to tackle the questions. While it was fuzzy at best in
the beginning, over time, through frequent communications with the aid of technology, the
resultant approach emerged. While we do not advocate that this synergistic output derived
from our core competencies will definitely give us a competitive advantage over our fellow
course mates, we realized the important facilitating and enabling role played by
communication technologies in helping to promote our team synergies and core
competencies. This is an important lesson for us. Through this description of our learning
journey, we believe IT will play an increasingly important role in promoting synergies and
core competencies within an organization, as it has helped our team in the completion of
this project.
References
1. “About NUS”, NUS, Accessed 15 March 2009.
http://www.nus.edu.sg/aboutus/
2. Amit, R., and Schoemaker, P. J. H., “Strategic Assets and Organizational Rent”,
Strategic Management Journal (14), 1993, pp. 33-46.
3. Barney, J., “Firm Resources and Sustained Competitive Advantage”, Journal of
Management (17:1), 1991, pp. 99-120.
4. Birkinshaw, J., and Goddard, J., “What is Your Management Model?”, MIT Sloan
Management Review (50:2), 2009, pp. 81-90.
5. Campbell, A., and Goold, M., “Synergy Why Links Between Business Units Often Fail
and How to Make Them Work”, Capstone Publishing Limited, 1998.
6. Campbell, A., and Luchs, K. S., “Strategic Synergy”, Butterworth-Heinemann Ltd
Publication, 1992.
7. Collis, D. J., and Montgomery, C. A., “Competing on Resources”, Harvard Business
Review, Beckett J. (Ed.), July-August 2008, pp. 140-150.
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http://www.financet.org/definition/competitive-advantage.php
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http://en.wikipedia.org/wiki/Core_competency
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March 2009.
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11. Goold, M., and Campbell, A., “Desperately Seeking Synergy”, Harvard Business Review,
September-October 1998, pp. 131-143.
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Digital Firm (10th Edition)”, Prentice-Hall, Inc., 2007, pp. 3.
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March 2009.
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http://www.nus.edu.sg/aboutus/vision.php
17. Peppard, J., Ward, J., and Daniel, E., “Managing the Realization of Business Benefits
from IT Investments”, MIS Quarterly Executive (6:1), March 2007, pp. 1-11.
18. Porter, M., “Competitive Advantage- Creating and Sustaining Superior Performance”,
The Free Press, 1985.
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20. “So hip NUS the choice for most JC students”, The Straits Times, 26 October 2004.
21. Wade, M., and Hulland, J., “Review: The Resource-Based View and Information
Systems Research: Review, Extension, and Suggestions for Future Research”, MIS
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How IS Promote Synergies and Core Competencies

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Synergy, Core Competency and Competitive Advantage

How information systems promote synergies and core competencies, ultimately

A report by CS5251 Group 8:

Definition of Key Concepts

Many competitive advantage types are unsustainable, as competitors will eventually

Synergies and Core Competencies Through IS

Information System Synergies or Core Competencies Promoted

Figure 3. An example of a (partial) benefits-dependency network for a new customer relationship

From Synergies and Core Competencies to Resources

Resource Strategically Important Supporting/ Enabling Synergy or Core

Attaining and Sustaining Competitive Advantage

Resource-based View and Attributes of Resources

Attaining Competitive Advantage

organization optimizes its processes and capabilities in response to market conditions.

For example, Intel’s core competency is in the manufacturing of microprocessors

Towards Sustainable Competitive Advantage

difficult for competitors to attain instant competitive advantage by attracting resources

Centralized Module Registration in NUS – A Case Study

utilization of IT resources; and (4) Consistency in project management, application

itself should be substitutable. As mentioned earlier, social complexity, such as

It is our intention that, through the application of a firm theoretical foundation

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