Blue Ocean Strategy
for Other information technology and computer service activities (ISIC 6209)
The 'Other information technology and computer service activities' industry is highly competitive, often leading to commoditization and margin erosion (MD03, MD07). Rapid technological advancement (IN02) also creates constant pressure to innovate. Blue Ocean Strategy is a powerful framework for this...
Why This Strategy Applies
Creating new market space (a 'blue ocean') by focusing on entirely new value curves, making the competition irrelevant. Focuses on value innovation.
GTIAS pillars this strategy draws on — and this industry's average score per pillar
These pillar scores reflect Other information technology and computer service activities's structural characteristics. Higher scores indicate greater complexity or risk — see the full scorecard for all 81 attributes.
Eliminate · Reduce · Raise · Create
- Hourly billing for routine technical support This practice creates unpredictable costs for clients, incentivizes prolonged work, and shifts focus from value delivery to time spent, fostering distrust.
- Proprietary vendor lock-in via specific tools Eliminating vendor-specific dependencies reduces customer switching costs, fosters trust, and allows clients greater flexibility and control over their technology stack.
- Complex multi-tiered service packages Simplifies decision-making for clients, reduces perceived complexity, and removes features that often go unused, streamlining offerings and reducing internal overhead.
- Extensive, high-touch sales cycles for commodity services Streamlines the customer acquisition process for basic needs, reduces sales overhead, and aligns with customer expectations for quick, transparent procurement.
- On-premise infrastructure setup and maintenance Many clients can benefit from reduced physical footprint and maintenance by migrating to optimized cloud or hybrid solutions, cutting operational costs and increasing scalability.
- Extensive customization for standard software deployments Reduces project complexity, accelerates deployment times, and lowers long-term maintenance costs by encouraging adoption of best practices and standard configurations.
- Long-term, rigid service contracts Offers greater flexibility to clients whose needs evolve rapidly, reducing perceived risk and friction, which can attract a broader range of businesses, particularly SMEs.
- Reactive, break/fix incident support models While necessary for critical failures, reducing reliance on this model by shifting towards proactive monitoring lowers downtime for clients and operational stress for providers.
- Proactive cybersecurity posture and threat intelligence Elevating prevention over reaction significantly enhances client security, mitigates business risks, and provides peace of mind in an increasingly threatened digital landscape.
- Transparent, outcome-based pricing models Shifts the focus from effort to value delivered, aligning provider and client incentives, increasing budget predictability, and fostering trust through clear performance metrics.
- Strategic business alignment and advisory services Transforms the IT provider from a technical vendor to a strategic partner, helping clients leverage technology for business growth, competitive advantage, and innovation.
- Speed of solution deployment and integration Accelerating time-to-value for clients allows them to realize benefits faster, respond to market changes more quickly, and improve overall business agility.
- AI-driven predictive maintenance and optimization Introduces a new level of efficiency and reliability by preempting issues before they occur, optimizing resource usage, and providing data-driven insights for IT operations.
- Elastic 'IT as a Utility' subscription model Offers unprecedented flexibility and cost efficiency, allowing clients to consume IT resources like electricity, scaling up or down instantly based on demand, perfect for variable workloads.
- Integrated digital transformation coaching for non-technical leadership Bridges the gap between technology and business strategy by empowering non-technical leaders to understand and drive digital initiatives, accelerating organizational adoption and value realization.
- Sustainability-focused IT carbon footprint optimization Addresses growing corporate social responsibility demands by helping clients measure, reduce, and report on the environmental impact of their IT infrastructure and operations.
This ERRC combination aims to create a new market space for 'Simplified Strategic IT Partnership.' It targets small to medium-sized enterprises (SMEs) and non-technical business leaders who are currently underserved by complex, reactive, and opaque IT service models. These customers would switch because they value predictable costs, proactive risk mitigation, strategic guidance, and frictionless technology adoption over traditional hourly billing and fragmented IT support, allowing them to focus on core business growth rather than IT overhead.
Strategic Overview
The 'Other information technology and computer service activities' sector is often characterized by intense competition (MD07), pricing pressures (MD03), and a 'red ocean' of similar service offerings. The Blue Ocean Strategy offers a compelling alternative by encouraging firms to create uncontested market space, making competition irrelevant. Instead of battling over existing demand, it focuses on creating new demand through value innovation – simultaneously pursuing differentiation and low cost. This approach is highly relevant given the industry's challenges with 'Maintaining Service Relevance' (MD01), 'Rapid Skill Obsolescence & Talent Gap' (IN02), and the high 'R&D Burden & Innovation Tax' (IN05) associated with staying competitive.
By systematically analyzing what factors to Eliminate, Reduce, Raise, and Create (ERRC) within their service offerings, IT service providers can break away from traditional industry boundaries. This could involve leveraging emerging technologies like AI, blockchain, or IoT (IN02) to solve problems for 'non-customers' or underserved segments that current IT solutions ignore. Adopting a Blue Ocean Strategy can lead to significantly higher margins, reduced customer acquisition costs (MD06), and a sustainable competitive advantage, transforming the firm's growth trajectory and reducing the impact of 'Structural Market Saturation' (MD08).
5 strategic insights for this industry
Escaping Commoditization & Price Wars
The IT services market often becomes a 'red ocean' where providers compete intensely on price and marginally differentiated features. Blue Ocean Strategy provides a framework to break this cycle by creating unique value propositions that render competitors irrelevant, moving beyond 'Pricing Pressure and Margin Erosion' (MD03) and 'Structural Competitive Regime' (MD07). This allows firms to command premium pricing for innovative services.
Leveraging Emerging Technologies for New Market Creation
Rapid technological advancements (e.g., AI, quantum computing, Web3) are constant in this industry (IN02). Blue Ocean thinking encourages IT service providers to apply these technologies to create entirely new service categories or address previously unsolvable problems for clients, rather than merely optimizing existing services. This addresses 'Rapid Skill Obsolescence & Talent Gap' (IN02) by creating demand for specialized, high-value skills.
Targeting Non-Customers and Underserved Segments
A core tenet of Blue Ocean Strategy is to look beyond existing customers and identify 'non-customers' or segments whose needs are poorly met by current industry offerings. For IT services, this could mean developing simplified, cost-effective, or highly specialized solutions for SMBs, niche industries, or even public sector entities that have been traditionally overlooked, thereby expanding the total market size and mitigating 'Structural Market Saturation' (MD08).
Value Innovation Through ERRC Framework
The Eliminate-Reduce-Raise-Create (ERRC) Grid provides a systematic tool for IT service providers to challenge industry assumptions and reconstruct market boundaries. By critically assessing current service factors (e.g., excessive customization, complex contracting, slow delivery), firms can eliminate or reduce non-value-adding elements while raising or creating new ones (e.g., predictable outcomes, managed security, proactive AI-driven insights), directly impacting 'Maintaining Service Relevance' (MD01) and 'Value Justification and Differentiation' (MD03).
Reduced Customer Acquisition Costs and Stronger Brand Equity
When a firm creates a blue ocean, it often attracts customers without intense marketing efforts because the value proposition is unique and compelling. This can significantly lower 'High Customer Acquisition Cost (CAC)' (MD06) and build strong brand equity as an innovator and market creator, rather than a follower, which helps address 'Client Retention & Differentiation' (MD07).
Prioritized actions for this industry
Conduct 'Pioneer, Migrator, Settler' Analysis for Service Portfolio
Categorize current service offerings as Pioneers (blue ocean), Migrators (value improvement), or Settlers (red ocean). This helps identify services to divest, improve, or invest heavily in for new market creation, providing a strategic roadmap to escape commoditization (MD07) and allocate R&D efforts more effectively (IN03).
Apply the ERRC Grid to Core Service Categories
Systematically analyze existing IT services using the Eliminate-Reduce-Raise-Create framework. For instance, for traditional managed services, eliminate reactive support, reduce manual tasks, raise proactive threat intelligence, and create AI-driven predictive maintenance. This drives value innovation and helps in 'Maintaining Service Relevance' (MD01) while potentially reducing costs.
Explore the Six Paths Framework to Redefine Market Boundaries
Use the six paths (e.g., looking across alternative industries, strategic groups, buyer chains, complementary offerings, functional/emotional appeal, time) to identify opportunities for new market space. This could involve combining IT services with business consulting for specific industry challenges or integrating niche IoT services, addressing 'Structural Market Saturation' (MD08) by finding unmet demand.
Establish Dedicated Value Innovation Teams
Form cross-functional teams with diverse expertise (technical, business, design thinking) specifically tasked with identifying blue ocean opportunities and developing corresponding service prototypes. Empower these teams to challenge industry norms and pursue unconventional solutions, fostering 'Commercialization of Breakthroughs' (IN03) and ensuring talent is focused on high-growth areas (MD01).
Pilot Blue Ocean Offerings with a Focus on Non-Customers
Develop and pilot new service offerings explicitly targeting non-customers or significantly underserved segments with a unique value proposition. Use agile methodologies to quickly iterate and refine, gathering feedback from this new market space. This reduces the 'High R&D & Re-Platforming Costs' (IN02) associated with large-scale failures and quickly validates new market entries.
From quick wins to long-term transformation
- Conduct internal workshops to educate leadership and key teams on Blue Ocean Strategy principles.
- Perform an initial 'Pioneer, Migrator, Settler' audit of current service offerings.
- Select one existing 'red ocean' service for an ERRC grid analysis as a pilot.
- Form small, empowered 'blue ocean' exploration teams to research non-customers and adjacent industries.
- Develop initial prototypes or minimal viable services (MVS) for identified blue ocean opportunities.
- Integrate Blue Ocean thinking into the annual strategic planning and budgeting cycles.
- Embed a culture of value innovation across the organization, making blue ocean thinking a core competency.
- Establish formal processes for continuous market scanning and non-customer analysis.
- Build organizational capabilities to rapidly scale successful blue ocean offerings while managing existing red ocean services efficiently.
- Failing to gain executive buy-in and resource allocation for blue ocean initiatives.
- Focusing on technological innovation for its own sake, rather than value innovation for customers.
- Underestimating the effort required to educate a new market or convert non-customers.
- Not having the organizational agility or talent to execute on radically new business models.
- Diluting blue ocean efforts by trying to incorporate too many existing 'red ocean' elements.
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| Revenue from New Market Offerings | Percentage of total revenue derived from services created by applying Blue Ocean principles, indicating successful market creation. | Achieve 20-30% of total revenue from blue ocean services within 3-5 years. |
| Profit Margin of Blue Ocean Services | Average profit margins for services identified as 'blue ocean' compared to 'red ocean' services. | Maintain profit margins 15-25% higher than traditional services. |
| Customer Acquisition Cost (CAC) for New Segments | Cost to acquire customers for services in newly created market spaces. | Reduce CAC for new segments by 10-20% compared to traditional service CAC. |
| Number of Value Innovation Initiatives Launched | Count of distinct projects or teams actively pursuing blue ocean opportunities. | Launch 3-5 significant initiatives per year. |
| Market Share in New Market Spaces | The percentage of the newly created or discovered market that the company captures, indicating leadership in uncontested space. | Aim for >50% market share in identified blue oceans within 2-3 years of launch. |
Software to support this strategy
These tools are recommended across the strategic actions above. Each has been matched based on the attributes and challenges relevant to Other information technology and computer service activities.
Capsule CRM
10,000+ customers worldwide • Includes Transpond marketing platform
Transpond's email marketing and audience tools support proactive brand communication that builds customer loyalty and reduces churn-driven reputational fragility
Cost-effective CRM for growing teams — manage contacts, track deals and pipeline, build customer relationships, and streamline day-to-day work. Paired with Transpond, a dedicated marketing platform for email campaigns and audience management.
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HubSpot
Free forever plan • 288,700+ customers in 135+ countries
Deal intelligence, win/loss analytics, and pipeline data give sales teams the evidence to defend price with ROI proof rather than discounting reactively against commodity competition
All-in-one CRM and go-to-market platform used by 288,700+ businesses across 135+ countries. Connects marketing, sales, service, content, and operations in one system — free forever plan to start, paid tiers to scale.
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Other strategy analyses for Other information technology and computer service activities
Also see: Blue Ocean Strategy Framework