SMEs can potentially gain competitive advantage from Internet-based technologies, because these require less investment and are more flexible than traditional Information Technologies. However, availability of IT resources is not enough. Organisations need particular competencies in order to deploy their resources effectively. Strategic application of these competencies can than lead to distinct organisational capabilities which provide competitive advantages. This paper presents a case study of a small organisation that was keen to exploit the potential of Internet-based technologies to help them compete in a very tough environment. It was found that Internet-based technologies enabled tactical quick-wins and hold the promise of potential strategic benefits through the creation of distinctive IT resources. However, it was shown that there was a need to develop competencies, particularly around capturing business needs as well as vendor management, before strategic capabilities could be realised. As SMEs have to be responsive to dynamic environments, these competencies and capabilities need to be enhanced and maintained by embedding IS management in overall management processes.