Creating Business Advantage with IT

Chapter 1

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 1 Figure 1- 2

Technology, Business, and Societal Evolution During the 20th Century

1900 1950 2000

AgriculturalEconomy

IndustrialEconomy

InformationEconomy

Typical mathematical formula:D=B2-4AC

Equivalent FORTRAN statement:D=B**2-4*A*CTelegraph

Technology Evolution

Social and Business Evolution

Photos reprinted with permission from AT&T and IBM

Technological Changes

• The Internet and broadband networks• The World Wide Web and high-performance

Servers• Uniform Resource Locator (URL) and browser• Multimedia digital devices• Wireless networks and protocols• Object-oriented programming languages and

database technologies.

Forces That Shape Business Strategy

• Value Chain Analysis

• Industry and Competitive Analysis

• Strategic Grid Analysis

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.Chapter 1 Figure 1-3

The Value Chain Defines Industry Structure and Relationships

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.Chapter 1 Figure 1-4

Market Roles

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Chapter 1 Figure 1-5

Forces Influencing Industry and Competitive Advantage

Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.Chapter 1 Figure 1-6

The Impact of IT on Strategy and Operations

Factory Strategic

Support Turnaround

Goal: Improve performance of core processes

Leadership: Business unit executives

Project Management: Process reengineering

Goal: Improve local performance

Leadership: Local level oversight

Project Management: Grassroots experimentation

Goal: Transform organization or industry

Leadership: Senior executives & board

Project Management: Change management

Goal: I dentify and launch new ventures

Leadership: Venture incubation unit

Project Management: New venture development

IT Impact on Core Strategy

IT Im

pac

t o

n C

ore

Op

erat

ion

s

Low

High

High

Analyzing the Impact of IT on Strategic Decision Making

• Can IT be used to reengineer core value activities and change the basis of competition?

• Can IT change the nature of relationships and the balance of power among buyers and suppliers?

• Can IT build or reduce barriers to entry?• Can IT increase or decrease switching costs?• Can IT add value to existing products and

services or create new ones?