Information Systems for Strategic Advantage
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Transcript of Information Systems for Strategic Advantage
Information Systems for Strategic Advantage
BiMBA, Fall 1999Professor Chen
School of BusinessGonzaga UniversitySpokane, WA 99258 [email protected]
Innovation as a Response to Change in Market and Technology
INNOVATION
Socio-politicalChanges
Technological Opportunities
Advances in Technology
New Products and Services
Market Needs
EFFICINCY
EFFECTIVENESS
INNOVATION
Time Market
Figure 3-6 Reengineered Accounts Payable Process (from Hammer[1])
Before
Purchasing
Vendor
Receiving
Accounts Payable
Goods
Payment
Invoice
Receiving Document
Copy of Purchase Order Purchase
Order
Figure 3-6 Reengineered Accounts Payable Process (from Hammer[1])
After
Purchasing
Vendor
Receiving
Accounts Payable
Goods
Purchase Order
Payment
Database
The Information Age vs. the Computer Age
The Computer Age Time-sharing Computer 1960’s
Interactive Computing
Mini/Micro provide user with computer power (as of Mainframe) but with little cost
Advances in telecommunications(link terminals/PC mainframe)End of the computer age
Beginning of the information age
PC as DSS tool to access information stored in the center computer files to support management decision-making process.
Software advances in application packages (e.g. , DBMS, spreadsheet
THE GENERIC VALUE CHAIN
Firm Infrastructure (general management, accounting, finance, strategic planning
Human Resource Management(recruiting , training , development)
Technology Development(R&D, product and process improvement)
Procurement(purchasing of raw materials, machines, supplies)
Inbound Logistics(raw materials handling and warehousing)
Operations(machining, assembling, testing)
Outbound Logistics (warehousing and distribution of finished product)
Marketing and Sales (advertising, promotion, pricing, channel relations)
Service(installation, repair, parts)
ProfitMargin
Primary Activities
Support
Activities
CONSTRUCTION
DESIGN
ANALYSIS
PLANNING
Information Engineering
What is Information Engineering
The application of an interlocking set of formal techniques for the planning, analysis, design and construction of IS, applied ton an enterprise-wide basis or across a major sector of an enterprise.
An enterprise-wide set of automated disciplines for getting the right information to the right people with the right form at the right time.
ENVISION
DESIGN
BUILD
OPERATE
SDLCANALYAIS
DESIGN
IMPLEMENTATION
MAINTENANCE
MANAGMENT IS DEVELOPMENT
REENGINEERING
INFLUENCE CAPABILITY
LEADERSHIP
CONTROL
MANAGERS IS PROFESSIONALS
BUSINESS ENVIRONMENT IS CHANGING RAPIDLY RADICALLY AND PERPLEXINGLY
SDLCANALYAIS
DESIGN
IMPLEMENTATION
MAINTENANCE
ENVISION
DESIGN
BUILD
OPERATE
MANAGMENT IS DEVELOPMENT
REENGINEERING
INFLUENCE CAPABILITY
LEADERSHIP
CONTROL
MANAGERS IS PROFESSIONALS
BUSINESS ENVIRONMENT IS CHANGING RAPIDLY RADICALLY AND PERPLEXINGLY
SupportsSupports
Business Plan Strategic Factors System Project3 Decrease direct
labor and overhead by 20%
3 Increase our customer order-filing rate to 95%
3 Produce timely tracking and sales information for inventory managers
3 Increase labor productivity
3 Improve service differentiation
3 Provide managers with better information
3 A standard cost accounting system that provides online labor rate and efficiency variances
3 An inventory management system that provides reorder points, EOQ’s, quantity on hand, and sales by item and salesperson.
Figure: Relationship and linkage of proposed system projects with strategic factors and the business plan
Objective Proposal
The Emergence of a Strategic Role for IT in Organizations
IT as a strategic resource
Technology Push
t Cost-performance trends
t Connectivity capabilities
Competitive Pull
t Innovative IT-enabled applications to obtain differential benefits in the marketplace to stay competitive
Five levels of IT-induced reconfiguration
One. Localized exploitation
Two. Internal integration
Three. Business process redesign
Four. Business network redesign
Five. Business scope redefinition
HighLow
Low
Revolutionary levels
Evolutionary levels
Des
ign
of b
usin
ess t
rans
form
atio
n
High
Range of potential benefits
Localized exploitation: Enablers and Inhibitors
IT-induced reconfiguration:
Level One
Enablers
Technologicalt Favorable cost-
performance trendst Vendor push-system
solution
Organizationalt Localized impactt Ease of assessing
efficiency benefitst Minimal disturbance
to operations
Inhibitors
Technologicalt Obsolescencet Further reduction in cost-
performance
Organizationalt Lack of strategic vision
t Unwillingness to recognize the strategic role of IT and IS
Internal Integration: Enablers and Inhibitors
IT-induced reconfiguration:
Level Two
Enablers
Technologicalt Increase connectivity
capabilitiest Favorable cost-per-
formance trendst Vendor push-system
solutions
Organizationalt Strategic vision for
integration through an IT platform
t Centrality of IT to the strategic context
Inhibitors
Technologicalt Uncertaintyt Cost of integrationOrganizationalt Lack of strategic vision
for integration
t Organizational inertia
t Centralization -decentralization conflict
IT-industry business reconfiguration in level 2: Enables and Inhibitors in the tax return preparation business
IT-induced reconfiguration:tax return preparation
business
Enablerst Electronic filing
initiative by IRS
t IT-based value-added services
t Perceived benefits of an integrated platform
t IT-based strategic advantages
Inhibitorst Inability to view
IT in strategic terms
t Low economies of scale for integration
t Inexperience with IT and IT-based applications
t Mismatch with market needs
Business process redesign: Enablers and Inhibitors
IT-induced reconfiguration:
Level Three
Enablers
Technologicalt Favorable cost-
performance trends
Organizationalt Awareness of the
power of ITt Willingness to make
quantum changes to fully exploit IT power
Marketplacet Competitive pressures
Inhibitors
Technologicalt Uncertaintyt Cost of redesign Organizationalt Lack of strategic vision
for redesign
t Organizational inertia
t Costs of transforming the organization
Business network redesign: Enablers and inhibitors
IT-induced reconfiguration:
Level Four
Enablerst Ability to specify
and/or create standards for integration
t Identification of value-added services
t Recognition of mutual benefits
Inhibitorst Lack of standards
t Lack of vision and understanding
t Lack of commitment to integration
t Possible erosion of market positions
Strategic options for business network redesign
Collaborativeadvantage
Business Network redesign
Electricinfrastructure
Competitiveadvantage
Information Technology Governance
Tightlycoupled
Looselycoupled
Common role
Unique role
Business Governance
Strategic options for business network redesign
Collaborativeadvantage
Business Network redesign
Electricinfrastructure
Competitiveadvantage
Information Technology Governance
Tightlycoupled
Looselycoupled
Common role
Unique role
Business Governance
A B
C D
Business Scope Redefinition: Shifting the business domain using IT
Technology
Before After
Technology
Markets Markets
Traditional business scope
Increased role for information technology in operations
Traditional operating technology
Products Products
Business Scope Redefinition: Enlarging the business domain using IT
Technology
Before After
Technology
Markets Markets
Traditional business scope
Traditional operating technology
Traditional operating technology
Products ProductsAdditional business using IT
Information technology
Most likely quadrant-to-quadrant movementIn
terr
elat
edne
ss
L Ow
LOW HIGH
Chaotic Proliferation Preemptive Penetration
Barroom Brawl Clash of the Titans
HIGH
Exploitability
Five levels of transformation: A Summary
Level Theme Potential Impacts Major objectives Management Implications
Localized exploitation
Internal integration
Business Process redesignBusiness network redesign
Business scope redefinition
One
Two
Three
Four
Five
Potentially high savings in narrow areas of business
Integration offers both efficiency and effectiveness
Powerful in creating differential capabilities
Opportunities for creatively exploiting capabilities
Altering the business scope both proactively and reactively
Reduced costs and/ or improved serviceElevate IT as a strategic resourceReengineer the business with IT leverCreate a virtual organization and occupy a central position in the network Identify new business as well as potential treats
Identify firm-specific areas for exploitationArticulate the logic for integrationStrategy -- IT alignment
Articulate the logic of network redesign for the focal firm
Identification of new scope of business
Figure 2-1 MIT 90s framework -- Chapter 2 emphasis
EXTERNALSOCIOECONOMICENVIRONMENT
EXTERNAL
TECHNOLOGY
ENVIRONMANT
STRUCTURE
STRATEGIC
INDIVIDUALS&
ROLES
TECHNOLOGYMANAGEMENTPROCESSES
Organization
Boundary
Figure 2-2. Advances in IT provide opportunities for dramatically increased connectivity, enabling new forms of
interorganizational relationships and enhanced group
productivity 1990s business forcesi Globalizationi Worldwide competitioni Productivity requirementsi Volatile environment
Increased connectivityInterorganizational business relationshipsIntraorganizational coordination for increased efficiency and effectivityAdaptable organizational structure
1990s Information Technology (IT) opportunitiesi Continued dramatic cost/performance and capacity advancesi New IT architectures encompassing:
--extensive communications networks--accessible distributed databases--enhaced human interface workstations
Figure 5-24 The strategic alignment model
Businessscope
Distinctivecompetencies
Businessgovernment
Administrativeinfrastruction
Process Skills
Businessscope
Distinctivecompetencies
Businessgovernment
Administrativeinfrastruction
Process Skills
Functional Integration
Business domain IT domain
Strategic integration
External
Internal
Figure 5-25 Comparison of alternative patterns of alignments
Four Dominant Patterns of Alignments
Characteristics Competitive potential
Technologypotential
Businessvalue Service level
Product-market arena
Reengineer business processes
Competitive strategy frameworks
Business measures relative to competitors
Domain anchor
Manager focus
Analytical frameworks
Measures
Adapting the IT platform
IT arena
Technology scan and forecasting, scenarios
Measures of IT capability and flexibility
Transforming work and organization
Organizational domain
Business process analysis
Organizational efficiency
IS products and services
Redesigning IS portfolio
Portfolio analysis of applications
Service levels