Organizational Strategy, Competitive Advantage, and Information Systems
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Transcript of Organizational Strategy, Competitive Advantage, and Information Systems
Organizational Strategy, Competitive Advantage, and Information Systems
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1. Discuss ways in which information systems enable cross-functional business processes and business processes for a single functional area.
2. Become familiar with business process defi nition, measurement, and analysis.
3. Compare and contrast business process improvement, business process reengineering, and business process management to identify the advantages and disadvantages of each one.
4. Identify effective IT responses to different kinds of business pressures.
5. Describe the strategies that organizations typically adopt to counter Porter’s five competitive forces.
6. Describe the characteristics of effective business–information technology alignment.
1. Business Processes2. Business Process Reengineering, Business
Process Improvement, and Business Process Management
3. Business Pressures, Organizational Responses, and Information Technology Support
4. Competitive Advantage and Strategic Information Systems
5. Business–Information Technology Alignment
[ [ Opening Case Opening Case A Tool to Combat A Tool to Combat
Terrorism and Fight Crime Terrorism and Fight Crime ]]
• The Problem
• A Potential IT Solution
• The Results
• What We Learned from This Case
About About [small] [small] businessbusiness
Sharing Bicycles
2.1
Business Processes2.1
• Cross-Functional Processes• Information Systems and
Business Processes
Business Processes
• A business process is:– an ongoing collection of related activities that create
a product or service of value to the organization, its business partners, and/or its customers.
• Comprised of three elements:– Inputs– Resources– Outputs
• Efficiency vs. Effectiveness
Cross-Functional Processes• No single functional area is
responsible• steps executed in a coordinated,
collaborative way• Procurement & Fulfillment Cross-
functional processes
Example: Purchasing Airline Tickets Online
Notify TravelerNotify Traveler
Receive Ticket OrderReceive Ticket Order
Reserve SeatsReserve Seats
Charge Credit CardCharge Credit Card
Confirm Flight(s)Confirm Flight(s)
Issue e-TicketIssue e-Ticket
Plan TripPlan Trip
Check FlightsCheck Flights
Submit Ticket OrderSubmit Ticket Order
Receive e-TicketReceive e-Ticket
Seats Available
Seats Available
Use Credit Card?
Use Credit Card?
Charge OK?
Charge OK?
Seats Available?
Seats Available?
Notify TravelerNotify Traveler
Frequent Flyer Mileage
Sufficient?
Frequent Flyer Mileage
Sufficient?
Subtract MileageSubtract Mileage
NO
YES
NO
YES
NO
YES
NO
YES
Traveler Airline Web Site
YES
NO
Information Systems & Business Processes
• IS’s vital role in three areas of business processes– Executing the process
– Capturing and storing process data
– Monitoring process performance
Executing the Process
• IS’s help Execute the Process by:– Informing employees when it is time to complete
a task
– Providing required data
– Providing a means to complete the task
Capturing & Storing Process Data• Processes generate data
– Dates, times, product numbers, quantities, prices, addresses, names, employee actions
• IS’s capture & store process data (aka, transaction data)
• Capturing & storing data provides immediate, ‘real time’ feedback
Monitoring Process Performance• IS evaluates information to determine
how well a process is being executed• Evaluations occur at two levels
– Process level
– Instance level
• Monitoring identifies problems for process improvement
Business Process Improvement, Business Process Reengineering, and Business Process Management
2.2
• Reengineering• Improvement• Management
Measures of Excellence in Executing Business Processes• Customer Satisfaction• Cost Reduction• Cycle and fulfillment time reduction• Quality• Differentiation• Productivity
Business Process Reengineering (BPR)
• Michael Hammer & James Champy, 1993, Reengineering the Corporation
• BPR – A radical redesign of an organization’s business
processes to increase productivity and profitability
– Examines business processes with a “clean slate” approach
Business Process Improvement (BPI)
• BPI– An incremental approach to move an organization
toward business process centered operations
– Focuses on reducing variation in process outputs by identifying the underlying cause of the variation
• Six Sigma is a popular methodology for BPI
Business Process Improvement (BPI)
• Five basic phases of successful BPI– Define
– Measure
– Analyze
– Improve
– Control
BPR versus BPI
• Low risk / low cost• Incremental change• Bottom-up approach• Takes less time• Quantifiable results• All employees
trained in BPI
• High risk / high cost• Radical redesign• Top-down approach• Time consuming• Impacts can be
overwhelming• High failure rate
BPI BPR
Business Process Management (BPM)
• A management system used to support continuous BPI initiatives for core business processes over time
• Important components of BPM:– Process modeling
– Web-enabled technologies
– Business Activity Monitoring (BAM)
Business Process Management (BPM)
• Business Process Management Suite (BPMS)– An integrated set of applications used for BPM
• Emerging Trend of Social BPM– Technologies enabling employees to collaborate
across functions internally and externally using social media tools
[about business][about business]
Chevron2.2
Business Pressures, Organizational Responses, and Information Technology Support
2.3
• Business Pressures• Organizational Responses
Business Pressures
• Market Pressures• Technology Pressures• Societal/Political/Legal Pressures
Market Pressures
• Globalization• Changing Nature of the Workforce• Powerful Customers
Globalization
• The integration and interdependence of economic, social, cultural, and ecological facets of life, made possible by rapid advances in IT.
Globalization
• The World is Flat, by Thomas Friedman– Technology is leveling global competition making the
world “Flat”
• Friedman’s Three Eras of Globalization– Globalization 1.0
– Globalization 2.0
– Globalization 3.0
Globalization 1.0 (1st Era)1492 - 1800• Focus:
– Countries
• Drivers:– Muscle
– Horse power
– Wind power
– Steam power
Globalization 2.0 (2nd Era) 1800 - 2000• Focus:
– Companies
• Main Driver:– Multinational Companies
• First Half of 2.0– Driver: Falling transport costs
• Second Half of 2.0– Driver: Falling telecom costs
Globalization 3.0 (3rd Era)2000 - Present• Focus:
– Groups & Individuals
• Drivers:– Convergence of 10 forces or “Flatteners”
The Ten “Flatteners”
5. Outsourcing
6. Offshoring
7. Supply Chaining
8. Insourcing
9. Informing
10.The Steriods
1. 11/9/1989: Berlin Wall Falls
2. 8/9/1995: Netscape Goes Public
3. Development of Workflow Software
4. Uploading
Changing Nature of the Workforce• Workforce is Becoming More
Diversified– Women
– Single Parents
– Minorities
– Persons with Disabilities
• IT is Enabling Telecommuting Employees
Powerful Customers
• Increasing consumer sophistication & expectations
• Consumer more knowledgeable about– Products and services
– Price comparisons
– Electronic auctions
• Customer Relationship Management
Technology Pressures
• Technological Innovation & Obsolescence– Rapid development of both New and Substitute
Products & Services
• Information Overload– Vast stores of data, information, & knowledge
– Difficulties in managing data for decision making
Societal / Political / Legal Pressures• Social Responsibility• Compliance with Government
Regulations• Protection against Terrorist Attacks• Ethical Issues
Social Responsibility
• Green IT– Facilities design and management– Carbon management– International and U.S. state environmental laws– Energy management
• Digital Divide– One Laptop per Child (OLPC)
http://one.laptop.org
Social Responsibility & Philanthropy in Business• www.patientslikeme.com• www.giftflow.org• www.ourgoods.org• www.sparked.com• www.thredup.com• www.collaborativeconsumption.com• www.kiva.org• www.donorschooce.org
Compliance with Government Regulations• Sarbanes-Oxley Act• USA PATRIOT act• Gramm-Leach-Bliley Act• Health Insurance Portability &
Accountability Act (HIPAA)
Protection against Terrorist Attacks• Employees in military reserves called
to active duty• Information Technology used to
identify and protect against terrorists and cyberattacks
• Department of Homeland Security’s (DHS) US-VISIT program– Network of biometric-screening systems
Ethical Issues
• General standards of right and wrong– Information-processing activities
– Monitoring employee email
– Monitoring employee Internet activity at work
– Privacy of customer data
[about business][about business]
“Bring Your Own Device” Can Cause Problems
2.3
[about business][about business]
The Surui Tribe of the Amazon
2.4
Organizational Responses
• Strategic Systems• Customer Focus• Make-to-Order and Mass
Customization– Bodymetrics (www.bodymetrics.com)
• E-Business & E-Commerce
[about business][about business]
Massechusetts Mutual Transforms Its Information Systems
2.5
Competitive Advantage and Strategic Information Systems
2.4
• Porter’s Competitive Forces Model
• Porter’s Value Chain Model• Strategies for Competitive
Advantage
Competitive Advantage and Strategic Information Systems
2.4
• Competitive Strategy– A statement identifying a business’s
approach to compete, it’s goals, and the plans and policies required to attain those goals.
Competitive Advantage and Strategic Information Systems
2.4
• Strategic Information Systems (SIS)– An information system that helps an
organization achieve and maintain a competitive advantages
Porter’s Competitive Forces Model
Porter’s Competitive Forces Model
1. Threat of Entry of New Competitors2. Bargaining Power of Suppliers3. Bargaining Power of
Customers/Buyers4. Threat of Substitute Products or
Services5. Rivalry Among Existing Firms within
the Industry
Porter’s Value Chain Model
Porter’s Value Chain Model • Value Chain
– A sequence of activities through which the organization’s inputs are transformed into valuable outputs.
• Primary Activities– Relate to Production & Distribution of Products &
Services• Support Activities
– Support Primary Activities Contributing to Competitive Advantage
Primary Activities
• Five Primary Activities for Manufacturing1. Inbound Logistics (inputs)
2. Operations (manufacturing & testing)
3. Outbound Logistics (storage & distribution)
4. Marketing & Sales
5. After Sales Services
Support Activities
• Four Support Activities1. Firm’s Infrastructure (accounting, finance,
management)
2. Human Resources Management
3. Product & Technology Development (R&D)
4. Procurement
Strategies for Competitive Advantage
• Cost Leadership• Differentiation• Innovation• Operational Effectiveness• Customer-Orientation
Business – Information Technology Alignment
2.5
• The tight integration of the IT function with the organization’s strategy, mission, and goals.
Six Characteristics of Excellent Business-IT Alignment1. IT viewed as an engine of innovation
continually transforming the business and often creating new revenue streams.
2. Organizations view their internal & external customers and their customer service function as supremely important.
3. Organizations rotate business and IT professionals across departments and job functions.
Six Characteristics of Excellent Business-IT Alignment4. Organizations provide overarching
goals that are completely clear to each IT and business
5. Organizations ensure that IT employees understand how the company makes (or loses) money.
6. Organizations create a vibrant and inclusive company culture.
Major Reasons Business-IT Alignment Does Not Occur
• Business managers and IT managers have different objectives.
• The business and IT departments are ignorant of the other group’s expertise.
• A lack of communication.
[[ Closing Case Closing Case IBM’s Watson IBM’s Watson ]]
• The Problem
• An Interesting IT Solution
• The Results: Initial Uses of Watson
• What We Learned from This Case