Transparency Strategy and the I-role of the CIO€¦ · IT Strategy: Information and Technology...
Transcript of Transparency Strategy and the I-role of the CIO€¦ · IT Strategy: Information and Technology...
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados
Transparency Strategyand the I-role of the CIO
Nelson F. Granados, Ph.D.Pepperdine University
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University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 2
THE PROBLEM
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Challenge
The T of IT:“The Internet, per se, will rarely be a competitive advantage.” Porter, HBR, 2001
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 4
ComputersBooks
Airline ticketsSoftwareStocks
Physical Information
Search
Experience
CONSUMERPRE-PURCHASE
PROCESS
PRODUCT ATTRIBUTES
Insurance
Tax advice
Food
JewelsClothes
What is the multi-channel strategy?
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 5
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 6
ComputersBooks
Airline ticketsSoftwareStocks
Physical Information
Search
Experience
CONSUMERPRE-PURCHASE
PROCESS
PRODUCT ATTRIBUTES
Insurance
Tax advice
Food
JewelsClothes
What is the multi-channel strategy?
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 7
Progressive
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 8
ComputersBooks
Airline ticketsSoftwareStocks
Physical Information
Search
Experience
CONSUMERPRE-PURCHASE
PROCESS
PRODUCT ATTRIBUTES
Insurance
Tax advice
Food
JewelsClothes
What is the multi-channel strategy?
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 9
Expedia
Travelocity
Offline
HotwirePriceline.com
Orbitz
The Internet Enables Competitionin the Transparency Dimension
Source: Granados, N.F., Gupta, A., and Kauffman, R.F. “Designing Internet-Based Selling Mechanisms: Multi-Channel Transparency Strategy,” WITS, Las Vegas, NV, 2005.
Transparent
Price Transparency
High
Low High
Opaque
ProductTransparency
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Leisure vs. BusinessRelative Price Elasticities – Leisure vs. Business
0.89
0.35
2.22
1.50
1.27
0.0 0.5 1.0 1.5 2.0
Business
Leisure
OfflineTransparent OTAOpaque OTA
Source: Granados, N.F., Gupta, A., and Kauffman, R.F. “Offline and Online Price Elasticities: Evidence from the Air Travel Industry,” working paper, 2009.
University of Minnesota, MISRC Seminar, November 2009 Copyright © Nelson Granados 11
The Challenges
The T of IT:“The Internet, per se, will rarely be a competitive advantage.” Porter, HBR, 2001
The I of IT:“The great paradox of the Internet is that its very benefits—making information widely available; reducing the difficulty of purchasing, marketing, and distribution..– also makes it more difficult for companies to capture those benefits as profits.”
Porter, HBR, 2001
• The positive effect of product information• Price information can lead to price erosion
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THE LESSONS
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IT Strategy: Information and Technology Strategy
The I of IT: INFORMATION STRATEGYTransparency: Differentiate from competitors by strategically disclosing or concealing information.• Blue Nile, Hotwire, Orbitz
The T of IT: TECHNOLOGY STRATEGYDevelop, use (smartly), or patent digital and search technologies, in line with the i-strategy.• Orbitz developed, Blue Nile and Hotwire used
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Link between Strategy and IT
Business Strategy
Channel Strategy
Information Strategy
Technology Strategy
Transparency Strategy
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Transparency as a strategic choice
Transparency strategy: What information do I disclose and to whom?
S1 S1 S1 S2 S2 S2 S1 S2
Case #1: Transparent
Case #2: Distorted
Case #3: Biased
Case #4: Opaque
Product
Price
Source: Granados, N.F, Ph.D. Dissertation, University of Minnesota, 2006.
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Orbitz Strategy: Industry Impacts
ONLINE
Global Distribution Systems (GDSs):
Amadeus, Sabre, Galileo, Worldspan
Airlines, Hotels, Rental Cars
SupplierPortals
(delta.com)
Offline Travel
Agencies
Consumer
Online Travel Agencies
(orbitz.com)
SupplierReservation
Offices
OFFLINE
Meta-Search Agents (kayak.com)
Pricing and SearchEngines:
ITA Software
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Low
Orbitz
High
High
Low
Airline Portals
Expedia
Product Transparency
Price Transparency
Travelocity Hotwire Priceline.com
Air Travel:Transparency Design Game
Source: Granados, N.F., Gupta, A., and Kauffman, R.F. “The Impact of IT on Market Information and Transparency: A Unified Theoretical Framework,” Journal of the Association for IS, March 2006.
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Low
Orbitz
High
High
Low
Airline Portals
Expedia
Product Transparency
Price Transparency
Travelocity Hotwire Priceline.com
Air Travel:Transparency Design Game
Source: Granados, N.F., Kauffman, R.F, and King. B. “How has Electronic Travel Distribution been Transformed? A Test of the Theory of Newly-Vulnerable Markets,” Journal of MIS, 2008, 25(2), 73-95
Kayak.com
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SUMMARY
Develop a transparency strategy and an IT strategy that supports the business strategy.
Understand the long-term trends in the industry to strategize accordingly• Transparency developments• Technological developments
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APPENDIX
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priceline.com
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Orbitz
BACK
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Source: Granados, N.F., Gupta, A., and Kauffman, R.F. “Transparency Strategy in Internet-Based Selling,” in Advances in the Economics of Information Systems (Ed. K. Tomak, UT Texas, Austin), Idea Group, Publishing, PA, 2005.
BACK
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BACK
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