Transcript Chapter 1

Chapter 12
IT & Business Strategy
Overview for Today
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What is a Strategic Information System
Strategic Advantage & IS
Porter’s Competitive Forces
For Next Time
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Critical Success Factors
Porter’s Value Chain Analysis
What is a Strategic IS?
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System that significantly improves the
manner in which business is conducted:
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Control a market
Larger than average profit margins
Significant increases performance/productivity
Contributes to strategic goals (responses to
busn pressures from Ch1)
Two Views of SIS
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Outwardly Focused SIS
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Inwardly Focused SIS
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Easy to copy or duplicate, Why?
Not as easy to copy or duplicate, Why?
Both can focus on new product/service
Which can be sustained longer?
Role of IT in Strategic Mgmt
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Enabler for change!
Allows creation of new applications for strategic
advantage: (Fed Ex, SABRE)
Supports strategic changes: BPR
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Improved communication (FDA)
New product development cycles (jeep liberty…)
Increases Competitive Intelligence (next)
Benefit comes from being FIRST, everyone else
is just keeping up! But - hard to sustain!
Competitive Intelligence
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Gathering information about competition
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Frito Lay and Hertz examples…
Gathering internal information (BI)
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Increases market knowledge, improves
internal relationships, raise quality of strategic
planning
About products, customers, suppliers, …
Organizational memory or knowledge base
What makes these so easy today?
BI: Been to Disney Recently?
Strategic Alignment Problems
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Recent surveys highlight mismatches:
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~90% IS critical to strategic success
<35% IS is very involved with busn strategy
<30% busn strategists work with IS division
What are the likely results?
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Inadequate IS
Tools for Aligning IS & Strategy
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Various tools and methodologies for
aligning IS with corporate strategy
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Porter’s Competitive Forces
Critical Success Factors
Value Chain Analysis
Many more in text – we don’t have time to
discuss all of them…
Porter’s Competitive Forces Model
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Used to develop strategies to increase
competitive advantage
5 Components to the model:
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Threat of entry of new competitors
Bargaining power of suppliers
Bargaining power of customers
Threat of substitute products/services
Rivalry among existing industry firms
Porter’s Model Applied
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List the players in each force
Relate the determinants of each force with
the players listed above
Devise a strategy to defend against these
forces
Use IT to support the strategy
Another Question…
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Some argue that an SIS gives a company
an unfair advantage and may even cause
the demise of smaller, weaker companies
that cannot afford to build similar systems.
What is your opinion on the fairness of
such systems?
Critical Success Factors (CSFs)
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Mission Statement - clear, concise, believable, repeatable!
Business Goals - broad, derived from mission
Business Objectives - tangible milestones: growth, roi
Critical Success Factors - make the milestones happen
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attractive style of product line, efficient dealer
organization, effective cost control in manufacturing
Identify what is most important to performance,
then develop good indicators of this performance:
information needs
Determining CSFs:
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Lets identify CSFs specifically for:
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Bank?
Ice Cream Manufacturer?
Discount Retail Chain?
Shipping Firm?
Any observations about these?
Discovering Critical Success Factors
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AKA: Things you might ask for your projects:
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What objectives are central to your organization?
What factors are essential to meeting these objectives?
What decisions or actions are key to these critical factors?
What variables underlie these decisions, how are they
measured?
How can I use IS to supply these measures?
Porter’s Value Chain Model, I
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1: Primary Value Activities (creation, sale,
& support of a product)
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Inbound logistics
Operations
Outbound logistics
Marketing & Sales
Service
Each activity adds value to product
Porter’s Value Chain, II
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2: Support Value Activities (each supports
Primary Value)
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Organizational infrastructure
Human resource management
Research & Development
Procurement
3: Margin
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Revenue generated by above activities minus
costs of each activity
Value Chain At Work
A Few Questions:
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What is the purpose of the Value Chain?
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What types of things might you learn?
What do you do with this new knowledge?
Why might this be important?
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What category of CI does this fall into?
Important Concepts to Know
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What is a Strategic Information System
Role of IT Strategic Management
Critical Success Factors
Porter’s Competitive Forces
Porter’s Value Chain Analysis
How do they all fit together?
For Next Time…
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Prepare minicases for Ch 12
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Will send via e-mail
We will discuss these on Friday
Milestone #2 due on Friday
EXAM#1 Coming Soon!