Transcript Information Systems: A Manager’s Guide to Harnessing

CIS 2200
Kannan Mohan
Department of CIS
Zicklin School of Business, Baruch College
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• Examine the relationship between Information
Technology and:
• Competitive advantage
• Resource-based view
• Value chain
• Porter’s five forces
• Examine the different IT asset classes and the IT
portfolio approach
2-3
• Sustaining?
• Does IT matter?
• Commoditization of IT
• Innovation
• Strategic use of IT
• Replication of business models, processes, technologies
• Operational effectiveness vs. strategic positioning
• Loss of uniqueness
• First mover vs. Fast Follower
2-4
• Using technology to craft an efficient model that makes
an end-run around stores
• Worker shifts are highly efficient
• The firm buys and prepares what it sells, leading to less waste
• Higher inventory turns
• Use of artificial intelligence software
• Use of climate controlled cold rooms to save energy
• Use of recycled bio-diesel fuel to cut down on delivery costs
2-5
• Relationship with suppliers
• Offering to carry a greater selection of supplier
products by eliminating “slotting fees”
• Co-branding products
• Paying in days rather than in weeks
• Sharing data to improve supplier sales and operations
2-6
• How can you recognize whether your firm’s differences
are special enough to yield sustainable competitive
advantage?
• Four critical characteristics of resources that lead to
sustainable competitive advantage:
• Valuable
• Rare
• Imperfectly imitable
• Non-substitutable
2-7
• Value chain: Set of interrelated activities that bring
products or services to market
2-8
• Imitation-resistant value chains
• A way of doing business that competitors struggle to
replicate and that frequently involves technology in
a key enabling role
• FreshDirect
• Incumbents straddled between two business models, unable to reap the
full advantages of either
• Straddling: When a firm attempts to match the benefits of a successful
position while maintaining its existing position
• Late-moving pure-play rivals will struggle, as FreshDirect’s lead time
allows it to develop brand, scale, data, and other advantages that
newcomers lack
2-9
• Firms can buy software and tools
• Supply chain management (SCM)
• Customer relationship management (CRM)
• Enterprise resource planning software (ERP)
Can be purchased
by competitors too
• Potential danger
• Adopting software that changes a unique process into a generic
one - co-opting a key source of competitive advantage
2-10
• Packaged ERP implementation — software would require
the firm to make changes to its unique and highly
successful operating model?
• Horizontal vs. Vertical vs. Virtual integration
• Disintermediation
• Information asymmetry
• Visibility across the supply chain
• Apple vs. Dell and choice of software to manage value
chain – Competing on product uniqueness vs.
operational differences
2-11
• Switching costs: Exist when consumers incur an expense
to move from one product or service to another
• Sources of switching costs:
• Learning costs
• Information and data
• Financial commitment
• Contractual commitments
• Search costs
• Loyalty programs
• Data can be a particularly strong switching cost for
firms leveraging technology
2-12
• Differentiation: Commodities vs. differentiated goods and
services
• Low-cost leadership: Use information systems to achieve the
lowest operational costs and the lowest prices (E.g. WalMart)
• Network effects: When the value of a product or service
increases as its number of users expands
• Managing various distribution channels: The path through
which products or services get to customers
• Patents: Intellectual property protection for those
innovations deemed to be useful, novel, and non-obvious
• Entry barriers
2-13
2-14
• Balancing exploitation and exploration
• Streamlining existing processes/products vs. new markets and
innovation
• Managing IT investments with this in mind
• Structural vs. contextual ambidexterity
• Traditional channel vs. Internet channel (USAToday.com)
2-15
(Weill and
Aral, 2004)
• What percentage of our key business processes are digitized?
Percentage of sales? Percentage of purchases? What degree of
cross-business unit linking is needed?
• What is our IT savvy by business unit? Should our IT investment
allocations vary by business unit to reflect the differences?
• How do I work with my senior management colleagues to increase IT
savvy?
• What is our current IT portfolio allocation by asset class? How did it
get that way?
• What have been our historical returns by asset class and by business
unit?
• What changes to IT governance do I need to make to address the
answers to the questions above?
• How are IT and competitive advantage related?
• Relate IT to the five forces model to assess how IT can be
leveraged by organizations in an industry
• How can you use the resource-based view to examine IT’s
role in business?
• How is IT related to organizational ambidexterity?
• What do we need to do to consider IT investments as a
portfolio?
2-18