Transcript Chapter 3 Effects of IT on Strategy and Competition

Chapter 3
Effects of IT on Strategy and
Competition
Jason C. H. Chen, Ph.D.
Professor of MIS
School of Business Administration
Gonzaga University
Spokane, WA 99223
[email protected]
Types of the Information Systems
KIND OF SYSTEM
GROUPS SERVED
STRATEGIC LEVEL
(ESS,EIS,DSS)
SENIOR
MANAGERS
MANAGEMENT LEVEL
(DSS, MIS)
MIDDLE
MANAGERS
KNOWLEDGE LEVEL
KNOWLEDGE &
DATA WORKERS
(KWS)
OPERATIONAL
LEVEL (TPS,OAS)
SALES &
MARKETING
OPERATIONAL
MANAGERS
MANUFACTURING
FINANCE
ACCOUNTING
HUMAN
RESOURCES
Figure 1: Creating Value & Agent of Change
Value Drivers
Value
Technology
Revenue
generation
Speed
Management
Decision
Innovation
(
to learn,
adapt, )
innovate
Competitive
Advantage
Cost
reduction
Cost
avoidance
Figure 1.2 Levels of Knowledge
Intuitive/Tacit
Codify
Verify
Science
Formalized Knowledge
Develop
Physically Embodied
Products and Processes
Figure. Evolution of Management of Technology
1950
1970
R&D
Management
Management
of
Innovation
1980
1990s & Beyond
Technology
Strategy
Era of Plentiful Resources
New venture
divisions
Allocation of
Funds to projects
Scientists &
engineers
Innovation
Management
Value-Based
Management
Era of Accountability
Linking to
business
Broader vision
of technology
Different
organizational
arrangements
Outsourcing
Tools to assess
value
Internal markets
Leadership
R&D Manager
Chief Technology Officer/
Chief Information Officer
Figure. Management of Technology
Purpose: value-driven
WHY
guided by
Organization &
Management
WHAT
guided by
guided by
principle
Technology
Strategy
HOW
principle
Technology
Choices
Deployment in
Products/Services
Development of
Technological Capability
focus
focus
Management of
Technology
Roles of the Information Infrastructure
1. Serve as a buffer for complexity, uncertainty and speed of change
Information Processing
<..balance..>
Vertical I.P. capacity
Capacity
invest more
I.P.
infor., resources
capacity
Demand
Organization
Human
I.P.C.
Internal I.P.C.
(Intra-org.)
Education training and
support in the development
of information competencies
Frito-Lay:4
Information
Infrastructur
e
Crisis Created when
structural, authority
and incentive
changes increased
interdependencies
To achieve the
potential,
employees
should develop
two important
Meet the
competencies:
increased
I.P.demand
of the new
structure
Flexible,
easy-to-use
Enable learning
Expanding I.P. capacity and buffering
complexity, uncertainty and speed of change.
1. The ability to
use the
technology
2. The ability to
use the
information
Roles of the Information Infrastructure
2. Enable the complex, interlocking authority structures and incentive systems
that were adopted
Authority
In
traditional/hierarchical
organizations, the
costs of coordinating
and aligning local
operations has
typically been
minimized by
Enable development
of interlocking
Information
Infrastructur
e
Information
Frito-Lay designed an
authority structure based on
“considerations” other than
the availability of the
requisite information
Centralized
Decision-making
TOP
executives
Decision Cost
Information Cost
Frito-5
Incentive
System
Access needed
information on
business
dynamics
Failed to consider
important trade-offs
costs
Time and expertise for
analysis of information to
ensure that they made the
right decision
Roles of the Information Infrastructure
3. Enable streamlining, integration, and time-synchronization of operating and
management processes
Operating
MGMT
Operating processes became
dysfunctional as traditional lateral
information processing systems
broke down.
Process
Streamline, integrate and
“time-synchronize” both
operating and management
Vertical I.P.S also broke down
IT
capacity
Achieve highlevels of
integration and
efficiency of
routine operations
Frito-6
Support
Redesign the
management
processes to
enable fast-cycled
process control
achieved
Process
Redesign
Effort