Information Systems for Strategic Advantage

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Information Systems for Strategic Advantage

• BiMBA, Fall 1999
• Professor Chen
• School of Business
• Gonzaga University
• Spokane, WA 99258
• chen_at_gonzaga.edu

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Innovation as a Response to Change in Market and
Technology
Technological Opportunities
Advances in Technology
EFFICINCY
EFFECTIVENESS
INNOVATION
INNOVATION
New Products and Services
Market Needs
Socio-political Changes
Market
Time
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Figure Reengineered Accounts Payable Process
(from Hammer1)
Before
Copy of Purchase Order
Purchasing
Purchase Order
?
Payment
Accounts Payable
Vendor
Invoice
Goods
Receiving Document
Receiving
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Figure Reengineered Accounts Payable Process
(from Hammer1)
After
Purchasing
?
Purchase Order
Payment
?
Accounts Payable
Database
Vendor
Goods
Receiving
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The Information Age vs. the Computer Age
The Computer Age Time-sharing
Computer 1960s
Interactive Computing
Mini/Micro provide user with computer power (as
of Mainframe) but with little cost
Advances in telecommunications(link terminals/PC
?mainframe)
End of the computer age
Beginning of the information age
Software advances in application packages (e.g. ,
DBMS, spreadsheet
PC as DSS tool to access information stored in
the center computer files to support management
decision-making process.
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Information Engineering
PLANNING
ANALYSIS
DESIGN
CONSTRUCTION
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What is Information Engineering

• The application of an interlocking set of formal
  techniques for the planning, analysis, design and
  construction of IS, applied ton an
  enterprise-wide basis or across a major sector of
  an enterprise.
• An enterprise-wide set of automated disciplines
  for getting the right information to the right
  people with the right form at the right time.

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BUSINESS ENVIRONMENT IS CHANGING RAPIDLY
RADICALLY AND PERPLEXINGLY
IS PROFESSIONALS
MANAGERS
ENVISION DESIGN BUILD OPERATE
SDLC ANALYAIS DESIGN IMPLEMENTATION MAINTENANCE
MANAGMENT
IS DEVELOPMENT
REENGINEERING
INFLUENCE CAPABILITY
LEADERSHIP
CONTROL
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BUSINESS ENVIRONMENT IS CHANGING RAPIDLY
RADICALLY AND PERPLEXINGLY
IS PROFESSIONALS
MANAGERS
ENVISION DESIGN BUILD OPERATE
SDLC ANALYAIS DESIGN IMPLEMENTATION MAINTENANCE
MANAGMENT
IS DEVELOPMENT
REENGINEERING
INFLUENCE CAPABILITY
LEADERSHIP
CONTROL
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Figure Relationship and linkage of proposed
system projects with strategic factors and the
business plan
Objective
Proposal
Business Plan
Strategic Factors
System Project

• Decrease direct labor and overhead by 20
• Increase our customer order-filing rate to 95
• Produce timely tracking and sales information for
  inventory managers

• Increase labor productivity
• Improve service differentiation
• Provide managers with better information

• A standard cost accounting system that provides
  online labor rate and efficiency variances
• An inventory management system that provides
  reorder points, EOQs, quantity on hand, and
  sales by item and salesperson.

Supports
Supports
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The Emergence of a Strategic Role for IT in
Organizations
Technology Push
Competitive Pull

• Innovative IT-enabled applications to obtain
  differential benefits in the marketplace to stay
  competitive

IT as a strategic resource

• Cost-performance trends
• Connectivity capabilities

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Five levels of IT-induced reconfiguration
High
Five. Business scope redefinition
Four. Business network redesign
Design of business transformation
Revolutionary levels
Three. Business process redesign
Two. Internal integration
Evolutionary levels
One. Localized exploitation
Low
High
Low
Range of potential benefits
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Localized exploitation Enablers and Inhibitors
IT-induced reconfiguration Level One
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Internal Integration Enablers and Inhibitors
IT-induced reconfiguration Level Two
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IT-industry business reconfiguration in level 2
Enablers and Inhibitors in the tax return
preparation business
IT-induced reconfigurationtax return
preparation business
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Business Process Redesign Enablers and Inhibitors
Enablers

• Technological
• Favorable cost-performance trends
• Organizational
• Awareness of the power of IT
• Willingness to make quantum changes to fully
  exploit IT power
• Marketplace
• Competitive pressures

IT-induced reconfiguration Level Three
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Business Network Redesign Enablers and Inhibitors
IT-induced reconfiguration Level Four
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Strategic options for business network redesign
Tightly coupled
Business Network redesign
Collaborative advantage
Business Governance
Electronic infrastructure
Competitive advantage
Loosely coupled
Common role
Unique role
Information Technology Governance
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Strategic options for business network redesign
Tightly coupled
C
D
Business Network redesign
Collaborative advantage
Business Governance
B
A
Electronic infrastructure
Competitive advantage
Loosely coupled
Common role
Unique role
Information Technology Governance
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Business Scope Redefinition Shifting the
business domain using IT
Traditional business scope
Products
Products
Markets
Markets
Increased role for information technology in
operations
Technology
Technology
Traditional operating technology
Before
After
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Business Scope Redefinition Enlarging the
business domain using IT
Traditional business scope
Products
Products
Additional business using IT
Markets
Markets
Traditional operating technology
Technology
Technology
Information technology
Traditional operating technology
Before
After
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Five levels of transformation A Summary
Level
Theme
Potential Impacts
Major objectives
Management Implications

Localized exploitation
One
Potentially high savings in narrow areas of
business
Reduced costs and/ or improved service
Identify firm-specific areas for exploitation
Elevate IT as a strategic resource
Articulate the logic for integration
Integration offers both efficiency and
effectiveness
Internal integration
Two
Reengineer the business with IT lever
Strategy -- IT alignment
Business Process redesign
Three
Powerful in creating differential capabilities
Business network redesign
Four
Opportunities for creatively exploiting
capabilities
Create a virtual organization and occupy a
central position in the network
Articulate the logic of network redesign for the
focal firm
Identification of new scope of business
Business scope redefinition
Five
Altering the business scope both proactively and
reactively
Identify new business as well as potential treats
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Most likely quadrant-to-quadrant movement
HIGH
Preemptive Penetration
Chaotic Proliferation
Interrelatedness
L O w
Barroom Brawl
Clash of the Titans
LOW
HIGH
Exploitability
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Figure 2-1 MIT 90s framework -- Chapter 2
emphasis
EXTERNAL TECHNOLOGY
ENVIRONMANT
STRUCTURE
STRATEGIC
TECHNOLOGY
MANAGEMENT PROCESSES
EXTERNAL SOCIOECONOMIC ENVIRONMENT
INDIVIDUALS ROLES
Organization Boundary
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Figure 2-2. Advances in IT provide opportunities
for dramatically increased connectivity, enabling
new forms of interorganizational relationships
and enhanced group productivity

• 1990s business forces
• Globalization
• Worldwide competition
• Productivity requirements
• Volatile environment

Increased connectivity Interorganizational
business relationships Intraorganizational
coordination for increased efficiency and
effectivity Adaptable organizational structure

• 1990s Information Technology (IT) opportunities
• Continued dramatic cost/performance and capacity
  advances
• New IT architectures encompassing
• --extensive communications networks
• --accessible distributed databases
• --enhaced human interface workstations

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Figure 5-24 The strategic alignment model
External
Strategic integration
Internal
Business domain
IT domain
Functional Integration
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Figure 5-25 Comparison of alternative patterns of
alignments
Four Dominant Patterns of Alignments
Characteristics
Competitive potential
Technology potential
Business value
Service level
Organizational domain
IS products and services
Product-market arena
Domain anchor
IT arena
Reengineer business processes
Adapting the IT platform
Transforming work and organization
Redesigning IS portfolio
Manager focus
Technology scan and forecasting, scenarios
Analytical frameworks
Business process analysis
Portfolio analysis of applications
Competitive strategy frameworks
Measures of IT capability and flexibility
Organizational efficiency
Business measures relative to competitors
Service levels
Measures
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THE GENERIC VALUE CHAIN
Support Activities