IT and the Value Chain

1
IT and the Value Chain
Secondary Activities
Design
Marketing
Accounting HR
Primary Activities
Production
Sales Distribution Service
Planning Purchasing Inventory
2
Deconstructing the Value Chain

• Responsiveness and scalability require moving
  from
• In-house control of processes to
• Partnerships for many processes
• By managing information more effectively
• Which processes do you keep?

3
The Digital Value Chain System
Information
Trust
Brokering to Improve On Internal Processes
Relationships
Services (key to sustainable revenues)
4
Deconstructing the Value Chain

• Identify your firms main activities
• e.g., insurance - sales, underwriting, claims,
  service
• Which of these are core activities?
• That is where value is generated
• In traditional value chain, non-core activities
  are cross subsidized by core activities
• e.g., claims processing is subsidized by sales
• e.g., daily news is subsidized by classifieds

5
Deconstructing the Value Chain

• Either un-bundle them
• Keep the non-subsidized,
• Broker the subsidized
• Example eCoverage
• Or manage the information aspect
• Example Nor-Cal EMS

6
Examples From Two Ends of the Value Chain

• Nor-Cal EMS (inbound logistics)
• Assumptions
• inbound reports controlled by agency vs.
• acquired in response to states demand
• Goals
• EMSs have to send data to us vs.
• flexibility is required for collaboration
• Critical activities
• storing / collating / building reports vs.
• massaging flow of information from EMSs to agency

7
Examples From Two Ends of the Value Chain

• Turlesareus (service)
• Assumptions
• on call, fixed in time / space
• available to you anytime / anywhere
• Goals
• Never see you again but thank you. vs.
• If you liked us, come back again.
• Critical activities
• maintaining product value vs.
• extending value to customer after the sale

8
Factors Motivating Change in Value Chain
Management

• Customers expectations resulting from digital
  economys impact on logistics, operations,
  distribution, customer service
• Need to better manage these external interactions
• Need to scale processes and infrastructure to
  meet dynamic and surging demand