Strategic Uses of Information Technology

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Strategic Uses of Information Technology

• Chapter 3
• Information Systems Management In Practice 6E
• McNurlin Sprague

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Introduction

• Strategic uses of IT means having a
  significant, long-term impact on a firms growth
  rate, industry, and revenue.
• Whither the Internet Revolution?
• The hypothesis is that the Internet revolution
  mirrors the British railway
• Both revolutions deal with connection
  technologies.

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Introduction
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Introduction

• Episode Two Profitability Strikes Back
• The only way to sustain advantage through the
  Internet is to create a distinct, unique value
  chain (highly integrated and difficult to
  replicate)
• CASE EXAMPLE Grainger
• Its Internet presence makes its physical sites
  more valuable.
• It cuts ordering costs and shipments to its
  stocking locations (where customers pick up
  items).
• Online customers purchase more and its paper
  catalog actually leads to more online orders.

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WORKING INWARD Business to Employee
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WORKING INWARD Business to Employee

• Managing an Intranet
• Based on Internet standards, an employee intranet
  helps ease global corporate operations.
• An intranet needs to interface with legacy and
  ERP systems, and company information must be
  safeguarded.
• Many companies have thus created a corporate
  portal for employees to get their information
• CASE EXAMPLE BearingPoint
• To make its intranet interactive, the company
  added content from third parties and a where can
  I find this information? advisor to the site,
  now making items actionable.

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WORKING INWARD Business to Employee

• Fostering a Sense of Belonging
• With employees becoming so dispersed, an intranet
  may be their main connection to the company.
• A major role providing the foundation for
  creating a sense of belonging among employees.
• CASE EXAMPLE Wire Nova Scotia
• The program coordinator built an intranet to
  provide a sense of belonging among students on a
  summer work program establishing community
  Internet sites in rural towns in Nova Scotia,
  Canada.
• The summer program was also administered via this
  intranet, each worker having a personal
  conference site.
• Staff conferences were held weekly, and regional
  conferences were held to coordinate joint
  ventures.

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WORKING OUTWARD Business to Customer
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WORKING OUTWARD Business to Customer
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WORKING OUTWARD Business to Customer

• Being an Online Customer
• CASE EXAMPLE A Day in the Life of an E-lancer
• One entrepreneur gains all his work and his
  working partners via Elance, an online services
  marketplace.
• This case tracks a typical day in his use of
  Elances site.

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WORKING OUTWARD Business to Business

• Working with Co-suppliers
• One arrangement is working with non-competitors
  who supply the same customers.
• CASE EXAMPLE General Mills and Land O Lakes
• Both supply non-competing refrigerated goods to
  retailers (yogurt and butter).
• Hence, they have teamed up to coordinate their
  shipments to stores.
• They use the Internet to easily share
  information.

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WORKING OUTWARD Business to Business
Establishing Close and Tight Relationships
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WORKING OUTWARD Business to Business
CASE EXAMPLE Sara Lee Bakery Group

• SLBG was one of the first to initiate scan-based
  trading with large retailers that sell its baked
  goods.
• Using this technology, SLBG does not get paid
  until a loaf of bread is sold and passes through
  the point of sale scanner.
• The technology requires drawing from a single
  database hosted by a third party.
• Its use has improved the quality of delivery
  people, lowered costs, and increased revenues.
• SLBG requires retailers to adhere to a number of
  prerequisites to demonstrate that they are good
  trading partners.

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WORKING OUTWARD Business to Business

• Becoming a Customer-Centric Value Chain
• The demand-pull world, where products and
  services are built to order, is a major trend
  these days. But getting there means becoming
  customer-centric and having a tightly integrated
  supply chain.
• CASE EXAMPLE Dell Computer
• Example of the demand-pull business model.
• Customers configure their own PCs on Dells Web
  site, and once an order is initiated, Dells
  suppliers can see the ordering information and
  production schedule on Dells extranet.
• Their production systems grab this information
  automatically as a result, Dells extranet has
  become a private exchange.
• Dell is even working to give suppliers two tiers
  down access to customer order information, so
  they can react to changes even faster.

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WORKING OUTWARD Business to Business

• Pros and Cons of Demand-Pull
• Value-chain transparency is much talked about
  because it can
• reduce duplicate orders,
• hasten response to changes, and
• allow all participants to become collaborators.
• But the ecosystem participants depend on the
  providers infrastructure, so seepage of
  confidential information could occur.
• Getting the Back-End Systems in Shape
• To have a hope of making working-across viable,
  internal back-end systems must be in shape.
  Companies are using ERP, extranets, and other
  approaches to do this.