SOM 301 Information Technology and Business Models

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SOM 301Information Technology and Business
Models

• Mike Wasserman
• April 29, 2002
• mwasser1_at_gmu.edu

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Todays Agenda

• Relationship Between Information Technology (IT)
  and Business Models
• What is IT?
• Definitions
• Why is IT important?
• Relationship to the Business Model
• Importance of IT Inside the Organization
• Linkages With Stakeholders Outside the Firm
• How is IT changing?
• IT and Firm Performance
• Conclusions and Sources for More Information

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Relationship Between Information Technology (IT)
and Business Models What is IT?

• Definition of Information Technology
• Hardware and software that helps collect,
  interpret, and store data, and facilitate the
  communication and availability of that data.
  Supports the conversion of data to information to
  knowledge.
• Data individual pieces of information (not
  necessary useful, timely, or relevant)
• Information multiple pieces of data organized
  in a way that makes the data useful (comparison
  over time or across cases)
• Knowledge multiple sets of information that
  are used to solve problems or make decisions

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What is IT?

• Classification of Information Technology
• Infrastructure
• Servers (dedicated machines that delivers and
  stores information to client personal computers)
• Personal Computers
• Networking Hardware (cables, routers, switches,
  hubs these are the physical parts of the
  network, the connections between machines)
• Protocols (PPP, TCP/IP, Ethernet these are the
  common languages that the components of the
  network use to communicate)
• Storage
• Mainframes
• Handhelds
• Printers, Scanners

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What is IT?

• Classification of Information Technology
• Applications
• Network applications these are programs that
  facilitate communication between components of
  the network (http, ftp, print)
• User applications user programs designed to
  improve individual and firm performance
  database, email, word processing, data mining,
  spreadsheets, etc.

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IT and Business ModelsThree Components of IT to
Consider

• Hardware
• Software
• Support

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Why is IT important?

• Can technology create sustainable competitive
  advantage?
• Controlling costs (Inventory Management,
  Purchasing)
• Increasing flexibility (Flexible Manufacturing
  Systems)
• Growth through innovation (Computer Aided
  Innovation)
• Improved quality (Quality Management Systems)
• Better strategic decision making (Enterprise
  Resource Planning systems, e.g. SAP, PeopleSoft)
• Decreased time to market (Project Management
  Tools)
• Better customer service (Customer Relationship
  Management systems, e.g. Siebel Systems)
• Faster learning (E-learning, Computer-based
  Training)

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IT and Business ModelsHow are these linked to
revenue and cost?

• Hardware
• Mainframe
• Client-Server (Local Area Network (LAN)/Wide Area
  Network (WAN)
• Distributed, Web Browser-based
• Intranet
• Internet
• Wireless
• Telecom

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IT and Business ModelsHow are these linked to
revenue and cost?

• Software
• Operating System
• Windows, Mac, Unix, Linux
• Database
• Applications
• Programming
• C, Visual Basic, Java, HTML, XML
• ERP
• Web Services

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IT and Business ModelsHow are these linked to
revenue and cost?

• Support
• Systems integration (getting legacy and new
  systems to work together)
• Applications Service Provider model
• Training

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Why is IT important?

• How does IT relate to the business model?
• IT can significantly change
• How products/services are created
• How products/services are delivered
• Revenues
• Costs

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Why is IT important?

• Can technology create sustainable competitive
  advantage?
• it depends.
• Yesif IT can help create UNIQUE
  products/services that cant be duplicated,
  resulting in sustainable shifts in revenues or
  costs or develops knowledge to accomplish
  uniqueness
• Noif technology merely automates processes in a
  way that rivals can duplicate easily

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Why is IT important?

• Importance of IT Inside the Organization
• Linking Functions
• Linking Levels
• Knowledge Management
• Process and Product Innovation
• Examples Nokia, Railroad Development Corp.

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Why is IT important?

• Linkages With Stakeholders Outside the Firm
• Customers
• Suppliers
• Partners
• E-commerce
• Security and Privacy
• Examples Thomson Financial, General Electric

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Why is IT important?

• IT Links Organizational Data
• Human Resources recruitment, selection,
  performance, career planning, training and
  development, compensation, benefits (HRIS Human
  Resource Information Systems)
• Financial Resources accounts receivable,
  payments, real-time accounting information,
  tracking risk and return of investments (AIS -
  Accounting Information Systems)
• Information and Knowledge Resources data
  warehousing, data mining (KM Knowledge
  Management)

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Why is IT important?

• With Stakeholders
• Employees (intranet)
• Customers (web interface)
• Suppliers (supply chain management)
• Partners (collaboration tools)
• Shareholders (webcasting)

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Why is IT important?

• TO IMPROVE
• DECISION MAKING,
• SERVICE,
• QUALITY,
• SPEED,
• CONVENIENCE

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Why is IT important?The Linking Role of
Technology
Bank
Customers
Marketing
Accounting Finance
Vendors
Distribution
Purchasing
Research Develop- ment
Manufacturing
Inventory
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Why is IT important?

• IT and Firm Performance
• Strategic Alignment
• Business Process
• Measurement
• Feedback
• Decision Making
• Examples General Motors, Deere

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How Is IT Changing?The Dynamics of Information
Technology Changes Business Models

• Adoption and Diffusion
• Technology Lifecycle
• Disruptive vs. Sustaining Innovation
• Standards
• Decisions about Technology and Firm Performance
• Example Delta, Southwest, and the Airline
  Industry

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Sources for More Information

• Free web-based sources
• Infoworld http//www.infoworld.com/
• Context http//www.contextmag.com
• Darwin http//www.darwin.com
• Technology Review http//www.technologyreview.com
• An article or two
• Is the Information Revolution, Business 2.0,
  March 2002
• The Future of IBM, Fortune, 2/18/02