Strategic Impact of Information Technology

1

• Strategic Impact of Information Technology

2

• Enabling technology

Information technology allows operations,
strategies and competitive advantages not
possible before.

• Operational dependency occurs when time, volume
  or other physical conditions makes IT unique to
  perform a task. It is related to the
  organization's EFFICIENCY.

• Strategic impact occurs when a policy, strategy
  or product uniquely requires IT for its
  implementation. It is related to the
  organization's EFFECTIVENESS.

3

• Strategic impact

4

• Competitive forces

Potential new
entrants
intraindustry
Strategic
Bargaining
Bargaining
power buyers
business unit
power suppliers
competition
Substitute
products, services
5

• Mass Production

from
6
to

• Mass Customization

7
Strategic Advantage
Cost Leadership
Differentia- tion
Innovation
Competitive Strategies
Growth
Alliance
Other Strategies
Rivalry of Competitors
Threat of New Entrants
Threat of Substitutes
Bargaining Power of Customers
Bargaining Power of Suppliers
Competitive Forces
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Value Chain Strategic IT

• Support Processes
• Administrative Coordination and Support Services
• Human Resources Management
• Technology Development
• Procurement of Resources

9
Value Chain Strategic IT

• Primary Business Processes
• Inbound Logistics
• Operations
• Outbound Logistics
• Marketing and Sales
• Customer Service

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Value Chain Strategic IT
The Value Chain of a Firm
Administrative Coordination Support Services
Collaborative Workflow Intranet
Human Resources Management
Employee Benefits Intranet
SUPPORT PROCESSES
Technology Development
Product Development Extranet with Partners
Procurement of Resources
E-Commerce Web Portals for Suppliers
Inbound Logistics
Outbound Logistics
Marketing Sales
Customer Service
Operations
PRIMARY BUSINESS PROCESSES
Computer- Aided Flexible Manufactu- ring
Customer Relation- ship Manage- ment
Online Point-of-Sale And Order Processing
Automated Just-in-Time Warehousing
Target Marketing
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Building Customer Value
Customer Place Orders Directly
Customer Orders Through Partners
Customer Database by Preferences Profitability
Internet
Intranets Extranets
Transaction Database
Customer Database
Customers Linked With Distribution
Web Personal- ization Builds Loyalty
Customers Check Own History
Employee View of Customer is Complete
Intranets Extranets
Internet
Intranets
Build a Web Community of Customers, etc.
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Reengineering Business Processes
Level of Change
Process Change
Starting Point
Frequency of Change
Time Required
Typical Scope
Horizon
Participation
Path to Execution
Primary Enabler
Risk
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The Virtual CompanyInterenterprise IS
Alliance - Subcontractors
Boundary of a Firm
Alliance - Major Supplier
Customer Response and Order- Fulfillment Teams
Intranets
Alliance - Major Customer
Extranets
Manufacturing Teams
Alliance - Small Suppliers
Alliance - Complementary Services
Engineering Teams
Cross-Functional Teams
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Virtual Company Strategies

• Share Infrastructure and Risk with Alliance
  Partners
• Link Complementary Core Competencies
• Reduce Concept-to-Cash Time Through Sharing
• Increase Facilities and Market Coverage
• Gain Access to New Markets and Share Market or
  Customer Loyalty
• Migrate from Selling Products to Selling Solutions