Presentation on theme: "IT IMPACT ON BUSINESS MODEL Session 02"— Presentation transcript:
1 IT IMPACT ON BUSINESS MODEL Session 02 Lecturer : JONATHAN SOFIAN LUSAReading materials : Applegate chapter 2MASTER IN MANAGEMENT PROGRAMPPM - School of ManagementDEC Week I0CT
2 Chapter Outline 1 2 3 Analyzing IT Impact The Search for Opportunity GPA Case Study2
3 ANALYZING IT IMPACT CASE STUDY : BORDERLESS MANUFACTURING AT LI & FUNG AssemblyCHINALiningTAIWANShellKOREAbyMade in Hong KongLabel, elastic,studs, toggleand stringHONG KONGFillerCHINAZipperJAPAN
4 LI & FUNG’S BUSINESS PARADIGM Raw MaterialSourcingProductDevelopm’tProductDesignConsumerNeedsSupply Chain ManagementLocalForwardingConsolidationFactorySourcingMfgControlExport Docu-mentationForwarderConsolidationCustomsClearanceSupply Chain FinancingFinancingFinancingFinancingFinancingSupply ChainRaw MaterialMillFactoriesShippingAirlinesWholesaleImporterRetailerConsumer4
5 THE CHANGING ROLE OF THE TRADING COMPANY Supply ChainManagementLevel of Value AddedVirtualManufacturingBorderlessManufacturingSourcingBuyingAgency
6 ANALYZING IT IMPACT IT impact on strategy IT impact on capabilities. Determining product, market, business network, and boundary positioningIT impact on capabilities.Building processes, infrastructure, people, partner, organization & culture, leadership, governance
7 ANALYZING IT IMPACT IBM Path to Business transformation
8 ANALYZING IT IMPACT IBM Path to Business transformation Goal: Use IT to improve end to end operating processesBusiness Sponsor: Business Unit & Shared service Leaders ( suppliers, customer, partner)Business Value: Reduce cost, decrease cycle time, improve org or extended enterprise operating performance, improve total cost of IT Ownership.Risk & Uncertainty: moderate to high, business & tech complexity and volatility, org change, required integration.Investment: Corporate Budgeting, steering committee.Goal: Transform organization n industry, differentiate strategy, develop proprietary asset.Business Sponsor: BOD, strong project leadership.Business Value: Enable sustained capital efficient profitable growth, improve market share, deliver sustainable competitive advantage.Risk & Uncertainty: High, new business model needed, new tech needed, organizational change, integration of new business.Investment: Integrated with corporate strategy, Review by committee, change control process n systemGoal: Pursue opportunities that enable launch of new products / business, entry into new marketBusiness Sponsor: Executive Committee, business unit leadership.Business Value: Grow Revenue, launch new product, enter high growth industries and marketRisk & Uncertainty: High, new business model neededInvestment: Staged commitments and investments base on milestones, base on business plan, new venture risk managementGoal: Use IT to improve local operating performanceBusiness Sponsor: Local Manager, team, individuals.Business Value: Reduce cost & Improve local operating performance.Risk & Uncertainty: Low to moderateInvestment: Local Budgeting
9 BASIC QUESTIONSFive key questions can be used to guide executives as they search for value creating opportunities to use IT to support and drive the business strategyCan IT change the basis of competition?Can IT change the nature of relationship and the balance of power among buyers and suppliersCan IT build or reduce barriers to entry?Can IT increase or decrease switching costs?Can IT add value to existing products and services or create new ones?
10 Impact of IT: questions 1 of 5. Can IT change the basis of competition?Uses IT not just to automate but also to transform and to informBenefits of conducting business onlineAHSC American Hospital Supply CorporationAmerican AirlinesInternet to reengineer value chain and the basis of competition
11 Impact of IT: questions 2 of 5. Can IT change the nature of relationships and the balance of power among buyers and suppliers?AHSCCustomers recognized the value of a multivendor marketplace but were unwilling to put up with the problems of using multiple different supplier systemsAHSC became channel managerElectronic market places: Oracle, CommerceOne, Ariba, …
12 Impact of IT: questions 3 of 5. Can IT build or reduce barriers to entry?Consultancy companies: knowledge technologyTechnology based advantage: AHSC, AA, …The internet can decrease the impact: low cost, ease of penetrationKnowledge and community barriers are more sustainableProprietary infrastructure and channels to market are at a particular disadvantage relative to new entrants when they attempt to create second-order barriers to entry (Amazon.com as new entrant with transaction, information and community infrastructures)
13 Impact of IT: questions 4 of 5. Can IT increase or decrease switching costs?Switching to another system might become difficult and costly in proprietary systemsWith the internet switching costs are substantially reduced difficult to achieve customer loyaltyIntuit increased the switching costProvided easy to use inexpensive financial service softwareWon users via ease-of-useHooked via simple ways of storing the information that should be reentered if the customer switches to a different product
14 Impact of IT: questions 5 of 5. Can IT add value to existing products and services or create new ones?Grocery stores are also in the business of selling information (client profiles)Information content of existing products (cars)Digital distribution of books, music, and video will dramatically alter existing publishing and entertainment industries.Manure and fertilizer company provides information.
15 GROUP PURCHASING ALLIANCE New concept for health care industryCASE STUDY