1CHAPTER 3 STRATEGIC & COMPETITIVE OPPORTUNITIES Using IT to Generate Organizational Horsepower
2CASE STUDY Creating Vision for a New Way to Do business Anderson Corp. Business process reengineeringEDI, Information partnership, Just-in-time, cross-functional teams, paperless product ordering system
3THE FLEETING COMPETITIVE ADVANTAGE 3-2IntroductionTHE FLEETING COMPETITIVE ADVANTAGEA COMPETITIVE ADVANTAGE is providing the best perceived perfect service at the customer‘s moment of value.This chapter examines 7 strategies, enabled by IT, that promote organizational competitiveness.
4YOUR FOCUS IN THIS CHAPTER 3-3IntroductionYOUR FOCUS IN THIS CHAPTERIT Enabling Perfect ServiceOrganizational Horsepower (OHP) DevelopmentQuality as the Foundation of Organizational CompetitivenessOHP Strategies Creating a Competitive AdvantageOHP Strategy Adoption - Radical or Continuous?
5ORGANIZATIONAL HORSEPOWER (OHP)... 3-4OHPORGANIZATIONAL HORSEPOWER (OHP)...is a measure of organizational competitiveness generated through organizational force and speed.ORGANIZATIONAL FORCE is meeting as many customer expectations as possible.ORGANIZATIONAL SPEED is meeting customer expectations quickly.
6Weather your organization pursues organizational force or speed or both, it’s IT that creates the opportunities.
77 IT-ENABLED OHP STRATEGIES 3-5OHP7 IT-ENABLED OHP STRATEGIESFORCE SPEEDJust-in-time (JIT) approach XTeams XInformation partnerships X XTimeless & locationless operations X XTransnational firm XVirtual organization XLearning organization XSee Figure 3.2 (page 83) to compare these strategies.
8WHAT IS QUALITY? QUALITY is meeting customer expectations. 3-6QualityWHAT IS QUALITY?QUALITY is meeting customer expectations.Quality is not goodness, prettiness, or luxury.Quality is the foundation of all OHP strategies and a fundamental building block to organizational competitiveness.
10STATISTICAL PROCESS CONTROL (SPC) 3-8QualitySTATISTICAL PROCESS CONTROL (SPC)is a method of gathering and analyzing quality requirements. SPC tools (such as those below) help you meet customer expectations.1.A CONTROL CHART - a graphic means of identifying causes to problems that are controllable.2.A HISTOGRAM - a graphic representation of frequency distributions.
13CONTINUOUS IMPROVEMENT TOOLS 3-9QualityCONTINUOUS IMPROVEMENT TOOLSA FISHBONE DIAGRAM - a line diagram that begins with a problem (the effect) and branches out into problem causes.A PARETO CHART - sorted frequencies of various problem causes with percentages of each.A SCATTER DIAGRAM - a tool used to depict data patterns and is created by plotting paired data on a two-axis graph.
16Organization-Wide Quality Ownership Supports TQM by... 3-10QualityOrganization-Wide Quality Ownership Supports TQM by...1.Promoting individual employee commitment and power.2.Communicating that sense of ownership to customers.3.The recognition that quality is everyone抯 job.
17The JUST-IN-TIME (JIT) Approach Is... 3-11JITThe JUST-IN-TIME (JIT) Approach Is...producing or delivering a product or service when the customer wants it.The JIT approach may be viewed from two perspectives:InternalExternalAn OHP strategy for organizational speed.
18JIT OVERCOMES SEVERAL PROBLEMS 3-12JITJIT OVERCOMES SEVERAL PROBLEMSUnsold inventories must be stored in costly warehouses.New products are delayed until existing inventories are sold.Quality lapses occur when defects aren抰 caught until quality control catches up with the inventory.
193-13JITIT SYSTEMS ENABLE JITPRODUCTION SCHEDULING systems provide detailed plans for producing all components of a final product.MATERIAL REQUIREMENTS PLANNING (MRP) systems take the production schedule and determine which raw materials and components are required and when.MANUFACTURING RESOURCE PLANNING (MRP II) systems tie material requirements from MRP systems into other organizational systems.
20Enterprise resource planning(ERP) is a cross-functional enterprise system that serves as a framework to integrate and automate many of the business processes that must be accomplished within the manufacturing, logistics, distribution, accounting, finance, and human resources functions of a business.For example ERP software for a manufacturing company will typically track the status of sales, inventory, shipping, and invoicing, as well as forecast raw material and human resource requirements.
21TEAMS IN AN ORGANIZATION 3-14TeamsTEAMS IN AN ORGANIZATIONA TEAM is a group of people with a shared goal and task interdependence.The shared goal gives the team focus.Task interdependence means each team member relies on one another to complete their work and achieve the shared team goal.An OHP strategy for organizational force.
223-15TeamsPROJECT TEAMSPROJECT TEAMS accomplish one-time goals and disband once the project is complete.Project teams compliment and don抰 replace a departmental structure.
233-16TeamsPERMANENT TEAMSPERMANENT TEAMS are designed to support permanent processes and are not intended to disband.Permanent teams are an alternative to a departmental structure.
24IT SYSTEMS ENABLE TEAMS 3-17TeamsIT SYSTEMS ENABLE TEAMSGroupware supports group decision-making.Work flow automation software speeds processing.Videoconferencing and electronic meeting software reduce the need for in-person team meetings.Group scheduling software facilitates scheduling.
25INFORMATION PARTNERSHIPS 3-18Information PartnershipsINFORMATION PARTNERSHIPSAn INFORMATION PARTNERSHIP is an agreement between organizations for the sharing of information to strengthen each partner organization.An OHP strategy for organizational force and/or speed.
26AN INFORMATION PARTNERSHIP FOR SPEED 3-19Information PartnershipsAN INFORMATION PARTNERSHIP FOR SPEEDElectronic data interchange (EDI) automates the transaction information flow between partner organizations.Partners do not modify their product offerings or their target markets.Business volume increases because transactions take less time and have fewer errors.
27AN INFORMATION PARTNERSHIP FOR FORCE 3-20Information PartnershipsAN INFORMATION PARTNERSHIP FOR FORCEInformation is shared between partner organizations to reach a larger market.Information is available because it is routinely captured and stored.EDI and interorganizational systems (IOSs) using networking technology support this strategy.
28AN INFORMATION PARTNERSHIP FOR BOTH 3-21Information PartnershipsAN INFORMATION PARTNERSHIP FOR BOTHPartner organizations share information that is strategic in nature and affects their fundamental business strategy.New product offerings or services result.Innovations are generated faster - organizational speed.Partners reach more customers - organizational force.
29TIMELESS & LOCATIONLESS OPERATIONS 3-22Timeless & LocationlessTIMELESS & LOCATIONLESS OPERATIONSTIMELESS OPERATIONS operate without regard to time. Timeless operations serve customers whenever the customers want.LOCATIONLESS OPERATIONS operate without regard to location. Locationless operations serve customers wherever the customers want.An OHP strategy for organizational force or speed.
30SUCCESSFUL TIMELESS OPERATIONS 3-23Timeless & LocationlessSUCCESSFUL TIMELESS OPERATIONSKansas City Power & LightWith wireless technologies, meter reading can take place any time.Cisco SystemsCustomers now service themselves whenever they want.See Table 3.1 on page 95.
31SUCCESSFUL LOCATIONLESS OPERATIONS 3-24Timeless & LocationlessSUCCESSFUL LOCATIONLESS OPERATIONSHot Hot Hot1,500 people daily drop by its Web site.Dell ComputersDell doesn抰 manufacture anything anywhere - it simply assembles pre-made components.Paul, Hastings, Janofsky & WalkerLawyers working anywhere they want. Definitely not in the office.See Table 3.1 on page 95.
323-25Timeless & LocationlessTHE PAPERLESS OFFICEThe PAPERLESS OFFICE is an office where all materials are maintained in electronic instead of paper form.Eliminating paper reduces the cost of storing that paper.Electronic materials can be searched electronically saving time.
33SUPPORTING THE TELECOMMUTER 3-26Timeless & LocationlessSUPPORTING THE TELECOMMUTERTelecommuting, or working away from the main office, requires the creation of an individual, remote workplace - a virtual workplace. Five components support this virtual workplace:1.Communication technology2.Constant communication3.Goal setting and monitoring4.Physical meetings5.Information access
34THE TRANSNATIONAL FIRM 3-27Transnational FirmTHE TRANSNATIONAL FIRMA TRANSNATIONAL FIRM is a firm that produces and sells products and services all over the world in coordinated cooperation.Operations are geographically dispersed.The dispersed operations extend the firm抯 market reach and thus its organization force.An OHP strategy for organizational force.
35INTERNATIONAL CONFIGURATIONS 3-28Transnational FirmINTERNATIONAL CONFIGURATIONSGLOBAL - all operations depend upon headquarters for resources and direction.MULTINATIONAL - all operations operate independently, reporting only financial information to headquarters.TRANSNATIONAL - all operations share information and resources equally.See Photo Essay 3-1, page 100.
36TRANSNATIONAL FIRM CRITICAL SUCCESS FACTORS 3-29Transnational FirmTRANSNATIONAL FIRM CRITICAL SUCCESS FACTORS1.Balancing local uniqueness with global uniformityUse translation software with Web communication2.Creating a global infrastructureGlobal DSSs, MISs, and WSSs
37TRANSNATIONAL FIRM CHALLENGES 3-30Transnational FirmTRANSNATIONAL FIRM CHALLENGES1.Fostering interoperational communication2.Integrating OHP strategies internationally3.Moving information across borders, called TRANSBORDER DATA FLOWS, that is subject to custom regulations just like any other product.
38THE VIRTUAL ORGANIZATION 3-31Virtual OrganizationTHE VIRTUAL ORGANIZATIONA VIRTUAL ORGANIZATION is a network of independent organizations linked together by IT to exploit market opportunities by sharing skills, costs, and market access.揑f you think of a transnational firm as located everywhere, think of a virtual organization as located nowhere.An OHP strategy for organizational speed.
39DEFINING A VIRTUAL ORGANIZATION 3-32Virtual OrganizationDEFINING A VIRTUAL ORGANIZATIONLocationlessOperationsUnlimited lifeEmployee runShare assignmentsVirtual OrganizationUnlimited lifePartnership runShare knowledge & resourcesOutsourcingSpecified lifetimeContractual operationShare only what抯 required
40IT SYSTEMS FOR THE VIRTUAL ORGANIZATION 3-33Virtual OrganizationIT SYSTEMS FOR THE VIRTUAL ORGANIZATIONJoining independent organizations can create IT systems integration challenges, including:Linking incompatible hardware and software.Fostering creativity without human contact.Effectively communicating concepts online.
41THE LEARNING ORGANIZATION 3-34Learning OrganizationTHE LEARNING ORGANIZATIONThe LEARNING ORGANIZATION is an organization whose people are continually discovering how to learn together while, at the same time, altering their organization as a result of what they learn.An OHP strategy for organizational speed.
42BARRIERS THAT PROHIBIT ORGANIZATIONS FROM 揕EARNING 3-35Learning OrganizationBARRIERS THAT PROHIBIT ORGANIZATIONS FROM 揕EARNINGA command and control structure.Always assigning blame.The failure to learn from your experience.
43COMMAND IT TO CONTROL IT 3-36Learning OrganizationCOMMAND IT TO CONTROL ITA command and control structure is an organizational learning barrier because:Efficiency is gained at the cost of flexibility.Information flows only from top to bottom.Use IT systems to increase the bottom to top flow of information.
44IT SHOULDN扵 BE A BLAME GAME 3-37Learning OrganizationIT SHOULDN扵 BE A BLAME GAMEAssigning blame for all errors in an organization is an organizational learning barrier because:It promotes individual not organizational learning.Assigning blame assumes you are to blame and not me.Use whiteboard software to solve problems jointly.
45LEARNING FROM YOUR EXPERIENCES 3-38Learning OrganizationLEARNING FROM YOUR EXPERIENCESFailing to learn from your experiences is an organizational learning barrier because:Seeing the 揵ig picture?requires experiencing both causes and effects.Effects from events are often separated by time and distance from the cause.Utilize artificial intelligence to identify patterns and find unique solutions to complicated problems.
46STEPS IN SELECTING AN OHP STRATEGY 3-39OHP Strategy ImplementationSTEPS IN SELECTING AN OHP STRATEGY1.How do your customers define perfect service?2.Does your organization have a strategic plan and how do those goals translate into OHP force and speed?3.Which OHP strategy best fits the answers to the first two questions?4.Does your organization have the resources to adopt the strategy you抳e selected?
47ADOPTING AN OHP STRATEGY 3-40OHP Strategy ImplementationADOPTING AN OHP STRATEGYOnce selected, adopting an OHP strategy considers three issues. They are:1.Is the strategy to be applied partially or comprehensively?2.Which technologies does the strategy require?3.Should a continuous improvement process or business process reengineering be used to adopt the strategy?
48BUSINESS PROCESS REENGINEERING 3-41BPRBUSINESS PROCESS REENGINEERINGBUSINESS PROCESS REENGINEERING (BPR) is the reinventing of processes within a business.BUSINESS PROCESSES are sequences of activities that take raw materials from a supplier and serve outcomes to a customer.
49BUSINESS PROCESS REENGINEERING 1993年哈默和钱皮的《再造企业--工商管理革命宣言》为了在衡量绩效的关键指标上取得显著改善，从根本上重新思考、彻底改造企业流程。企业业务流程的再造关键是：根本、彻底、显著和流程。
50BUSINESS PROCESS REENGINEERING 根本就是企业流程需要从根本上重新思考业已形成的基本信念，组织需要对长期以来形成的分工思想、等级制度、规模经营、标准化生产和管理体制等进行重新思考，打破原有的思考模式，进行创造性思维。需要重新思考"我们为什么要这样做"，"我们为什么需要做这样的事"等。
51BUSINESS PROCESS REENGINEERING 彻底就是企业流程再造就是一次彻底的变革，不是对组织修修补补，而是进行彻底改造，抛弃现有的业务流程和组织结构，另起炉灶。显著，即企业通过流程再造可以取得显著的进步，哈默和钱皮为"显著改善"制定了一个目标：周转期缩短70%，成本降低40%，顾客满意度和企业收益提高40%，市场份额增长25%。
52BUSINESS PROCESS REENGINEERING 流程，即企业流程再造从重新设计业务流程着手。在一个企业中，业务流程决定着组织的运行效率，是企业的生命线。在传统的企业组织中，分工理论不仅决定着业务流程的构造方式，同时也带来了一系列弊端。企业流程再造之所以要从重新设计业务流程着手，是因为原有的业务流程是组织低效率的根源所在。
53STEPS IN PERFORMING BPR 3-42BPRSTEPS IN PERFORMING BPR1.Defining the OHP strategy you wish to adopt.2.Identifying the affected processes that need to be reengineered.3.Identifying the goal for each process.4.Identifying process participants and a facilitator for each process.5.Mapping the “as-is” process.6.Designing the “to-be” process.
54TO SUMMARIZE Competitive advantages are fleeting. 3-43TO SUMMARIZECompetitive advantages are fleeting.7 OHP strategies enabled by IT are:Just-in-time approachTeamsInformation partnershipsTimeless & locationless operationsTransnational firmVirtual organizationLearning organization
553-44TO SUMMARIZEQuality through TQM is the foundation for all OHP strategies.Each OHP strategy generates various magnitudes of organizational force and speed - the components of OHP.Adopting an OHP strategy may be done either continuously or radically.TQM is the continuous adoption process.BPR is the radical adoption process.