ISM 158 Business Strategy and Information Systems Jack Callon

Eighth year at UCSC. Original Sponsor of the ISM major. 11 1/2 years at San Jose State (MIS program). A careerist and not an academic. A business person that understands IT and IS. 28 years with IBM in sales and marketing. International experience (fairly early in the game). Spent July in Sapporo at HIU after visiting China. An attorney wife and three sons: No. 1 - Trying to do an Internet application company startup in Brazil; No. 2 - Managing Director of Morgan Stanley, Japan; No. 3 - Wilson, Sonsini corporate attorney. Jack Callon

Objective for Today For you to decide that you are in the right class at the right time.

The Job of an ISM Professional To help run the business better. Through the effective, successful use of Information Systems.

A Satisfied Student 1. ”I never realized that Information Systems played such a significant role in so many very successful companies.” 2. “I really enjoyed doing a paper on Wal-Mart and learned a great deal from the experience.” 3. “I feel that I can personally do an objective assessment of a company as to their effective use of information systems to gain a competitive advantage.”

Karl Brandt Quote “I recently started a job at Broadcom as a software engineer and I wanted to tell you that my ISM classes are coming in more handy than I would have guessed.”

What’s Happening?! Start every class with some comments on newsworthy events in the business world.

EnergyA 4.3% AerospaceA1.7% HardwareA7.6% Basic Industry (Manufacturing)A-2.2% HealthcareB+3.3% MediaB+2.3% TransportB3.9% RetailB5.3% Professional ServicesB4.3% EducationB3.2% InsuranceB-1.1% BusinessWeek Industry Projections

AutomobileC+4.4% PharmaceuticalC+2.9% TravelC+6.2% ConstructionC1.1% TelecomC3.3% SoftwareC3.2% ChipsC2.4% BankingC5.8% BusinessWeek Industry Projections

Sarbanes-Oxley Requirements for sharper audits, better informed and more Requirements for sharper audits, better informed and more responsible board of directors and tighter internal financial responsible board of directors and tighter internal financial controls. controls. The cost of a typical audit has increased by 60% since the The cost of a typical audit has increased by 60% since the laws passage in laws passage in Provisions that apply to the largest 4,000 companies will Provisions that apply to the largest 4,000 companies will apply to 10,000 more in apply to 10,000 more in Companies with over $5 billion in revenue spent $8 million Companies with over $5 billion in revenue spent $8 million more to comply with the provisions of the act. more to comply with the provisions of the act. None of them saw any value for the added expense. None of them saw any value for the added expense. Is an absolute boon for accounting and law firms. Is an absolute boon for accounting and law firms. Deloitte & Touche CEO has called for a reassessment of Deloitte & Touche CEO has called for a reassessment of laws costs and benefits. laws costs and benefits.

Right Class at the Right Time? Course objectives and content. Assignments and grading. Your opportunities. My expectations. Your priorities.

ISM Business Strategy and IS ISM Student Understands how to use information systems to solve business problems “ I’m ready to graduate! Business Knowledge Accounting Finance Operations Marketing Business Management Information Systems Knowledge Systems A&D Programming Database Networks “Because I’m ready to help to run a business better.”

IT Doesn’t Matter May 2003 Edition of HBR By Nicholas G. Carr Editor-at-Large Harvard Business Review

IT Doesn’t Matter When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantage it provides. As information technology’s power and ubiquity have grown, its strategic importance has diminished. The way you approach IT investment and management will need to change dramatically.

IT Doesn’t Matter What makes a resource truly strategic and gives it the capacity to be the basis for a sustained competitive advantage is not ubiquity but scarcity. You only gain an advantage over a rival by having or doing something that they can’t have or do.

IT Implications The core functions of IT—data storage, data processing and data transport—have become available and affordable to all. A distinction needs to be made between proprietary technologies and infrastructure technologies. Infrastructure technologies offer far more value when not treated as proprietary but shared.

The Future of the American Programmer Programmers have the highest unemployment rate of all IT job categories. Distributed computing, packaged applications and low cost offshore alternatives have reduced the demand for programming. Well-trained, highly productive programmers may still be needed, though in much smaller numbers than in the past. InformationWeek, Nov. 17, 2003

The Future of the American Programmer Business analysts have replaced programmers as the IT people with the most influence in companies.

Where Does an ISM Graduate Fit? Information Systems Organization Users Senior Management Company

1. Lack ability to put “pieces and things” into a logical bigger perspective. 2. Communication skills, particularly oral presentations. Student Weaknesses

ISM Toastmasters VI If ten students are interested. Will meet seven times for one hour during the quarter. Each student will give an impromptu talk at each meeting. There are no preparation assignments but a person needs to think about how they are doing and what needs to be done to improve. Will meet on Thursday at either 4:00 to 5:00 or 5:00 to 6:00 PM starting next week.

Introduce Yourself Stand up as if you were making a presentation. Name Something interesting about yourself. (In 3 sentences or less)

JDC Terminology Information Technology (IT) Information Systems (IS) Computing Telecommunications Data Communications Voice Communications IS Organization

ISM Business Capstone Class This class was considered the most difficult of the MIS classes at SJSU. (10% non-pass rate) The only class that has both CS and Econ/Business prerequisites. A business class for those with IT knowledge. “Important to come to class.” This course is the alternative to a comprehensive exam along with CS115.

Class Objectives Learn practical, useable things. Become more savvy as to major business issues and trends in the high-tech world. Help you look good in job interviews. Help you make a difference when you get hired..... For a price!

Unstated Objective To not duplicate the performance of the Winter 02 class. 12 of 42 students did not earn passing grades.

An Appropriate Message This course is significantly more challenging than ISM 50. The business analysis paper in ISM 50 was a relatively easy assignment compared to the analysis term paper in this class.

Course Assistance Will run sessions on both the analysis term paper and pre-exam clinics.

A Successful Business? The right business model now and for the future. Provides value to customers. Is responsive, flexible, adaptable, innovative, resilient, talented and financially strong. Is anything else necessary to achieve and sustain business success?

A Challenging Business Environment Global Economy. Knowledge and information-based service economies. Transformation of business enterprises. Dramatic increase in the use of IT and a significant shortening of IT product cycles.

Important Business Topics Direct Business Model E-Commerce E-Business Supply Chain Management (Customer Relationship Management) Outsourcing Reengineering Core Business Processes Managing Change

Internet Significance How it will: Provide value to customers. Provide value to customers. Change business processes. Change business processes. Change the way people work. Change the way people work.

Business Strategy and Information Systems Concepts Relative To (Bigger Picture) Company Examples

Specific Class Premises Every enterprise faces unprecedented competitive challenges. The source of this competition is becoming more global and the pace of change within the business environment is accelerating. A business enterprise needs to understand where it is going. The business vision and its supporting strategies should drive the role and use of information systems within the organization. The compression of time and events has significantly increased information needs for the growing number of people involved in making decisions within an enterprise.

Class Premises For the above reasons the potential role of information systems as a competitive resource has increased. Innovative use of information technology needs (dictates) a systematic approach. To accomplish this, it is essential that there be an on-going working relationship between those that run the business and the people charged with a responsibility for information systems. Conclusion: It is necessary to establish and maintain three distinct perspectives.

Three Perspectives 1. Business Environment (Industry) 2. Company 3. IT Role, Use, and Management

Management Of With [ [ Information Systems This course is about managing a business with the support of information systems.

Competitive Enabler Of all the things that can change the rules of competition, technology change is among the most prominent. IT/IS are enablers.

Why Aren’t All Companies Equally Good in Using IS to Compete? 1. Business Reasons. 2. Information Technology Reasons.

Four Important C’s Competition Complexity Computers Change

Necessary Leadership Skills Able to deal with the relentless, discontinuous change influenced by IT. Global in outlook and practice. Able to balance the instinct for cultural preservation and the promise for regional, national and/or global cooperation. Willing to accept and support the move to a business model that emphasizes openness and integration and not isolation.

Vision Strategy Tactics Business Plan Competitive Options Roles, Roles and Relationships Redefine and/or Define Telecommunications as the Delivery Vehicle Success Factor Profile A Systematic Approach Class Road Map

Emphasis A revised list of companies for the analysis term papers. Business management content. The implications of globalization and the significance of the Internet.

What Isn’t New There should definitely be times when you say, “that’s obvious or it certainly isn’t new to me.” My reaction will be, “good, the message of using information systems to support major business strategies and core business processes has previously gotten through.”

Course Syllabus is on my web page

Grade Structure Analysis Term Paper 49 % (10, 10, 25, 4) Introduction Letter 2 % Midterm Exam 15 % Oral Presentations (2) 4 % Comprehensive Final Exam 30 % Note: Exams will not be open book or open notes.

This book is dedicated to those that must compete in an increasingly complex, dynamic and global business environment. I wish you the best of success in your competitive endeavors and hope that the contents of this book provide the help that is intended. Textbook Competitive Advantage Through Information Technology by Jack Callon

Textbook Status 1.Structure and concepts are current and valid. 2.Company examples and status are dated in some cases.

Textbook Structure 1. Introduction Chapter 2. Business Environment 3. Company Assessment 4. Structured Analysis of IS Use 5. Management Issues

Textbook Chapter 1: Business and Information Systems Management Challenges Preface: Book Overview

Section I - The First of Three Perspectives: Business Environment Chapter 2: Business Competitive Environment Chapter 3: The Porter Competitive Model for Industry Structure Analysis Chapter 4: Airline Industry Analysis (will get a revision of this chapter) Chapter 5: Information Systems Can Redefine Competitive Boundaries Textbook

Section II - The 2nd Perspective: Company Environment Chapter 6: Business Vision Chapter 7: Implementing a Vision: Strategy, Tactics and Business Plan

Section III - The 3rd Perspective: Information Systems Use Chapter 8: Evaluating Business Strategies and the Use of Information Systems Chapter 9: The Roles, Roles and Relationship Concept Chapter 10: The Redefine and/or Define Concept and Change Management Chapter 11: Telecommunications as the Delivery Vehicle Chapter 12: A Success Factor Profile

Section IV: Major Information Systems Management Issues Chapter 13: Information Systems Organization and Personnel Considerations Chapter 14: Information Systems Value and Financial Strategy Chapter 15: Integrating Information Systems into the Business Plan Chapter 16: Total Quality Management and the Role of Information Systems (Will probably get a revision of this chapter)

Chapter 17: Conclusions Exhibit I - Why Change When You Are Flying High? An Analysis of The Boeing Company Read the Boeing and Wal-Mart papers for background and understanding of the assignment. Don’t overdo duplicating how they were done.

Peter Drucker - Business Visionary Michael Porter - Business Competition Peter Keen - IS Management and Trends Jim Collins - Successful Businesses Jack Welch - Business Management My Personal “Expert Profile”

Oral Presentations Introduce or summarize the textbook chapters. Five minute presentations. Details regarding the presentations are addressed on the course web page.

Presentation Evaluation 1. Established a presence before beginning presentation. 2. Good eye contact with audience during presentation. 3. Voice articulation during presentation. 4. Professionalism of the presentation 5. Organization and content of presentation. 6. Presentation style (how well actually presented) 7. Timing of presentation. 8. Enthusiasm for topic 9. Overall evaluation Excellent Good Fair Poor

Content Tip In making an oral presentation, always ask the following question: Who is my audience and what is my major message?

Presentation Mistakes Tried to do too much in a five minute presentation. Lacked organization: introduction, content, summary (close). Read slide content or information from notes. Lacked any sign of interest in the topic and/or poor voice articulation. Didn’t establish an initial presence or eye contact with audience during the presentation. Major message was not clear. Very negative body language.

Chapter Introduction Objective of the chapter. Major topics. Importance of the chapter. How material fits within a bigger perspective. How the material will be used in the Analysis Term Papers.

Chapter Summary Key messages of the chapter. Major business management issues. Major IT issues (if any). Why the above factors are significant/important. Two or three possible exam questions that focus on important chapter content. Will use Powerpoint slides that you will to me 24 hours before the presentation.

Presentation Assignments 1.Introduce Chapter 1 on Thursday – 2.Summarize Chapter 1 on Tuesday – 3.Introduce Chapter 2 on Tuesday – 4.Summarize Chapter 2 on Thursday – 5.Introduce Chapter 3 – 6.Summarize Chapter 3 – 7.Introduce Chapter 4 – 8.Summarize Chapter 4 –

Oral Presentations 9. Introduce Chapter 5 – 10. Summarize Chapter 5 – 11. Introduce Chapter 6 – 12. Summarize Chapter 6 –

Analysis Term Paper Significance Successful completion of the analysis term paper is mandatory to pass the course. Qualifies course for a W. You can do joint research and chart preparation but the entire paper will be written individually. You must select a different company than the one you addressed in ISM 50. Important that you talk to me regarding your paper.

ATP Companies Apple Computer – Many niche battles that can still be won. Cisco Systems - From boxes to end-to-end communication! Dell Computer - The direct business model king! IBM – The new IBM: Services versus traditional businesses. Intel Corporation - Shifting major business strategies!? Knight-Ridder (SJ Mercury News) - What business are they in? Oracle - Database and enterprise software company. Plantronics – Communication headset leader taking on the big boys. Sun Microsystems – A big deal or fading into the hi-tech atmosphere?

ATP Companies All of these companies have Internet implications as to their strategies and their ability to continue to be successful. All but one of these companies have global issues that must be addressed for them to be successful. Your papers should focus on these implications. Include this focus as part of the objective statement of your paper.

IT Industry Truly unique. Truly unique. A number of outspoken company leaders. A number of outspoken company leaders. Ferocious competition. Ferocious competition. Occupation with underlying technology. Occupation with underlying technology. Battle for standards. Battle for standards. No trade association. No trade association.

Apple Computer What is the correct industry designation? What is the correct industry designation? Significance of Steve Jobs leadership? Significance of Steve Jobs leadership? Significance of Internet to drive product development and improve business processes? Significance of Internet to drive product development and improve business processes?

Cisco Systems Claim that they built the Internet. From routers to end-to-end communication. Want to be their own best reference! Cisco Connection is the basis for 82% of revenue. Research and technology through acquisition. Success is attracting major competitors. John Chambers walked on water. (until he got fairly wet in recent years)

Dell Computer Fierce competition in the PC segment of the Computer Industry. Questionable industry profit margins. As prices get cheaper, clones are losing market share. A major factor in the global market that is US dominated. The direct business model continues to be a hot topic and Dell is the king! The ultimate example of outsourcing?

IBM Corp. Has regained its position as the industry leader? Has regained its position as the industry leader? Still the world’s largest IT company. Still the world’s largest IT company. Getting out of the PC manufacturing business. Getting out of the PC manufacturing business. Services versus hardware and software! Services versus hardware and software! A challenge to evaluate since it is still so big! A challenge to evaluate since it is still so big!

Intel New leaders and a new business strategy. Does the new business strategy really make sense? How important is it to continue to grow as a company? What primary strengths has Intel had in the past? How significant is it’s global position? In what business functions has Intel emphasized the use of IT/IS?

Knight-Ridder Newspapers were a traditional source of information. Industry is dominated by conglomerates. San Jose Mercury News was one of the first to go online first with AOL and then via the Internet. Mercury Center has lost its differentiation advantage. How would you define Knight-Ridder’s business in the current business environment?

Oracle Corp. A dominant company in database software with much less of a position in integrated enterprise software. Founded and led by Larry Ellison. Historically have had an outstanding growth record with impressive financial performance. Recent acquisition of PeopleSoft. Seem determined to try to beat Microsoft any way that they can.

Plantronics Local company. Local company. A small company trying to compete with some industry giants. A small company trying to compete with some industry giants. Want to convince the world that voice is the best and correct PC input/output device. Want to convince the world that voice is the best and correct PC input/output device.

Sun Microsystems Wants to be your Internet company. Wants to be your Internet company. A good early business success story. A good early business success story. A good IT story. A good IT story. Struggling in terms of financial performance. Struggling in terms of financial performance. Unix foundation. Unix foundation.

ATP Companies Apple Computer – A successful niche player. Cisco Systems - From boxes to end-to-end communication! Dell Computer - The direct business model king! IBM Corporation – The new IBM! Intel Corporation - Shifting major business strategies. Knight-Ridder (SJ Mercury News) - What business are they in? Oracle - Database and enterprise software company. Plantronics – PC headsets in your future? Sun Microsystems-Your Internet company?

Boeing Commercial Aircraft Company Analysis Paper Paper Objective I Commercial Aircraft Industry Summary A. Industry Profile B. Typical Industry Competitive Strategy C. Porter Competitive Model Analysis D. Globalization of the Industry E. Importance of Information Technology to the Industry II Boeing Company A. Boeing Company Profile B. Market and Financial Performance C. Competitive Strategy Statement D. Significance of Information Systems E. Strengths and Weaknesses of Boeing as a Company

III Information Systems at Boeing Commercial Aircraft Company A. Structured Analysis 1. Strategic Option Generator 2. Roles, Roles and Relationships 3. Redefine and/or Define 4. Significance of Telecommunications 5. Success Factor Profile IV A Final Analysis: The Success of the Boeing Commercial Aircraft Company A. Success of Business Strategy and IT Use to Date B. Is the Company Effectively Postured for the Future? Bibliography

ATP Grades 1. Section I and II will be written and submitted individually. 2. A revised Section I and II will be resubmitted with Section III and IV as a final complete paper. 3. Each section is given a specific grade. 4. The Section III grade is based on 1/3 for the revised Section I and II and 2/3 on Section III. 5. Section IV has its own grade.

Analysis Term Paper Grades 1. Analysis Grade - 50% Did you analyze the major important points in an effective manner? 2. Presentation Grade - 50% How well were the contents of the paper organized and presented. This includes spelling, grammar and whether the total paper “comes together.”

Analysis Term Paper 1. Information Given Today. 2. Web Page Guidelines.

Analysis Term Paper Challenges Company 1. Content and Organization2. Researching Content 3. Analyze, Write and Edit Paper

Citing Sources “Semiconductors have found a place in virtually every electronic device in existence. This helps explain why the industry was able to reach $200 billion in sales before a slump brought the figure back down in 2001.” 1 1 “Semiconductor Trends”, Silicon Valley Tech Week, August 9, 1999, page 81. Plagiarism is illegal and cheating and will not be tolerated. More than thirty words verbatim must be cited.

ATP Discussion Points 1. A definition of the analysis company industry in writing. 2. A draft of the Porter Competitive Model. 3. A draft of the Business Strategy Model. 4. A list of the key people within the company that will serve as the basis of the company analysis. 5. A draft of the strengths and weaknesses of the analysis company.

Due on Thursday 1. Request for three possible companies on which to base your business analysis paper. 2. An introduction letter and personal resume. See my web page for details on creating a resume.

Introduction Letter A page, not a paragraph. Personal Introduction Work Experience Computer Related Experience Career Objective Personal Interests A business professional format addressed to me. Should not start with, “Hi, my name is!” The last paragraph should explain the intent of your resume.

Introduction Letter Mistakes 1. Did not use a business letter format. Block address : and not a, Single paragraph Very truly yours, (not used) 2. Lacked content. Didn’t really introduce yourself personally Didn’t explain the objective of the resume

1. Looks good. (fonts, format, margins) 2. Brutally clear what you have done and what you want to do ( job objective). 3. Perfect! (no spelling or grammar mistakes) Additional information plus an example is on my web page. Personal Resume Criteria

Resume Purpose Focus: –Knowledge, Experience, Skills and Abilities –What can YOU do for the employer? Ultimate Objective? –To get an interview! –It should SELL you!

Written Assignment Grades Two grades on all written assignments: An analysis grade (50%) A presentation grade (50%) Resumes will also receive a “yes, maybe or no” comment.

– Can’t do this if you don’t come to class! – Don’t intend to read the textbook to you. – Class time will be spent on clarifying, expanding on and discussing the material in the textbook. – Need to familiarize yourself with assigned material before you come to class. – Course syllabus and lectures on the School of Engineering web page. (JDC or course web pages) I am only on campus on Tuesday and Thursday! My Job is to Steer You Through the Course

Academic Honesty If I can’t trust you, there is no other question! Plagiarism from web pages. Thirty words or most must be cited with a source.

Class Decorum The classroom should be treated like a business environment. Class activities should be treated like a business meeting.

Meaning 1.People come to business meetings on time. 2.They don’t wonder in and out during a meeting. 3.In a large meeting, people that want to talk get recognized in order to do so. 4.Meeting participants don’t hold sub-meetings while the main meeting is going on. 5.Meeting participants demonstrate mutual respect for each other. 6.Presenters don’t wear baseball hats while presenting.

Class Schedule Start 1/04/05 Sec. I and II of Paper Due 2/01/05 Final Paper Sec. I, II, III and IV 3/03/05 Final Exam 3/18/05 10 Weeks Midterm Exam 2/08/05

Conclusion If you feel you are in the right class at the right time and are prepared to make the necessary time commitment, see you on Thursday.