1. Applegate, L.M., Austin, R.D, and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Instructor’s Manual Chapter 4 Key Learning Objectives for Chapter 4: Recognize that IT impacts the business model through its effects on sources of business value: costs, revenues, and assets Learn how to analyze and document how IT can potentially impact value sources Understand the importance of effective execution and monitoring in the delivery of IT-enabled business value Making the Case for IT

2. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT “IT Doesn’t Matter” – Nicholas Carr, May 2003, HBR Based on legendary strategic IT applications (or “Legacy” mindset) By the late 1990s, many of the IT applications in use within firms were widely available from vendors and service providers Thus, systems can be quickly copied Carr believed that IT could no longer enable sustainable proprietary advantage – therefore, IT should be considered a commodity Business executives challenged CIOs to explain (and sometimes defend) their IT budgets and new IT investment

3. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT “Legacy” Mindset Limitations It is little wonder that there is confusion over how to exploit IT to create business value. Most executives continue to view technology as a budgeted expense to be managed on a project-by-project basis within traditional budgeting cycles. Value-creating IT applications were funded as stand-alone projects – usually involving cost savings that would come from increasing efficiency of a structured, paper-intensive back-office process. Once deployed, they became “commodity”. The ability to reuse (or share) applications was limited. A fact: the cost of maintaining and managing IT infrastructure often represented 80% or more of the yearly IT budget.

4. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Overwhelmed Responses John Seely Brwon and John Hagel [Businesses] “need to manage large portions of their infrastructure more rigorously to reduce capital investment and operating expenses.” “IT may be ubiquitous but the insight to harness its potential [is not]” “IT remains a profound catalyst （觸媒） for the creation of strategic differentiation.” Vijay Gurbaxani “The scarce resource never was technology; it was always the set of managerial capabilities needed to create value with that technology”

5. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Remarks Today’s flexible, open standard and ubiquitous IT infrastructures are designed to be shared and become actually more valuable when shared. … has dramatically increased the range of business building opportunities that can be pursued, while also dramatically decreasing the cost and time to launch them. IBM executives call this new era of IT-enabled business advantage “Innovation On Demand” Lies in “component-based technologies” and “flexible business processes”. Ex. American Airlines, Amazon AWS, Linked Open Data, etc.

6. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT The “IT Business Value” Mindset A shared services approach to building and deploying IT infrastructure and applications demands a very different approach to investment decision making. 在 2010 召回事件中，豐田在無比的壓力下，終於（事 件爆發日期是美國時間 01/21/2010 ）在 02/27/2010 推 出全球性的 information sharing platform 給各國的分公司 使用；在過去，這些資料都集中在豐田日本總部。 The business model can also be used to frame the evaluation of IT opportunities and the development of a business case for IT investment.

7. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Using Business Models to Frame the Business Case for IT

8. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Cost Savings? It is little wonder that many IT project portfolios emphasize incremental cost savings. Savvy IT and business executives recognize that the benefits don’t have to stop there. 1993, IBM saved $2 billion per year mainly reducing the number of data centers from 155 to 3 regional “megacenters” fed by 11 “server farms” and a 60% reduction in headcount. IBM’s 31 incompatible networks were converted to one common Internet-standard network. As part of restructuring, the application development process was reengineered to enable modularization and reusable code, and the number of internal applications decreased from 16000 to 5200.

9. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Cost Savings? 1994, IBM generated $3 billion in net profits. Further, the shift of IT infrastructure services and corporate back-office functions from decentralized silos to a centralized shared-services model was the first step to return the company to a position of industry leadership by bringing the power of IBM’s products and services together to solve its large global customers’ most pressing business problems. The centralized, streamlined IT infrastructure and corporate services functioned as a platform and a testing ground as the company tackled more complex business process reengineering projects aimed at streamlining core operating processes (e.g., supply chain, new product development, marketing, etc.) and driving revenue growth.

10. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Cost Savings? 想想看： 目前各級政府的資訊處／室的架構？ 當初五都新成立的時候，各級機關在更改住址 時的做法 討論：各位觀察到（或者有證據顯示）持續性 的成本減少嗎？還是 ” 價值 ” 增加？

11. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Revenue Growth? IT can be used to enhance revenue-growth capabilities. Opportunities include (but not limited to) Use IT to streamline and improve revenue-generating process. Ex. Charles Schwab’s development of online and self-serve customer service centers that increased loyalty of existing customers while decreasing cost to serve and improving strategic differentiation. Use IT to improve business intelligence. ex. Aflac’s CRM: provided the information the customers immediately on [mobile phones] ex. IBM’s knowledge management platform Ex. 國網中心 Fish4Knowledge 判讀 4 年以上海底錄製的影像 進行魚類判斷，以便於環境相關之研究

12. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Revenue Growth? IT can be used to launch new products, services, or solutions, or to add significant value to an existing product or service. Opportunities include (but not limited to) Embed IT into existing physical products. Ex. Boeing’s “e-Enabled”, smart phones, smart cards, smart glasses, Google Goggle, 脈搏與網路的結合 (smart home), etc. Launch new IT product and service offerings Ex. Apple’s iTune service, Google music and books, etc. Add significant value to existing product and service offerings. Ex. Nike’s ID online service that enables customers to design their own shoe Ex. Google maps  3D

13. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Revenue Growth? Samsung 推出 EK-GC100 Galaxy Camera 智慧型數位相機 資料來源：隱科技

14. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Revenue Growth? After IBM reengineered and centralized its core operating processes: Product development expenses were decreased by 50% and, more importantly, yielding increased revenue from the accelerated rate of successful new products that entered the market. As information became available from streamlined, standardized, real- time IT-enabled operating processes, IBM provided tools and IT support to help teams of employees create their own portals that would provide access to actionable information to support decision making and the collaboration tools needed to coordinate work. Ex. at a cost of $25,000 invested over several weeks, the consultants launched the portal and within one year has used the improved information and collaboration tools to decrease consultant engagement times by 40-80%, increase revenues per consultant by 20%, and improve contribution margin per consultant by 400%.

15. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Asset Efficiency? Asset efficiency defines how many dollars of revenue are generated for every dollar of assets. Assets include financial assets (cash, account receivable, etc.), tangible assets (inventory, equipment, and software). A category, called “Goodwill” （商譽）, in balance sheet is used to capture intangible assets. In general, it include the value of acquisitions or the value of intellectual property and patents; however, it rarely considered knowledge assets (e.g., the expertise and experience of people, proprietary information on customers or products that is stored in databases) and the value of strong relationships with customers, suppliers, and partners or a strong brand that draws people to your firm and keeps them loyal.

16. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Asset Efficiency? Key IT asset categories: Tangible assets IT operating infrastructure: includes data centers, network centers, etc.; and the people and operating systems that develop, run, and maintain these systems and solutions. Enterprise solutions: include ERP systems, CRM systems, payroll and HR systems, etc. Intangible assets Specialized business solutions: include IT systems (including people, software, etc.) that support a specific business activity or team Executive leadership and governance systems

17. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Asset Efficiency? The term " Governance " specifies the ability of an organization to be able to control and regulate its own operation so as to avoid conflicts of interest related to the division between beneficiaries (shareholders) and people involved in the company. Source: http://en.kioskea.net/contents/654-information- systems-governance-it-governance

18. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Asset Efficiency? IT asset efficiency increases when a company does something to drive more revenue from the same asset base or takes an underperforming assets off its books The typical move: outsourcing legacy IT infrastructure Cautions: a 2005 study of 25 “world-class” companies found that 25% brought outsourced IT activities back in-house; another 44% found that outsourcing did not result in any cost saving, and over half found hidden costs that were not accounted for in the initial contract.

19. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Asset Efficiency? What else? IT assets should be designed as “lean and scalable” and “agile and leverageable” at the same time so that a company can scale its current business while it also pursues new business innovations and opportunities. When designed as “lean and scalable”, they deliver best-in-class performance by lowering costs, achieving high levels of efficiency, and provide reliable and scalable platform for growing the current business When designed as “agile and leverageable”, they can be quickly customized or changed to provide personalized customer solutions or to respond to new organizational or industry requirements. Ex. In 09/2003, Procter & Gamble ( 寶僑，品客、金頂電池等 ) signed a 10-year $400 million agreement with IBM to outsource HR services. The HR services were developed for internal IBM employees. In 2007, the total of revenue is over $54 billion which represented over 55% of IBM’s total revenue. Ex. 逢甲電算中心  GIS 中心

20. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Drive Asset Efficiency? 中興大學於 12/2012 通過個資保護的國際標準 BS10012 無形價值：全國第一個通過的大學 有形價值：是否可以進一步以建立的 knowledge 獲取教育部的計畫？ 機房內有超過 10 年的設備，每年還在固定支付一筆維護費（約 10-15% ），這樣做有改進的空間嗎？ 例如：有兩部單價為 42 萬的伺服器，其採購日期為 2004 ，應該繼續 維護嗎？ 例如：學校的核心交換機（ core switch ）應該超過 10 年，每年維護費 約 25 萬，換新的卻要 250 萬，換嗎？

21. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Can IT Be Used to Create Sustainable Advantage? The question of how firms create sustainable advantage has been debated for decades. Some achieved sustainability based on Strategic positioning: ex. Apple iPods Build capabilities: ex. Wal-mart’s legendary sourcing capabilities. ( 補充資料 : http://money.howstuffworks.com/wal-mart.htm) IT can serve as a powerful driver of business model alignment and evolutionary potential.

22. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT How Wal-Mart Works It all started with a simple philosophy from founder Sam Walton: Offer shoppers lower prices than they get anywhere else. Wal-Mart is more than just the world's largest retailer. It is an economic force, a cultural phenomenon and a lightning rod for controversy How big is Wal-Mart? Wal-Mart employs 1.6 million people Wal-Mart has 6,200 retail outlets. Wal-Mart had sales of $312.43 billion in 2005. By comparison, the second-largest retailer in US, Home Depot, posted sales of $81.5 billion.

23. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Wal-Mart Strategy Technology Wal-Mart pushed the retail industry to establish the universal bar code, which forced manufacturers to adopt common labeling Recently, Wal-Mart became the first major retailer to demand manufacturers use radio frequency identification technology (RFID). During the first eight months of 2005, Wal-Mart experienced a 16 percent drop in out-of-stock merchandise at its RFID- equipped stores, according to a University of Arkansas study

24. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Wal-Mart Strategy Culture The company has been criticized for the relatively meager wages and health care plans that it offers to rank-and-file employees. It has also been accused of demanding that hourly workers put in overtime without pay Wal-Mart is headquartered in Bentonville, Arkansas, instead of an expensive city like New York. The building is drab and dull. Executives fly coach and often share hotel rooms with colleagues. They work long hours, typically arriving at work before 6:30 a.m. and working half-days on Saturdays.

25. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Wal-Mart Power Because of Wal-Mart's massive size, it wields incredible power. Economist Emek Basker’s, Ph.D., study found that in a typical United States county, when a Wal-Mart opens, three other retailers close within two years and four close within five years. While the Wal-Mart might employ 300 people, another 250 people working in retail lose their jobs within five years in that county Suppliers are also heavily impacted by Wal-Mart Lakewood Engineering & Manufacturing Co. in Chicago, a fan manufacturer. In the early 1990s, a 20-inch box fan costs $20. By 2003, the price on the fan in a Wal-Mart store had dropped to about $10. It also affects how even major, established companies like Coca-Cola and Pepsico do business. In 2005, Coke planned to launch one new diet cola called Coke Zero. At Wal- Mart's request, it changed the name to Diet Coke with Splenda and launched a separate product called Coke Zero. This kind of retailer involvement was unheard of at Coke a decade ago. Pepsi also came up with a line of diet drinks, called Slice One, to initially be sold exclusively in Wal-Mart.

26. Applegate, L.M., Austin, R.D., and Soule, D.L., Corporate Information Strategy and Management, 8 th edition, Burr Ridge, IL: McGraw-Hill/Irwin, 2009 Chapter 4: Making the Case for IT Closing the Loop Implementing the project, delivering on milestones, and then conducting the post-implementation audit are critical to maintaining credibility and receiving future funding. A survey of over 400 IT executives in 2007, it is found that only 37% of companies performed post-implementation audits on IT projects. Many executives also failed to stop or revise project financing when assumptions prove wrong and project scope or requirements must be altered midstream. 討論：各位的組織做了 post-implementation audit ？如 果要做，如何做？