Copyright 2010 John Wiley & Sons, Inc.

Copyright 2010 John Wiley & Sons, Inc.
Turban and Volonino Chapter 1 IT Supports Organizational Performance in Turbulent Business Environments Information Technology for Management Improving Performance in the Digital Economy 7th edition John Wiley & Sons, Inc. Slides contributed by Dr. Sandra Reid Chair, Graduate School of Business & Professor, Technology Dallas Baptist University Copyright 2010 John Wiley & Sons, Inc.

Chapter Outline 1.1 Doing Business in the Digital Economy 1.2 Information Systems and Information Technology (IT) 1.3 Business Performance Management, Business Pressures, Organization Responses, and IT Support 1.4 Strategy for Competitive Advantage and IT Support 1.5 Social Computing and Networking Copyright 2010 John Wiley & Sons, Inc.

Chapter Outline cont’d
1.6 Why Should You Learn About Information Technology? 1.7 Plan of the Book 1.8 Managerial Issues Copyright 2010 John Wiley & Sons, Inc.

Learning Objectives Describe characteristics of the digital economy and digital enterprises. Define information systems, computer-based information systems and information technology. Explain the relationships between performance, environmental pressures, organizational responses, and information technology. Identify major pressures in the business environment and describe major organizational responses to them. Describe adaptive enterprises and why they are IT-dependent. Copyright 2010 John Wiley & Sons, Inc.

Learning Objectives cont’d
6. Explain the function and impacts of social computing and social-networking. 7. Understand the importance of learning about information technology. Copyright 2010 John Wiley & Sons, Inc.

Figure IT 7eU The Business Performance Management Cycle and IT Model
Figure IT 7eU provides early opportunity to discuss overview of IT’s role in corporate strategy setting and its intricate importance to performance as business solutions and the resulting profitability. Compare and contrast the profit and nonprofit sectors; public versus private. Copyright 2010 John Wiley & Sons, Inc.

Toyota Scion’s Innovative Advertising Strategies
The Problem: Increasingly competitive global marketplace for the automotive industry. Toyota with introduction of Scion goes directly up against General Motors and the Malibu for the position of #1 car manufacturer. Gen Y target market Wide target market Begin discussion as to how IT has facilitated the explosion of the global economy, marketplace. GM Vs. Toyota Copyright 2010 John Wiley & Sons, Inc.

Toyota Scion’s Innovative Advertising Strategies (continued)
Toyota known for its manufacturing innovations. Aggressive web-presence strategy. Generation Y population, those born , expected to be a bigger consumer base than the Baby Boomers and the target market of the Scion. PBS Documentary Looks at 'Generation Next‘ PBS documentary is a great tool for discussion of the Gen Y profile & characteristics affecting this group as consumers. According to Wikipedia, the link following, can be a basis for better understanding of how really innovative the advertising strategy used with the Toyota Scion: Copyright 2010 John Wiley & Sons, Inc.

The Solution: Segmented advertising major media-based strategy. Search engine marketing products – see demo example by clicking this image: Toyota uses Scion Campaign Has Personality-Driven Ads to reach future customers at a very young age according to Target marketing focuses on customizing marketing components for groups of customers rather than individuals. Search engine marketing is the concept of using search engines such as Google, Microsoft, Yahoo to analyze “clicks” of where people go to determine their likes and dislikes regarding likely purchases…this is called “pay per click” advertising dollar expenditures. According to Wikipedia - Search engine marketing, or SEM, is a form of Internet marketing that seeks to promote websites by increasing their visibility in search engine result pages (SERPs). According to the Search Engine Marketing Professional Organization, SEM methods include: search engine optimization (or SEO), paid placement, and paid inclusion.[1] Other sources, including the New York Times, define SEM as the practice of buying paid search listings. One-to-one marketing (sometimes expressed as 1:1 marketing) is a customer relationship management (CRM) strategy emphasizing personalized interactions with customers. The personalization of interactions is thought to foster greater customer loyalty and better return on marketing investment. ClickZ article extends understanding of web-based customer involvement used to promote Scion advertising. Ethical questions abound and provide a good source for discussion now. Copyright 2010 John Wiley & Sons, Inc.

In August 2007, Scion launched Club Scion to create a virtual reality world site of dance floors, music, & hot tubs for enthusiasts. Additional virtual world presence by Scion to attract the maturing Gen Y consumer including: - Secondlife.com - Whyville.com - Gaia.com - There.com Web-based technology used to create social environments, or networks, that will provide a sense of community, of wanting to be included in the experience continues to be important to the success of Toyota’s advertising strategies such as used to promote Scion. Secondlife.com generated 10,000 blog posts between April and June 2007; Scion is the third most recognized brand in SecondLife awareness. Copyright 2010 John Wiley & Sons, Inc.

Toyota Uses Chat to Promote Scion – smart strategy to tap into the social networks of 18 to 24 year old audience. Various providers of live chat software exist such as: Toyota Uses Chat to Promote Scion article for discussion. Click images for homepages. Livechat feature gets hundreds of conversations per week. Conversations provide valuable information for dealers & expansion plans. Copyright 2010 John Wiley & Sons, Inc.

Click image for website visit. Visitors to the site can earn points by playing games, watching videos, and ing others about the site. More of the social network connection to promote customer loyalty at a very early age. For the 2008 xB SUV, Scion created a special Web site, want2bsquare.com Copyright 2010 John Wiley & Sons, Inc.

Toyota targets children as a means to influence their parents. Scion is creating its own broadband channel as a way to move from push to pull marketing where the customer decides what materials to view and when. Toyota created its own social network called Scion Speak where Scion’s enthusiasts can socialize, communicate and play. Copyright 2010 John Wiley & Sons, Inc.

The Results: Scion has 80% brand recognition according to Marketing Vox News (2007). - Amazing jump to #1 ranking due to interactive and community-oriented nature of the Scion online experiences. - Scion website is highly personalized with sophisticated customization tools with offline information integration. Copyright 2010 John Wiley & Sons, Inc.

The Digital Enterprise
Digital enterprises – an organization that uses computers and information systems to perform or support its activities Task students to bring examples from select categories for discussion to expand critical thinking skills. Copyright 2010 John Wiley & Sons, Inc.

What is the Digital Economy?
Information & entertainment products that are digitized. Symbols, tokens & concepts. Processes & services. Click on the Wikipedia image for an expanded description & definition of the Digital Economy. Task students to bring examples from select categories for discussion to expand critical thinking skills. Copyright 2010 John Wiley & Sons, Inc.

Table 1.1 Depending upon focus planned by faculty, drill down into discussions about some or all of these categories. Each has ethical dilemmas associated with it. Discuss the implications to business overall in each category. Copyright 2010 John Wiley & Sons, Inc.

Electronic Commerce Siemens AG established existing old company into transformed digital enterprise and is excellent example of electronic commerce. Click image for homepage & more about changes at Siemens AG. Click Siemens AG hotlink for pdf with more in-depth presentation by corporate representatives. Perhaps discuss executive decision guidelines prior to transforming business to digital enterprise. Wikipedia definition of electronic commerce: Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily since the spread of the Internet. A wide variety of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as as well. A large percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web. Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. This is the type of electronic commerce conducted by companies such as Amazon.com. Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions Copyright 2010 John Wiley & Sons, Inc.

Networked Computing – Digital Organization Infrastructure
Enables computers to connect to other computers & other electronic devices via telecommunication networks. Connections give users access to remote information. Users may be connected via wireless networks to public network-Internet (value-added networks (VAN)); Intranets (within organizations only); & connections to business partners (Extranets). Refer to Figure 1.1 for discussion opportunities. Copyright 2010 John Wiley & Sons, Inc.

Figure 1.1 Digital networked enterprise.
Provide opportunity for students to discuss their own examples of Internet, Intranets, & Extranets. Copyright 2010 John Wiley & Sons, Inc.

Buying or Renting a Movie Online
Do students subscribe to such services? If so, why? What are other business opportunities based on similar technologies? Screenshot 1U.1 Netflix Copyright 2010 John Wiley & Sons, Inc.

Business model in the digital economy
A business model is a method of doing business by which a company can generate revenue to sustain itself. Four representative business(e-commerce) models of the digital age (1) Tendering via reverse auctions (2) Affiliating marketing (3) Product and service customization (4) E-marketplaces and exchanges Students may compare & contrast to consider each of processing orders through Internet. Copyright 2010 John Wiley & Sons, Inc.

What is an information system?
Figure 1.3 Discuss dynamic relationships within each. Good opportunity to discuss students’ vision of future trends. A schematic view of an information system. Copyright 2010 John Wiley & Sons, Inc.

Table 1.2 Discuss the role of IT in strategic direction within organization. How might IT be a competitive advantage? Performing more customer-centric services that are difficult to emulate by others. Strategic plans cannot be implemented in even the smallest organizations without IT. Strategic advantage is not possible with IT infrastructure being properly in place. Effective performance is not possible without it either. Copyright 2010 John Wiley & Sons, Inc.

What is information technology?
IT support the following six business objectives. (1) Improving productivity (2) Reducing costs (3) Improving decision making (4) Facilitating collaboration (5) Enhancing customer relationships (6) Developing new strategic applications Copyright 2010 John Wiley & Sons, Inc.

Figure 1.5 Facilitate discussion of each step & how improved with IT. Organizations must manage their performance rather than just letting it happen. Business performance management cycle and IT. Copyright 2010 John Wiley & Sons, Inc.

Business performance management and organizational environment
BPM is done in a four-step cyclical process. Step 1. Decide on desired performance levels. Step 2. Determine how to attain the performance levels. Step 3. Periodically assess where the organization stands with respect to its goal, objectives, and measures. Step 4. Adjust performance and/or goals. Copyright 2010 John Wiley & Sons, Inc.

Business environmental pressures
Environmental factors can impact performance of individuals, departments, & entire organizations. Discuss, for instance, how each level of performance might be impacted by an implementation of an ERP, a “going green” initiative, etc. Better reporting might be possible making real time decision making a reality where before it was not. Green approach may be more cost effective. Business pressures, organizational performance and responses, and IT support. Copyright 2010 John Wiley & Sons, Inc.

Green IT Pushing Green Technology Click Pushing Green Technology for video to stimulate further critical thinking and discussion about the benefits of green technology. Examples can be appropriate disposal of obsolete equipment; technology that will not emit dangerous elements into the environment. Efficient utilization by using power save features. Click image for more. Wikipedia definition of Green Computing: Green computing is the study and practice of using computing resources efficiently. The primary objective of such a program is to account for the triple bottom line, an expanded spectrum of values and criteria for measuring organizational (and societal) success. The goals are similar to green chemistry; reduce the use of hazardous materials, maximize energy efficiency during the product's lifetime, and promote recyclability or biodegradability of defunct products and factory waste. Modern IT systems rely upon a complicated mix of people, networks and hardware; as such, a green computing initiative must be systemic in nature, and address increasingly sophisticated problems. Elements of such as solution may comprise items such as end user satisfaction, management restructuring, regulatory compliance, disposal of electronic waste, telecommuting, virtualization of server resources, energy use, thin client solutions, and return on investment (ROI). Copyright 2010 John Wiley & Sons, Inc.

Companies Going Green – It’s Good Business
60 Minutes (cbs news magazine) correspondent Scott Pelley and crew got roughed up at a Chinese dump while working on a story on toxic electronic waste. Click the following link & read/watch the story, Following The Trail Of Toxic E-Waste : Click the images to go to the homepages to learn more about the respective companies “green” activities. Facilitate discussion about why companies are willing to spend money to be eco-friendly. In the long term it is more cost effective. How can energy-efficient data centers be justified? Reliability, cost, customer satisfaction, employee productivity. Discuss 60 Minutes segment. Click link to access it. InformationWeek article is linked here to stimulate further discussion. An E-Waste Story That'll Make You Want To Quit Tech Copyright 2010 John Wiley & Sons, Inc.

Organizational responses
Task students to bring examples beyond what is represented here for further discussion. Copyright 2010 John Wiley & Sons, Inc.

Ethics & IT Governance Gauge: Hail To The Compliance Chiefs Intelligent Enterprise , March 01, 2005 SOX SUIT: Holding Feet To The Fire Intelligent Enterprise , January 01, 2005 Lawsuit Spotlights Loyalty As Well As Ethics Intelligent Enterprise , March 27, 2007 A Brief History Of Viral Time Intelligent Enterprise , July 05, 2006 Web-based Service Aims to Bridge Gap Between Knowledge Sharing and Copyright Compliance Intelligent Enterprise , June 08, 2006 Dating Service Beats Poor Metrics Trend With Privacy Tools Intelligent Enterprise , February 13, 2006 The Shift to Holistic Compliance Intelligent Enterprise , June 28, 2005 Managing Incentives and Rewards for Financial Compliance Intelligent Enterprise , May 23, 2005 Review: An Affordable Escape From Spreadsheet Hell Intelligent Enterprise , May 01, 2005 Students may pick an article for presentation & discussion regarding the issue of ethics & IT. Wikipedia definition: Ethics of intellectual property, knowledge and skills Knowledge and skills are valuable but not easily "ownable" as objects. Nor is it obvious who has the greater rights to an idea: the company who trained the employee, or the employee themselves? The country in which the plant grew, or the company which discovered and developed the plant's medicinal potential? As a result, attempts to assert ownership and ethical disputes over ownership arise. Patent infringement, copyright infringement, trademark infringement. Misuse of the intellectual property systems to stifle competition: patent misuse, copyright misuse, patent troll, submarine patent. Even the notion of intellectual property itself has been criticised on ethical grounds: see intellectual property. Employee raiding: the practice of attracting key employees away from a competitor to take unfair advantage of the knowledge or skills they may possess. The practice of employing all the most talented people in a specific field, regardless of need, in order to prevent any competitors employing them. Bioprospecting (ethical) and biopiracy (unethical). Business intelligence and industrial espionage. Cases: private versus public interests in the Human Genome Project Business ethics is a form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment. In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions (known as ethicism) is increasing.[1] Simultaneously, pressure is applied on industry to improve business ethics through new public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles).[2] Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, today most major corporate websites lay emphasis on commitment to promoting non-economic social values under a variety of headings (e.g. ethics codes, social responsibility charters). In some cases, corporations have redefined their core values in the light of business ethical considerations (e.g. BP's "beyond petroleum" environmental tilt). Copyright 2010 John Wiley & Sons, Inc.

Figure 1.7 Porter’s competitive forces model.
Assign students to take an industry…..such as air transportation….and apply Porter’s model within it….take their own company & industry for interesting & relevant discussion. Copyright 2010 John Wiley & Sons, Inc.

Porter’s Five Competitive Forces that Shape Strategy
Click image for YouTube interview with Michael Porter about this model. The model provides opportunity to discuss the impact & importance of IT upon corporate strategy implementation & success. Copyright 2010 John Wiley & Sons, Inc.

Porter’s value chain model
Facilitate discussion about the importance of activities in each category. Students bring examples from various industries. The firm’s value chain. The arrows illustrate the flow of goods & services (the internal part of the supply chain). (Source: Drawn by E. Turban) Copyright 2010 John Wiley & Sons, Inc.

Porter’s value chain model
Value system Value network Link is to informative YouTube video on this topic. Business intelligence is the ability to convert corporate data into strategies for competitive advantage. Copyright 2010 John Wiley & Sons, Inc.

IT Provides Strategic Advantage
The Value of Business Intelligence Link is to informative YouTube video on this topic. Business intelligence is the ability to convert corporate data into strategies for competitive advantage. Copyright 2010 John Wiley & Sons, Inc.

Adaptive and innovative organizations
Charles Darwin “It’s not the strongest of species that survives, nor the most intelligent ; but the one most responsive to change.” Click image to homepage link. Students should be tasked to review site & bring back practical applications for the technology. Copyright 2010 John Wiley & Sons, Inc.

Example of Real-time IT Support
Click image to homepage link. Students should be tasked to review site & bring back practical applications for the technology. Copyright 2010 John Wiley & Sons, Inc.

Some Successful First Movers
Click images to homepage links. Do you consider these organizations to generally be successful first-movers? When does it makes sense to be a late-adopter in IT? Yes, first-movers as they were leaders; others rushed to follow with wannabe replicas. There can be serious mistakes, costs, associated with first-movers that may not be part of a later entrant strategy. Wikipedia definition: First-mover advantage is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match.[1] Sometimes the first mover is not able to capitalize on its advantage, leaving the opportunity for another firm to gain second-mover advantage. There are several advantages that can be gained from entering first:[1] Scarce resources can be preempted, e.g. occupation of prime retail locations The ability to register patents and trademarks that will protect the first entrant from future competition. Changing the economics of the market in a way that second entrants will not have an economic justification to enter. This can cause total failure for second-movers who go to large expenses to capture a limited market. Early profits can be re-invested in improving the resource base. Reputation will likely have the advantages that come from suppliers, distributors and customers who are familiar with and loyal to their products. Second-movers tend to suffer inherently from being labeled "copy cats" and their product reputation may be unfairly questioned by the general public. Nevertheless, there are two obvious drawbacks to being the first mover: cost and risk. Not only is it expensive to be a pioneer - often investing in both R&D and market education, but it is risky, as the first company in a particular market cannot benefit from knowledge of successes and mistakes of others. Copyright 2010 John Wiley & Sons, Inc.

First Mover Advantage Losses
Click images to home page links. Discuss why advantages turned to losses. Competition overtook them. Wikipedia suggests possibilities & helpful for discussions: First-mover Disadvantages: (Lieberman and Montgomery, 1988) Free-rider effects Late movers may be able to free-ride on a pioneering firm’s investments in a number of areas including R&D, buyer education and infrastructure development. Imitation costs are lower than innovation costs in most industries. However, innovators enjoy an initial period of monopoly that is not available to imitator firms. Late-mover firms can acquire already trained skillful labor at lower cost Resolution of technological or market uncertainty Entry in an uncertain market obviously involves a high degree of risk. Early entry is more attractive when the firm can influence the way that uncertainty is resolved. For example, the firm may be able to set industry standards in its favor. Firm size may also be important, large firms may be better equipped to wait for resolution of uncertainty or to hedge by maintaining a more flexible investment portfolio. Shifts in technology or customer needs Technological progress as a process of ‘creative destruction’ in which existing products are superseded by the innovations of new firms. New entrants exploit technological discontinuities to displace existing incumbents. Since the replacement technology often appears while the old technology is still growing, it may be difficult for an incumbent to perceive the threat and take adequate preventative steps. Customer needs are also dynamic, creating opportunities for later entrants unless the first-mover firm is alert and able to respond. Incumbent inertia Vulnerability of the first-mover firm is often enhanced by incumbent inertia. Such inertia can have several root causes: the firm may be locked into a specific set of fixed assets. the firm may be reluctant to cannibalize existing product lines. the firm may become organizationally inflexible. All three factors above inhibit the ability of the firm to respond to environmental change or competitive threats. Incumbent monopolist is less likely to innovate than a new entrant, since innovation destroys rents on the firm’s existing products. Under a broad range of conditions the incumbent’s optimal strategy is to develop an improved product but delay market introduction until challenged by the appearance of a rival product. Lieberman, Marvin (Summer 1988.). First-mover advantages,. Strategic Management Journal, Vol. 9. Copyright 2010 John Wiley & Sons, Inc.

Information Systems Failures
Nike_Rebounds_How_and_Why_Nike_Recovered_from_Its_Supply_Chain_Disaster Project Management: AT&T Wireless Self-Destructs Click links to respective interesting articles for discussion. Consider similarities & differences. Copyright 2010 John Wiley & Sons, Inc.

Social Computing What is Web 2.0? Web 2.0 is platform for social computing. Social computing has revolutionized business opportunities with the formation of communities for like-interest participants. Ask students to give their own examples of social sites to which they belong, why do they, and often do they use them. Click model for helpful article & discussion topic. According to wikipedia: Web 2.0 encapsulates the idea of the proliferation of interconnectivity and interactivity of web-delivered content. Tim O'Reilly regards Web 2.0 as the way that business embraces the strengths of the web and uses it as a platform. O'Reilly considers that Eric Schmidt's abridged slogan, don't fight the Internet, encompasses the essence of Web 2.0 — building applications and services around the unique features of the Internet, as opposed to expecting the Internet to suit as a platform (effectively "fighting the Internet"). Copyright 2010 John Wiley & Sons, Inc.

Social Networks Services
How might organizations use social networks to their advantage? They use them to test acceptance for new products before they are launched. Social Networking Sites often include electronic discussions such as chat rooms. These sites appear on the Internet, within corporate intranets, and on blogs. A blog (Weblog) is an informal, personal journal that is frequently updated and intended for general public reading. The logos represent popular social networking sites. Clicking on the logo will take you to the respective home pages. Social Networks Go to Work is linked to an article recommended to stimulate discussion regarding pervasive presence of social networking in organizations. These sites are very important to the success, and can lead to the failure, of business activities, events, promotions, etc. Word-of-mouth communication, while not easily controlled by organizations, is facilitated greatly through such special interest groups. Click to PCWorld Business Center article for more…. Social Networks Go to Work Copyright 2010 John Wiley & Sons, Inc.

Vitual worlds and second life
A virtual world is a computer-based simulated environment intended for its users to inhabit, and virtual spaces interact via avatars. Copyright 2010 John Wiley & Sons, Inc.

Managerial Issues Recognizing opportunities for using IT and Web-based systems for strategic advantage. Who will build, operate, and maintain information systems? How much IT? What social networking activities should be pursued? How important is IT? Globalization. Ethics and social issues. Transforming organization to digital economy. Copyright 2010 John Wiley & Sons, Inc.

Minicase : Dartmouth College Goes Wireless
Dartmouth College technology initiative is the subject of the Minicase at the end of this first chapter. If you click on the respective pictures, it will take you to the university in order to put this decision within the context of their culture for innovation and cutting-edge technological advances. Dartmouth College Goes Wireless provides more insight to the case for discussion. Opportunities exist for discussion of the pros and cons associated with such administrative decisions. Discuss from the business model perspective ie: competitive aspect of business, financial decision, enhancement to educational (product) experience and delivery. See Dartmouth College Goes Wireless article in InformationWeek Copyright 2010 John Wiley & Sons, Inc.

All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the Information herein. Copyright 2010 John Wiley & Sons, Inc.

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