Chapter 3 Effects of IT on Competition

Chapter 3 Effects of IT on Competition
Competitive Forces: (Michael Porter) threat of new entrants buyers’ bargaining power suppliers’ bargaining power threat of substitute products or services traditional intraindustry rivals Improve some traditional IS such as ordering management systems will improve internal productivity, but just for some period of time only -- Reduce the total cost, speed processing time, quality (provide more flexibility to customers) The benefits continued as long as the company continued to INNOVATE. Five years later, even in attempt to control internal costs and customer satisfaction (services), profits and market share rapidly DECLINED. (examples, airline, aerospace company., grocery chain stores) WHY? - Strategic Advantages using IT ... The changing nature of IT within organizations and industries -- With the dramatic improvements in the price/performance of IT over the three decades, when coupled with the increased penetration of IT within the firm and the learning that accompanies experimentation and use, have allowed computer systems (IS) to move our of the back office and to create significant competitive advantage. IS/IT becomes a powerhouse of a strategic center. N 1 10

TYPES OF INFORMATION SYSTEMS
KIND OF SYSTEM GROUPS SERVED STRATEGIC LEVEL SENIOR MANAGERS MANAGEMENT LEVEL MIDDLE MANAGERS KNOWLEDGE LEVEL KNOWLEDGE & DATA WORKERS OPERATIONAL OPERATIONAL LEVEL MANAGERS SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN MARKETING RESOURCES

Roles of Information Systems
This slide relates to the material on pp Automates Business Process Reengineering (BPR) as defined by Hammer is "the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements" in areas such as costs, quality, service, and speed. IT facilities the process of reengineering in three key ways: Automates. When IT substitutes for human effort, it automates a task or process. Teaching Tip: For example, computerized welders can make more welds on a car body frame than human welders can, in less time, and with fewer mistakes. Informates. When IT augments human effort, it informates a task or process. Teaching Tip: For example, using a statistical package to match marketing programs with customer profiles most likely to respond to a particular theme or offer. Transforms. When IT restructures human effort, it transforms a task or process. Teaching Tip: For example, the implementation of total quality management concepts to stop mistakes early in a production process, has totally changed the way production lines operate. Informates Innovates/ Transforms 7 8 8 8 7

Competitive Strategies
This slide corresponds to Figure 1.21 on pp. 26 and relates to the material on pp Competitive Advantage is created or maintained with the company succeeds in performing some activity of value to customers significantly better than does its competition. According to Porter, competitive advantage can be developed by following one or more of these strategies: Cost Strategies. Becoming a low-cost producer in the industry allows the company to lower prices to customers. Competitors with higher costs cannot afford to compete with the low-cost leader on price. Differentiation Strategies. Some companies create competitive advantage by distinguishing their products on one or more features important to their customers. Unique features or benefits may justify price differences and/or stimulate demand. Innovation Strategies. Unique products or services or changes in business processes can cause fundamental changes in the way an industry does business. Teaching Tip: For example, applying TQM, originally developed for manufacturing, to the service industry helped Ritz Carlton when the Malcolm Balridge Award for excellence. 8 9 9 9 8

Strategic Advantage and IT
Strategic Information System (SIS) Elements of strategic management

How can IS be Competitive Weapons?
In order to use IS as competitive weapons, you must first understand where strategic opportunities for business are likely to be found. Two models are used to help identify areas of business where IS can provide advantages over competitors: competitive forces model and value chain models.

A Strategic Information Systems Example at Caterpilar - Defending against Business Pressures and Competition

Strategic Management has Three Complementary Elements
Internet Competitive strategy and sustainable advantage Role of IT and Competitive Intelligence

Figure 3-1: FIVE COMPETITIVE FORCES MODEL
Threats NEW MARKET ENTRANTS SUBSTITUTE PRODUCTS & SERVICES THE FIRM TRADITIONAL COMPETITORS Contemporary strategic planning frameworks -- too narrow and pessimistic they were based on projections of market share and market growth. COMPETITIVE FORCES that SHAPE strategy - depends on the type of the industry The ability to mange complexity and responsiveness has become a powerful source of competitive advantage SUPPLIERS CUSTOMERS Bargaining power N

Figure 3-1: FIVE COMPETITIVE FORCES MODEL
Threats NEW MARKET ENTRANTS SUBSTITUTE PRODUCTS & SERVICES TRADITIONAL COMPETITORS THE FIRM Contemporary strategic planning frameworks -- too narrow and pessimistic they were based on projections of market share and market growth. COMPETITIVE FORCES that SHAPE strategy - depends on the type of the industry The ability to mange complexity and responsiveness has become a powerful source of competitive advantage Bargaining power CUSTOMERS SUPPLIERS N

Figure 3-2: Elements of Industry Structure
The trend in E-commerce is shifting away from electronic vertical integration based IT-enabled hierarchical control and toward the establishment of alliances and partnerships facilitated by distributed power and control and frequent interaction. In essence, IOS empower companies to compete, interestingly enough, by allowing them new ways to cooperate. IT-enabled partnerships need NOT be based on ownership. Managers of companies in reciprocal industries can plan and coordinate common approaches to customers through shared information and frequent interaction without vertical integration. Airline + Hotel + Car Rental --> good services to customers, but managers not likely to enjoy any operational advantages. -- management time and attention would be drained by these diverse business with their specialized operating problems. Drawing on the experience of firms like AA, Nike, Dell, ample evidence suggests that there is much to be gained by coordinating production activities through a network of IT-enabled relationships, while focusing efforts and resources on core competencies. N

Table 3-1: Impact of Competitive Forces
Dr. Chen, The Trends of the Information Systems Technology TM -12

Differentiation Focus
Figure 3-3: Three Generic Strategies Related to Competitive Advantages and Scope Broad Target Cost Leadership Differentiation Competitive Scope Narrow Target Cost Focus Differentiation Focus Dr. Chen, The Trends of the Information Systems Technology TM -13

Porter’s Competitive Forces Strategies
Cost leadership Differentiation Focus Expanded generic strategies Strategic positioning (e.g., internal efficiency) Customer service and my own view ... Innovation Dr. Chen, The Trends of the Information Systems Technology TM -14

Competitive Strategies
This slide corresponds to Figure 1.21 on pp. 26 and relates to the material on pp Cost Strategies Competitive Advantage is created or maintained with the company succeeds in performing some activity of value to customers significantly better than does its competition. According to Porter, competitive advantage can be developed by following one or more of these strategies: Cost Strategies. Becoming a low-cost producer in the industry allows the company to lower prices to customers. Competitors with higher costs cannot afford to compete with the low-cost leader on price. Differentiation Strategies. Some companies create competitive advantage by distinguishing their products on one or more features important to their customers. Unique features or benefits may justify price differences and/or stimulate demand. Innovation Strategies. Unique products or services or changes in business processes can cause fundamental changes in the way an industry does business. Teaching Tip: For example, applying TQM, originally developed for manufacturing, to the service industry helped Ritz Carlton when the Malcolm Balridge Award for excellence. Differentiation Strategies Innovation Strategies 8 9 9 9 8

STRATEGIC ROLE OF INFORMATION SYSTEMS
STRATEGIC INFO SYSTEM: CAN CHANGE GOALS, OPERATIONS PRODUCTS, SERVICES ENVIRONMENT TO GAIN COMPETITIVE ADVANTAGE 2.23 Dr. Chen, The Trends of the Information Systems Technology TM -16

A SIS example for Defending against Business Pressures and Competition

Bakos and Treacy Framework

Alignment of Global Vision with IT using Global Drivers

A framework for the Internet as a source of information for strategic decision making
Figure 03.03

Use of Porter’s Model List players Analyze business drivers
Devise a strategy Investigate supportive information technologies 2. Drivers -- e-shopping Switching cost of the buyers, the buyers’ propensity to substitute, the price advantage of the e-shopping etc. 3. Devise a strategy To counter e-shopping, Wal-Mart can provide a playground for children, hand out free samples of products, and recognize frequent shoppers personally. It also imitates the competitor’s strategy -- Wal-Mart on-line. 4. Investigate supportive information technologies Managing frequent shoppers and using a DBMS, Data Mining to analyze the database (or datawarehouse) to assess shoppers’ activities. Find out what are the frequent shoppers’ purchasing trends, preferences etc. N Dr. Chen, The Trends of the Information Systems Technology TM -21

Competitive Forces: Wal-Mart Example

Another example on using IT

Opportunities to Use IT to Gain Advantage
Can IT build barriers to entry? difficult to emulate enhance products and add values to the services over time Can IT build in switching costs? simple to adopt increasingly complex and useful procedures, frequent flyer program (airline, credit card, telephone services) * ASSESSEMENT of the impact of IT on strategy begins by addressing five questions: 1. Can IT build barriers to entry? The harder the services is to emulate, the higher the barrier to entry. Enhance products and add values to the services over time 2. Can IT build in switching costs? simple to adopt for the customer at the beginning, then increasingly complex and useful procedures - yet valuable - enhancement N Dr. Chen, The Trends of the Information Systems Technology TM -24 18 3

Opportunities to Use IT to Gain Advantage
Can IT change the basis of competition? provide information lower costs Can IT change the balance of power in supplier relationships? interorganizational systems: EDI, CAD Can IT generate new products? technology in the product analysis of data: delinquent accounts, POS data mining 3. Can IT change the basis of competition? Dramatic cost reduction can significantly alter the old ground rules of competition, enabling companies to find strategic opportunity in the new cost-competitive environment by providing appropriate information e.g., DISTRIBUTOR of newspaper stand, MANUFACURING -- better scheduling, cost-effective maintenance, inventory reduction. WHEN to move on -- is difficult and troublesome, exact timing is very short 4. Can IT change the balance of power in supplier relationships? Companies are using IT to link suppliers and manufacturers; by improving information flow, they are able to decrease uncertainty, and, in the process, reduce inventory, cut the number of warehouses, and decrease headcount while also streamlining the production process. E.g., Car dealership -- move cars from the available location Can IT generate new products? 5. Can IT generate new products/services? Amorazon.com; e-trade, data mining N Dr. Chen, The Trends of the Information Systems Technology TM -25 18 4

The Value Chain Model The model views the firm as a series or "chain" of basic activities that add a margin of value to a firm's products or services, indicating where IS can best be applied to achieve a competitive advantage. IN SUMMARY: A systematic examination of a company’s value chain is an effective way to search for profitable IT applications. HOW SHOULD ADMINISTOR PREPARE ... This analysis requires 1) keen administrative insight, 2) awareness of industry structure, and 3) familiarity with the rules of competition in the particular setting. Companies need to understand their own value chains as well as those of key customers and suppliers in order to uncover potential new service areas. MORE ... Similarly, understanding competitor’s value chains provides insight on (company’s) potential competitive moves. Careful thought is needed to identify potential new entrants to an industry -- those companies whose current business could be EHNANCED by an IT-enabled product or service. N Dr. Chen, The Trends of the Information Systems Technology TM -26 18 5

Manufacturing Industry Value Chain Product and Service Flow
Primary Activities Research and Development Engineering Production and Manufacturing Marketing Sales and Distributiion Service Support Activities Administrative and Other Indirect Value Added

The Value Chain Flow of product through the system (primary activities) inbound logistics operations outbound logistics marketing and sales service Support activities: corporate infrastructure human resource management technology development procurement IT can profoundly affect one or more of these activities - sometimes simply by improving effectiveness, sometimes by fundamentally changing the activity, and sometimes by altering the relationship between activities. In addition, the actions of one firm can significantly affect the value chain of key customers and suppliers. Operations: Boeing -- Lean Manufacturing N Dr. Chen, The Trends of the Information Systems Technology TM -28 18 5

Figure 3-4: The Value Chain
Corporate infrastructure Competitive Advantage IT can profoundly affect one or more of these activities - sometimes simply by improving effectiveness, sometimes by fundamentally changing the activity, and sometimes by altering the relationship between activities. In addition, the actions of one firm can significantly affect the value chain of key customers and suppliers. Operations: Boeing -- Lean Manufacturing N Dr. Chen, The Trends of the Information Systems Technology TM -29

Analyzing the Value Chain for IT Opportunities
Inbound Logistics JIT, on-line ordering Operations and Product Structure computer-controlled manufacturing new services Outbound Logistics ticket machines express delivery Marketing and Sales order-entry services (pharmacy) computerized planning (crops) * Dr. Chen, The Trends of the Information Systems Technology TM -30 18 6

Analyzing the Value Chain for IT Opportunities
After-Sale Service maintenance technology Corporate Infrastructure on-line links to integrate remote locations more sophisticated reward systems coordination of activities Human Resource Management personnel information Technology Development support for research and development Procurement market knowledge After-Sale Service - maintenance technology Devices identify potential problems before the customer notices a difficulty and enable the service representative to fix the elevator before it breaks down, reducing repair costs and increasing customer satisfaction. Corporate Infrastructure - on-line links to integrate remote locations (27% sales growth) MANAGEMENT CONTROL - more sophisticated reward systems software (sales commission on each product sold by its sales force; thus (a) maximum incentive: sales force (b) NO incentive: ensure the customer continued to be satisfied with the services coordination of activities - coordination of activities airline, truck, railroad: optimizing schedule, fueling, cargoes by using , groupware, videoconferencing: a networked “workflow” system. Technology Development support for research and development CHINA(SPARK MIS) Procurement market knowledge (purchase price, exert pressure on --> suppliers N Dr. Chen, The Trends of the Information Systems Technology TM -31 18 7

Examples of the Value Chain
IN SUMMARY: A systematic examination of a company’s value chain is an effective way to search for profitable IT applications. HOW SHOULD ADMINISTOR PREPARE ... This analysis requires 1) keen administrative insight, 2) awareness of industry structure, and 3) familiarity with the rules of competition in the particular setting. Companies need to understand their own value chains as well as those of key customers and suppliers in order to uncover potential new service areas. MORE ... Similarly, understanding competitor’s value chains provides insight on (company’s) potential competitive moves. Careful thought is needed to identify potential new entrants to an industry -- those companies whose current business could be EHNANCED by an IT-enabled product or service. N Dr. Chen, The Trends of the Information Systems Technology TM -32

The Objectives of the Value Chain Model
The value chain model can supplement the competitive forces model by identifying specific, critical leverage points where a firm can use IT most effectively to enhance its competitive position. Dr. Chen, The Trends of the Information Systems Technology TM -33 18 5

Porter and Millar Five-Step Process
Access information intensity Determine the role of IT in the industry structure Identify and rank the ways in which IT can create competitive advantage Investigate how IT might spawn new businesses Develop a plan for taking advantage of IT Turban p.93

The Risks of Information System Success
Systems that change the basis of competition to a company’s disadvantage Systems that lower entry barriers Systems that bring on litigation or regulation Systems that increase customer’s or suppliers’ power to the detriment of the innovator Bad timing Investments that turn out to be indefensible and fail to produce lasting advantage Systems that pose an immediate threat to large, established competitors Inadequate understanding of buying dynamics across market segments Cultural lag and perceived transfer of power 1. Investing in mainframe software, but competitors in PC and FREE 2. Tighter links to customers becomes other company’s advantage. Since customers move to IS and easy for them to switch other IS-based service providers. E.g. Web-Commerce. 3. Work well --> effectiveness --> claims of unfair competition and cries for government regulation. “Information monopoly” - control of the electronic channels of distribution may be unacceptable to the public. 4. Sender <----- intermediary (company) ----> Reciever with FAX technology xxx (no loner needed) the intermediary 5. Not too early, neither too late (the timing is very short for the SIS) 6. IF … low daily transaction rates - when end users get lost Features of great value to end users, but if it is easily replicable by the firm’s competitors 7. HOTEL chains (failed) vs. AIRLINES 8. SW airline does NOT use airline reservation systems, but it still performs very well on other strategic issues (low price, less services - food etc.) 9. Not all IT efforts are WIN-WIN situations. N Dr. Chen, The Trends of the Information Systems Technology TM -35 18 8

Partnership of Three Constituencies
Consists of ... USERS Management IT Management Management Plus ... Challenge ... Imagination GENERAL Management Dr. Chen, The Challenge of the Information Systems Technology TM -36

The Challenge … to deal with subjective assessments of benefits
to determine in which quadrant the company resides — now and in the future support factory turnaround strategic Dr. Chen, The Trends of the Information Systems Technology TM -37 18 10

A Contingency Approach to IT Management
What four IT environments are created by variation in strategic impact of existing systems and strategic impact of the applications development portfolio? 1. Strategic: Bank, insurance Both existing systems and new apps under development are crucial to the firm’s operations and strategies. New apps are crucial to future competitive success. 2. Turnaround: (a) IT support for operations is important, but (b) To achieve operating objectives, the Uninterruptive cost-effective function is NOT crucial- Pharmaceutical co. Manufacturing firms like Boeing (its factory and accounting processes thought important, but was not absolutely vital to its effectiveness 3. Factory: Bank Existing one - crucial (NO disruption) New apps - less crucial Turn to outsourcing 4. Support Little strategic impact if IT operations fail to perform (IT budget may be very large) N Dr. Chen, The Trends of the Information Systems Technology TM -38 18

Framework for Global Competition
Apply IT through global business drivers Quality Risk reduction Suppliers Dr. Chen, The Trends of the Information Systems Technology TM -39

Strategic Information Systems Applications
Cost leadership Differentiation Growth Alliances Innovation Improve internal efficiency Customer-oriented approaches Dr. Chen, The Trends of the Information Systems Technology TM -40

Approaches of Sustaining A Strategic Advantage
Inward systems: efficient, effective Comprehensive, innovative and expensive system: difficult to duplicate 1. Inward systems: efficient, effective -- THAT ARE NOT visible to competitors. GM, AA 2. Comprehensive, innovative and expensive system: difficult to duplicate -- making global connections N Dr. Chen, The Trends of the Information Systems Technology TM -41

Managerial Issues Implementing strategic information systems can be risky Strategic information systems require planning Sustaining competitive advantage is challenging Ethical issues Dr. Chen, The Trends of the Information Systems Technology TM -42

Analysis using Porter’s model and Internal organizational matters
Competitive Forces: Competitive Strategies: 1. Traditional competitors 2. New market entrants 3. Substitute products and services Bargaining power of 4. Customers/buyers 5. Suppliers 1. Product differentiation 2. Cost leadership 3. Innovation - operational and marketing innovations IT-Based SABRE AAdvantage (Frequent flyer Club) Yield management system: price-setting Hub-and-spoke (pioneered by Delta Air) Maintain flexibillity - no Jumbo Jets Cost-conscious- actions are not undertaken unless the NPV is positive Two strategic weaknesses: 1. No really large, centrally positioned hub 2. No operational or marketing alliance with a European airline

Strategic Focus Movement of strategic analysis
Structural analysis (e.g., Porter’s competitive forces model) Internal organizational matters -- concerned with creation, sustenance organizations that are flexible, adaptable, and quick to learn (e.g., American Airlines InterAAct)

Opening Questions What business are we really in?
Who are our biggest competitors today and in the future? Who else does, or could, provide the same products or services? Can we use technology to integrate our own value chain activities to improve efficiency and effectiveness of operations? Can we use IT to create entry and exit barriers? * Dr. Chen, The Trends of the Information Systems Technology TM -45 18 12

Opening Questions Are any big changes in our industry looming on the horizon? Can technology help us compete in the new setting? Will future changes in related industries influence the competitive situation? Can IT help us compete effectively in the new environment? What are the risks involved in IT-enabled strategic initiatives? Can these risks be managed? Dr. Chen, The Trends of the Information Systems Technology TM -46 18 13

IT Planning: The Relationship Between Business, IS, and IT Strategies

IT Planning: Basic Four-Stage Model

Major Activities and Outputs in the Four-Stage of IT Planning

Business Systems Planning (BSP) Approach
(Top-Down)

IT Planning: Stages, Methods, and Outputs
ENDS/MEANS analysis: A planning technique that IT planners can use to determine information requirements at the organizational, departmental, or individual manager level. Ends: output, or end result, of inventory management function is an inventory kept as low as possible but at an acceptable level of availability Means: inputs and processes to accomplish the ends, e.g., forecasts of future needs, amounts on hand and on order Effectiveness: refers to how well outputs from a process match up with the input requirements of other processes. Efficiency: refers to the amount of resources required to transform inputs into outputs. Ends/means analysis is concerned with both the effectiveness and the efficiency of generating outputs from processes.

Alignment of Global Vision with IT using Global Drivers
P. 96 of Turban: This model provides a tool for indentifying the business entities such customers, suppliers, projects and orders that will benefit most from an integrated global IT management system. The basic idea is to apply IT through a firm’s global business drivers. Business drivers are quality, risk reduction, and suppliers. They are considered to be drivers if they can benefit from global economies of scale and scope, and thus add value to the global business strategy. They are the means for assessing high-level global information requirements. The drivers look at the current and future information needs and focus on worldwide implementation. The global drivers are determined by the global vision and strategy. To identify them, we and use CSF methodology. Once the drivers have been identified, they form the basis for the IT strategy as well as for the specific data, applications, and infrastructure needed. N Dr. Chen, The Trends of the Information Systems Technology TM -52

Chapter 4 Electronic Commerce: From Interorganizational Systems to the Internet
Over the past three decades, the speed and functionality of technology to support information management and communication have dramatically increased, causing us to RETHINK the business value of information. N Dr. Chen, The Trends of the Information Systems Technology TM -53 1 10

“… information has become a product in its own right, one that can be bought and sold in the marketplace.” (p. 155) “As the economic value of information increases, the economic rewards accruing to those who can access it, transform it, and use it also increase.” (ibid.) Over the past three decades, the speed and functionality of technology to support information management and communication have dramatically increased, causing us to RETHINK the business value of information.3 N Dr. Chen, The Trends of the Information Systems Technology TM -54 1 10

IT Planning: The relationship between business, IS, and IT strategies

IT Planning: Basic four-stage model

A Framework for the Internet as a Source of Information for Strategic Decision Making
& & Dr. Chen, The Trends of the Information Systems Technology TM -57

Properties of Information
It is reusable. It can be used as an efficient (and effective) substitute for labor. The time value of information also increases as the speed of business increases. It is reusable. UNlike the PHYSICAL products. It can be used as an efficient (and effective) substitute for labor. The time value of information also increases as the speed of business increases -- MONEY value of TIME instead of TIME value of MONEY. N Dr. Chen, The Trends of the Information Systems Technology TM -58 18 2

Foundations of Electronic Commerce (EC)
Interorganizational Information System (IOS) Benefits and limitations of EC Future of EC & Dr. Chen, The Trends of the Information Systems Technology TM -59

Electronic Commerce Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information via computer networks, including the Internet. & Dr. Chen, The Trends of the Information Systems Technology TM -60

Interorganizational Information System
An interorganizational information system (IOS) involves information flow among two or more organizations. Its major objective is efficient transaction processing, such as transmitting orders, bills, and payments using electronic data interchange (EDI). & Dr. Chen, The Trends of the Information Systems Technology TM -61

The Evolution of Interorganizational Systems
IOS — “networked computers that enable companies to share information and information processing across organizational boundaries.” (p. 156) American Hospital Supply (ASAP) American Airlines (SABRE) United Airlines (APOLLO) AA, UA - IOS greatly increased quality and efficiency. 40% of profits now is from the Airlines reservation system. N Dr. Chen, The Trends of the Information Systems Technology TM -62 18 3

Internet Time Line 1969: DOD commissions ARPANET, three nodes on-line
1971: Fifteen nodes, 23 host computers 1972: First program, England and Norway join 1975: Usenet news groups established 1982: TCP/IP approved as standard for ARPANET 1983: Desktop workstations came into being (???) 1984: More than 1,000 computers on ARPANET 1986: NSFNet added 1987: More than 10,000 computers on ARPANET Dr. Chen, The Trends of the Information Systems Technology TM -63 18 6

Internet Time Line 1988: Business connections for research purposes
1989: More than 100,000 computers on ARPANET ; relay to CompuServe 1990: ARPANET changed to Internet 1991: WAIS and Gopher (search tools) released 1992: WWW released; commercial traffic allowed; audio and video multicasts 1993: White House on-line; Mosaic Web browser released 1994: Congress on-line; substantial presence of business 1994: Netscape 1995: MS/Internet Explorer Dr. Chen, The Trends of the Information Systems Technology TM -64 18 7

E-Commerce and its Infrastructure

A Model of E-Market Dr. Chen, The Trends of the Information Systems Technology TM -66

A Transformation Model from Market to Customer

IOS and Electronic Markets
Drivers of IOS Types of IOS Electronic Markets (EM) & Dr. Chen, The Trends of the Information Systems Technology TM -68

Electronic Markets

Drivers of IOS Reducing costs Improving the quality of information
Compressing cycle time Eliminating paper Making the trading process easy for users & Dr. Chen, The Trends of the Information Systems Technology TM -70

Types of IOS Electronic data interchange (EDI)
Electronic funds transfer (EFT) Integrated messaging Shared databases & Dr. Chen, The Trends of the Information Systems Technology TM -71

Benefits and Limitations of Electronic Commerce
Organizations Consumers Society Limitations Technical Nontechnical & Dr. Chen, The Trends of the Information Systems Technology TM -72

Keys to successful interactive marketing

EC: Benefits to Organizations
Decreasing information costs Reduced inventories Reduced cycle time Supports BPR Lowers telecommunication costs & Dr. Chen, The Trends of the Information Systems Technology TM -74

EC: Benefits to Consumers
More choice Less expensive products Quick delivery 24-hour availability Quick access to information Customized product at competitive prices Virtual auctions Interact with other EC customers & Dr. Chen, The Trends of the Information Systems Technology TM -75

Limitations Technical
Lack of security Insufficient telecommunication bandwidth Software tools still evolving Integration of internet and EC software Special Web servers Interoperability of software and hardware & Dr. Chen, The Trends of the Information Systems Technology TM -76

Limitations Nontechnical
Accessibility Legal issues Government regulations Difficult to measure benefits EC still evolving Customers resist change * & Dr. Chen, The Trends of the Information Systems Technology TM -77

Limitations Nontechnical
Insufficient support services Perception that EC is expensive and insecure EC has not obtained a critical mass of sellers and customers EC - breakdown of human relationships & Dr. Chen, The Trends of the Information Systems Technology TM -78

Business to Consumer Applications
Advertising, online publishing and push technology Cyber banking, personal finance and stock trading Job market, auctions, bids and bartering Travel and real estate Electronic retailing and malls & Dr. Chen, The Trends of the Information Systems Technology TM -79

Push Technology Push technology is an approach designed to deliver only the information users want or need. & Dr. Chen, The Trends of the Information Systems Technology TM -80

Business to Business Applications
Electronic Data Interchange (EDI) Internet Intranet commerce Extranet & Dr. Chen, The Trends of the Information Systems Technology TM -81

Electronic Data Interchange (EDI)
EDI can be defined as the electronic movement of specially formatted standard business documents, such as orders, bills, and confirmations sent between business partners. * & Dr. Chen, The Trends of the Information Systems Technology TM -82

Electronic Data Interchange (EDI)
Business transactions messages Data formatting standards EDI translators Private lines versus the Internet & Dr. Chen, The Trends of the Information Systems Technology TM -83

An Example of With and Without EDI
& Dr. Chen, The Trends of the Information Systems Technology TM -84

& Dr. Chen, The Trends of the Information Systems Technology TM -85

THE INTERNET BEGAN AS GOVERNMENT CONNECTION OF UNIVERSITIES
INTERNET SERVICE PROVIDER (ISP): organization connected to Internet, leases temporary connections to subscribers NO ONE OWNS IT, NO FORMAL ORGANIZATION * Dr. Chen, The Trends of the Information Systems Technology TM -86

INTERNET CAPABILITIES
E -MAIL: person -to-person messaging; document sharing USERNET NEWSGROUPS: electronic bulletin boards for discussion groups LISTSERVs: list servers for discussion groups CHATTING: interactive conversations TELNET: log on one computer, work on another FTP: transfer files from computer to computer GOPHERS: use menus to locate text material * Dr. Chen, The Trends of the Information Systems Technology TM -87

INTERNET CAPABILITIES
ARCHIE: search database for files to download VERONICA: speeds searching gopher sites by using keywords WIDE AREA INFORMATION SERVICE (WAIS): locates files using key words WORLD WIDE WEB: retrieve, format, display information (text, audio, graphics, video) using hypertext links * Dr. Chen, The Trends of the Information Systems Technology TM -88

INTERNET TERMS HOME PAGE: WWW screen display welcomes user to organization’s page WEBMASTER: person in charge of Web site UNIFORM RESOURCE LOCATOR (URL): address of specific Internet resource * Dr. Chen, The Trends of the Information Systems Technology TM -89

INTERNET TERMS HYPERTEXT TRANSPORT PROTOCOL (http): communications standard used to transfer Web pages HYPERTEXT MARKUP LANGUAGE (HTML): popular programming language for creating Web sites * Dr. Chen, The Trends of the Information Systems Technology TM -90

SURFING THE NET Surf's Up!
SEARCH ENGINE: tool for locating specific sites or information on WWW HYPERLINK: spot on screen, when clicked shifts to a new page or site “PUSH” TECHNOLOGY: server streams relevant content to browser Surf's Up!

SURFING THE NET SEARCH ENGINE: tool for locating specific sites or information on WWW HYPERLINK: spot on screen, when clicked shifts to a new page or site “PUSH” TECHNOLOGY: server streams relevant content to browser Dr. Chen, The Trends of the Information Systems Technology TM -92

Intranets, Extranets, and the Internet
This slide corresponds to Figure 9.2 on pp. 352 and relates to the material on pp Internet Web Sites Firewall Internet Links Engineering Server Marketing Server CORPORATE INTRANET Companies are rapidly installing and extending intranets throughout their organizations. Businesses realize that intranets enable them to use Internet and World Wide Web technologies to support communication, collaboration, and business processes throughout the internetworked organization. An intranet is a network inside an organization that uses Internet technologies (such as web browsers and servers, TCP/IP network protocols, HTML hypermedia document publishing and databases, and so on) to provide an Internet-like environment within the enterprise for information sharing, communications, collaboration, and the support of business processes. An intranet is protected by security measures such as passwords, encryption, and fire walls, and thus can be accessed by authorized users through the Internet. A company’s intranet can also be accessed through the intranets of customers, suppliers, and other business partners via extranet links. Extranet Links Extranet Links Suppliers Customers Legacy Data Server H.R. Server Intranet Links Other Company Locations 3 3 3 3 3 3 3

Intranet Intranet is an internal network based on World Wide Web technology. It uses the existing company network infrastructure with the software developed for WWW - overcomes computer platform differences The Intranet is private and is protected from public visits by firewalls - security systems with specialized software to prevent outsiders from invading private networks. Intranet Technology Intranets require no special hardware and so are run over any existing network infrastructure. Intranet software technology is the same as that of WWW. (e.g., use of HTML to program web pages). Pros: Using Intranet, companies are making customer profiles, product inventories, policy manuals, and company telephone directories available to their employees. Cons: Intranets can not replace complex business programs such as payrolls, accounting, manufacturing, and marketing systems because they are too slow for high-speed transaction processing. &,N Dr. Chen, The Trends of the Information Systems Technology TM -94

BENEFITS OF INTRANETS Connectivity
Can be tied to legacy system & transaction processing Interactive applications with text, audio, video Scaleable to larger or smaller systems as required Easy to use browser interface *

However, Intranets can not replace complex business programs.
BENEFITS OF INTRANETS Low start-up costs Rich, responsive information environment Reduced information distribution costs However, Intranet can not replace complex business programs such as payrolls, accounting, manufacturing, and marketing systems because they are too slow for high-speed transaction processing However, Intranets can not replace complex business programs.

Intranet Examples Boeing Intel The Social Security Administration
Fujitsu Sun MicrosystemsIndustry Canada & Dr. Chen, The Trends of the Information Systems Technology TM -97

What is Extranet? The term “extranet” comes from “extended intranet.”
It is a network that links business partners to one another over the Internet by tying together their corporate Intranets. & Dr. Chen, The Trends of the Information Systems Technology TM -98

EXTRANET Dr. Chen, The Trends of the Information Systems Technology TM -99

ALLOWS SELECT USERS OUTSIDE ORGANIZATION TO USE ITS INTRANET:
EXTRANET ALLOWS SELECT USERS OUTSIDE ORGANIZATION TO USE ITS INTRANET: CUSTOMERS BUSINESS PARTNERS VENDORS Dr. Chen, The Trends of the Information Systems Technology TM -100

Public and Private Keys For Secure Electronic Transaction

How Secure Electronic Transaction Protocol (SET) Works.

CyberCash Payment System

SUPPLY-CHAIN MANAGEMENT

The Firewall between the Intranet and its connection to the Internet

Support and Implementation
Electronic commerce infrastructure Electronic payments Support services Legal and security issues Implementation issues & Dr. Chen, The Trends of the Information Systems Technology TM -106

Electronic Commerce Infrastructure
Networks Web servers Web server supporting tools Web page design Transactional activities & Dr. Chen, The Trends of the Information Systems Technology TM -107

EDI and VAN Dr. Chen, The Trends of the Information Systems Technology TM -108

Patterns of Market Exchange
The Trend is From … Vertical integration Selective sourcing Virtual corporation, Disintermediation of distribution and supply channels to The trend in E-commerce is shifting away from electronic vertical integration based IT-enabled hierarchical control and toward the establishment of alliances and partnerships facilitated by distributed power and control and frequent interaction. Vertical integration s vertically integrate without ownership -- directly link to customers AA, UA <----> travel agents, now <---> customers 1) simplifying product complexity 2) enhancing market penetration 3) expanding opportunities to create IT-enabled buyer-seller partnerships. Selective sourcing s can be “outsourced” to an external party to enable manager to reduce complexity, respond more quickly, and focus on core competencies Virtual corporation s and after can be created within which a firm retains the coordination, control, and resource management activities traditionally considered high risk (using IT) and contracts out all or most other activities Disintermediation of distribution and supply channels Contracting out the majority of the activities of production, eliminating intermediaries in the distribution selective core competencies and management systems needed to coordinate and control the network of relationships. Use of IT has enabled firms to create the technology platform required to integrate, streamline, and manage inter-organizational processes. N Dr. Chen, The Trends of the Information Systems Technology TM -109 8 18

Internetworked Enterprise
This slide corresponds to Figure 1.15 on pp. 22 and relates to the material on pp Extranets Suppliers and Other Business Partners Company Boundary Procurement, Distribution, and Logistics Engineering & Research Manufacturing and Production Accounting, Finance, and Management Businesses are becoming internetworked enterprises. The Internet and Internetlike networks inside the enterprise (intranets), between an enterprise and its trading partners (extranets), and other networks have become the primary information technology infrastructure that supports the business operations of many organizations. This is especially evident in the areas of: 1. Electronic Commerce systems among businesses and their customers and suppliers. 2. Electronic collaboration systems among business teams and workgroups. Electronic Commerce: Is the buying and selling of products, services, and information over a variety of computer networks. An internetworked enterprise uses the Internet, intranets, extranets, and other networks to support every step of the commercial process. Electronic Collaboration Systems: Involve the use of computer networks to support communication, coordination, and collaboration among the members of process teams and workgroups. An internetworked enterprise may use the Internet, intranets, extranets, and other networks to implement such systems. Advertising Sales Customer Service Extranets Customer and Business Customers 6 6 5 6

Information Technology and Globalization
This slide corresponds to Figure 1.17 on pp. 23 and relates to the material on pp Drivers of Change Competitive Environment Business/IT Strategy Business Implementation Globalization Global companies operate in a competitive environment in which networked computer systems make possible global markets that can instantly and cheaply process business transactions. The role of information technology provides the fuel for global growth and the means for meeting global opportunities. Drivers of Change. Just as IT makes competing globally more strategically possible, it also drives the forces of change to move from a relatively domestic or regional view of business to one that sees the world as a single, actionable market. Competitive Environment. IT makes it possible for companies, even small companies, to manage and extend the effective range of their competitive reach far beyond the boundaries of their domestic markets. Competitive Response. IT provides managers with "real time" information, often linking suppliers, manufacturers, and retailers together to help manage the ideal distribution of supply and demand much more quickly than ever before. This helps develop agile competition -- the ability of a company to profitably operate in a competitive environment of continual and unpredictable changes in customer opportunities. Implementation. As decision processes and logistics speed up and become better informed and more integrated, businesses can implement their strategic plans more robustly. Emerging Global Markets Internetworking The Global Enterprise Global Business Operations & Alliances Information Technology 6 7 7 7 6

Impacts of IOS on Marketing
Reduce product and market complexity while increasing market penetration Expand relationship-selling (to transaction-selling) opportunities while decreasing the cost and complexity of offering customized services Database marketing Electronic catalogs On-line consultation and after-sales service Interorganizational electronic mail Real-time customer interaction * Relationship-selling: pre-industrial era increased market exchange costs Transaction-selling: reduced the buyer-seller interaction to a discrete transaction ---> (products/services) Seller < > Buyer < money BUSINESS LOGIC (RULE) Traditional On selected key accounts IOS End Customers E- Catalogue Enhanced by Internet’s ability to enable real-time, interactive selling. Global penetration, low cost, and easy accessibility dramatically decrease the cost of communicating a message to a very large potential market. Dr. Chen, The Trends of the Information Systems Technology TM -112 10 18

Impacts of IOS on Marketing
Interactive queries in marketing materials Logic to guide buyer through complex product and service offerings Continuous update of marketing, sales, and demand data Real-time, interactive selling Electronic filters and Internet-ready direct marketing support systems Tap into communities of interest On-line shopping Dr. Chen, The Trends of the Information Systems Technology TM -113 18 10

IOS Security Issues Firewalls
Electronic barriers creates with dedicated hardware and software systems that 1) screen network traffic 2) validate the flow of information between internal and external networks. Firebreaks physical barriers across which there are no electornic connections between the Internet server and internal company IS. While digital signatures, firewalls, encryption algorithms, and passwords can help to protect out rights, they are not sufficient. - Current security, privacy, and information integrity procedures and practices must be examined; and interorganiztional information and communication policies must be established. - Government regulations and legal issues must also be addressed. N Dr. Chen, The Trends of the Information Systems Technology TM -114

Information Partnerships
What can be accomplished? novel incentives and services joint marketing programs new channels of distribution operational efficiencies revenue enhancements opportunities for scale and cross-selling What are the benefits? move large amounts of electronic data lessen financial and technical exposure reduce risk in leading-edge technology investments The trend in E-commerce is shifting away from electronic vertical integration based IT-enabled hierarchical control and toward the establishment of alliances and partnerships facilitated by distributed power and control and frequent interaction. In essence, IOS empower companies to compete, interestingly enough, by allowing them new ways to cooperate. IT-enabled partnerships need NOT be based on ownership. Managers of companies in reciprocal industries can plan and coordinate common approaches to customers through shared information and frequent interaction without vertical integration. Airline + Hotel + Car Rental --> good services to customers, but managers not likely to enjoy any operational advantages. -- management time and attention would be drained by these diverse business with their specialized operating problems. Drawing on the experience of firms like AA, Nike, Dell, ample evidence suggests that there is much to be gained by coordinating production activities through a network of IT-enabled relationships, while focusing efforts and resources on core competencies. Dr. Chen, The Trends of the Information Systems Technology TM -115 12 18

Types of Information Partnership
Joint marketing partnership Intraindustry partnerships Buyer-seller partnerships IT vendor-driven partnerships New form of market cooperation pass large volumes of electronic data: 1) precisely, 2) instantaneously, and 3) relatively cheaply Joint Marketing: Prodigy - IBM and Sears Participating companies: access to new customers, new territories, economies of scale by sharing cost of transacting, coordinating, and controlling market exchanges Customers: life is simplified when a number of desired products arrive through a single channel. Intraindustry - government may involve, e.g., Singapore’s TradeNet System The most difficult-to-manage information partnerships. It will be able to provide the speed and quality of response that were technically and financially unattainable by any participant individually. Who should be involved? Third-party network provider or industry associations often become involve due to its inherent difficulty in creating and managing intraindustry partnerships among competitors. Buyer-Seller: Reduce inventories in the retailer’s warehouse and to facilitate full-scale coordination and mutual cost reduction. IT Vendor-Driven Offer novel, technologically sophisticated customer services. Vendor: gain valuable insight into the practical field problems associated with their technology Customer: learns about, and participates in the development of, a new technology that may otherwise by beyond its skill and financial resources. Dr. Chen, The Trends of the Information Systems Technology TM -116 13 18

Questions for the General Manager
1. Is your company capitalizing on the potential benefits of electronic commerce? 2. Are you harnessing the power of information embedded within your products and services to add value to customers? 3. Are you capturing the potential benefits of electronic channel integration? 4. Have you and your information partners jointly redesigned business processes and designed appropriate authority and control systems? 5. Have you selected your partners wisely? 6. Is the technical infrastructure you have in place the right one to effect and manage the types of electronic commerce you are considering? Like the telephone before it, modern approaches to E-commerce have become an integral part of the fabric of business. * Managers must recognize that E-Commerce requires interorganizational business and management process redesign. 1. Competitor’s actions: competitive advantage and/ fighting survival 2. IT-embedded products/services could substitute for your current offerings 3. Can IOS manages products and market complexity? Eliminating channel intermediaries? Simplify and streamline product/service delivery? Dramatically decrease costs? 4. See * above. 5. Do you have a shared vision and common purpose? Do you bring equal, and complementary, power and resources to the relationship? Are you and your partners financially viable, and is the relationship financially and competitively sustainable? 6. Are you maintaining the appropriate balance between experimenting with promising new technologies - like Internet - while ensuring technical stability and performance. Firms want to position themselves as “leading edge,” but no “bleeding edge.” Dr. Chen, The Trends of the Information Systems Technology TM -117 14 18

Chapter 5 Information, Organization, and Control
“The important point is that technology neither encourages nor discourages centralized or decentralized structures and controls, but … offers new possibilities.” As companies use IT to redefine 1) the basis of competition within industries and 2) the power relationships and organizational boundaries among industry players, 3) they are also turning inward and reevaluating the role of IT within the firm. Imaginative companies are 1) not just using the technology to support the existing organization design; 2) they are creatively applying the speed, flexibility and dramatically increased information processing capacity of1990s information and 3) communication systems to transform their organizations. 1 10

The Organization Design Challenge of the 1990s
Hierarchy: centralized intelligence control complex organization in stable environment mainframe Entrepreneurial: autonomy decentralized intelligence simple organization in dynamic environment microcomputer Information Age: distributed intelligence collaboration complex organization in dynamic environment networked IT architecture * 1. Hierarchy: centralized intelligence control tight control of operating process a) building it --> destroying it (process-oriented, team-based etc.) b) “Think globally and act locally” c) expand organizational capabilities, scale, and scope and , at the extreme, support the development of “virtual corporations.” d) Distributed info. And comm. Infrastructure must be implemented to enable flexible and timely infro sharing both inside and outside the firm. 2. Entrepreneurial: autonomy decentralized intelligence 3. Information age:distributed intelligence collaboration promote flexibility, creativity, and leraning while continuing to enable tight control of operating process Take advantage of the information revolution. “As managers struggle to find a solution to the organizational design challenge, they must understand how emerging technology is enabling the handling of the increased information processing requirements of the new organizational models.” 4. Autonomy: decentralized intelligence 2 18

The Organization Design Challenge of the 1990s
From Control to Learning Promote flexibility, creativity, and learning while continuing to enable tight control of operating process From Autonomy to Collaboration Line mangers are empowered to make decisions Timely, quality distributed information and new communication technologies (e.g., video conferencing) are important factors that are enabling dramatic changes in organization redesign. From Control to Learning Hierarchy - tight control of operating process Promote flexibility, creativity, and learning while continuing to enable tight control of operating process The ability to mange complexity and responsiveness has become a powerful source of competitive advantage. IT as a tool to streamline, integrate, and time-synchronize the processes Hierarchical Control Infor. Age Control routine flow of infor Real-time long mgt. Control cycle time short mgt. Control cycle time Reactive mode Proactive model (feedforward system) manage complexity minimize complexity From Autonomy to Collaboration TOP- corporate (wide) view, but may not reflect an in-depth understanding of the business MIDDLE - in between, however, the processes (filtering and reinterpretation INFOR.) of this layer seriously hampers the speed and effectiveness of organizational decision making. BOTTOM- local optimal 2 18

From Control to Learning
“Networked, distributed information and communication systems allow rigid, costly hierarchical controls to be replaced by a new form of information age controls that promote flexibility, creativity, and learning while continuing to enable tight control of operating processes” “Processes are still defined in detail.” “IT can be used as a tool to streamline, integrate, and time-synchronize the process.” “Leading companies are also learning to manage rather than minimize complexity.” From Control to Learning Hierarchy - tight control of operating process Promote flexibility, creativity, and learning while continuing to enable tight control of operating process The ability to mange complexity and responsiveness has become a powerful source of competitive advantage. IT as a tool to streamline, integrate, and time-synchronize the processes Hierarchical Control Infor. Age Control routine flow of infor Real-time long mgt. Control cycle time short mgt. Control cycle time Reactive mode Proactive model (feedforward system) manage complexity minimize complexity 3 18

From Autonomy to Collaboration
“Decision makers at all levels must be able to directly access timely information that integrates a corporate-wide perspective with knowledge of local business dynamics.” “By solving the problem of poor information access and communication, selecting where to locate accountability for key business decisions can be based on the nature of the business and the capabilities of the people, rather than on who has access to the appropriate information.” “Boundary and value systems that prescribe the limits of authority and the ethical principles upon which decisions should be based become much more critical in an empowered organization in which major corporate decisions are made in real time.” From Autonomy to Collaboration TOP- corporate (wide) view, but may not reflect an in-depth understanding of the business MIDDLE - in between, however, the processes (filtering and reinterpretation INFOR.) of this layer seriously hampers the speed and effectiveness of organizational decision making. BOTTOM- local optimal 4 18

Frame for Analyzing Organizational Impacts of the Shadow Partner
Defining Direction Executing and Adapting Sustaining Value Process Performance Time Quality Cost Flexibility Innovation Potential Stakeholder Satisfaction Employee/Partners Customers Shareholders Society Benchmarks Best of class Best of bread Reputation Other Sustainability Resiliency Environmental Context and Resources Units, groupings Incentives Authority Coordinating mechanisms Formal and informal power Purpose Core Values, & Core Competencies Boundary systems Strategy People Values and Behavior operation, processes Control Work Management processes Information Policy Technology Exhibit TN-3

Management vs. Leader Management Leadership Planning Budgeting
Organizing Staffing Controlling Problem-solving Leadership Establishing direction Aligning people Motivating Inspiring Empowering Problem-preventing “Soft” Interpersonal Skills Working with conflict Relationship building Understanding how to work effectively in teams Knowing when to say NO! Effective communication Deep listening Facilitating Negotiating

Organization Structure
Flat hierarchy with broader spans of control Downsized corporate headquarters; staff reassigned to the field Strategic partnerships and alliances enable focus on core competencies Networked coordinating mechanisms layered over hierarchical reporting mechanisms Functional units remain as center of expertise and career development 18 6

Authority and Decision Making
Shared authority and decision making replace clearly defined hierarchical authority Senior management more involved in monitoring/ understanding operations; responsible for defining, communicating, and consistently enforcing boundary and value systems Interfunctional middle management operating units responsible for operating strategy development, strategy execution, network coordination, and innovation Self-managing work teams responsible for defining and managing local operations and product quality 18 7

Operating Processes Integrated, streamlined, and time-synchronized product/service delivery and new product development processes Cycle time of operating processes equals cycle time in environment Increased complexity of operating processes matches the inherent complexity in the environment Efficient, yet flexible, management Interfunctional and interorganizational Focus on continuous improvement and innovation 18 8

Management Processes Integrated, streamlined, and time-synchronized management processes Cycle time of management processes matches cycle time of operating processes Increased complexity of management processes matches the increased complexity of operations Efficient, yet flexible, management Interfunctional and interorganizational Increased vertical and lateral interaction “Tight control” achieved through information vs. structure and supervision 18 9

Incentives and Rewards
Shared incentive systems augment and enforce shared authority structures Personal accountability and commitment maintained “Stretch” targets motivate commitment to collaborate, maintain focus on organizational priorities, and intensify efforts to achieve organizational goals 18 10

Roles/Skills and Expertise
Roles evolve as individuals and teams struggle to redefine work within the new structure and incentive systems Increased analytical/intellectual content of the work People expected to have a broader skill base Information competency at all levels Increased emphasis on the development of leadership and change management skills 18 11

Career Development Fewer opportunities for advancement available within the hierarchical reporting structure Expanded jobs and increased lateral movement instead of hierarchical movement 18 12

Communicating Organizational Priorities
What are the common causes of failure of traditional control systems? people do not understand corporate goals people understand corporate goals but lack the resources to meet them people are not motivated to meet corporate goals 18 13

Meaningful Budgets What technology makes this possible?
spreadsheets What are the aspects of this change? budget process: ability to investigate several scenarios budget update: continual entry of actual vs. budget 18 14

Effective Incentive Systems
What technology makes this possible? database, communications What are the aspects of this change? continuous tally of sales commissions identify and track the contribution of a working unit base customer’s discounts on total volume 18 15

Solutions for Production
What technology makes this possible? process monitoring systems What are the aspects of this change? early detection of problems in output or equipment function correction of settings or maintenance of equipment 18 16

Facts to Make the Sale What technology makes this possible?
database, datawarehouse, and “automated ‘tickler’ system” What are the aspects of this change? correlation/crosstabulation distributed branches with all the data available at HQ 18 17

Adaptation to Change What technology makes this possible?
more powerful and flexible data architectures What are the aspects of this change? identify those affected by change communicate to those affected by change 18 18

Conclusions The power of Is department now and the future will come from leadership, influence and capability - and less from control. The measure of success of the IS will no longer be numbers of people but contributions to the business - quality, speed, products/services, and innovation. The roadblock to competitive advantage generally is not technology, but implementation - with people. Successful implementation requires working closely with line people. Thus IS departments need to establish better relationships with outside organizations, senior management, and users.

Opportunities 18 19

How to Capitalize on the real Business Opportunities?
Integrating ... STRATEGIES POLICIES ORGANIZATION INFORMATION TECHNOLOGY Theme 2: Integrating Changing Technology Platforms Dr. Chen, The Challenge of the Information Systems Technology TM -140

Who should be Involved in the Project Development?
Consists of ... USERS TECHNICAL PROFESSIONALS PROJECT MEMBERS MANAGEMENT Dr. Chen, The Challenge of the Information Systems Technology TM -141

How to Capitalize on the real Business Opportunities?
Integrating ... STRATEGIES POLICIES ORGANIZATION INFORMATION TECHNOLOGY Theme 2: Integrating Changing Technology Platforms Dr. Chen, The Trends of the Information Systems Technology TM -142

Who should be Involved in the Project Development?
Consists of ... USERS TECHNICAL PROFESSIONALS PROJECT MEMBERS MANAGEMENT Dr. Chen, The Trends of the Information Systems Technology TM -143

Table 3-1: Impact of Competitive Forces
18 2

Chapter 3 Effects of IT on Competition

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