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Chapter 12 IT & Business Strategy.

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Presentation on theme: "Chapter 12 IT & Business Strategy."— Presentation transcript:

1 Chapter 12 IT & Business Strategy

2 Overview for Today What is a Strategic Information System
Strategic Advantage & IS Porter’s Competitive Forces For Next Time Critical Success Factors Porter’s Value Chain Analysis

3 What is a Strategic IS? System that significantly improves the manner in which business is conducted: Control a market Larger than average profit margins Significant increases performance/productivity Contributes to strategic goals (responses to busn pressures from Ch1)

4 Two Views of SIS Outwardly Focused SIS Inwardly Focused SIS
Easy to copy or duplicate, Why? Inwardly Focused SIS Not as easy to copy or duplicate, Why? Both can focus on new product/service Which can be sustained longer?

5 Role of IT in Strategic Mgmt
Enabler for change! Allows creation of new applications for strategic advantage: (Fed Ex, SABRE) Supports strategic changes: BPR Improved communication (FDA) New product development cycles (jeep liberty…) Increases Competitive Intelligence (next) Benefit comes from being FIRST, everyone else is just keeping up! But - hard to sustain!

6 Competitive Intelligence
Gathering information about competition Increases market knowledge, improves internal relationships, raise quality of strategic planning Frito Lay and Hertz examples… Gathering internal information (BI) About products, customers, suppliers, … Organizational memory or knowledge base What makes these so easy today?

7 BI: Been to Disney Recently?

8 Strategic Alignment Problems
Recent surveys highlight mismatches: ~90% IS critical to strategic success <35% IS is very involved with busn strategy <30% busn strategists work with IS division What are the likely results? Inadequate IS

9 Tools for Aligning IS & Strategy
Various tools and methodologies for aligning IS with corporate strategy Porter’s Competitive Forces Critical Success Factors Value Chain Analysis Many more in text – we don’t have time to discuss all of them…

10 Porter’s Competitive Forces Model
Used to develop strategies to increase competitive advantage 5 Components to the model: Threat of entry of new competitors Bargaining power of suppliers Bargaining power of customers Threat of substitute products/services Rivalry among existing industry firms

11 Porter’s Model Applied
List the players in each force Relate the determinants of each force with the players listed above Devise a strategy to defend against these forces Use IT to support the strategy

12 Another Question… Some argue that an SIS gives a company an unfair advantage and may even cause the demise of smaller, weaker companies that cannot afford to build similar systems. What is your opinion on the fairness of such systems?

13 Critical Success Factors (CSFs)
Mission Statement - clear, concise, believable, repeatable! Business Goals - broad, derived from mission Business Objectives - tangible milestones: growth, roi Critical Success Factors - make the milestones happen attractive style of product line, efficient dealer organization, effective cost control in manufacturing Identify what is most important to performance, then develop good indicators of this performance: information needs

14 Determining CSFs: Lets identify CSFs specifically for:
Bank? Ice Cream Manufacturer? Discount Retail Chain? Shipping Firm? Any observations about these?

15 Discovering Critical Success Factors
AKA: Things you might ask for your projects: What objectives are central to your organization? What factors are essential to meeting these objectives? What decisions or actions are key to these critical factors? What variables underlie these decisions, how are they measured? How can I use IS to supply these measures?

16 Porter’s Value Chain Model, I
1: Primary Value Activities (creation, sale, & support of a product) Inbound logistics Operations Outbound logistics Marketing & Sales Service Each activity adds value to product

17 Porter’s Value Chain, II
2: Support Value Activities (each supports Primary Value) Organizational infrastructure Human resource management Research & Development Procurement 3: Margin Revenue generated by above activities minus costs of each activity

18 Value Chain At Work

19 A Few Questions: What is the purpose of the Value Chain?
What types of things might you learn? What do you do with this new knowledge? Why might this be important? What category of CI does this fall into?

20 Important Concepts to Know
What is a Strategic Information System Role of IT Strategic Management Critical Success Factors Porter’s Competitive Forces Porter’s Value Chain Analysis How do they all fit together?

21 For Next Time… Prepare minicases for Ch 12 Milestone #2 due on Friday
Will send via We will discuss these on Friday Milestone #2 due on Friday EXAM#1 Coming Soon!

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