2 Overview for Today What is a Strategic Information System Strategic Advantage & ISPorter’s Competitive ForcesFor Next TimeCritical Success FactorsPorter’s Value Chain Analysis
3 What is a Strategic IS?System that significantly improves the manner in which business is conducted:Control a marketLarger than average profit marginsSignificant increases performance/productivityContributes 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 SISNot as easy to copy or duplicate, Why?Both can focus on new product/serviceWhich 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: BPRImproved 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 competitionIncreases market knowledge, improves internal relationships, raise quality of strategic planningFrito Lay and Hertz examples…Gathering internal information (BI)About products, customers, suppliers, …Organizational memory or knowledge baseWhat makes these so easy today?
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 divisionWhat are the likely results?Inadequate IS
9 Tools for Aligning IS & Strategy Various tools and methodologies for aligning IS with corporate strategyPorter’s Competitive ForcesCritical Success FactorsValue Chain AnalysisMany 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 advantage5 Components to the model:Threat of entry of new competitorsBargaining power of suppliersBargaining power of customersThreat of substitute products/servicesRivalry among existing industry firms
11 Porter’s Model Applied List the players in each forceRelate the determinants of each force with the players listed aboveDevise a strategy to defend against these forcesUse 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 missionBusiness Objectives - tangible milestones: growth, roiCritical Success Factors - make the milestones happenattractive style of product line, efficient dealer organization, effective cost control in manufacturingIdentify what is most important to performance, then develop good indicators of this performance: information needs
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 logisticsOperationsOutbound logisticsMarketing & SalesServiceEach activity adds value to product
17 Porter’s Value Chain, II 2: Support Value Activities (each supports Primary Value)Organizational infrastructureHuman resource managementResearch & DevelopmentProcurement3: MarginRevenue generated by above activities minus costs of each activity
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 SystemRole of IT Strategic ManagementCritical Success FactorsPorter’s Competitive ForcesPorter’s Value Chain AnalysisHow do they all fit together?
21 For Next Time… Prepare minicases for Ch 12 Milestone #2 due on Friday Will send viaWe will discuss these on FridayMilestone #2 due on FridayEXAM#1 Coming Soon!