INFORMATION SYSTEMS FOR STRATEGIC
ADVANTAGE
"IT HAS BECOME A STRATEGIC NECESSITY. BELIEVE
IT, ACT ON IT, OR BECOME A FOOTNOTE IN HISTORY"
COMPETITIVE STRATEGY CONCEPTS
GATX: SAP SAP AG
<company> (Systeme, Anwendungen, Produkte
in der Datenverarbeitung - German for "Systems, Applications and Products
in Data Processing") A company from Germany that sells the leading
suite of client-server business software. The US branch is called SAP America.
WHAT INFORMATION SYSTEMS SUPPORT A COMPANY'S STRATEGY?
TYPES OF STRATEGIES
- COST LEADERSHIP
- DIFFERENTIATION
- INNOVATION
- GROWTH
- ALLIANCE
STRATEGIC ROLES FOR INFORMATION MANAGEMENT
IMPROVING BUSINESS PROCESSES
- CUT COSTS, IMPROVE QUALITY AND CUSTOMER SERVICE, DEVELOP
NEW PRODUCTS
PROMOTING BUSINESS INNOVATIONS
- ELECTRONIC COMMERCE, ATM'S
LOCKING IN CUSTOMERS AND SUPPLIERS
- BUILD VALUABLE RELATIONSHIPS
- EDI
CREATING SWITCHING COSTS
- COST TOO MUCH TO SWITCH FIRMS BECAUSE OF INVESTMENT IN
SHARING OF INFORMATION
- EXAMPLE: SABRE RESERVATION SYSTEM
RAISING BARRIERS TO ENTRY
- KEEP COMPETITOR'S OUT. COST TOO MUCH TO ENTER
LEVERAGING A STRATEGIC IT PLATFORM
- INVESTMENT IN INFORMATION TECHNOLOGY CAN HELP IN OTHER
AREAS
DEVELOPING A STRATEGIC INFORMATION BASE
- IT ALLOWS FIRM TO DEVELOP AND GAIN ACCESS TO LOTS OF
INFORMATION, STORED IN DATABASES, GIVING IT AN INFORMATION ADVANTAGE
BREAKING INFORMATION BARRIERS
BREAKING TIME BARRIERS
- DRAMATICALLY SHORTENING STEPS IN THE BUSINESS PROCESS
- JIT
BREAKING GEOGRAPHIC BARRIERS
- OPERATE IN SEVERAL LOCATIONS AND SHARE THE INFORMATION
BREAKING COST BARRIERS
- PURCHASING: DECENTRALIZED PURCHASING, BUT SHARE INFORMATION
WITH ALL LOCATIONS (QUANTITY DISCOUNTS)
THE NEW ECONOMICS OF INFORMATION
- REACH: NUMBER OF PEOPLE RECEIVING INFORMATION
- RICHNESS: BANDWITH: AMOUNT OF INFORMATION; INTERACTIVITY:
AMOUNT OF DIALOG BETWEEN SENDER AND RECIPIENT; CUSTOMIZATION: PERSONALIZED
TO USED
- CAN HAVE IT ALL WITH THE INTERNET
BREAKING STRUCTURAL BARRIERS
- SEND INFORMATION ACROSS TRADITIONAL ORGANIZATIONAL STRUCTURES.
EVERYONE HAS A LAPTOP CONNECTED TO THE COMPANY'S INTRANET.
THE VALUE CHAIN AND STRATEGIC INFORMATION SYSTEMS (IS)
- basic set of activities that add value to a product or
service
- look at value chain to see where IS can be of help
STRATEGIC APPLICATIONS AND ISSUES IN INFORMATION TECHNOLOGY
business use of information technology
- strategic: IT competitive advantage
- offensive: IT leverage
- defensive: IT controlled
- cost justified: IT tight control
- controlled: IT is an expense
REENGINEERING BUSINESS PROCESSES
- radically improve
- similar to zero based budgeting
- start from ground zero
- why are you doing activities
- speed and efficiency of IS are major impact
IMPROVING BUSINESS QUALITY
TOTAL QUALITY MANAGEMENT
- eliminate waste
- kaizan: continuous improvement
- monitor information flows
- identify problems close to the source
- simplify and standardize processes
- poka yoke: self inspection
- andon: warning signal
BECOMING AN AGILE COMPETITOR
- lean production
- eliminate "fat" of middle management
- quick response time
- flexible, response to market demands
CREATING A VIRTUAL COMPANY
BUILDING THE KNOWLEDGE CREATING COMPANY
two types of knowledge
- explicit knowledge: things stored in the computer
- tacit knowledge: residing in your workers
knowledge management
- managing these two types of knowledge to your strategic
advantage
- databases, human experts, readily available to the decision
makers
USING THE INTERNET STRATEGICALLY
- where does your organization fit in the matrix?
- cost and efficiency improvement: low
connectivity to the web. Improve by using low level technology, email.
- performance improvement of business effectiveness: high
internal, low external connectivity. Work on internal communications for
strategic advantage.
- global market penetration: low internal,
high external connectivity. Interact with customers, through better web
sites.
- product and service transformation: high
internal, high external connectivitiy. Use of all telecommunication technologies.
INTERNET VALUE CHAINS
- LOOK AT INTERNET CAPABILITIES AND LOOK WHERE THEY CAN
PROVIDE YOUR ORGANIZATION A COMPETITIVE EDGE
- LOOK INSIDE AS WELL AS OUTSIDE
THE CHALLENGE OF STRATEGIC IS
- NOT ONLY FOR OPERATIONS, BUT LONG RANGE FOCUS