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MANAGING INFORMATION SYSTEMS FOR STRATEGIC ADVANTAGE

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MANAGING INFORMATION SYSTEMS FOR STRATEGIC ADVANTAGE LEARNING GOALS Describe the various approaches to devising corporate strategy. Explain how information systems ... – PowerPoint PPT presentation

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Title: MANAGING INFORMATION SYSTEMS FOR STRATEGIC ADVANTAGE


1
MANAGING INFORMATIONSYSTEMS FOR STRATEGIC
ADVANTAGE
2
LEARNING GOALS
  • Describe the various approaches to devising
    corporate strategy.
  • Explain how information systems can help
    organizations achieve a strategic advantage.
  • Describe the methods organizations use to choose
    a strategic information systems project.
  • Describe how information systems can bring about
    corporate change.
  • Explain the concept of knowledge management and
    describe the technologies that comprise knowledge
    management systems.

3
Value Chain
  • Value chain activities within an organization
    that bring products and services to market
  • Primary activities take raw materials and
    transform it into something of greater value
  • Inbound logistics Marketing and sales
  • Operations Service
  • Outbound logistics
  • Supporting activities those functions that the
    company requires to do business but do not
    directly add value to a product or service
  • HR Procurement
  • IT Firm infrastructure

4
Value Chain Analysis
  • Process of analyzing the activities within an
    organizations value chain
  • Companies gain strategic value by focusing on a
    particular portion of the value chain
  • IT can help reduce the costs of these processes,
    thus increasing profit margins

5
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6
Porters Competitive Forces Model
  • Unlike the value chain, the Competitive Forces
    Model deals with external factors
  • Five components
  • Level of competition in industry
  • Threat of new entrants into industry
  • Bargaining power of customers
  • Bargaining power of suppliers
  • Threat of substitute products
  • Uses for CFM
  • Determine position within industry
  • Analyze industries and market segments they might
    wish to enter (exit)

7
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8
Competitive Advantage (CA)
  • Those qualities that allow a company to earn
    above-average profits within an industry
  • Low cost
  • Unique product
  • Three generic strategies to achieve competitive
    advantage
  • Cost leadership strategy
  • Differentiation strategy
  • Focus strategy

9
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10
Information Systems forStrategic Advantage
  • How can information systems improve the value
    chain?
  • By reducing the cost of primary and support
    activities
  • How can information systems change the way an
    organization reacts to its competitive forces?
  • By changing the bargain power of suppliers
  • By building closer ties with customers
  • By increasing or decreasing barriers to entry in
    a market
  • By serving as the basis for new products and/or
    services

11
Sustainable Competitive Advantage
  • Four approaches lead to sustainable competitive
    advantage
  • Create barriers to entry through patents,
    monopoly, or technical expertise
  • Be the first to develop systems with high
    switching costs
  • Develop the technologies that change the
    underlying nature of the industry
  • Cultivate and hire people with excellent
    information systems management skills

12
Productivity Paradox
  • We see computers everywhere, but in the
    productivity statistics.

    Robert Solow, Nobel Prize-winning economist
  • It is difficult to attribute cost savings
    directly to a specific information system
  • It is difficult to prove that a specific system
    led to certain financial outcomes
  • Other measures are needed
  • Balanced scorecard
  • Total cost of ownership (TCO)

13
The Balanced Scorecard
  • Strategic planning method that translates
    business strategy into a comprehensive set of
    performance measures
  • Investigates strategies in four areas
  • Financial e.g. improving cash flow and reducing
    expenses
  • Internal business processes e.g. decreased
    cycle time and improved quality
  • Learning and growth e.g. develop successful new
    products
  • Customer e.g. improve customer satisfaction and
    decrease product defects

14
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15
Value of Information Systems
  • Cost must NOT outweigh benefits
  • Return on investment (ROI)
  • ROI (Benefits Costs) 100 / Costs
  • Costs include Benefits include
  • Hardware Tangible benefits
  • Software Intangible benefits
  • Labor
  • Total cost of ownership (TCO)
  • Method to quantify long-term direct and indirect
    costs

16
TCO Analysis for PDA Purchase
17
The IS Portfolio
  • Treat investments in IS assets like a portfolio
    of investment assets to find redundancies and
    achieve balance
  • Five steps
  • Put information about all the organizations IS
    projects into a database
  • Prioritize the IS projects
  • Divide the IS projects into three types of
    investments
  • Infrastructure
  • Upgrades
  • Strategic initiatives
  • Automate the entire process
  • Have the organizations top finance executive
    perform a Modern Portfolio Theory analysis

18
Sample IS Portfolio
19
Business Process Improvement and Reengineering
  • BPI processes are good but can be better
  • BPR elimination or change of business processes
  • The fundamental rethinking and radical redesign
    of business processes to achieve dramatic
    improvements in critical contemporary measures of
    performance such as cost, quality, service, and
    speed. Hammer and Champy,
    1993
  • Automation (e.g information systems) is a key
    factor in both BPI and BPR

20
Major Themes of Successful BPR
  • Several jobs are combined into one.
  • Workers are empowered to make decisions.
  • Work is performed where it makes the most sense.
  • Checks and controls are reduced or eliminated.
  • Reconciliation is minimized.

21
Steps in BPR
  • Have a clear strategy that is aligned with the
    organizations goals
  • Clearly defined scope that identifies exactly
    which processes need to be reengineered and which
    supporting processes need to be revised
  • Define measures and benchmarks for success
  • Develop an understanding of the current, as-is
    processes
  • Develop a plan for transition from the as-is
    processes to the to-be processes
  • Implement the changed processes
  • Measure the outcomes of the changes

22
Knowledge Management (KM)
  • Knowledge assets the knowledge that exists
    within the minds of each employee and the
    knowledge that exists in a tangible form such as
    databases, documents, and reports
  • Companies must know how to manage this knowledge
  • Knowledge management (KM) the process by which
    organizations extract value from their knowledge
    assets

23
KM Systems
  • Information technologies that enable the exchange
    of knowledge among employees and the storage of
    knowledge in repositories
  • Types of KM systems
  • Expert directories
  • Knowledge repositories
  • Knowledge sharing technologies
  • Knowledge representation technologies
  • Knowledge discovery tools

24
Knowledge Portals
  • A single access point to the knowledge of an
    organization
  • Provides Web-based access to all of the KM
    technologies within an organization
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