What

1
Whats Happening?!

• Oracle take-over attempt of PeopleSoft is not
  dead.

SIA is forecasting a 19 increase in
semiconductor sales for 2004.
A 30 second ad during the Superbowl cost 2.3
million.
2
100 Best Places to Work

1. J.M. Smucker, Orville, Ohio
2. Alston Bird, Atlanta
3. Container Store, Dallas
4. Edward Jones, St. Louis
5. Republic Bancorp, Owosso, Mich.
6. Abode Systems, San Jose
7. TDIndustries, Dallas
8. SAS Institute, Cary, N.C.
9. Wegmans Food Markets, Rochester, N.Y.
10. Xilinx, San Jose

3
100 Best Places to Work

• 25 Microsoft
• 28 Cisco Systems
• 34 Starbucks
• 35 Mayo Clinic
• 46 Intel
• 48 Network Appliance
• 55 Qualcom
• 62 Continental Airlines
• 72 IBM
• 78 Intuit
• 79 Harley-Davidson

84 Marriott International 86 Mens Wearhouse 90
Granite Construction 91 Texas Instruments 94
International Data Group 96 FedEx 99
Nordstrom 100 Simmons
4
Chapter 7 Summary

• Implementing a Vision Strategy, Tactics, and
  Business Plan

5
Three Key Elements
Vision - Identifies what the organization wants
to look like at some logical point in the future.
Strategy - How a company will achieve the
long-term goal of the vision.
Tactics - More specific time-oriented, measurable
ways to make a vision a reality
6
Two Challenges for a New Business Strategy

1. Deciding what things are worth doing.
2. Getting them done.

7
Elements of a Business Strategy

• Competitive framework - definition and size of a
  market including direct and indirect competitors.
• Market Target primary buyer or customer
  segment for product or service.
• Basis for Perceived Competitive Advantage how
  key customers define superior value of a product.
• Key Profit Drivers the factors that affect the
  profitability of a product or service.
• Product and/or Service Portfolio relating a
  product or service with the other four points.

8
The Three Components of a New Strategy
Vision
Internal Assessment
External Assessment
A New Strategy
Figure 7-1
9
Strategic Management Process
10
Managing for Results

• Objectives
• Authority
• Responsibility
• Training
• Motivation
• Performance
• Results
• Reward

Control
Figure 7-4
11
Information-Oriented Infrastructure is key to a
Responsive Competitive Strategy

• Data Management Providing access to timely,
  accurate and cost- effective data.
• User Applications Support of application to the
  users in functional and individual support.
• Voice Management Effective ways of
  communication (i.e. E-mail, data access, video
  conferencing).
• Network Management Manage networks to assure
  high levels of availability and performance.
• Planning Process Integrating information
  systems into the business planning process.
• Financial Strategy and Organization How does an
  organization afford, justify and pay for
  information systems?

12
A Logical Goal

• The goal is determine if a business strategy
  can be more successful through the support of
  information systems.

13
Possible Exam Questions

• What factors will influence the selection of the
  primary strategy?
• What can be done to facilitate the transition
  from vision to strategy to tactics?

14
Chapter 8 Introduction
Evaluating Business Strategies and The Use of
Information Systems The Strategic Option
Generator
15
A Systematic Approach
Vision Strategy Tactics Business Plan
Competitive Options

• Competitive Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
• as the Delivery Vehicle
• Success Factor Profile

16
Chapter Objectives

• Evaluating Business Strategies
• The use of the Information Systems to gain
  competitive advantage

Strategic Option Generator A model that can
identify strategic opportunities involving the
use of information systems
17
TARGET
18
THRUST
19
MODE
20
DIRECTION
21
EXECUTION
22
Analysis of Federal Express Using the
Customer
Differentiation
Innovation
Growth
Offensive
Use
Provide
23
Where Are We?

• Section I The Business Environment
• Chapters 2 5
• Section II The Company Environment
• Chapters 6 7
• Section III The Use of Information Systems

24
A Systematic Approach
Vision Strategy Tactics Business Plan

• Competitive Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
• as the Delivery Vehicle
• Success Factor Profile

Figure 1-4
25
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STRATEGIC OPTION GENERATOR
TARGET
CUSTOMER
COMPETITOR
SUPPLIER
THRUST
DIFFERENTIATION COST
INNOVATION GROWTH ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC ADVANTAGE
Figure 8-1
27
Biggest Mistake
Target, thrust and mode are fairly
straight-forward so they dont tend to cause
problems for students.
Direction is a source of problems and confusion
since the name of the element is not
self-explanatory.
This element deals with whom the use of IS is
intended.
28
Federal Express Analysis Using the Strategic
Option Generator
TARGET
CUSTOMER
COMPETITOR
SUPPLIER
THRUST
DIFFERENTIATION COST
INNOVATION GROWTH ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC ADVANTAGE
Figure 8-2
29
UPS Analysis Using the Strategic Option Generator
TARGET

CUSTOMER
COMPETITOR
SUPPLIER
THRUST
DIFFERENTIATION COST
INNOVATION GROWTH ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC ADVANTAGE
Figure 8-3
30
Chapter 9 Introduction

• The Roles, Roles and
• Relationships Concept

31
Roles, Roles and Relationships

• The role of information systems focused on
  competitive priorities
• The role of senior management positioning and
  prioritizing the competitive role of information
  systems
• The relationship the need for an effective
  working relationship between senior management
  and the information systems organization

32
Senior Management

• Senior Executive Communication and direction to
  the information systems organization of the long
  term goals of the organization
• Making sure that major information systems are
  properly funded and staffed
• Motivating people throughout the organization to
  make things happen

33
Senior Managers of Major Business Functions

• Understand the competitive role of information
  systems within the organization
• Identify and specify requirements for new systems
• Making sure these new systems are adequately
  funded through the budget process

34
The Role of the Users of Information Systems

• Operation level people make things happen!
• They need to be motivated by their managers to
  support the information systems organization and
  system changes
• Without their support a well designed, planned
  and executed information system can fail

35
The Role of the IS Manager

• Mission statement
• To assure that the corporations present as well
  as future demands for information, information
  processes, information systems and computer based
  technologies are provided for in such a manner
  that the daily conduct of the business will not
  be impacted and that the future business
  opportunities can be capitalized and managed by
  the corporation.

36
Roles, Roles and Relationships
Senior Management
Users
Information Systems Organization
Functional Management
Figure 9-1
37
Making Things Happen!

• There are three factors that can be identified
• that cause a business to initiate action in the
• information systems area
• A threat to the business
• The personal power of a senior manager
• The need for business process improvements

38
Conclusion
The chapter focuses on approaches for making
these relationships work and how to capitalize on
them.
39
Chapter 9

• The Roles, Roles and Relationships Concept

40
Chapter 9
1. Roles, Roles, Relationship Concept and
Examples. 2. Triggers of Action. 3. Technology
Transfer Through Organizational Learning. 4.
IS Organization as a Business within a
Business. 5. Outsourcing the management of IS.
41
IS as a Competitive Resource?

• Business competitiveness is a top priority.
• What about Information Systems?

42
Success Can Be Elusive!
Why are some companies successful while others
are frustrated with a lack of results and
benefits from the use of information systems?
43
Roles, Roles and Relationships
1. What organizational leadership is necessary to
gain a competitive advantage through the use of
information systems? 2. How does an organization
determine the appropriate use of information
systems to gain a competitive advantage on an
on-going basis? 3. Does a specific event,
activity or person tend to trigger the start of a
program that emphasizes the competitive use of
information systems?
44
Roles, Roles and Relationships
4. Can an organization sustain a competitive
advantage that is built on an information system?
5. Is this a broad based approach or is the
successful use of competitive information tied to
a small number of people playing key roles? 6.
Does outsourcing the management of information
systems impact its possible use as a competitive
resource?
45
How Much is Based On
1. Business Leadership? 2. Information Systems
Leadership? 3. A Proven Information Systems Track
Record? 4. Business Stability? 5. Information
Content of the Business? 6. IS Cost and/or Risk?
46
Specific Roles of Information Systems
1. Business Process Partner. 2. Provide Access to
Information. 3. Enhance Communications. 4.
Provide Decision Assist.
47
Information systems are strategic weapons, not
cost centers.
Information systems are strategic weapons, not
cost centers.
Robert F. McDermott Former USAA CEO
48
Roles, Roles and Relationship Concept
1. The role of information systems is focused on
competitive priorities.
2. Senior management plays a major role in
positioning and prioritizing the competitive
role of information systems.
3. There is an on-going working relationship
between senior management and the
information systems organization to sustain
the successful use of information systems to
compete.
49
Two Important Questions
1. Who Makes Competitive Strategy Decisions?
2. Who Makes Competitive Strategy Decisions
When the Process is Built on a Computer Base?
50
Top Executive Job Description
The primary role of the top executive is to
assure the long term viability of the business.
51
The Role of the Senior Executive
The Person that Runs the Business on a Day-To-Day
Basis

• Provide a long term vision for the future of the
  business.
• Recognize the value of information to the
  organization.
• Sponsor and participate in determining the role
  of information systems.

52

• Communicate the importance of the information
  systems role.
• Provide funding, including RD, to address the
  major requirements.
• Focus on results and benefits.
• Motivate to make things happen!

53
Role of Other Senior Management

• Understand the role of information systems within
  the organization.
• Identify and specify requirement for new
  information systems.
• Justify and fund existing and new systems.
• Sponsor their information systems on an on-going
  basis.

54
Role of IS Executive

• Function as a member of the senior management
  team.
• Provide an understanding of the realm of the
  possible, feasible, affordable and achievable
  with information systems.
• Posture information systems as a service and
  support organization in both fact and perception.

55
Using IS to Compete
Senior Management
Users
Information Systems Organization
Functional Management
Figure 9-1
56
Roles, Roles and Relationships
Leadership in two forms
- Business Leadership - IT Leadership
57
Information Systems Organization Mission Statement
To assure that the corporation's present as well
as future demands for information, information
processes, information systems and computer-based
technologies are provided in such a manner that
the daily conduct of the business will not be
impacted and that the future business
opportunities can be capitalized on and managed
by the corporation.
58
The Reeducation of UPS
Kent Oz Nelson ,CEO

• For decades UPS focused on managing physical
• distribution.
• Today, new IT and relaxed regulations have made
• logistics management the imperative.
• Information about a package is often as important
  as
• the package itself.
• In one decade IT went from a limited factor to a
• critical enabling resource.

59
Using Information Systems to Gain a Competitive
Advantage
An Essential Partnership
60
Using Information Systems to Compete
Senior Management
IT Leadership
Business Leadership
Information Systems Organization
Figure 9-2
61
Relationships
1. A formal structure within the organization.
2. Integral to the way that the business is run.
62
Who Should Be the Primary Initiator of Using
Information Systems to Compete?

• Senior Management?
• Functional Management?
• Information Systems Management?

63
Using IS to CompetePrimary Responsibilities
Conceptual Approach
Specific Approach
Direction
Senior Management
7
2
1
Functional Management
2
5
4
I/S Management
1
3
5
10
10
10
Figure 9-4
64
Technology TransferThrough Organizational
Learning

• There is a direct correlation between
• the successful introduction of a new
• information system within an organization
• and the learning curve of the primary
• users.

65
Learning Curves
Information Technology
Computer-based Applications
Organization
66
Making It Happen!
Competitive Advantage
Business Leadership
Technology Leadership
Tactics
Vision
Strategy
Crisis Management
Action Initiators
Process Improvement
Executive Power
Figure 9-5
67
You manage things, but you lead people.
Grace Hopper Admiral U.S. Navy
68
More on Leadership
1. Entrepreneur Founder 2. Corporate
Managers 3. Corporate Caretakers
Bob Townsend Up the Organization
69
Board of Directors
A Business
Suppliers
Users
Products/Services
Competitors
Figure 9-6
70
Steering Committee
Information Systems Business
Suppliers
Customers
Competitors
Figure 9-7
71
Steering Committee
Needs and Priorities
Direction
Opportunities
Wants Needs Justification Real s?
I/T Needs Real s
Information Systems Organization
Suppliers
Users
Products Services Constraints Costs
Products People
Real Dollars
Competitors
Figure 9-8
72
Outsourcing

• Hiring someone whose expertise can perform a
  business function or activity better, more cost
  effectively and/or in a more timely manner than
  can be achieved in-house.

Also enables the company to focus on its core
competencies and those factors that mean the
difference between success and failure.
73
Outsourcing
Outsourcing is a current, major focus of many
business enterprises. It continues to be a
very hot topic.
74
Outsourcing
What? With Whom? Where? How Long? How Much Risk?

• Logical?
• Necessary?
• Appropriate?
• Cost-effective?

75
The Evolution of Outsourcing

• The concept of outsourcing is not new. For
  decades,
• companies have outsourced a number of functions
  such as
• cafeteria service, janitorial service, security
  guards, payroll,
• clerical support, manufacturing and distribution.
  
• Outsourcing, by the old definition, was very
  specific, targeted,
• and often project based. The company might
  design a product,
• then outsource the manufacture of various
  components,
• subassemblies, even the finished product.
• Things have evolved to where anything that is not
  a core
• business process is a candidate to outsource.

76
Outsourcing IS Management

• A Way to Save Money on a Short Term Basis?

• A Way to Avoid the Need to Manage Technical
• People in an Environment that Keeps Changing?

• Strategically Significant?

UB example
77
Outsourcing Information Systems Management
Is the outsourcing of the management of
information systems a contradiction of its
possible strategic significance?
78
Information System Goals
To help achieve organizational objectives by
1. Supporting the decision making process. 2.
Providing necessary information. 3. Providing
a communications network. 4. Accommodating
change within the organization. 5.
Maintaining an approach with a general
managers perspective.
79
IS Organization Business
1. Designing Information Systems
2. Building Information Systems
3. Maintaining and Running Information
Systems
80
IT Outsourcing Options

• Software Development and/or Maintenance
• Application Service Provider
• Global Network Provider
• Network Management
• Management of Entire IS Function
• IT Training
• Consulting and Reengineering

81
Indias IT Outsourcing Industry
GOOD STUFF, CHEAP That's the reputation of
India's IT outsourcing industry, and it's both a
blessing and a curse. The blessing is that India
has finally been able to move onto the global
stage by harnessing its greatest natural
resourcepeopleand focusing on filling the
world's need for IT skills and services. India
has grown its IT exports in less than a decade
from 150 million to more than 4 billion10.5
of India's total overseas sales. Its success is
built on a solid record for developing IT talent
as well as delivering top-notch legacy system
maintenance and software applications.

82
Indias IT Outsourcing Industry
The curse is that, despite what IT outsourcing
has meant for India's economy, the country's top
IT vendors have been typecast and they have major
competition from Ireland, China, the Philippines
and Israel.
83
Indias IT Outsourcing Industry
Nobody can beat their price! Software programming
in India costs roughly 35 per hour, as opposed
to 200 in the United Statesand their quality is
world-class. Of the 23 companies worldwide that
have been awarded the US Software Engineering
Institute's Capability Maturity Model Level 5
rating for fault-free software engineering
processes (the equivalent of a perfect 10 in
Olympic competition), 15 of those elite companies
are Indian, among them Infosys, NIIT and Wipro.
84
China Versus India for Outsourcing

• Indias global advantage in IT rests on a
  tripartite
• foundation
• Good IT education
• Competitive wages
• English language competency.
• On the first two, China already competes. That
  leaves
• English which has improved significantly in the
  past ten
• years.

85
US Corporations

• Most managers are used to managing internal
  resources and staff directly, and having total
  control over the decision-making process in their
  area.
• There are some fundamental differences in
  managing an outsourced function.

86
The Corporation Today

• A company must ensure that internal
• resources are dedicated to core competencies
• and that the right outside relationships are
• established, maintained, and nurtured.

87
Chief Resource Officer (CRO)

• New Organizational Model is Creating a New
  Management Role.
• Outsourcing has rapidly changed and evolved --
  from vertical to virtual, tactical to strategic,
  cost-cutting to cutting-edge.
• The stakes have increased, the risks and the
  rewards have soared, yet the manner in which
  outsourcing engagements are conducted and
  supervised has remained the same.

88
Chief Resource Officer

• The CRO is a strategic position, charged not with
  
• managing corporate resources (time, money, and
• personnel), but with managing the complex series
  of
• relationships the modern corporation must have
  with
• its outside resources.
• The CRO evaluates the need for resources in each
• function, finds the resources required outside
  the
• company, and implements and nurtures the
• relationship to the company's best advantage.

89
Chief Resource Manager

• Outsourcing deals fall apart because there was
  no one in a Chief Resource Manager position to
  manage and follow-up on objectives and
  contractual agreements.
• A CRO-type position means taking a global,
  visionary, forward-thinking role in how to use
  resources and make them effective and efficient
  for an organization.
• There is a definite need to manage change during
  the life of an outsourcing contract.

90
CRO Skill Profile

• 1. Experience managing different businesses
• 2. Experience managing costs
• 3. Project management
• 4. Contract negotiations
• 5. Political and cultural consciousness
• 6. Ability to think out of the box
• 7. Comfortable with change

91
Evaluation Criteria
It is important in considering offshore
outsourcing to address the following with a
potential vendor a) Do they have offices in US
and in proximity to them. Developing long
term products require lot of interaction with
the vendor locally. b) Get resumes of IT
professionals who will work on your project
in foreign country and/or the US. If an
offshore vendor has experienced IT professionals
working for them for a good length of time,
they have good retaining and employee
policies.
92
Evaluation Criteria
c) Understand the vendor process to develop and
deliver the project on a timely basis. d) Get
references on where they have successfully
completed similar projects. e) Clearly understand
the financial and property rights of such a
relationship. f) Make sure that you have a way
out if things do not go well or according to
schedule.
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A Well-Structured Alliance

• Strategic Synergy. The two (or more)
  organizations
• together can achieve a high level of benefits.
• Clarity of purpose. The goals and benefits are
  explicit
• and clear.
• Growth opportunity. The relationship--and its
  benefits--
• can be expanded.
• Less risk. The relationship reduces the level
  of risk.
• Excellent chemistry. There a good "fit" between
  the two
• or more organizations.
• Win-Win Proposition. Each party can benefit
  fairly from
• the relationship.

95
Outsourcing Resources

• The Outsourcing Institute
• http//www.outsourcing.com
• ASP Outsourcing Center
• http//www.asp-outsourcing-center.com

96
Some Basic Conclusions
1. There are common factors among companies that
have gained a competitive advantage through the
use of information systems. 2. The difference
between the good examples and the less
successful ones is getting bigger.