Information Technology and Competitive Advantage

1
Information Technology and Competitive Advantage

• Spend sufficient time confirming the need and
  the need will disappear.
• Ed's Fifth Rule of Procrastination

2
The Imperative

• Global competition
• A more perfect market for information
• Customers
• Suppliers
• Competitors
• Investors
• Transformation from industrial to information
  economy

3
What To Do?

• Flattening the hierarchy
• Decentralization
• Driving decisionmaking downward
• Collaborative working
• Downsizing and outsourcing
• Moving more rapidly

4
What Information Systems Can Do

• Computation and manipulation
• Communication
• Data storage
• Data access
• Data organization
• Data presentation

5
New Organizational Capabilities

• Waves of Innovation (Primozic Leben, 1991)
• Reducing costs
• Leveraging investments
• Enhancing products services
• Enhancing executive decision-making
• Reaching the consumer

6
Supply Chain
Upstream
Internal
Downstream

• 2nd Tier Supplier

1st Tier Supplier
2nd Tier Supplier
Assembly, mfg, pkg
Dist.
Retail
Cust.
1st Tier Supplier
2nd Tier Supplier
7
Supply Chain Problems

• Uncertainty of demand
• Coordination problems
• Product shortages
• Too much (or the wrong kind of) inventory
• Quality problems (caught late)
• Poor customer service

8
Early Solutions

• Vertical integration
• Control of the entire chain
• Can be costly, distracting
• Building inventories
• Just in case vs. just in time
• Also costly
• No guarantees

9
Supply Chain Management

• Coordination of activities in the supply chain
• Use sales data for forecasting
• JIT purchasing lower inventories
• Strategic partnerships
• Build-to-order rather than build-to-inventory

10
How IT Can Help

• Rapidly communicate orders
• Track order status
• Check and maintain inventory availability
• Plan production based on demand and forecasts
• Rapidly communicate design specifications and
  changes
• Share info about defects, returns

11
Enterprise Resource Management
Sales Office
Sales Office
Sales Office
Central database And servers
Factory
Warehouse
Acctg
Hdqtrs
12
ERP - Advantages

• Firm structure
• Unified processes
• One firm
• Management control
• Rapid access to up-to-date information
• Cross-functional information
• Aid in decision making

13
ERP - Advantages

• Technology
• Unified platform
• Data standardization (definitions and formats)
• Business
• Cross-functional integration
• Efficient response to customer requests for
  information
• Flexible manufacturing
• Smart procurement, lessen inventory
• Better data leading to better forecasts

14
ERP - Challenges

• Massive implementation
• Costly
• Requires lots of user input
• Changes to organizational culture
• Larger benefits are down the road
• Inflexibility?
• Failure to reap benefits

15
The Virtual Corporation

• Also known as virtual organization, virtual
  enterprise
• Set of alliances among various organizations
• Each partner contributes unique capability
• Temporary or permanent

16
IT-enabled Phenomenon

• EDI (early technology)
• Interorganizational systems
• Ecommerce (B2B)
• Mass customization technology
• Internet (intranet, extranet)
• Groupware

17
VC - Caveats

• Carefully define core competency
• Make vs. buy decisions
• Relationship of trust with partners
• Aggressively use IT capabilities
• Softer issues

18
Electronic Commerce

• Use of telecomm networks to conduct business
  transactions
• eCommerce vs. eBusiness
• Differing definitions
• Business-to-business (B2B)
• Business-to-consumer (B2C)

19
B2C - Using the Web to Make

• Advertising (Yahoo)
• Selling information (Consumer Reports)
• Selling goods and services (Amazon)
• Referrals (Autobytel)
• Razors/blades (Adobe Acrobat)

20
B2B Applications

• To save money, realize efficiencies
• Three types of marketplaces
• Supplier-oriented marketplace
• Buyer-oriented marketplace
• Intermediary-oriented marketplace
• Use of EDI in private VANs and via Internet
• XML

21
Knowledge Management

• Enhance strategic flexibility
• Only lasting advantage
• The learning organization
• The knowledge economy

22
Types of Knowledge

• Tacit vs. explicit
• Implicit (Tacit) know but cant explain
• Explicit can be expressed

23
The Knowledge Management Life-Cycle
Create/ Capture
Refine/ Store
Manage/ Disseminate
Apply
24
IT Applications

• Knowledge bases
• As opposed to database
• Computerized repository
• Factual/procedural knowledge (manuals)
• Best practices
• Discussion databases
• Corporate yellow pages/directories
• Organizational experience
• Expert systems

25
IT Applications

• Groupware
• Enable online collaboration, communication
• Document sharing
• Indexing and archiving
• Lotus Notes
• Internet
• Standard technology base for building
  applications
• World Wide Web (knowledge creation)

26
Does IT Matter?

• Nicholas Carr (HBR, 2003)
• IT as a commodity, available to all
• Price to pay to play
• Any IT-based advantage can be imitated
• Opposing(?) points of view
• New technologies
• Continuous innovation
• IT and management
• Ongoing debate