© 2003 prentice hall, inc.2-1 chapter information systems for competitive advantage information...

© 2003 Prentice Hall, Inc. 2-1

Chapter

Information Systems for Competitive Advantage

Information Systems TodayInformation Systems TodayLeonard Jessup and Joseph ValacichLeonard Jessup and Joseph Valacich


Chapter 2 Objectives

Understand the IS in automation, organizational Understand the IS in automation, organizational learning, and strategic supportlearning, and strategic support

Understand IS for strategic organizational successUnderstand IS for strategic organizational success Understand the need for making an IS business Understand the need for making an IS business

casecase Understand technological innovations to improve Understand technological innovations to improve

competitive advantagecompetitive advantage


Why Use Information Systems?

Automating: doing things fasterAutomating: doing things faster Organizational learning: doing things betterOrganizational learning: doing things better Supporting Strategy: doing things smarterSupporting Strategy: doing things smarter


Automating: Doing Things Faster Technology is used to automate a manual Technology is used to automate a manual

processprocess Doing things faster, better, cheaperDoing things faster, better, cheaper Greater accuracy and consistencyGreater accuracy and consistency

Loan application exampleLoan application example Manual processingManual processing Technology-supported processTechnology-supported process Completely automatedCompletely automated


Organizational Learning: Doing Things Better Going beyond automationGoing beyond automation

Involves learning to improve the day-to-day activities Involves learning to improve the day-to-day activities within the processwithin the process

Looking at patterns and trendsLooking at patterns and trends Organizational LearningOrganizational Learning

Using acquired knowledge and insights to improve Using acquired knowledge and insights to improve organizational behaviororganizational behavior

Total Quality Management (TQM)Total Quality Management (TQM) Monitoring an organization to improve quality of Monitoring an organization to improve quality of

operations, products, and servicesoperations, products, and services


Supporting Strategy: Doing Things Smarter

Strategic PlanningStrategic Planning1.1. Create a Create a visionvision: setting the direction: setting the direction

2.2. Create a Create a standardstandard: performance targets: performance targets

3.3. Create a Create a strategystrategy: reaching the goal: reaching the goal


Types of Competitive Advantage Low-Cost LeadershipLow-Cost Leadership

Best prices on goods/servicesBest prices on goods/services Examples: Dell, TargetExamples: Dell, Target

DifferentiationDifferentiation Best products or servicesBest products or services Examples: Porsche, Nordstrom, IBMExamples: Porsche, Nordstrom, IBM

Best-Cost Provider (middle-of-the-road)Best-Cost Provider (middle-of-the-road) Reasonable quality, competitive pricesReasonable quality, competitive prices Example: Wal-MartExample: Wal-Mart


Information Systems for Competitive Advantage A clear strategy is essentialA clear strategy is essential Sources of competitive advantage:Sources of competitive advantage:

Best-made productBest-made product Superior customer serviceSuperior customer service Lower costsLower costs Superior manufacturing technologySuperior manufacturing technology Shorter lead timesShorter lead times Well-known brand nameWell-known brand name High value per costHigh value per cost


Information Systems for Competitive Advantage IS and Value Chain AnalysisIS and Value Chain Analysis

VC Analysis: adding value within an organizationVC Analysis: adding value within an organization Organizations as big input/output processesOrganizations as big input/output processes IS can automate many value chain activities:IS can automate many value chain activities:

Purchased supplies inbound logisticsPurchased supplies inbound logisticsOperationsOperationsOutbound logisticsOutbound logisticsSales and marketingSales and marketingServiceService


Organizational Value Chain


Information Systems for Competitive Advantage The Role of IS in Value Chain AnalysisThe Role of IS in Value Chain Analysis IS competitive advantage in VCA:IS competitive advantage in VCA:

Internet link with suppliers, dealersInternet link with suppliers, dealers Extranets: using the Internet for B2B interactionsExtranets: using the Internet for B2B interactions

Computer-aided manufacturing systemsComputer-aided manufacturing systems Web site with online product orderingWeb site with online product ordering Customer service response systemCustomer service response system Computer-aided designComputer-aided design


Information Systems for Competitive Advantage The Technology/Strategy FitThe Technology/Strategy Fit

An IS implementation should create a An IS implementation should create a significant organizational change consistent significant organizational change consistent with the business strategywith the business strategyBusiness Process Reengineering (BPR)Business Process Reengineering (BPR)


Making the Business Case for a System

The Productivity Paradox (how to quantify gains?)The Productivity Paradox (how to quantify gains?) Measurement problemsMeasurement problems End-user developmentEnd-user development Decision support systems (DSS)Decision support systems (DSS) Strategic systemsStrategic systems Time lagsTime lags RedistributionRedistribution MismanagementMismanagement


Making the Business Case for a System Making a Successful Business CaseMaking a Successful Business Case

Arguments Based on Arguments Based on FaithFaith Arguments Based on Arguments Based on FearFear

Industry factorsIndustry factors Stage of maturityStage of maturity RegulationRegulation Nature of competition or rivalryNature of competition or rivalry

Arguments Based on Arguments Based on FactsFacts Cost-benefit analysis for a web-based systemCost-benefit analysis for a web-based system

• Recurring/nonrecurring costsRecurring/nonrecurring costs• Tangible/intangible costsTangible/intangible costs• Tangible/intangible benefitsTangible/intangible benefits


Presenting the Business Case

Know the AudienceKnow the Audience The IS ManagerThe IS Manager Company Executives (VPs and higher)Company Executives (VPs and higher) Steering CommitteeSteering Committee

Convert Benefits to Monetary TermsConvert Benefits to Monetary Terms


Presenting the Business Case

Devise Proxy VariablesDevise Proxy Variables Measure changes in terms of perceived valueMeasure changes in terms of perceived value

Develop a Work Profile MatrixDevelop a Work Profile Matrix Time spent on each job, each type of workTime spent on each job, each type of work

Measure What Is Important to ManagementMeasure What Is Important to Management Conoco: Making a Business CaseConoco: Making a Business Case Changing Mindsets About Information SystemsChanging Mindsets About Information Systems


Competitive Advantage in Being at the Cutting Edge

Deploying new technologies faster, better, Deploying new technologies faster, better, and cheaper than competitorsand cheaper than competitors

Using new technology in innovative waysUsing new technology in innovative ways



The Need for Constant IS InnovationThe Need for Constant IS Innovation On the lookout for new technologies that On the lookout for new technologies that

impact businessimpact business



E-Business Innovation CycleE-Business Innovation Cycle ChoosingChoosing enabling/emerging technologies enabling/emerging technologies MatchingMatching with economic opportunties with economic opportunties ExecutingExecuting business innovation for growth business innovation for growth AssessingAssessing client value client value



Implications of E-Business Innovation CycleImplications of E-Business Innovation Cycle Begin with technology when considering Begin with technology when considering

successful business strategiessuccessful business strategies Marketing is secondary to ITMarketing is secondary to IT Emerging technology cycle is ongoingEmerging technology cycle is ongoing



Terms and ConceptsTerms and Concepts E-commerce (Internet-related)E-commerce (Internet-related) E-business (any IT that supports business)E-business (any IT that supports business) Enabling technologiesEnabling technologies Economic opportunitiesEconomic opportunities



The Cutting Edge vs. The Bleeding EdgeThe Cutting Edge vs. The Bleeding Edge Information systems are often bought from, or Information systems are often bought from, or

built by, someone elsebuilt by, someone else An organization typically cannot patent an ISAn organization typically cannot patent an IS Rivals can copy emerging information systemsRivals can copy emerging information systems Therefore, one’s IS competitive advantage can be Therefore, one’s IS competitive advantage can be

short-lived short-lived



Requirements for Being at the Cutting EdgeRequirements for Being at the Cutting Edge Consider Porter’s competitive forcesConsider Porter’s competitive forces To deploy emerging systems well:To deploy emerging systems well:

Organization must adapt well to changeOrganization must adapt well to change Human capital available for deployment Human capital available for deployment

(knowledge, time, skills)(knowledge, time, skills) Tolerance of risk and uncertaintyTolerance of risk and uncertainty

© 2003 prentice hall, inc.2-1 chapter information systems for competitive advantage information...

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