INFORMATION TECHNOLOGY, INTEGRATION AND ORGANIZATIONAL CHANGE

WRITTEN BY,ROBERT I. BENJAMINMICHAEL S. SCOTT

MORTON

Presented By,

B. Sundaravadivelu

ESIGELEC, Rouen, France

Email: buvanesh.s@gmail.com

POINTS TO DISCUSS What is IT ?

Effect of IT

After effect of IT

Case Study – Batterymarch

Research – Apply IT

Assessing The Integration Chain

WHAT IS IT? A power that has changed traditional labor

into capital relationship.

It has also opened up new opportunities for strategic use of technology.

Improved interconnection and larger accessible databases adds strategic advantage.

Search strategy available in organizations provide help to find potentially strategic application

EFFECT OF IT

Information technology drives new and powerful forms of integration in companies.

Integration of: Multiple classes of transaction data Multiple forms of data representation Knowledge Group communications

The above are mainly possible due to Improved Interconnection Improved Accessibility to shared data.

EFFECTS OF IT Historically, the labor and capital goods prices

have tend to move in a similar fashion over different product groups.

But capital goods have gained an upper hand over last three decades.

Cost of Technology Capital Equivalency ratio = --------------------------

Cost of Labor

Improved 1.4 times compared to improvement of 1.7 times for one product in a period of 10 years.

COST IMPROVEMENT

Significant difference between the rate of change of the capital equivalence index for IT as contrasted with other technologies.

The difference in the curves suggests the enormous potential available to those organizations willing to seize the opportunity.

Example: Swiss makers not taking into consideration which the Japanese manufacturers of Electronic watches. Increased revenue by 10 times in 4 years.

AFTER EFFECT The benefits are delivered to end users in two

ways: Reduction in cost of the product (Instruction per

second) Increase in functionality of the product (Workstations)

Investment in IT has three effects New cost effective applications

Accounting era Operations era Information era Knowledge era

Consistent progress in Technology areas New applications that generate strategic advantage.

CASE STUDY - BATTERYMARCH

Financial investment management firm with 12 Billion dollars in managed assets.

“Finding stocks that are out of favor or neglected by other portfolio managers”

Investments firms of the future will be a few senior people with one big machine – Dean LeBaron

CASE STUDY - BATTERYMARCH Batterymarch accomplished the goal with

lesser work strength and used IT to support value-added chain.

Ways of implementation Investment process

Developing research themes Data was available Browse database to find stocks before placing order

Portfolio Construction Assigning stocks to each portfolio Executing Transactions

Record Keeping and Client Support One Staff can manage average of 15 clients.

RESEARCH – APPLY IT Two complementary

Models Market Positioning Model

Understanding where the firm stands

Low-cost producer, Product differentiation or Niche positioning

Value-added Chain Break organization into

Operational and Support activities

Separate entities can be analyzed and concentrated

Rockart and Scott Morton model (1984) showing Strategy and Information Technology being the change stimuli

ASSESSING THE INTEGRATION CHAIN

Search strategy based on finding new forms of integration

Tier1 – Conceptual side of the model where possibilities opened by IT. E.g. Batterymarch

Tier2 – Implementation elements of the model with the logical flow between IT, Integration, Strategic Advantage & Org forms.

ASSESSING THE INTEGRATION CHAIN Integration has been enabled by

improvements in interconnectivity and data accessibility.

Concerns combining and eliminating tasks associated with a process carried on by several people or groups

Measured through Cost of Transmission Purity of the Data Speed of Access Type of Data Availability of Data

INTEGRATION – RESTRUCTURE

Leads to structural change in: Processes Functions Organizations

With these Integration an organization can fall in two classes: More productive organization Better positioned w.r.t its market place.

INTEGRATION RESTRUCTURE - EXAMPLES

Batterymarch Database of Information

Travel Industry Reservation Systems

Engineering and Manufacturing Design drawing, CAD

Financial Services Merrill Lynch – Cash Management Account

CONCLUSION

- Improved Interconnectio

n- Shared

Access data

Transactional Processes

Multiple forms of data

representation

Groups through Communication

GRACIAS