Pertemuan 25

• Materi :– Understanding e-Business Strategic and

Tactical

• Buku Wajib & Sumber Materi :– Turban, Efraim, R. Kelly Rainer and Richard

E. Potter (2003). Introduction to Information Technology. Second Edition. John Wiley & Sons, Inc. Bab 13

Strategic Information Systems• Strategic Information Systems :

systems that support or shape an organization’s competitive strategy

• May significantly change the way the business operates

• Makes substantial contribution toward achieving strategic goals

• May increase performance and productivity significantly

Strategic Information Systems• Outward focus: aimed at direct competition

in an industry

• Inward focus: enhance the competitive position of the firm through…– Increasing employee productivity– Improving teamwork– Enhancing communication

• Strategic Alliances : two or more companies share an inter-organizational system for mutual benefit

Competitive Strategy & IT• Strategy is the creation of a unique and

valuable position, involving a set of activities different than what rivals do

• IT creates competitive advantage by giving companies new ways to outperform their rivals– Create new applications– Enable reengineering of business processes– Enable innovation– Provide competitive intelligence

Competitive Intelligence on the Internet

Intelligence Search Strategy Description

Review competitor’s Web sites Reveal information about marketing information

Analyse related newsgroups Find out what people think about a company and its products

Examine publicly available financial documents

By entering a number of databases and analyse findings

Do market research at your own Web site

Pose questions to Web site visitors

Use an information delivery service to gather news on competitors

Find what is published on the Internet about competitors

Use corporate research companies Provide information ranging from risk analysis to stock market analysts’ reports about competitors

Porter’s Competitive Forces Model and IT

• Porter’s Competitive Forces Model– Competition - at the core of a firm’s success or

failure– Used to develop strategies for companies to

increase their competitive edge– Demonstrates how IT can enhance the

competitiveness of corporations– 5 major forces:

Threat of entry of new competitors Threat of substitute products or services

Bargaining power of suppliers Bargaining power of customers (buyers)

Rivalry among existing firms in the industry

Porter’s Five Forces Model

Porter’s Competitive Forces Model and IT

• Response Strategies (Per Porter and Others) – may be supported in part by IT– Cost leadership strategy - producing at lowest cost– Differentiation strategy - being unique– Focus strategy - selecting a narrow-scope segment– Growth strategy - increasing market share– Alliances strategy - working with business partners– Innovation strategy - developing new products– Internal efficiency strategy - improving the manner

in which business processes are executed– Customer-oriented strategy - concentrating on

making customers happy

Impact of IT on Competitive ForcesKey Forces Affecting

the IndustryBusiness

ImplicationsPotential IT Responses

Threat of new entrants

• Additional capacity• Reduced prices• New basis for competition

• Exploit existing economies of scale

• Differentiate products / services,

• Control distribution channels• Segment markets

High power suppliers

• Raise prices/costs• Reduce quality of supply• Reduce availability

• Implement sourcing systems• Extend quality control into

suppliers’ operations• Use forward planning with

suppliersHigh power buyers

• Forces prices down• Higher quality

demanded• Service flexibility

required• Encourage competition

• Differentiate and improve products/ services

• Increase switching costs of buyers

• Facilitate buyers product selection

Key Forces Affecting the Industry

Business Implications

Potential IT Responses

Substitute products threatened

• Limits potential and profit

• Imposes price ceilings

• Use differentiation strategy• Incorporate IT into

product, service, or method of provision

Intense competition from rivals

• Price competition• Need to develop new

products and services• Distribution and

service become critical

• Customer loyalty required

• Improve price/performance• Redefine products and

services to increase value• Redefine market segments• Differentiate products and

services in distribution channels and to consumers

• Get closer to the end consumer - understand the user requirements

Impact of IT on Competitive Forces

The Need for Organizational Change

• Organizational structures and processes established in the Industrial Revolution are no longer effective, due to…– Globalization– Pressure for rapid change– Increasingly demanding customers– Opportunities afforded by IT

• Focus on vertical, functional organization is inappropriate

• Need integration that spans departmental and organizational boundaries

Business Process Reengineering• Solution based on fundamental rethinking and

radical redesign of business processes to achieve dramatic improvements in measures of performance

• Elements:– Job Enrichment– Employee Empowerment– Process Simplification– Mass Customization– Reduced Cycle Time

Changes in Work Rules Brought by ITOld Rule

Intervening Technology

New Rule Information appears in

only one place at one time

Shared databases, client/server architecture, electronic mail

Information appears simultaneously wherever needed

Only an expert can perform complex work.

Expert systems, neural computing Novices can perform complex work.

Managers make all decisions.

Decision support systems, enterprise support systems, expert systems

Decision making is part of everyone’s job

Field personnel need offices to receive, send, store, and process information.

Wireless communication and portable computers, information highways, electronic mail

Field personnel can manage information from any location.

You have to locate items manually.

Tracking technology, groupware, workflow software, client/server

Items are located automatically

Plans get revised periodically.

High-performance computing systems

Plans get revised instantaneously whenever needed.

Changes in Work Rules Brought by ITOld Rule

Intervening Technology

New Rule People must come to

one place to work together.

Groupware and group support systems, telecommunication, electronic mail, client/server

People can work together from different locations.

Customized products and services are expensive and take a long time to develop.

CAD-CAM, CASE tools, online systems for JIT decision making, expert systems

Customized products can be made fast and inexpensively (mass customization).

A long period of time is spanned between the inception of an idea and its implementation (time to market)

CAD-CAM, electronic data interchange, groupware, imaging (document) processing

Time-to-market can be reduced by 90 percent

Work should be moved to countries where labor is inexpensive (off-shore production).

Robots, imaging technologies, object-oriented programming, expert systems

Work can be also done in countries with high wages and salaries.

Networked Organization• Resemble computer networks and are supported by

computerized systems• Shift toward the networked organization due to the movement

toward an information-based economy

Highly structured

ControlDirect

Employees a costInformation

management-ownedHierarchical organizations

Risk avoidanceIndividual contributions

Hierarchical Organization InformalLoosely structured

Delegate/leadOwnership/participation

EmpowerEmployees an asset

Information shared ownership

Flatter/ manageable organizations

Team contributions

Networked Organization

Manage

Formal

Risk management

Virtual Corporations

• Characteristics of Virtual Corporations (VC)– Excellence - each partner brings its core competence so an

all-star winning team is created. No single company can match what the virtual corporation can achieve.

– Full utilization of resources - some resources of the business partners may be underutilized when not in a VC.

– Opportunism - the partnership is opportunistic. A VC is organized to seize market opportunities.

– Lack of borders - it redefines traditional boundaries.– Trust - business partners in a VC are far more reliant on each

other and more trusting than ever before.– Adaptability to change - the VC can quickly adapt to

environmental changes because its structure is relatively simple.

– Technology - IT makes the VC effective and efficient.