INFORMATION SYSTEMSINFORMATION SYSTEMS

for Competitive Advantagefor Competitive Advantage

a.a. Discuss how IS can be used in Discuss how IS can be used in organizations organizations

b.b. Describe the strategic importance Describe the strategic importance of IS to the success of modern of IS to the success of modern organizations.organizations.

c.c. Formulate and present the Formulate and present the business case for a system and business case for a system and understand why it is sometimes understand why it is sometimes difficult to do so.difficult to do so.

d.d. Explain why and how companies Explain why and how companies are continually looking for new are continually looking for new ways to use technology for ways to use technology for competitive advantage.competitive advantage.

““Competitive Advantage” Learning GoalsCompetitive Advantage” Learning Goals

2a2a. . How IS Can Be Used in Organizations How IS Can Be Used in Organizations

AutomatingAutomating– Doing Things FasterDoing Things Faster

Organizational LearningOrganizational Learning– Doing Things BetterDoing Things Better

Supporting StrategySupporting Strategy– Doing Things SmarterDoing Things Smarter

Using technology to Using technology to complete a task complete a task – faster, faster, – more cheaply, andmore cheaply, and– perhaps with greater perhaps with greater

accuracy/consistency accuracy/consistency

AutomatingAutomating (1 of 3)(1 of 3)

2a2a. . How IS Can Be Used in OrganizationsHow IS Can Be Used in Organizations

Using technology Using technology to better to better understand and improve understand and improve the day-to-day activities the day-to-day activities within the processwithin the process

2a2a. . How IS Can Be Used in Organizations How IS Can Be Used in Organizations Organizational LearningOrganizational Learning (2 of 3)(2 of 3)

The best way to use The best way to use information systemsinformation systems

Uses IS strategically Uses IS strategically to enable the firm to enable the firm to gain or sustain competitive to gain or sustain competitive advantageadvantageover its rivalsover its rivals

2a2a. . How IS Can Be Used in Organizations How IS Can Be Used in Organizations Strategic PlanningStrategic Planning (3 of 3)(3 of 3)

2b. Critical Importance of IS2b. Critical Importance of IS

Low-Cost LeadershipLow-Cost Leadership – Best prices on goods/servicesBest prices on goods/services

DifferentiationDifferentiation– Best quality goods/servicesBest quality goods/services

Best-Cost Provider Best-Cost Provider (middle-of-the-road)(middle-of-the-road)– Reasonable quality, Reasonable quality,

competitive pricescompetitive prices

Types of Types of Competitive AdvantageCompetitive Advantage

(1 of 7)(1 of 7)

2b. Critical Importance of IS2b. Critical Importance of ISOrganizational StrategiesOrganizational Strategies (2 of 7)(2 of 7)

2b. Critical Importance of IS2b. Critical Importance of IS

A clear strategy is essentialA clear strategy is essential

Sources of competitive Sources of competitive advantage: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

IS for IS for Competitive AdvantageCompetitive Advantage

(3 of 7)(3 of 7)

2b. Critical Importance of IS2b. Critical Importance of IS

Views organizations as big Views organizations as big input/output systemsinput/output systems

IS can automate many value IS can automate many value chain activities:chain activities:– Purchased supplies inbound Purchased supplies inbound

logisticslogistics– OperationsOperations– Outbound logisticsOutbound logistics– Sales and marketingSales and marketing– ServiceService

IS andIS andValue Chain AnalysisValue Chain Analysis

(4 of 7)(4 of 7)

2b. Critical Importance of IS2b. Critical Importance of ISIS andIS andValue Chain AnalysisValue Chain Analysis

(5 of 7)(5 of 7)

2b. Critical Importance of IS2b. Critical Importance of IS

Role of IS in Value Chain AnalysisRole of IS in Value Chain Analysis– Provides potential Provides potential

competitive advantages competitive advantages at various parts in the chainat various parts in the chain

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

interactionsinteractions

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

IS forIS forCompetitive AdvantageCompetitive Advantage

(6 of 7)(6 of 7)

2b. Critical Importance of IS2b. Critical Importance of IS

The Technology/Strategy FitThe Technology/Strategy Fit– Every organization can’t build every Every organization can’t build every

possible system (due to financial and time possible system (due to financial and time constraints)constraints)

– Need to match systems used with overall Need to match systems used with overall organizational strategy.organizational strategy.

There may need to be significant There may need to be significant organizational change in order for a organizational change in order for a system to be successfulsystem to be successful

IS forIS forCompetitive AdvantageCompetitive Advantage

(7 of 7)(7 of 7)

2c. Making the Business Case for a System2c. Making the Business Case for a System

Usually easy to quantify costsUsually easy to quantify costs

Difficult to quantify gainsDifficult 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

The Productivity Paradox The Productivity Paradox (1 of 4)(1 of 4)

2c. Making the Business Case for a System2c. Making the Business Case for a System

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

Stage of industry maturityStage of industry maturity

Degree of RegulationDegree of Regulation

Nature of Competition or RivalryNature of Competition or Rivalry

– Arguments Based on Arguments Based on FactsFactsCost-benefit analysis for a web-based Cost-benefit analysis for a web-based systemsystem– Recurring/nonrecurring costsRecurring/nonrecurring costs– Tangible/intangible costsTangible/intangible costs– Tangible/intangible benefitsTangible/intangible benefits

General ApproachesGeneral Approaches (2 of 4)(2 of 4)

2c. Making the Business Case for a System2c. Making the Business Case for a System

Know the AudienceKnow the Audience– The IS ManagerThe IS Manager– Company Executives Company Executives

(VPs and higher)(VPs and higher)– Steering CommitteeSteering Committee

Try to Convert all Benefits Try to Convert all Benefits into Monetary Termsinto Monetary Terms

Things to RememberThings to Remember (3 of 4)(3 of 4)

2c. Making the Business Case for a System2c. Making the Business Case for a System

If can’t use Monetary Variables, If can’t use Monetary Variables, then Devise Proxy Variablesthen Devise Proxy Variables– Measure changes in terms of perceived Measure changes in terms of perceived

valuevalue

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

Be sure to Measure Be sure to Measure What Management Considers What Management Considers to Be Important to Be Important

Try to Change Mindsets About Try to Change Mindsets About Information Systems from a Necessary Information Systems from a Necessary Evil to a Competitive AssetEvil to a Competitive Asset

Things to RememberThings to Remember (4 of 4)(4 of 4)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge

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

Using new technology in innovative Using new technology in innovative waysways

What is Meant by What is Meant by Being at the Cutting Edge?Being at the Cutting Edge?

(1 of 7)(1 of 7)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge

The Need for The Need for Constant IS InnovationConstant IS Innovation

Always on the lookout for new Always on the lookout for new technologies that impact businesstechnologies that impact business

What is Meant by What is Meant by Being at the Cutting Edge?Being at the Cutting Edge?

(2 of 7)(2 of 7)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge

ChoosingChoosing – enabling/emerging technologies enabling/emerging technologies

MatchingMatching – with economic opportunitieswith economic opportunities

ExecutingExecuting– business innovation for growthbusiness innovation for growth

AssessingAssessing – client valueclient value

E-Business E-Business Innovation CycleInnovation Cycle

(3 of 7)(3 of 7)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge E-Business E-Business Innovation CycleInnovation Cycle

(4 of 7)(4 of 7)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge

Begin with the technology Begin with the technology when considering successful when considering successful business strategiesbusiness strategies

Marketing is secondary to ITMarketing is secondary to IT

Emerging technology cycle Emerging technology cycle is ongoingis ongoing

Implications of the Implications of the E-Business Innovation CycleE-Business Innovation Cycle

(5 of 7)(5 of 7)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge

Information systems are often Information systems are often bought from, or built by, someone bought from, or built by, someone elseelseAn organization typically cannot An organization typically cannot patent an ISpatent an ISRivals can copy emerging Rivals can copy emerging information systemsinformation systemsTherefore, one’s IS competitive Therefore, one’s IS competitive advantage can be short-lived advantage can be short-lived

Painful Realities of BeingPainful Realities of Being

at the Cutting Edgeat the Cutting Edge

(6 of 7)(6 of 7)

2d. 2d. Competitive Advantage Competitive Advantage in Being at the Cutting Edgein Being at the Cutting Edge

To deploy emerging systems well:To deploy emerging systems well:

– Organization must adapt well to changeOrganization must adapt well to change

– Human capital must be available for Human capital must be available for deployment (knowledge, time, skills)deployment (knowledge, time, skills)

– Tolerance of risk and uncertaintyTolerance of risk and uncertainty

Requirements for Being Requirements for Being at the Cutting Edgeat the Cutting Edge

(7 of 7)(7 of 7)