summary of last week will send team presentation feedback sometime this weekend
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Summary of last week
Will send team presentation feedback sometime this weekend
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Update on Alibris
Interloc was simple listing service for hard-to-find books Profitable Sustainable?
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Alibris 2000
Switched from Oracle to Thunderstone Smaller company specializing in huge text
databases eCommerce site went live in Fall 98
New Revenue Model Percentage of purchase price for all books sold vs
dealer listing fees Secured bridge loan
Investor’s terms too harsh
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Alibris 2000 – cont’d
Expanded Sparks facility Centralized inventory
Both owned (physical) and consignment (virtual)
Created a “catalog and pricing engine” Provides current market information to book
dealers and customers Use knowledge gained selling “virtual” inventory to
buy books at attractive margins
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Oct, 1998
What was status of economy? Dow Jones at 8500
What was major IT issue for firms? “Putting Enterprise into Enterprise System”
What was major message from Davenport?
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Putting Enterprise into Enterprise System Major Message Why do ERP projects fail?
Require significant money, time and expertise Force firms to do business in ways that conflict with their best
interest If used by all companies in industry, erasing sources of
differentiation and competitive advantage How to prevent failure?
Clarify strategic and organizational needs and business implications of integration.
Change organizational structures to address information-flow problems
Create competitive advantage with your enterprise system Put right people in place Install system gradually
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Putting Enterprise into Enterprise System Major Message – cont’d “If the development of an enterprise system is not
carefully controlled by management, management may soon find itself under control of the system.”
The most successful ERP deployments involved companies that viewed them in strategic terms. “ They stressed the enterprise, not the system.”
Main reason for “failures” is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise. “The logic of the system may conflict with the logic of the
business.
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Mar, 2001
What was going on in the economy? All time high of 11,723 in Jan 2000 Hovering above 11,000 in early 2001
What were the major IT issues? “Strategy and the Internet”
What was Porter’s major message?
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Strategy and the Internet (Porter) We need to “…see the internet for what it is: an
enabling technology…” (pg 64) The “…greatest impact [of the internet] has been to
enable the reconfiguration of existing industries that had been constrained by high costs for communicating, gathering information, or accomplishing transactions.” (pg 66)
“The great paradox of the Internet is that its [benefits] also make it more difficult for companies to capture those benefits as profits.” (pg 66)
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Principles for Internet Strategy (Porter)
Strategic Positioning Start with the right goal Deliver a unique value proposition Develop a distinctive value chain Make trade-offs for robust strategy Fit all elements of company to the strategy Maintain continuity of direction
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Nov, 2002
What was going on in the economy? On Oct 9th, 2002, Dow Jones falls 215.22 to close
at 7,286.27. The market has declined 4,436.71, or 38%, since January 14, 2000
By Oct 21, closed above 8,500 What were the major IT issues? “Six IT Decisions Your IT People Shouldn’t
Make” What was major message?
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Six IT Decisions Major Message IT departments should not make choices that
determine the impact of IT on business strategy.
Senior executives failed to realize that adopting the enterprise systems posed a business challenge Consequentially, did not take responsibility for the
organizational and business process changes the systems required.
Determine the strategic role that IT will play, and then establish company-wide funding level that will enable technology to fulfill the objective.
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May, 2003
What was going on in the economy? On Jun 4th, closes above 9,000
What were the major IT issues? “IT Doesn’t Matter”
What was major message?
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IT Doesn’t MatterMajor Message IT has lost its strategic value. Businesses should manage IT as a commodity.
But -- partial standardization does not wipe out opportunities for gaining competitive advantage.
Firms using identical IT and spending comparable amounts on IT display enormous variability in profits.
IT is diminishing as a source of strategic differentiation. But – creates possibilities and options that did not exist before
IT functions will be homogenized, and proprietary applications are therefore doomed.
As corporations adopt generic applications, business processes become uniform and without competitive advantage
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Oct, 2003
What was going on in the economy? Sep 2nd, closes above 9500 Closes above 10,000 on Dec 11th
What were the major IT issues? “The Real New Economy”
What was major message?
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The Real New EconomyMajor Message New economy did not spring from internet
Rather from intensifying business competition Explains productivity growth in six sectors. Associated with dismantling of regulatory constraints
Managers needed to cut costs and increase value to buyers. In industries with complex operating processes, heavy
transaction loads, and technically sophisticated products, IT was powerful tool: Enabled development of new products and business processes Facilitated industry-wide diffusion of new innovations
To retain an edge, companies must couple diffusing technologies with other distinctive capabilities and processes
Strong scale economies
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The Real New EconomyMajor Message Three practices distinguished companies who were
successful in IT investments Targeted investment at productivity levers that matter Paid attention to sequencing and timing of investment
Example of companies that invest in CRM before they had consistent and reliable repositories of customer data
Should only rush investments when it is clear that technology will advance business goals, enable true innovation, and is resistant to imitation
Pursued managerial and technological innovations in tandem Managerial practices must adapt to technological innovations
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Feb & Apr, 2004
What is going on in the economy? What are the major IT issues? Two articles
“Getting IT Right” “Saving IT’s Soul: Human-Centered Information
Management”
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Getting IT RightMajor Message IT can work if you focus on process
Presume that IT is a commodity – what should you do? Start with business strategy Develop common underlying infrastructure Develop support staff that ensures infrastructure
enables business strategy
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Saving IT’s SoulMajor Message Railroad Paradox – by Gerald Weinberg
Focus on how people use information Managers get 2/3 of information from non-computer based
data Strategic data plans focus on information found in
computer Global data only results when shared understanding
is reached Need information maps and guides to deal with information
particularism Changing an IT system will not change the
information culture
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Insights
Extracting value from IT requires innovations in business practice IT Spending rarely correlates with superior
financial results. Too many business insert IT without changing
business practices.
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Insights – cont’d
Strategic Impact comes from cumulative effect of sustained initiatives to innovate business practices. Wal-Mart led innovations. As competitors adopted
practices, Wal-Mart continued to innovate – maintained productivity advantage.
Opportunities for innovation continue because advances in IT create possibilities not previously economically available
Opportunity for business practice innovations extend beyond the walls of the enterprise to include relationships with other companies
Differentiation is not a result of IT – but the new practices IT enables
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Insights – cont’d
Big-bang IT-driven initiatives rarely produce expected returns. Successful projects proceed in waves of short-
term (6-12 months) operating initiatives designed to test and refine specific innovations in practices. Ties initiative to explicit operating performance metrics –
focus on tangible near-term returns
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Insights – cont’d
Need to look at IT use through several different lenses Efficiency: Improve cost savings and efficiencies Effectiveness & Efficacy: Incremental
improvements in products, services, organizational structure
Enabling: Creation of strategic advantage through extending competitive scope, partnerships, changing rules of competition, provision of new IT-based services.
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InsightsMaybe the dinosaur had a valid point! Strategic Positioning
Start with the right goal Deliver a unique value proposition Develop a distinctive value chain configuration Make trade-offs for robust strategy Fit all elements of company to the strategy Maintain continuity of direction
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Insights – cont’d
Must align business and IT strategies
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Observed characteristics of well-aligned companies (from Deloitte Survey) Executive agreement on the role of IT –
where and how IT adds value Executive agreement on the priorities and
focus areas for IT Follow through and delivery on IT
expectations
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2004 Survey by Deloitte Consulting LLP (Advertising Supplement in CIO Magazine)
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Strategic Alignment Model
4 Domains of Strategic Choice
Business StrategyScope
CompetenciesGovernance
Organizational InfrastructureStructure
ProcessesSkills
IT StrategyScope
CompetenciesGovernance
IT InfrastructureArchitectureProcesses
Skills
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Strategic Alignment Model IT Infrastructure defined by business processes:
Business structure and IT Strategy are not aligned
Business StrategyScope
CompetenciesGovernance
Organizational InfrastructureStructure
ProcessesSkills
IT StrategyScope
CompetenciesGovernance
IT InfrastructureArchitectureProcesses
Skills
IT is not strategic
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Strategic Alignment Model
Business strategy drives IT
Business StrategyScope
CompetenciesGovernance
Organizational InfrastructureStructure
ProcessesSkills
IT StrategyScope
CompetenciesGovernance
IT InfrastructureArchitectureProcesses
Skills
IT is not integrated with business operations
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Strategic Alignment Model
Information is a core product or service
Business StrategyScope
CompetenciesGovernance
Organizational InfrastructureStructure
ProcessesSkills
IT StrategyScope
CompetenciesGovernance
IT InfrastructureArchitectureProcesses
Skills
IT enables enterprise wide business processes
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Strategic Alignment Model
IT enables new strategic opportunities
Business StrategyScope
CompetenciesGovernance
Organizational InfrastructureStructure
ProcessesSkills
IT StrategyScope
CompetenciesGovernance
IT InfrastructureArchitectureProcesses
Skills
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Strategic Alignment Model
Alignment is a dynamic and evolving process
Business StrategyScope
CompetenciesGovernance
Organizational InfrastructureStructure
ProcessesSkills
IT StrategyScope
CompetenciesGovernance
IT InfrastructureArchitectureProcesses
Skills