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IS605/606: Information Systems Instructor: Dr. Boris Jukic

IS605/606: Information Systems Instructor: Dr. Boris Jukic. Does It Matter? Reading Discussion. Main Points of the Article. Capital Investment Expenditures on IT are nearing the 50% mark Strategic Resource has to be scarce Infrastructure analogy:

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IS605/606: Information Systems Instructor: Dr. Boris Jukic

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  1. IS605/606: Information SystemsInstructor: Dr. Boris Jukic Does It Matter? Reading Discussion

  2. Main Points of the Article • Capital Investment Expenditures on IT are nearing the 50% mark • Strategic Resource has to be scarce • Infrastructure analogy: • Steam engine, telegraph, railroads, electricity • Processor, Operating system, Bandwidth • New Infrastructure technology often goes through the phase of overbuilding • Railroads vs. High speed optic fiber networks

  3. Main Points of the Article • Not only the technology but the modes of its use can be commoditized • IT is primarily a transport mechanism • Analogies with railroads and electricity grid will hold • IT functions are becoming highly standardized and are highly replicable • At the basic application level such as e-mail, word processing

  4. Main Points of the Article • Internet based Web services will commoditize business IS applications much like electric power or telecommunications services • MS and IBM will become IT “utility” companies providing applications over the “IT grid” • Fall in cost of processing power results in rapidly increasing affordability of IT functions

  5. Main Points of the Article • Proprietary technology may offer early competitive advantage • AHS example: proprietary ordering system • Improved efficiency • Locked out competition • In the long run the, sticking to the same system may prove to be a liability • Emergence of standardized, out-of-the-box systems • In many cases, though, early adoption of the IT solution may lead to further operational and marketing advantages (trust, brand recognition) • FedEx: Package Tracking System • AA: SABRE reservation system • E-Bay: Internet Auctions

  6. Main Points of the Article • Opportunities for Gaining IT Advantages are Dwindling • Best practices are quickly built into software or reveres engineered and replicated • Most IT-spurred industry transformations have already happened

  7. Main Points of the Article • Five signs that IT buildout is at its end • IT “power” is outstripping business needs • Price of essential IT functionality has dropped to the universally affordable point • Internet bandwidth capacity exceeds traffic demand • No more WWW: “world wide wait” • IT vendors are positioning themselves as utility suppliers • Stable recurring charge model • IT investment bubble has burst • IT is at the point where it should be treated to remaining competitive but inconsequential to strategy • Concentrate on operational issues: outages, glitches, other vulnerabilities

  8. Main Points of the Article • Organizations should avoid IT overspending • Separate essential form discretionary and even counterproductive spending • Look for simpler and cheaper alternatives • Open source • Consider outsourcing • Eliminate waste • PC example • Data storage example • Avoid vendor pressure • Adopt longer IT investment cycles • IT management should become boring • Risk avoidance and management

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