What’s Happening?!

1. What’s Happening?! Consumer Electronics Show – Las Vegas 2,000 companies in a million square feet of space An obvious reminder that there is a major merging of the computer industry and the consumer electronics industry. Bill Gates gave the keynote speech. Major product focus on mobility which means wireless and miniaturization.

2. FYI If you email me send it to my school address which is automatically forwarded to me at home.

3. Due Today • Introduction Letters. • Requests for the company that you will base your analysis term paper in priority sequence. • Please also return the business awareness • questionnaires.

4. Given your understanding of the content of this course Let’s begin.

5. Chapter 1 Introduction Business and Information Systems Management Challenges By Steven Parker

6. Objective of the Chapter To introduce the major business issues that must be addressed to successfully manage a business and factors that would influence the possible role of information systems as an enabler of business success. This is clearly a big picture chapter rather than one that fits within a broader perspective.

7. Major Chapter Topics 1. The challenges of running a successful business in the current global environment. 2. Specific business success factors. 3. Three necessary perspectives. 4. Simultaneous revolutions in the current environment. 5. A business driver model. 6. A possible systematic approach to gain better results from the use of information systems. 7. The three possible roles of information systems.

8. Business Success Factors • A credible list of success factors would undoubtedly vary if cited by a specific successful executive or highlighted by one of multiple highly publicized studies. • The chapter cites eight such factors with an emphasis on business leadership, company culture and effective communication.

9. Three Necessary Perspectives • Business Environment • Specific industry • Enterprise Environment • The company itself • Information Technology • Used for a competitive advantage

10. Business Driver Model 1. Helps to understand the business environment 2. The four components affect how an organization addresses business processes: • Market • Technology • Regulation • Employees and Work

11. Systematic Approach to Information Systems • The class roadmap chart • Emphasizes the important factors to manage the business and the relationship with and possible role of information systems. • Highlights the relationship between managing the business and managing information systems relative to business priorities and needs.

12. Identifies three possible roles of Information Systems • Efficiency • Effectiveness • Competitive Advantage As a company’s Information Systems evolve, it often uses IS in a more sophisticated and competitive manner.

13. Suggests A Quick Assessment of the Significance of Information Systems in a Company • Would increasing the involvement of IS increase value to customers? • Is the IS manager one of the top managers? • Is the role of information systems a top priority for multiple senior managers? • How much of the revenue dollar is the company spending on IS? • Is IS an integral part of the daily business operations?

14. Additional Points Made 1. Introduces multiple company examples where key business strategies were successfully supported by the effective implementation and use of information systems. 2. Reminds us that some industries have far better track records through the use of information systems than others.

15. In Conclusion This chapter is obviously the start of a ten week journey. Bon voyage!

16. Chapter 1 Business and Information Systems Management

17. Three Necessary Perspectives Business Success • Business Environment • Enterprise Environment • I/T Environment Figure 1-1

18. Innovative Uses of Information Systems Requires a Systematic Approach A Fundamental Premise

19. A Systematic Approach Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles and Relationships • Redefine and/or Define • Telecommunications • as the Delivery Vehicle • Success Factor Profile Figure 1-4

20. Competing with Information Technology through People. A Logical Premise

21. IS Roles (Objective) 1. Efficiency--doing things better. 2. Effectiveness--broadening the scope of individual tasks, jobs or processes. 3. Competitive Advantage--doing better or new things for the customer.

22. Key to Business Success Competitiveness is the pivotal issue in the 21st century. Global competitiveness has frequently become the pivotal issue in the 21st century. (an offense/defense decision)

23. Competitiveness How does a business compete? What benefits does a business gain if it competes successfully to the point of being a market leader?

24. Market Leader Benefits? Increased volumes. Lower unit cost. Higher profit margins. Ability to invest in product development and market exploitation. Increased brand strength. Satisfied customers. Customers less likely to substitute. Lower probability of new entrants. Happy, motivated employees and other stakeholders.

25. Purpose of a Business The purpose of a business is to create a customer. For this reason a business has only two basic functions: 1. Marketing. 2. Innovation. This demands that a business define its goal as the satisfaction of customer needs.

26. Purpose of a Business The customer defines the business. The customer is primarily interested in its own wants, needs, values and reality. Defining a business must start with understanding the customer’s realities, situation, behavior, expectations and values. The business is defined by the want the customer satisfies when a purchase is made.

27. Who is the Customer? Not a simple or intuitively obvious question. There is never thecustomer but multiple customers that are frequently different. Each customer has possible different expectations and values and may think that it is buying something different or for a different reason.

28. Where is the Customer? An increasingly important question. Greatly influenced by increasing mobility on a global basis. What does the Internet do to questions regarding where is the customer?

29. A Successful Business The right business model now and for the future. • Is responsive, flexible, adaptable, innovative, • resilient, talented and financially strong. • Provides value to customers. Is anything else necessary to achieve and sustain business success?

30. Running a successful business is like doing a jigsaw puzzle. The problem is that the pieces and the picture are both changing. Cyril J. Yansouni Chairman and CEO Read-Rite Corp.

31. My Selection Criteria Started with list of companies in the In Search of Excellence book. Frito-Lay, American Airlines, Boeing Emphasized the role of senior management to focus the role of information systems on key business strategies from the very beginning. Also how IS was used to make significant changes. Quickly discovered that good companies could point me to other good companies. Wal-Mart, USAA, Federal Express, Schwab, L.L. Bean

32. Using IS to Compete • American Airlines • Boeing • Federal Express • Frito-Lay • Frost Inc. • IBM Canada • Marion Laboratories • McKesson Corp. • L.L. Bean • National Institutes of Health • Progressive Corp. • Charles Schwab • Security Pacific Bank • USAA • University of South Carolina • Wal-Mart Stores

33. Business Success Factors 1. Business Leadership. 2. The Ability to Fit the Pieces into the Increasingly Bigger Business Picture. 3. Organizational Responsiveness and Resilience. 4. Realizing That Most Major Customer Problems Are Solved Through a Combined Organizational Effort.

34. Business Success Factors 5. A Strong Company Culture. 6. Ability and Willingness to Innovate, Change and Take Risks. 7. Accomplishing All of These Factors While Maintaining a Necessary Balance. 8. Effective and Timely Communication Across the Entire Organization.

35. Successful Books In Search of Excellence: Lessons from America's Best-Run Companies by Tom Peters and Robert Waterman, 1982 (43 companies) Built to Last by Jim Collins and Jerry Porras, 1994 (20 companies) Good to Great, 2001 by Jim Collins, 2001 (11 companies)

36. Built to Last The objective in a six year study was to systematically identify visionary companies, to examine how they differed from comparison companies to understand the underlying factors that account for their extraordinary long term position. Visionary companies were identified based on their having distinguished themselves as a very special and elite breed of institutions.

37. Built to Last Companies Marriott Merck Motorola Nordstrom Phillip Morris Procter & Gamble Sony Wal-Mart Stores Walt Disney 3M American Express Boeing Citicorp Ford General Electric Hewlett-Packard IBM Johnson & Johnson

38. Good to Great Companies • Abbott • Circuit City • Fannie Mae • Gillette • Kimberly-Clark • Kroger • Nucor • Philip Morris ** • Pitney Bowes • Walgreens • Wells Fargo

39. Selection Criteria • Premier institution in its industry. • Widely admired by knowledgeable businesspeople. • Made an indelible imprint on the world in which we • live. • Had multiple generations of chief executives. • Been through multiple product (or service) cycles. • Founded before 1950.

40. Selection Criteria Started with Fortune 500 ranking of 1,435 largest publicly traded US companies in 1965, 1975, 1985 and 1995. Did a sophisticated analysis of compounded annual return looking for companies that showed a pattern of above average returns preceded by average or below average returns. This reduced the list to 126 companies. Analyzed the cumulative stock return relative to the general market looking for good-to-great stock return patterns. Reduced the list to 19 companies.

41. Dow Jones Industrial List • McDonald’s • Merck • Microsoft • 3M • Philip Morris • Procter & Gamble • SBC Communication • United Technology • Wal-Mart Stores • Walt Disney • Exxon Mobil • General Electric • General Motors • Hewlett-Packard • Home Depot • Intel • IBM • International Paper • JP Morgan • Johnson & Johnson • Alcoa • Honeywell • American Express • AT&T • Boeing • Caterpillar • Citigroup • Coca-Cola • DuPont • Eastman Kodak

42. Business Challenges 1. Relative to all of this, what role should information systems play? 2. How do you determine relevance regarding any of these factors?

43. SIMULTANEOUS REVOLUTIONS NEW COMPETITORS NEW RULES OF COMPETITION NEW POLITICAL AGENDAS INDUSTRY STRUCTURE CHANGES THE BUSINESS NEW TECHNOLOGIES NEW REGULATORY ENVIRONMENT NEW EMPLOYEES AND NEW VALUES EVER INCREASING CUSTOMER EXPECTATIONS Figure 1-2

44. New Competitors • Global defines the competitive landscape. • Aircraft and communication technologies are shrinking the • economic world. • English has become the international language. • There are very few countries that are not global players. • Standardization of industrial and consumer products. • Breakdown in industry boundaries is also resulting in new • domestic competitors. • Technology versus physical competition via the Internet.

45. New Rules of Competition • Speed has become a major success factor including time to • market, time to decisions and response time to customers. • Distribution has become a key competitive strategy. • Productivity defines competitive positioning. • Assets can become a liability. • Quality as a competitive factor is a given. • All business functions must contribute value to customers. • Need to focus on core processes and outsource the rest. • Success is a combination of leadership and empowerment. • When timely to do so, reinvent the business.

46. Industry Structure Changes • The US has led the way, but the rest of the world is also • deregulating industries and/or privatizing government • owned businesses. • Freedom from government imposed laws and/or controls • frequently leads to industry structure change. • IT has prompted industry change because of the direct • access aspects of the Internet. • Open competition over time results in industry change based • on changing rules of competition.

47. New Regulatory Environment • One could conclude that there is a definite trend towards • deregulation of industries. In some cases this can be • misleading. • Highly visible industries tend to be directly or indirectly • “regulated” in some form. • As long as there are politicians there will be new laws and/or • regulations that can directly impact specific industries. • Business managers prefer to compete openly despite a • perception of the benefits of having a protected market.

48. Increasing Customer Expectations Is there such a thing as a customer that would be happier with a more costly, lower quality product or service? The better you do in servicing your customer, the more they will want (and expect)! Time constraints and pressures on customers also prompts an increase in their expectations since they often do not have the time or inclination to find alternative sources. On the other hand, the global economy offers more options and alternative sources.

49. New Employees and Values Salary and benefit expectations are greatly influenced by the financial status of people while they were growing to adulthood. Different attitudes towards authority and societal issues. Surveys say that salary is not the highest priority for many employees. Meanwhile, an increasing number of people are pursuing the startup route “to get rich.”

50. New Technologies • IT and transportation technologies have changed the world • of competition and can greatly influence success or failure • of a company. • The pace of technology change adds to the challenge. • New technologies often complement each other. • The impact of the Internet as a global network is huge. • Integrating IT into a rapidly changing business can be a • major challenge.