Chapter 2 Information Systems for Competitive Advantage

1. Chapter 2Information Systems for Competitive Advantage Information Systems Today Leonard Jessup and Joseph Valacich

2. Chapter 2 Objectives • Understand the IS in automation, organizational learning, and strategic support • Understand IS for strategic organizational success • Understand the need for making an IS business case • Understand technological innovations to improve competitive advantage

3. Why Use Information Systems? • Automating: doing things faster • Organizational learning: doing things better • Supporting Strategy: doing things smarter

4. Automating: Doing Things Faster • Technology is used to automate a manual process • Doing things faster, better, cheaper • Greater accuracy and consistency • Loan application example • Manual processing • Technology-supported process • Completely automated

5. Organizational Learning: Doing Things Better • Going beyond automation • Involves learning to improve the day-to-day activities within the process • Looking at patterns and trends • Organizational Learning • Using acquired knowledge and insights to improve organizational behavior • Total Quality Management (TQM) • Monitoring an organization to improve quality of operations, products, and services

6. Supporting Strategy: Doing Things Smarter Strategic Planning • Create a vision: setting the direction • Create a standard: performance targets • Create a strategy: reaching the goal

7. Types of Competitive Advantage • Low-Cost Leadership • Best prices on goods/services • Examples: Dell, Target • Differentiation • Best products or services • Examples: Porsche, Nordstrom, IBM • Best-Cost Provider (middle-of-the-road) • Reasonable quality, competitive prices • Example: Wal-Mart

9. Information Systems for Competitive Advantage • A clear strategy is essential • Sources of competitive advantage: • Best-made product • Superior customer service • Lower costs • Superior manufacturing technology • Shorter lead times • Well-known brand name • High value per cost

10. Information Systems for Competitive Advantage • IS and Value Chain Analysis • VC Analysis: adding value within an organization • Organizations as big input/output processes • IS can automate many value chain activities: • Purchased supplies inbound logistics • Operations • Outbound logistics • Sales and marketing • Service

11. Organizational Value Chain

12. Information Systems for Competitive Advantage • The Role of IS in Value Chain Analysis • IS competitive advantage in VCA: • Internet link with suppliers, dealers • Extranets: using the Internet for B2B interactions • Computer-aided manufacturing systems • Web site with online product ordering • Customer service response system • Computer-aided design

13. Information Systems for Competitive Advantage • The Technology/Strategy Fit • An IS implementation should create a significant organizational change consistent with the business strategy • Business Process Reengineering (BPR)

14. Making the Business Case for a System • The Productivity Paradox (how to quantify gains?) • Measurement problems • End-user development • Decision support systems (DSS) • Strategic systems • Time lags • Redistribution • Mismanagement

15. Making the Business Case for a System • Making a Successful Business Case • Arguments Based on Faith • Arguments Based on Fear • Industry factors • Stage of maturity • Regulation • Nature of competition or rivalry • Arguments Based on Facts • Cost-benefit analysis for a web-based system • Recurring/nonrecurring costs • Tangible/intangible costs • Tangible/intangible benefits

16. Presenting the Business Case • Know the Audience • The IS Manager • Company Executives (VPs and higher) • Steering Committee • Convert Benefits to Monetary Terms

17. Presenting the Business Case • Devise Proxy Variables • Measure changes in terms of perceived value • Develop a Work Profile Matrix • Time spent on each job, each type of work • Measure What Is Important to Management • Conoco: Making a Business Case • Changing Mindsets About Information Systems

18. Competitive Advantage in Being at the Cutting Edge • Deploying new technologies faster, better, and cheaper than competitors • Using new technology in innovative ways

19. Competitive Advantage in Being at the Cutting Edge • The Need for Constant IS Innovation • On the lookout for new technologies that impact business

20. Competitive Advantage in Being at the Cutting Edge • E-Business Innovation Cycle • Choosing enabling/emerging technologies • Matching with economic opportunities • Executing business innovation for growth • Assessing client value

22. Competitive Advantage in Being at the Cutting Edge • Implications of E-Business Innovation Cycle • Begin with technology when considering successful business strategies • Marketing is secondary to IT • Emerging technology cycle is ongoing

23. Competitive Advantage in Being at the Cutting Edge Terms and Concepts • E-commerce (Internet-related) • E-business (any IT that supports business) • Enabling technologies • Economic opportunities

24. Competitive Advantage in Being at the Cutting Edge The Cutting Edge vs. The Bleeding Edge • Information systems are often bought from, or built by, someone else • An organization typically cannot patent an IS • Rivals can copy emerging information systems • Therefore, one’s IS competitive advantage can be short-lived

25. Competitive Advantage in Being at the Cutting Edge Requirements for Being at the Cutting Edge • Consider Porter’s competitive forces • To deploy emerging systems well: • Organization must adapt well to change • Human capital available for deployment (knowledge, time, skills) • Tolerance of risk and uncertainty