L 2 Information Systems for Competitive Advantage GP

L 2 Information Systems for Competitive Advantage GP Dhillon Virginia Commonwealth University . 2 -1

Objectives n n 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 2

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

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

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

Supporting Strategy: Doing Things Smarter Strategic Planning 1. 2. 3. Create a vision: setting the direction Create a standard: performance targets Create a strategy: reaching the goal 6

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

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

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

Organizational Value Chain 11

Information Systems for Competitive Advantage The Role of IS in Value Chain Analysis n IS competitive advantage in VCA: n u Internet link with suppliers, dealers t Extranets: using the Internet for B 2 B interactions Computer-aided manufacturing systems u Web site with online product ordering u Customer service response system u Computer-aided design u 12

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

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

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

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

Presenting the Business Case n n n Devise Proxy Variables u Measure changes in terms of perceived value Develop a Work Profile Matrix u 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 17

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

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

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

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

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

Competitive Advantage in Being at the Cutting Edge The Cutting Edge vs. The Bleeding Edge n n 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 24

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