Chapter 3: Strategy and Information Management (IT-enabled Strategies) Flashcards Preview

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Relation between corporate strategy and information systems 

corporate strategy -align-> information systems

information systems -enable-> corporate strategy


On-going Discussion

  • IT as an enabler for corporate strategies & success Nicholas Carr 2003: IT does not matter!
  • Both Points of Views may be partly right:

    • Hal Varian (2004): „It is not information technology itself that matters, but how you use it.“

    • Costs for IT are lower, ability to manage IT is widespreadIT is ubiquitous. In some areas, IT has indeed become a commodity

    • But: As various technologies in history show, even if some components get standardized, they multiply the opportunities to create new innovations and establish sustainable or temporary competitive advantages. 


Key questions to determine the impact of IT on Strategic Decision Making 

  • Previously, we talked about Michael Porter’s Competitive Forces and Value Chain Analysis

  • These help in framing decision making along two dimensions depicted in McFarlan’s strategic grid 



Key questions to determine the impact of IT on Strategic Decision Making 

Guides decision making when evaluating the impact of IT on core strategy and core operations

  • Can IT be used to reengineer core value activities and change the basis of competition?
  • Can IT change the nature of relationships and the balance of power between buyers and suppliers?
  • Can IT build or reduce barriers to entry?
  • Can IT increase or decrease switching costs?
  • Can IT add value to existing products and services or create new ones? 


Strategic Information Systems (SIS) 

Strategic information systems are IS that assure a competitive advantage for a company or avoid a drop of the company‘s competitiveness. 


• Airline reservation system SABRE 


System Categories for SIS 

1. Inter-Organisational Systems
2. Value-Added Services
3. IT for new products and services

4. Electronic Markets 


Successful SIS: Key Questions 

  • Do we need the SIS to compensate for a competitive disadvantage?

  • Does the SIS add value for our customers?

  • Is the SIS defendable?

  • Does the SIS make use of the unique qualities of our company?

  • Are there exit barriers?

  • Does the SIS produce unrealistic expectations?

  • Is the project the SIS is part of cost-effective? 


Technological Advancement Spurs Change 

  • Steam engine
  • Mass production
  • Internet technology
  • Internet of things


Business Process Model for Serial Products 


IT-enabled Business Process Change 

  • Business processes (in private and public organizations) present a collection of activities that takes one or more kinds of input and creates an output.
  • Business Process Change (BPC) presents a management concept that involves any type of process change (radical and continuous) for increasing efficiency and effectiveness in organizations
  • While both approaches, radical (e.g., BPR, BPT) and continuous (e.g., TQM, CPI, six sigma), share the common goal of improving processes, they are also frequently used complementary


Process Change Concepts/Methods 

  • BPC Business Process Change

  • BPI Business Process Innovation

  • BPM Business Process Management

  • BPR Business Process Reengineering

  • BPT Business Process Transformation

  • CPI Continues Process Improvement

  • TQM Total Quality Management 


Definition of BPM 

Business Process Management is a holistic view of business processes and aims at a structured, analytical, cross-functional and continuous improvement of business processes (see also Lee/Dale 1998, p. 216). 


Core Elements of Business Process Management 


Business Process Reengineering 

  • Objective: achieve sustainable productivity improvements by changing processes substantially.

  • This is typically achieved by applying ICT, often in a new and unprecedented way. 


ICT in the context of Business Process Reengineering 

IM as Facilitator --> Process Design
IM as enabler -->  Process Design


IM as implementor -->Implementation
IM as operator --> Implementation


Phases of a BPR project 

Phase  Tasks and objectives


  • Creation of general conditions for the BPR project
    •  Establishing a project organisation
    • Defining the scope of analysis
    • Defining the objectives of the restructuring/ reengineering

As is- analysis phase

  • Detailed Description of current situation
    • Creation of process transparency
    • Discovering major process weaknesses and improvement poten- tials

Design phase

  • Development of a holistic to-be concept / ideal concept
    • Desciption of new business processes with corresponding structures
    • Development of an action plan

Implementation phase

  • Step-by-step implementation of the to-be concept
    • Implementationofpilotprojects 
    • Area-wide introduction of new structures
    • Continuous progress controll and establishment of new structures


E-Commerce Business Models 

  • The Storefront Model

  • The Auction Model

  • The Portal Model (Vertical vs. horizontal)

  • The Name-Your-Price Model

  • The Comparison Pricing Model

  • The Demand Sensitive Pricing model

  • The B2B Exchange Model 


Partial Models of an Integrated Business Model 

  • Competition model Market model Demand model 

  • Procurement model

  • Product & service production model

  • Product & service offering model 

  • Distribution model

  • Financing model, capial model, revenue model


IT-Enabled Business Models and Platforms 

Many IT-enabled business models are platforms

  • Examples: iPhone, Microsoft Windows, Uber, Airbnb
  • Platform brings together two sides by the help of IT: –
    • iPhone userapp developer
    • PassengerUber driver 

Software platform:

A software-based product or service that serves as a foundation on which outside parties can build complementary products or services (Tiwana, Platform Ecosystem, 2014) 


Platform Governance in an App Store 

3 dimension of platform governance

  • Control–ensure integration
    • The platform owner needs to control and guide the development process of third-party.
  • Pricing–create incentives
    • The platform owner needs to create incentives e.g. by sharing revenues with developers
  • Decision rights – provide autonomy
    • The platform owner can transfer decision rights to the app developer to trigger innovation
  • Exercise class on October 30:
    • Experiment on developing for a software platform
    • Participation improves final grade by 0.3 


Open vs. closed innovation


Types of Innovation 

Sustaining innovations:
New technologies or business models which suit an existing market better (improvement) evolutionary / revolutionary

Disruptive innovations:

--> New technologies or business models that (at first) lead to worse products measured against common criteria; often cheaper / less complex; 


Disruptive Innovation – Christensen's Criteria 

  • Historically most valued attributes

  • Other quality criteria

  • Cost and margin

  • Simplicity / convenience

  • Interest of main customers

  • First customers

  • First vendors

  • Value chain

  • It is not possible to forecast market disruption ex-ante

  • Criteria are a good first indicator

  • Market disruption 

  • It is not possible to forecast market disruption ex-ante

    Criteria are a good first indicator