What’s Happening?! Oracle take-over attempt of PeopleSoft is not dead. SIA is forecasting a 19% increase in semiconductor sales for 2004. A 30 second ad

What’s Happening?!What’s Happening?!

Oracle take-over attempt of PeopleSoft is not dead.

SIA is forecasting a 19% increase in semiconductor sales for 2004.

A 30 second ad during the Superbowl cost $2.3 million.

100 Best Places to Work100 Best Places to Work

1. J.M. Smucker, Orville, Ohio

2. Alston & Bird, Atlanta

3. Container Store, Dallas

4. Edward Jones, St. Louis

5. Republic Bancorp, Owosso, Mich.

6. Abode Systems, San Jose

7. TDIndustries, Dallas

8. SAS Institute, Cary, N.C.

9. Wegmans Food Markets, Rochester, N.Y.

10. Xilinx, San Jose

100 Best Places to Work100 Best Places to Work

25 Microsoft28 Cisco Systems34 Starbucks35 Mayo Clinic46 Intel48 Network Appliance55 Qualcom62 Continental Airlines72 IBM78 Intuit79 Harley-Davidson

84 Marriott International

86 Men’s Wearhouse

90 Granite Construction

91 Texas Instruments

94 International Data Group

96 FedEx

99 Nordstrom

100 Simmons

Chapter 7 SummaryChapter 7 Summary

Implementing a Vision: Strategy, Implementing a Vision: Strategy, Tactics, and Business PlanTactics, and Business Plan

Three Key ElementsThree Key Elements

Vision - Identifies what the organization wants to look like at some logical point in the future.

Strategy - How a company will achieve the long-term goal of the vision.

Tactics - More specific time-oriented, measurable ways to make a vision a reality

Two Challenges for a New Two Challenges for a New Business StrategyBusiness Strategy

1. Deciding what things are worth doing.

2. Getting them done.

Elements of a Business StrategyElements of a Business Strategy

Competitive framework - definition and size of a

market including direct and indirect competitors. Market Target – primary buyer or customer segment

for product or service. Basis for Perceived Competitive Advantage –

how key customers define superior value of a product. Key Profit Drivers – the factors that affect the

profitability of a product or service. Product and/or Service Portfolio – relating a

product or service with the other four points.

InternalAssessment

ExternalAssessment

The Three Components of a New Strategy

Vision

A New Strategy Figure 7-1

Strategic Management ProcessEnvironmental Analysis

General Environment

Operating Environment

Competitive Positioning

Directions for Development

Company Analysis

Structure

Values/Culture

Skills

Resources

CompanyStrategic History

CurrentStrategy

StakeholderAnalysis

Vision &Strategy

ChosenStrategy

RealizedStrategy

CompanyVision

Reprinted with permission fromThe Strategic Management BlueprintCambridge, Ma: Blackwell, 1993.Figure 7-2

Strategic Management ProcessStrategic Management Process

Managing for ResultsManaging for Results

• Objectives

• Authority

• Responsibility

• Training

• Motivation

• Performance

• Results

• Reward

Control

Figure 7-4

Information-Oriented Infrastructure is key Information-Oriented Infrastructure is key to a Responsive Competitive Strategyto a Responsive Competitive Strategy

Data Management – Providing access to timely, accurate and cost- effective data.

User Applications – Support of application to the users in functional and individual support.

Voice Management – Effective ways of communication (i.e. E-mail, data access, video conferencing).

Network Management – Manage networks to assure high levels of availability and performance.

Planning Process – Integrating information systems into the business planning process.

Financial Strategy and Organization – How does an organization afford, justify and pay for information systems?

A Logical GoalA Logical Goal

The goal is determine if a business strategy can be more successful through the support of information systems.

Possible Exam QuestionsPossible Exam Questions

What factors will influence the selection of the primary strategy?

What can be done to facilitate the transition from vision to strategy to tactics?

Chapter 8 IntroductionChapter 8 Introduction

Evaluating Business Strategiesand

The Use of Information Systems:The Strategic Option Generator

A Systematic ApproachA Systematic Approach

VisionStrategyTactics

Business Plan

• Competitive Options• Roles, Roles and Relationships• Redefine and/or Define• Telecommunications

as the Delivery Vehicle• Success Factor Profile

Competitive Options

Chapter ObjectivesChapter Objectives

Evaluating Business Strategies

The use of the Information Systems to gain competitive advantage

Strategic Option Generator

A model that can identify strategic opportunities involving the use of information systems

TARGET

CUSTOMER COMPETITORSUPPLIER

THRUST

DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE

MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE

STRATEGIC OPTION GENERATOR

Figure 8-1

TARGET

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE


Figure 8-1

THRUST

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE


Figure 8-1

MODE

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE


Figure 8-1

DIRECTION

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE


Figure 8-1

EXECUTION

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE


Figure 8-1

Analysis of Federal Express Using the

Customer

Differentiation Innovation Growth

Offensive

Use Provide

Where Are We?Where Are We?

Section I: The Business Environment

Chapters 2 – 5

Section II: The Company Environment

Chapters 6 – 7

Section III: The Use of Information

Systems

VisionStrategyTactics

Business Plan

• Competitive Options• Roles, Roles and Relationships• Redefine and/or Define• Telecommunications

as the Delivery Vehicle• Success Factor Profile

A Systematic Approach

Chapter 8Chapter 8

Evaluating Business Strategies and the Use of

Information Systems: Strategic Option Generator

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE


Figure 8-1

Biggest MistakeBiggest Mistake

Target, thrust and mode are fairly straight-forward so they don’t tend to cause problems for students.

Direction is a source of problems and confusion since the name of the element is not self-explanatory.

This element deals with whom the use of IS is intended.

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE

Federal Express Analysis Using the Strategic Option Generator

Figure 8-2

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE

UPS Analysis Using the Strategic Option Generator

Figure 8-3

Chapter 9 IntroductionChapter 9 Introduction

The Roles, Roles andThe Roles, Roles and

Relationships Concept Relationships Concept

Roles, Roles and RelationshipsRoles, Roles and Relationships

The role of information systems: focused The role of information systems: focused on competitive prioritieson competitive priorities

The role of senior management: positioning The role of senior management: positioning and prioritizing the competitive role of and prioritizing the competitive role of information systemsinformation systems

The relationship: the need for an effective The relationship: the need for an effective working relationship between senior working relationship between senior management and the information systems management and the information systems organizationorganization

Senior ManagementSenior Management

Senior Executive: Communication and Senior Executive: Communication and direction to the information systems direction to the information systems organization of the long term goals of the organization of the long term goals of the organizationorganization– Making sure that major information systems are Making sure that major information systems are

properly funded and staffedproperly funded and staffed– Motivating people throughout the organization Motivating people throughout the organization

to make things happento make things happen

Senior Managers of Major Senior Managers of Major Business FunctionsBusiness Functions

Understand the competitive role of Understand the competitive role of information systems within the organizationinformation systems within the organization– Identify and specify requirements for new Identify and specify requirements for new

systemssystems– Making sure these new systems are adequately Making sure these new systems are adequately

funded through the budget processfunded through the budget process

The Role of the Users of The Role of the Users of Information SystemsInformation Systems

Operation level people make things happen!Operation level people make things happen!– They need to be motivated by their managers to They need to be motivated by their managers to

support the information systems organization support the information systems organization and system changesand system changes

– Without their support a well designed, planned Without their support a well designed, planned and executed information system can failand executed information system can fail

The Role of the IS ManagerThe Role of the IS Manager

Mission statement:Mission statement:– To assure that the corporation’s present as well To assure that the corporation’s present as well

as future demands for information, information as future demands for information, information processes, information systems and computer processes, information systems and computer based technologies are provided for in such a based technologies are provided for in such a manner that the daily conduct of the business manner that the daily conduct of the business will not be impacted and that the future will not be impacted and that the future business opportunities can be capitalized and business opportunities can be capitalized and managed by the corporation.managed by the corporation.


Senior Management

Information SystemsOrganization

Functional Management

Users

Figure 9-1

Making Things Happen!Making Things Happen!

There are three factors that can be identified There are three factors that can be identified

that cause a business to initiate action in the that cause a business to initiate action in the

information systems area:information systems area:1.1. A threat to the businessA threat to the business

2.2. The personal power of a senior managerThe personal power of a senior manager

3.3. The need for business process improvementsThe need for business process improvements

ConclusionConclusion

The chapter focuses on approaches for making these relationships work and how to capitalize on them.

Chapter 9Chapter 9

The Roles, Roles and Relationships Concept

Chapter 9Chapter 9

1. Roles, Roles, Relationship Concept and

Examples.

2. Triggers of Action.

3. Technology Transfer Through

Organizational Learning.

4. IS Organization as a Business within a

Business.

5. Outsourcing the management of IS.

IS as a Competitive Resource?IS as a Competitive Resource?

• Business competitiveness is a top priority.

• What about Information Systems?

Why are some companies successful

while others are frustrated with a lack

of results and benefits from the use of

information systems?

Success Can Be Elusive!Success Can Be Elusive!


1. What organizational leadership is necessary to gain a competitive advantage through the use of information systems?

2. How does an organization determine the appropriate use of information systems to gain a competitive advantage on an on-going basis?

3. Does a specific event, activity or person tend to trigger the start of a program that emphasizes the competitive use of information systems?


4. Can an organization sustain a competitive advantage that is built on an information system?

5. Is this a broad based approach or is the successful use of competitive information tied to a small number of people playing key roles?

6. Does outsourcing the management of information systems impact its possible use as a competitive resource?

1. Business Leadership?

2. Information Systems Leadership?

3. A Proven Information Systems Track

Record?

4. Business Stability?

5. Information Content of the Business?

6. IS Cost and/or Risk?

How Much is Based OnHow Much is Based On

Specific Roles of Information SystemsSpecific Roles of Information Systems

1. Business Process Partner.

2. Provide Access to Information.

3. Enhance Communications.

4. Provide Decision Assist.

Information systems are strategic weapons, not cost centers.

Information systems are strategicweapons, not cost centers.

Robert F. McDermottFormer USAA CEO

Roles, Roles and Relationship ConceptRoles, Roles and Relationship Concept**********************

1. The role of information systems is focused on competitive priorities.

2. Senior management plays a major role in positioning and

prioritizing the competitive role of information systems.

3. There is an on-going working relationship between senior

management and the information systems organization to

sustain the successful use of information systems to compete.

1. Who Makes Competitive Strategy Decisions?

Two Important QuestionsTwo Important Questions

2. Who Makes Competitive Strategy Decisions

When the Process is Built on a Computer Base?

The primary role of the top executive

is to assure the long term viability

of the business.

Top Executive Job DescriptionTop Executive Job Description

The Role of the Senior ExecutiveThe Role of the Senior Executive

• Provide a long term vision for the future of the business.

• Recognize the value of information to the organization.

• Sponsor and participate in determining the role of information systems.

The Person that Runs the Business on a Day-To-Day Basis

• Communicate the importance of the information systems role.

• Provide funding, including R&D, to address the major requirements.

• Focus on results and benefits.

• Motivate to make things happen!

Role of Other Senior ManagementRole of Other Senior Management

Understand the role of information systems within

the organization.

Identify and specify requirement for new

information systems.

Justify and fund existing and new systems.

Sponsor their information systems on an on-going

basis.

Role of IS ExecutiveRole of IS Executive

Function as a member of the senior management team.

Provide an understanding of the realm of the possible, feasible, affordable and achievable with information systems.

Posture information systems as a service and support organization in both fact and perception.

Using IS to CompeteUsing IS to Compete

Senior Management

Information SystemsOrganization

Functional Management

Users

Figure 9-1

Leadership in two forms:

- Business Leadership

- IT Leadership


To assure that the corporation's present as well as future demands for information, information processes, information systems and computer-based technologies are provided in such a manner that the daily conduct of the business will not be impacted and that the future business opportunities can be capitalized on and managed by the corporation.

Information Systems Organization Information Systems Organization Mission StatementMission Statement

The Reeducation of UPSThe Reeducation of UPS

• For decades UPS focused on managing physical

distribution.

• Today, new IT and relaxed regulations have made

logistics management the imperative.

• Information about a package is often as important as

the package itself.

• In one decade IT went from a limited factor to a

critical enabling resource.

Kent “Oz” Nelson ,CEO

An Essential Partnership

Using Information Systems to Using Information Systems to Gain a Competitive AdvantageGain a Competitive Advantage

Using Information Systems to CompeteUsing Information Systems to Compete

InformationSystems

Organization

Business Leadership

Senior Management

IT Leadership

Figure 9-2

1. A formal structure within the organization.

2. Integral to the way that the business is run.

RelationshipsRelationships

• Senior Management?

• Functional Management?

• Information Systems Management?

Who Should Be the Primary Who Should Be the Primary Initiator of Using Information Initiator of Using Information

Systems to Compete?Systems to Compete?

Using IS to CompeteUsing IS to CompetePrimary ResponsibilitiesPrimary Responsibilities

DirectionConceptualApproach

SpecificApproach

SeniorManagement

FunctionalManagement

I/SManagement

7

2

1

10

2

5

3

10

4

1

5

10Figure 9-4

Technology TransferTechnology TransferThrough Organizational Through Organizational

LearningLearning

There is a direct correlation between

the successful introduction of a new

information system within an organization

and the learning curve of the primary

users.

Information Technology

Computer-based Applications

Organization

Learning Curves

CompetitiveAdvantage

Action Initiators

Vision

Strategy

Tactics

ProcessImprovement

CrisisManagement

Executive Power

Business Leadership

Technology Leadership

Figure 9-5

Making It Happen!Making It Happen!

You manage things, but you lead people.

Grace HopperAdmiralU.S. Navy

More on LeadershipMore on Leadership

1. Entrepreneur Founder

2. Corporate Managers

3. Corporate Caretakers

Bob TownsendUp the Organization

A Business

Competitors

Board of DirectorsS

uppl

iers U

sers

Products/Services

Figure 9-6

InformationSystemsBusiness

Competitors

Steering CommitteeS

uppl

iers

Custom

ers

Figure 9-7

Competitors

Steering CommitteeS

uppl

iers U

sers

InformationSystems

Organization

Opportunities Direction

I/T NeedsReal $s

ProductsPeople

Wants & NeedsJustificationReal $s?

Products& ServicesConstraintsCosts

Real Dollars

Needs and Priorities

Figure 9-8

OutsourcingHiring someone whose expertise can perform a business function or activity better, more cost effectively and/or in a more timely manner than can be achieved in-house.

Also enables the company to focus on its core competencies and those factors that mean the difference between success and failure.

Outsourcing

Outsourcing is a current, major focus of many business enterprises.

It continues to be a very hot topic.

OutsourcingOutsourcing

Logical?

Necessary?

Appropriate?

Cost-effective?

What?

With Whom?

Where?

How Long?

How Much Risk?

The Evolution of Outsourcing of Outsourcing

The concept of outsourcing is not new. For decades, companies have outsourced a number of functions such as cafeteria service, janitorial service, security guards, payroll, clerical support, manufacturing and distribution.

Outsourcing, by the old definition, was very specific, targeted, and often project based. The company might design a product, then outsource the manufacture of various components, subassemblies, even the finished product.

Things have evolved to where anything that is not a core business process is a candidate to outsource.

Outsourcing IS ManagementOutsourcing IS Management

• Strategically Significant?

• A Way to Save Money on a Short Term Basis?

• A Way to Avoid the Need to Manage Technical

People in an Environment that Keeps Changing?

UB example

Outsourcing Information Outsourcing Information Systems ManagementSystems Management

Is the outsourcing of the management of

information systems a contradiction of its

possible strategic significance?

Information System GoalsInformation System Goals

To help achieve organizational objectives by:

1. Supporting the decision making process.

2. Providing necessary information.

3. Providing a communications network.

4. Accommodating change within the

organization.

5. Maintaining an approach with a general

manager’s perspective.

IS Organization BusinessIS Organization Business

1. Designing Information Systems

2. Building Information Systems

3. Maintaining and Running Information

Systems

IT Outsourcing OptionsIT Outsourcing Options

• Software Development and/or Maintenance

• Application Service Provider

• Global Network Provider

• Network Management

• Management of Entire IS Function

• IT Training

• Consulting and Reengineering

India’s IT Outsourcing IndustryIndia’s IT Outsourcing Industry

GOOD STUFF, CHEAP

That's the reputation of India's IT outsourcing industry, and it's both a blessing and a curse.

The blessing is that India has finally been able to move onto the global stage by harnessing its greatest natural resource—people—and focusing on filling the world's need for IT skills and services.

India has grown its IT exports in less than a decade from $150 million to more than $4 billion—10.5% of India's total overseas sales. Its success is built on a solid record for developing IT talent as well as delivering top-notch legacy system maintenance and software applications.

India’s IT Outsourcing IndustryIndia’s IT Outsourcing Industry

The curse is that, despite what IT outsourcing has meant for India's economy, the country's top IT vendors have been typecast and they have major competition from Ireland, China, the Philippines and Israel.

India’s IT Outsourcing IndustryIndia’s IT Outsourcing IndustryNobody can beat their price!

Software programming in India costs roughly $35 per hour, as opposed to $200 in the United States—and their quality is world-class.

Of the 23 companies worldwide that have been awarded the US Software Engineering Institute's Capability Maturity Model Level 5 rating for fault-free software engineering processes (the equivalent of a perfect 10 in Olympic competition), 15 of those elite companies are Indian, among them Infosys, NIIT and Wipro.

China Versus India for OutsourcingChina Versus India for Outsourcing

India’s global advantage in IT rests on a tripartite

foundation:

1) Good IT education

2) Competitive wages

3) English language competency.

On the first two, China already competes. That leaves

English which has improved significantly in the past ten

years.

Most managers are used to managing internal resources and staff directly, and having total control over the decision-making process in their area.

There are some fundamental differences in managing an outsourced function.

US CorporationsUS Corporations

The Corporation Today

A company must ensure that internal

resources are dedicated to core competencies

and that the right outside relationships are

established, maintained, and nurtured.

Chief Resource Officer (CRO)

New Organizational Model is Creating a New Management Role.

Outsourcing has rapidly changed and evolved -- from vertical to virtual, tactical to strategic, cost-cutting to cutting-edge.

The stakes have increased, the risks and the rewards have soared, yet the manner in which outsourcing engagements are conducted and supervised has remained the same.

The CRO is a strategic position, charged not with managing corporate resources (time, money, and personnel), but with managing the complex series of relationships the modern corporation must have with its outside resources.

The CRO evaluates the need for resources in each function, finds the resources required outside the company, and implements and nurtures the relationship to the company's best advantage.

Chief Resource Officer

Chief Resource ManagerChief Resource Manager

Outsourcing deals fall apart because there was no one in a Chief Resource Manager position to manage and follow-up on objectives and contractual agreements.

A CRO-type position means taking a global, visionary, forward-thinking role in how to use resources and make them effective and efficient for an organization.

There is a definite need to manage change during the life of an outsourcing contract.

CRO Skill Profile

1. Experience managing different businesses

2. Experience managing costs

3. Project management

4. Contract negotiations

5. Political and cultural consciousness

6. Ability to think out of the box

7. Comfortable with change

Evaluation CriteriaEvaluation CriteriaIt is important in considering offshore outsourcing to

address the following with a potential vendor:

a) Do they have offices in US and in proximity to

them. Developing long term products require lot of

interaction with the vendor locally.

b) Get resumes of IT professionals who will work

on your project in foreign country and/or the US. If an

offshore vendor has experienced IT professionals working

for them for a good length of time, they have good retaining

and employee policies.

Evaluation CriteriaEvaluation Criteria

c) Understand the vendor process to develop and

deliver the project on a timely basis.

d) Get references on where they have successfully

completed similar projects.

e) Clearly understand the financial and property rights of

such a relationship.

f) Make sure that you have a way out if things do not go

well or according to schedule.

Benefits Realized from Outsourcing IS Management

0% 10% 20% 30% 40% 50% 60% 70%

Vendor Expertise

Increased Focus on CoreCompetencies

Improved Quality and Delivery

Cost Reduction

Balance Sheet Improvement

Actual Benefits

Expected Benefits

Deloitte & Touche Survey

A Well-Structured AllianceA Well-Structured Alliance

• Strategic Synergy. The two (or more) organizations

together can achieve a high level of benefits. • Clarity of purpose. The goals and benefits are explicit

and clear. • Growth opportunity. The relationship--and its benefits--

can be expanded. • Less risk. The relationship reduces the level of risk. • Excellent chemistry. There a good "fit" between the two

or more organizations. • Win-Win Proposition. Each party can benefit fairly from

the relationship.

Outsourcing Resources

The Outsourcing Institute

http://www.outsourcing.com

ASP Outsourcing Center

http://www.asp-outsourcing-center.com

Some Basic Conclusions Some Basic Conclusions

1. There are common factors among companies that have gained a competitive advantage through the use of information systems.

2. The difference between the good examples and the

less successful ones is getting bigger.

Documents

What’s Happening?! Oracle take-over attempt of PeopleSoft is not dead. SIA is forecasting a 19% increase in semiconductor sales for 2004. A 30 second ad