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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

1

I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

C h a p t e r

2

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Competing

with

Information Technology

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

2

• Identify several basic competitive strategies and explain how they can be used to confront the competitive forces faced by a business.

• Identify several strategic uses of information technology and give examples of how they give competitive advantages to business.

• Identify several strategic uses of Internet technologies for electronic business and commerce, and give examples of each.

Chapter Objectives

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

3

• Give examples of how business process reengineering involves the strategic use of information technology.

• Identify how total quality management differs from business process reengineering in its use of information technology.

• Identify how information technology can be used to help a company be an agile competitor, or to form a virtual company to meet strategic business opportunities

Chapter Objectives

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

4

• Explain how knowledge management systems can help a business build a knowledge-creating company.

Chapter Objectives

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

5 The Competitive Environment

Threat of New

Entrants

Rivalry AmongExisting

Competitors

Bargaining Powerof Customers

Bargaining Powerof Suppliers

Threat ofSubstitutes

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

6 Fundamental Competitive Strategies

Differentiation StrategiesDifferentiation Strategies

Innovation StrategiesInnovation Strategies

Growth StrategiesGrowth Strategies

Alliance StrategiesAlliance Strategies

Cost Leadership StrategiesCost Leadership Strategies

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

7 Strategic Uses of Information Technology

ImprovingBusinessProcess

PromoteBusinessInnovation

Locking in Customers and Suppliers

Use IT to reduce costs of doing business

•Use IT to improve quality•Use IT to link business to customers and suppliers

Use IT to create new products or services

EnhanceEfficiency

Create NewBusiness Opportunities

Maintain ValuableCustomers and Relationships

Strategy

IT Role

Outcome

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

8 Strategic Uses of Information Technology

RaiseBarriersto Entry

Build aStrategic ITPlatform

Build a Strategic Information Base

Increase amount of investment or complexity of IT needed to compete

Use IT to provide information to support firm’s competitive strategy

Leverage investment in IS resources from operat- ional uses to strategic uses

IncreaseMarket Share

Create NewBusiness Opportunities

EnhanceOrganizational Collaboration

Strategy

IT Role

Outcome

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

9 Strategic Positioning of Internet Technologies

Global MarketPenetration

E-Commerce WebsiteValue-added IT Services

Product and ServicesTransformation

E-Business; ExtensiveIntranets and Extranets

Cost andEfficiency Improvements

E-Mail, Chat Systems

Performance Improvements inBusiness Effectiveness

Intranets and Extranets

Strategy

Solution

Low

High

High

Cu

sto

me

r C

om

pe

titio

n C

onn

ect

ivi ty

E-Business Processes Connectivity

Internal Drivers

Ex

tern

al D

rive

rs

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

10 The Value Chain

Administrative Coordination & Support Services

Human Resource ManagementHuman Resource Management

Technology DevelopmentTechnology Development

Procurement of ResourcesProcurement of Resources

InboundLogisticsInboundLogistics OperationsOperations Outbound

LogisticsOutboundLogistics

Marketingand

Sales

Marketingand

Sales

CustomerServiceCustomerService

Com

petit

ive

Adv

anta

ge

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

11 The Internet Value Chain

Marketing andProductResearch

Sales andDistribution

Support and Customer Feedback

Data for market research, establishes consumer responses

•Access to customer com-ments online•Immediate re-sponse to customer problems

•Low cost distribution•Reaches new customers •Multiplies contact points

EnhanceEfficiency

Create NewBusiness Opportunities

Maintain ValuableCustomers and Relationships

InternetCapability

Benefitsto

Company

Opportunityfor

Advantage

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

12 Customer-Focused E-Business

Let customersplace orders thrudistributionpartners

TransactionDatabase

Link Employees and distributionpartners

Let customers check order history and delivery status

Let customers place orders directly

CustomerDatabase

Build acommunityof customers,employees,and partners

Give allemployees acomplete viewof customers

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

13 Business Reengineering and Quality Management

Business QualityImprovement

Business QualityImprovement

BusinessReengineering

BusinessReengineering

DefinitionDefinition

TargetTarget

PotentialPaybackPotentialPayback

RiskRisk

What Changes?What Changes?

PrimaryEnablersPrimaryEnablers

Incrementally Improving Existing ProcessesIncrementally Improving Existing Processes

Radically Redesigning Business SystemsRadically Redesigning Business Systems

Any ProcessAny Process Strategic Business ProcessesStrategic Business Processes

10%-50% Improvements10%-50% Improvements 10-Fold Improvements10-Fold Improvements

LowLow HighHigh

Same Jobs - More EfficientSame Jobs - More Efficient Big Job Cuts; New Jobs; Major Job RedesignBig Job Cuts; New Jobs; Major Job Redesign

IT and Work SimplificationIT and Work Simplification IT and Organizational RedesignIT and Organizational Redesign

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

14 The Customer- Focused Agile Competitor

Leverage theImpact of People and IS Resources

Acc

essi

bilit

yD

eliv

ery

Tim

eC

usto

mer

’s

time

to m

arke

t

Anticipation offuture needs

Customization

Conformance

Co

st of

Tran

saction

Cost of

Value-added

Services

Give Customers Solutions

to Problems

Give Customers Solutions

to Problems

Cooperate with Business Partnersand Competitors

Cooperate with Business Partnersand Competitors

Organize toMasterChange

Organize toMasterChange

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

15

Borderless

Technology

Excellence

Trust-Based

Adaptability

Opportunism

SixCharacteristics

of VirtualCompanies

Virtual Corporations

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

16 Knowledge Management Systems

SolutionKnowledge

DevelopmentEngineers

TechnicalSupportStaff

ProductManagers Other

Vendors

Customers

The Internet

Intranet

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

17

FirmFirm

EnvironmentEnvironment

PerformancePerformance

• Size• Geographical scope• Product scope• Organization structure

• Technological resources

• Knowledge resources

• Creating switching costs

• Exploiting knowledge

• Developing response strategies

• Managing risks

Key Factors for Sustaining Strategic Success

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

18

• Information systems can play several strategic roles in business.

• The Internet, intranets, extranets, and other Internet-based technologies can be used strategically for E-Business and E-Commerce.

• A key strategic use of Internet technologies is to build an E-Business which develops its business value by making customer value its strategic focus.

Chapter Summary

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

19

• IT is a key ingredient in reengineering business operations, by enabling radical changes to business processes that dramatically improve their efficiency and effectiveness.

• IT can be strategically used to improve the quality of business performance.

• A business can use IT to help it become an agile company, that can respond quickly to changes in its environment.

Chapter Summary (cont)

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I n t r o d u c t i o n t o I n f o r m a t i o n S y s t e m s Tenth EditionJames A. O’Brien

20 Chapter Summary (cont)

• Forming virtual companies has become an important competitive strategy in today’s dynamic global market.

• Lasting competitive advantages today can only come from innovative use and management of organizational knowledge by knowledge creating companies and learning organizations.

• Successful strategic information systems are not easy to develop and implement. They may require major change in how businesses operate.