IT Strategy

Learning Objectives
What is the impact of information systems on organizations?
Which features of organizations do managers need to know about to build and use information
systems successfully?
How do Porter’s competitive forces model, the value chain model, and core competencies help
companies use information systems for competitive advantage?
What are the challenges posed by strategic information systems, and how should they be
addressed?
Challenges Posed by Strategic Information Systems
} Sustaining competitive advantage
 Competitors can retaliate and copy strategic systems.
 Systems may become tools for survival.
} Aligning IT with business objectives
 Performing strategic systems analysis
o Structure of industry
o Firm value chains
} Managing strategic transitions
 Adopting strategic systems requires changes in business goals, relationships with
customers and suppliers, and business processes.
Porter’s Value Chain Model 波特價值鏈
價值鏈列示了總價值、並且包括價值活動和利潤。價值活動是企業所從事的物質上和技術
上的界限分明的各項活動，這些活動是企業創造對買方有價值的產品的基石。利潤是總價
值與從事各種價值活動的總成本之差。
} Value chain analysis
 Used to identify sources of competitive advantage.
} Specifically:
 Opportunities to secure cost advantages.
 Opportunities to create product/service differentiation.
} Firm as series of activities that add value to products or services.
} Highlights activities where competitive strategies can best be applied.
 Primary activities vs. support activities
} At each stage, determine how information systems can improve operational efficiency
and improve customer and supplier intimacy.
} Utilized for benchmarking of industry best practices.
一、 基本活動 (Primary Activities)
1. 進料後勤 (Inbound Logistics)
接收、儲存、和分配進料。如原物料搬運、倉儲、庫存控制、車輛調度，和供應
商退貨。這裏供應商代表創造價值的角色。
2. 生產作業 (Operations)
將投入轉化為最終形式的產品與服務。如加工、包裝、組裝、設備維護，與檢測
等。這裏的價值油生產系統創造。、
3. 發貨後勤 (Outbound Logistics)
集中、儲存，與將產品配送給消費者的活動。例如成品庫存管理，與車輛調度，
訂單處理流程。他們可能隸屬於組織內部或外部。
4. 銷售 (Marketing and Sales)
說服消費者選擇自家產品服務，而不是競爭者。廣告促銷，與品牌溝通是創造價
值的要角。
5. 服務 (Service)
售後企業所提供能維持甚至增加價值的活動。包括安裝、維修，或退換貨。
 二、 支持性活動 (Supporting Activities)
1. 採購與物料管理 (Procurement)
購買價值鏈的投入要素之活動。包括與供應商議價原物料的量價、購買研發設備、
實施物料管理等。
2. 科技研發(Technology)
核心技術的開發與應用，如自動化生產，硬體設備，與軟知識等。

3. 人力資源管理(Human
Resource Management)
包括對人力的聘用、培訓、獎懲、開除。
4. 基礎制度(Infrastructure)
企業維持日常營運的各種制度，如會計、法律、行政、公關與品質管理。更抽象
的包括組織階層與組織文化。
}
Porter’s Five Force Analysis 五力分析
} Porter’s 5 forces are a
framework/tool to analyze the
competition within an industry and

business strategy development.

 } 其用途是定義出一個「市場吸引力高低」程度。 波特認為影響市場吸引力的五種
力量是「個體經濟學面」，而非一般認為的總體經濟學面。 五種力量由密切影響
「公司服務客戶」及「獲利的構面」組成，任何力量的改變都可能吸引公司退出或
進入市場。

Porter’s 5 Forces – Competitors Rivalry 競爭激烈

波特五力中的第一力著眼於競爭對手的數量和實力。考慮一下您有多少競爭對手，
他們是誰，以及他們的產品質量與您的相比如何。在競爭激烈的行業中，公司通過大幅降
價和開展高影響力的營銷活動來吸引客戶。這可以讓供應商和買家在覺得沒有從您那裡得
到一筆好交易時很容易去別處。
另一方面，如果競爭對手很少，並且沒有其他人在做你所做的事情，那麼你可能會擁
有巨大的競爭實力，以及可觀的利潤。
例子：如果您要開展運輸業務，您可能會進入一個擁擠的市場。你必須考慮許多潛在
的競爭對手，他們收費多少，以及他們是否能夠大幅打折。您還需要考慮他們的資源：您
可能要與國際物流公司以及本地競爭對手競爭。（請記住，此時分析應該集中在您的潛在
競爭對手身上。只有當你在競爭中收集到你的數據時，才開始考慮你自己的報價。）
} Factors that have an effect
 The product and service differentiation.
 Customer switching costs.
} IT/IS strategy: Differentiation using mobile banking apps.
Porter’s 5 Forces – Potential Entrants 新進入的威脅
您的地位可能會受到潛在競爭對手進入您的市場的能力的影響。如果進入你的市場並
進行有效競爭只需要很少的金錢和努力，或者如果你對你的關鍵技術缺乏保護，那麼競爭
對手就會迅速進入你的市場並削弱你的地位。
然而，如果你有強大而持久的進入壁壘，那麼你就可以保持有利地位並公平利用它。
這些障礙可能包括複雜的分銷網絡、高昂的啟動資金成本，以及難以找到尚未與競爭對手
合作的供應商。
現有的大型組織可能能夠利用規模經濟來降低成本，並保持相對於新來者的競爭優勢。
如果客戶在一個供應商和另一個供應商之間切換的成本太高，這也可能成為一個重要的進
入壁壘。政府對一個行業的廣泛監管也是如此。
例子：即使是那些似乎受到很好的保護以防止新進入的行業也可能被證明是脆弱的。
多年來，大量航空旅行掌握在相對少數的老牌航空公司手中。進入壁壘是巨大的。開辦成
本高，航線和起降時刻多被大運營商搶奪，行業監管嚴格。即便如此，一些小型運營商還
是設法打入了市場，主要是通過提供前往熱門目的地的簡單、低成本旅行，並利用監管減
少的優勢。這些規模更小、更靈活的運營商現在在行業中佔有重要地位，尤其是在中短途
旅行方面。
} Factors that have an effect
 Entry barriers – economics of scale, policy, technology protection, etc.
 Customer switching costs.
} IT/IS strategy: Online travel agency’s big database and search algorithm.
Porter’s 5 Forces – Substitutes 替代威脅
指您的客戶找到一種不同的方式來做您所做的事情的可能性。它可能更便宜，或更好，
或兩者兼而有之。當客戶發現很容易改用另一種產品時，或者當一種新的理想產品出人意
料地進入市場時，替代的威脅就會增加。
例子：如果您的組織生產醫療器械，您可能會發現自己的地位受到 3D 打印興起的威
脅。這使得儀器可以由多種材料製成，有時成本僅為傳統方法的一小部分。如果競爭對手
做對了，它會削弱您的地位並威脅您的盈利能力。
} Factors that have an effect
 The performance of substitutes
 Customer switching costs.
} IT/IS strategy: HD-PVR
Porter’s 5 Forces – Buyers 買家力量
如果與行業中的供應商數量相比，買家數量較少，那麼他們就擁有所謂的“買家力量
”。這意味著他們可能會發現很容易轉向新的、更便宜的競爭對手，這最終會壓低價格。
想想你有多少買家（即向你購買產品或服務的人）。考慮他們的訂單規模，以及他們轉向
競爭對手需要花費多少。當您只與少數精明的客戶打交道時，他們的權力更大。但如果你
有很多客戶而競爭很少，購買力就會下降。
例子：購買力是食品零售的一個重要因素。想想在擁擠、競爭激烈的市場中經營的大
型超市。隨著廉價、簡潔的食品折扣店的出現，這個市場發生了巨大變化。購物者在這裡
擁有強大的購買力。這就是為什麼超市有優惠券計劃、會員卡和激進的折扣——以吸引最
大份額的買家。這些組織反過來對自己的供應商擁有強大的購買力，利用他們的影響力降
低製造層面的食品成本。
} Factors that have an effect
 Buyer information availability
  Buyer switching costs.
} IT/IS generally increases buyer power through better access to information.
Porter’s 5 Forces – Sellers 供應商力量
如果供應商能夠輕鬆提高價格或降低產品質量，他們就會獲得權力。如果您的供應商
是唯一可以提供特定服務的供應商，那麼他們具有相當大的供應商力量。即使您可以更換
供應商，您也需要考慮這樣做的成本。
您必須選擇的供應商越多，就越容易轉向更便宜的替代品。但如果供應商較少，而你
嚴重依賴他們，他們的地位就會越強——他們向你收取更多費用的能力也就越強。這可能
會影響您的盈利能力，例如，如果您被迫簽訂昂貴的合同。
例子：假設您的經營理念是製造電子設備。您必須評估一系列專業組件的供應選項。
如果一家供應商主導了零部件市場，那麼他們就可以提高價格而不必擔心自己的競爭對手。
這可能會影響您產品的可行性。
} Factors that have an effect
 Existence of substitute suppliers
 Supplier switching costs.
} IT/IS strategy: E-procurement system.
Porter’s 5 Forces
} “The winners will be those that view the Internet as a complement to, not a cannibal
of traditional ways of competing” (Porter 2001)「贏家將是那些將互聯網視為傳統
競爭方式的補充，而不是掠食者。」
Cost Leadership & Differentiation
} Cost Leadership Strategy 成本領導策略

 Reduce price.
 Reduce cost.
 Decrease supplier bargaining power.
(e.g., E-procurement)
} Differentiation Strategy 差異化策略
 Increase brand power.
(e.g., online communication channels)
 Build loyal customers.
(e.g., customized services)
  Charge premium.
IT/IS Strategies for Dealing with Competitive Forces
} Four generic strategies for dealing with competitive forces, enabled by using IT:
1. Low-cost leadership
2. Product differentiation
3. Focus on market niche.
4. Strengthen customer and supplier intimacy.
} Low-cost leadership
- Use information systems to achieve the lowest operational costs and the lowest
prices. (e.g. Walmart)
 Inventory replenishment system sends orders to suppliers when purchase recorded at
cash register.
 Minimizes inventory at warehouses, operating costs.
 Efficient customer response system.
} Product differentiation
- Use information systems to enable new products and services, or greatly change the
customer convenience in using your existing products and services. (e.g., Google's
continuous innovations, Apple's iPhone)
- Use information systems to customize, personalize products to fit specifications of
individual consumers. (e.g., Nike's NIKE id program for customized sneakers)
} Focus on market niche
- Use information systems to enable specific market focus, and serve narrow target
market better than competitors. (e.g., Hilton Hotel’s OnQ System)
o Analyse customer buying habits, preferences
o Advertising pitches to smaller and smaller target markets
} Strengthen customer and supplier intimacy.
- Strong linkages to customers and suppliers increase switching costs and loyalty.
- Toyota: uses IS to facilitate direct access from suppliers to production schedules.
- Permits suppliers to decide how and when to ship supplies to plants, allowing more
lead time in producing goods.
 - Amazon: keeps track of user preferences for purchases, and recommends titles
purchased by others
Basic strategy: Align IT with business objectives
1. Identify business goals and strategies
2. Break strategic goals into concrete activities and processes
3. Identify metrics for measuring progress
4. Determine how I T can help achieve business goals
5. Measure actual performance
Strategic Alignment 策略一致性
} A high degree of fit and consonance between the priorities and activities of the
strategic direction and the IT/IS strategy of the firm.
} In reality,
- 65% of organizations have an agreed-
upon strategy.
- 14% of employees understand the
organization strategy.
- Less than 10% of all organizations
successfully execute the strategy.

Enterprise Analysis
Business Process
} A collection (flow) of related (linked or structured) Activities, Resources, and
Information.
} Logically related set of tasks that define how specific business tasks are performed
  The tasks each employee performs, in what order, and on what schedule
(e.g., Steps in hiring an employee)
} Some processes tied to functional area (e.g., Sales & marketing: identifying customers)
} Some processes are cross-functional (e.g., Fulfilling customer order)
Example: Order Fulfilment Process

Business Process Reengineering (BPR)

} Reengineering Work: Don’t Automate, Obliterate by Michael Hammer, a former

professor at MIT.
 Organization’s activities that do not add value should be removed, not accelerated
through automation.
 In 3 years, 60% of the Fortune 500 companies claimed to either have initiated BPR
efforts or to have plans to do so.
 Similar concepts with: PI (Process Innovation)
} BPR and Information Technology
  Information Technology provides many solutions to organizations’ issues (i.e., replace
many activities that do not create value)
 ERP (Enterprise Resource Planning) packages such as SAP have been vehicles for
BPR.
Seven principles of BPR
1. Organize around outcomes, not tasks.
2. Link parallel activities in the workflow instead of just integrating their results.
3. Treat geographically dispersed resources as though they were centralized.
4. Capture information once and at the source.
5. Identify all the organization’s processes and prioritize them in order of redesign
urgency.
6. Put the decision point where the work is performed and build control into the process.
7. Integrate information processing work into the real work that produces the
information.
Critics of BPR
} BPR is too expensive.
} BPR is a way to dehumanize the workplace, increase managerial control, and justify
downsizing.

What is ERP (Enterprise Resource Planning)

System?
Software application with a centralized database
that can be used to run an entire company.

SAP ERP
} SAP ERP system is the world’s most popular:
 Designed to satisfy the information needs for SMEs to MNCs
o Multi-lingual, multi-currency, and parallel G/L Accounting
 Ties together disparate business functions as integrated business solutions