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Welcome to our presentation

IT Investment That Makes a Competitive Difference

Presented by
Name Sobrata Halder S.M.Ashraful Alam Md.Motasim Billah Md.Tarikul Islam Taqdir Hossain ID ID# 05-005 ID#05-017 ID#05-075 ID#05-076 ID#05-077

To be discussed

In finance, the purchase of a financial product or other item of value with an expectation of favorable future returns. In general terms, investment means the use money in the hope of making more money.
In business, the purchase by a producer of a physical good, such as durable equipment or inventory, in the hope of improving future business

An investment is purchasing capital with the desired outcome being profitable returns. Profits can come in the form of income, appreciation in value, capital gain, or interest.

Placing of money or capital in something that gives returns, as interest or income, or appreciates in value or an instance of this

IT Investment
This term is total different from the definition of Investment. It does not mean to invest capital in IT based farm in a desire for a handsome return. It means to convert a traditional business process into IT based process so that this new process can yield much more productivity that will eventually raise profit. So, IT investment is the cost of infrastructure development of a business farm that will return more profit.

Competitive Difference
It means the competitive advantages one business farm has, the other business farms dont have. The core item or element of business process that is unknown or not copy able by the other business farms. In a word, In real world business competition which element makes a difference in terms of productivity, market gain, profit, etc. among the farms is called a competitive difference.

Relationship between IT Investment and Competitive Difference

Business Benefits - The "Returns" Decision-Makers Need To Know

Key features of Competitive Differences when IT Investment is made.

Greater gaps between the leader and the laggards in industry. More concentrated and winner take all the market. More churn among the rivals in a sector. Sales leaders are frequently leapfrogging. Overall performance of IT based farms is much more better. Change in position/rank is dynamic

Dont be confused
IT investment does not make digital product but digital process. IT Investment does not mean that all processes are IT configured. Overabundance of new technologies is not fundamental concept of IT investment but to digitalize only that process which will improve traditional process more widely and increase productivity.

Competitive dynamics : several ways to slice it

1.Industry concentration: The organization those who use it are taking the market more easily. That is it users are the winners and winner takes all. Ex-iphone of apple 2.Turbulence: when it is used the market becomes very competitive. So the position of market leader changing all the time. There is no absolute market leader all the time and if there is they are not for long time, it is the it which makes the market unstable. Ex- Samsung vs apple, Altibase vs oracle

Competitive dynamics : several ways to slice it

3.Performance spread: As winner takes all so the laggards are not participating the feast. High it users are moving with high speed and others cannot. So the gap between them are increasing since 1990. Ex- IBM vs apple.

How tech is changing competition

>What if, IT is not in charge! 1. Quick innovative process is not possible to propagate. 2. Periodic change and train for the managers.

>Apply IT to all locations: Suppose one company is adopting their ERP in their Dhaka HQ or branch but not to the other locations. Then Dhaka branch will develop but not the others. So IT should be applied to all of the places simultaneously.

How tech is changing competition

>Rivals game: Then the company is not alone in that industry but other rivals are also by getting idea of ERP or others tech or business process will also adopt to sharpen their process also. Ultimately market will be competitive. ex-iPhone vs Galaxy S series >competitive market: We know that firm with best process will win but not for the all time. Others will come with their tech and will try to tolerate the position of the market in a competitive way. Ex- cell phone market leader NOKIA vs others.

Adaptation: competing on a digital process

>What we should do in this massive IT based environment? >Role of CEO: 1. Deploy: to use sth effectively. Here not only the initiation of new tech is enough but also the consistent tech should use effectively. 2. Innovate: introduce the new method of working procedure. Uniqueness of your process which will give competitive advantage. 3. Propagate: then the winning process should deliver throughout the entire business. >Role of IT: 1.Catalyst for innovative idea. It is a supportive tool of good ideas. 2. Act as a tool of delivering that innovative idea.

Adaptation: competing on a digital process

>Case study : deployment of IT in CISCO It is a very hard and challenging task for the management to deploy a new IT based system easily. After mid 90S CISCO when it deployed new enterprise software then there was no integration or uniform distribution of same software rather each manager introduced IT modules at their own will. Then a situation arose where a single process( say, order) was running with 09 different software's. Data distortion and conflicting info was presented by those software with different features. Then in 2001, the new expert saw this jam-packed situation and for the uniform deployment he invested $200M and integrated the whole situation.

The Elements of a Successful ITEnabled Process

There are some cost & risks in implementing IT but it also bring some positive changes. Hypothetical example of a company is given below The furniture maker company sells standard & custom pieces through 100 showrooms nationwide. Many salespeople are not willing to sell the customized product. To solve this problem company develops a software to integrate the activities of customized order receiving & accurate delivery date. The software also manage customer satisfaction. As the software response were positive the company applied it in other 99 showrooms.

The Elements of a Successful ITEnabled Process

Successful IT-enabled business process has some important characteristics those are given below 1) Cover wide span : Large swath of company. In this case It covers all stores factories & delivery teams. 2) Produce results immediately : Response to change is immediate. 3) Precise : Highly scripted instructions for business activities. 4) Consistent : Execution method like lead time, delivery period is same in every showroom. 5) Easy monitoring : Activities & feedback can be observed & tracked in real time.

The Elements of a Successful ITEnabled Process

6. Build enforceability : Process are being executed as intended, use the collected data properly, determine if all team were calling properly. They updated Ciscos original ERP system & other key applications to support standardized data & process. This software updates & the strategy discussions the technology eventually resulted in greater consistency throughout the organization & contributed to Ciscos strong performance. Like Cisco Otis developed new enterprise technology platform called E-Logistics, which was designed to connect sales, factory & field operations worldwide through internet which brought significantly shorter sales-cycle times but higher revenues & operating profit. 7.Innovation: IT-enabled opportunities :- IT applications with collective intelligence & other web technologies can be important to propagating ideas but also in generating them. 8.Propagation top down & bottom up : ERP system is an obvious tool for propagation .They show that innovations do not necessarily emanate from headquarters or central management also from lower level in organization.

Propagation : Top down & bottom up

ERP is an obvious tool for propagation . Enterprise systems help manager to impose best practices and standardized procedures universally. It also eliminate the chaos of inconsistent homegrown practices. Now a days, the bottom line managers need not to take help or complain to the top management to solve any problem while using a software. They can solve the problem by sharing information, files, links , tips and tricks without central management direction.

The Role of Decision Rights

With the advance of IT, the decision making power is being decentralized. Although the core decisions are taken by the top management, rest of the decisions are taken by frontline managers. They make the decision as the representative of the organization. As an example, when e- Logistic was put in place at Otis, The field installation supervisors became responsible for the first time for certifying that a site is ready to install an elevator before it would be shipped.

The Role of Decision Rights

Zara, a Spanish clothing company has 1000 stores all over the world. They all use the same digital format, rigid weekly timetable to place the orders. Here the store managers are playing the vital role for Zara. Because they know the customers choice better than the headquarter. There are no centralized forecasting for Zara. While the traditional companies are driven by centralized computerized forecasting. So now a days companies try to understand who has the most relevant knowledge to make decision and where, ultimately, to site decision rights.

Maximizing Return On Talent

As the value of inventing better methods will rise for IT facilities, organizations need employees talented in IT management & process innovations. Leaders of an organization requires to have careful supervisions on selection & maintenance of such talented employees

Selection & Maintenance Talents

Consideration of more applicants Intensive scrutinizing in vetting new hires Support of HRM policies & corporate culture Top level managers involvement Investing huge time & money on internal & external training & education. Discretion in how to perform jobs Detailed suite of metrics containing reward, performance, compensations & promotion.

Costs & Returns On Talent

Cost of managing talents is very high. The payoff will increase exponentially by leveraging the talents of a high performing manager. Talents must be accumulated at one location but their influence will result in maximizing returns in 1000s of sites worldwide

IT & Survival For The Fittest

Configurations & testing of IT is complex but changing peoples attitudes towards IT is much more complex. IT changes jobs in terms of speed, spread, concentration, performance indicator etc. Management has become less comfortable. Neither good nor better but only the best can survive the inevitable turbulence created by IT. The best executives thus expect outsize rewards

Three Conclusions Regarding ITIM

Differences among companies in their ability to select, adopt & exploit innovations that technology has accelerated. Highly Qualified vendors, consultants & IT departments are essential for IT platform implementation but success in IT invest depends on line executives who innovate processes. Competitive shakeup brought on by IT isnt nearly complete, even in IT intensive economies.

Thank You