e-Everything Age

Competing with Information Technology

Chapter 2
 James A. O’Brien Introduction to Information Systems Eleventh Edition 2

Chapter Objectives
• Identify competitive strategies of
information technologies.
• Give examples of how business process
reengineering frequently involves the
strategic use of e-business technologies.
• Identify the business value of using e-
business technologies

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3
The Age of Networked Intelligence

 Not just networking of technology but it

is about the networking of humans
through technology
Digital Economy
 Individuals and enterprises create
wealth by applying knowledge,
networked human intelligence, and
effort to manufacturing, agriculture, and
services
 Knowledge Economy
 Based on the application of human know
how
 Life long learner
 “SMART” products
 Economy added value will be created by
brain not brawn
 Mass Customized rather than mass-
produced (Boutique Bakers/Garden
scents)
 Mass Customization
 One of the most successful  Mass customization
models of e-Commerce is can be facilitated by
mass customization. the Web in four
 the production of large different approaches;
quantities of customized
items.  Collaborative
customizers
 It supplements or even  Adaptive
replaces one of the most customizers
innovative concepts of the
 Cosmetic
customizers
Industrial Revolution, mass  Transparent
production. customizers
7
Example of customization

8
Home Depot
 Online Design Tools

9
Organization Structure

Need for new structures…..

Information Technology

 Information technologies are flexible tools,

constrained primarily by managers’ will to use
them, expectations about their roles, and
applications choices.
Cash p.267

11
Organization Structure
 Division of Labor
 Who does what?
 Division of Decision Rights
 Who should make which decision?
 Coordination Mechanisms
 Organizational Boundaries
 Informal Structures

12
 James A. O’Brien Introduction to Information Systems Eleventh Edition 13

Strategic Uses of Information Technology

Raise Build a Locking in
Strategic IT Customers
Strategy Barriers
to Entry Platform and Suppliers

IT Role Increase Leverage Use IT to

amount of investment in improve quality
investment or IS resources Use IT to link
complexity of from operat- business to
IT needed to ional uses to customers and
compete strategic uses suppliers

Create New Enhance

Outcome Increase Business Organizational
Market Share Opportunities Collaboration

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Strategic Information Systems
 Cost leadership
 Differentiation
 Supports strategic changes – like
reengineering
 Growth
 Innovation
 Provide business intelligence by collecting
and analyzing information
 Improve internal efficiency
 Customer-oriented approaches

14
 James A. O’Brien Introduction to Information Systems Eleventh Edition 15

The Internet Value Chain

Marketing and Sales and Support and
Internet Distribution Customer
Product
Capability Feedback
Research

Data for •Low cost •Access to

Benefits customer com-
market distribution
to ments online
research, •Reaches new
Company •Immediate re-
establishes customers
consumer •Multiplies sponse to
responses contact points customer
problems

Opportunity
for Maintain Valuable
Increase Lower Customers and
Advantage Cost Margins
Market Share Relationships

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 16

Customer-Focused e-Business
Let customers
place orders
directly
Let customers
check order history
and delivery status Let customers
place orders thru
Build a distribution
community partners
of customers,
employees,
and partners Customer Transaction
Database Database

Link Employees
Give all and distribution
employees a partners
complete view
of customers

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Customer Service on the Web

 Providing Search and  Allowing Customers to

Comparison Order Customized
Capabilities. Products and Services
Online.
 Providing Free Products
and Services.  Letting Customers
Track Accounts or
 Providing Technical and Order Status
Other Information and
Service.

17
Tools for Customer Service

 Personalized Web  E-mail and

Pages Automated
Response
 FAQs
 Help Desks and
 Tracking Tools Call Centers

 Chat Rooms  Troubleshooting

Tools

18
 James A. O’Brien Introduction to Information Systems Eleventh Edition 19

Strategic Positioning of Internet Technologies

High
Customer Competition Connectivity

Global Market Product and Services

Penetration Transformation Strategy
External Drivers

E-Commerce Website E-Business; Extensive

Value-added IT Services Intranets and Extranets Solution

Cost and Performance

Efficiency Improvements in
Improvements Business
Effectiveness
E-Mail, Chat Systems Intranets and Extranets

Low E-Business Processes Connectivity

High
Internal Drivers
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 Reengineering….

BPR, Process Innovation, ERP,

Mass Customization, Networked
Organization, Empowerment, Teams,
Virtual Corporations, TQM, JIT, POM,
BPM, CRM
Reengineering the Corporation

 Written - 1993
 Michael Hammer
 One of 1996 most influential people in the
U.S.
Time Magazine
July 17,1996
 James Champy

21
What is Reengineering?
 “the fundamental rethinking and radical
redesign of business
processes to achieve dramatic
improvements in critical,
contemporary measures or
performance, such as cost,
quality, service, and speed”
p. 32

22
24
 Impacts
Company Customers Employees
 Increase Teams
 Benefit from
product by an better product Less Workers
order of - More Work
 Needs are
magnitude Empowered
met
 Examine
 Tendency to Layoffs
process
return
 Vision
 Loyalty
 Increase
Profits 25
 To reengineer a company is to take a
journey from the familiar into the
unknown. The journey has to begin
somewhere and with someone. Where
and with whom?
 P. 101

26
Business Process Reengineering

 Initially,
attention was given to a complete
restructuring of organizations.
 Later, the concept was changed due to failures of
BPR projects and the emergence of Web-based
applications.
 Today, BPR can focus on anything from the
complete restructuring of an organization to the
redesigning of individual processes.
 Major objective of BPR = Information
Integration.
27
Bell Atlantic’s Experience
 The difference is that in a compliance mode
I do what I must do because my boss tells
me I must do it. In a commitment mode, I
understand what the corporation is trying to
achieve and how we’re going to achieve it,
and I will do whatever it takes to make that
happen, including changing the way I do my
job if that is what is required
 p. 196/197

28
BPR

 No longer a need to destroy

everything - start from scratch

 Instead - Flexible approach that can

be executed by proven
methodologies and principles.
Hammer and Stanton[1995]
& Champy [1995]

29
Process Innovation
Encompasses the envisioning of new
work strategies, the actual process
design activity, and the implementation of
the change in all its complex
technological, human, and organizational
dimensions – order-of-magnitude
improvements
Davenport (1993)

30
 James A. O’Brien Introduction to Information Systems Eleventh Edition 31

Business Reengineering and Quality Management

Business Quality Business

Improvement Reengineering

Incrementally Improving Radically Redesigning

Definition Existing Processes Business Systems

Any Process Strategic Business

Target Processes

Potential 10%-50% Improvements 10-Fold Improvements

Payback
Low High
Risk

Same Jobs - More Efficient Big Job Cuts; New Jobs;

What Changes? Major Job Redesign

Primary IT and Work Simplification IT and Organizational

Enablers Redesign

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 32

Chapter Summary
• Information systems can play several
strategic roles in business.
• Using the Internet, intranets, extranets,
and other Internet-based technologies as
a strategic competitive advantage for e-
business and e-commerce
• Build the an e-business model by making
customer value its strategic focus.

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 James A. O’Brien Introduction to Information Systems Eleventh Edition 33

Chapter Summary (cont)

• IT is a key driver in changing and streamlining
business processes.
• 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.

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