IT for Business

Introduction and overview | Sessions 0-2

Course Instructor: Prof Arindra N Mishra

What is a firm?
Role of Information Technology

Value delivery platform

Tool Competitive advantage Deterrent

 Non-technical background

Lack of understanding &

overwhelmed by complexity
Challenges
Bottoms up thinking
Technical background
The spectrum of IS adoption
No Structured IT Truly Digitalized
System System
 Understanding what are the
components and functions of
different aspects of IS

Why study Evaluating different options and

ITB? assessing the most optimal system

Understand how IS interacts with

other functional areas and how it
interacts with external environment
Course overview

Introduction to IT Building and

IS Applications
& IS managing IS

Current trends in
Project
IT
Course evaluation
Serial Number Evaluation Item Unit of Evaluation Weight
1 End-term Individual 50%
2 Project Group 20%
3 Quizzes (2 of 3) Individual 15%
4 Caselet Analysis (2 of 3) Individual 15%

Project components:
1. Interim presentation (not evaluated)
2. Project Report (10 to 20 pages)
3. Video submission (5-10 mins)

*Seek permission for shorter than 10 and longer than 20 pages. I will mark you for your insights not for the
number of words. You may even submit a single poster with detailed infographics in lieu of project.
Whatever you submit should exhibit clarity, usefulness and professional rigor.

*You may submit shorter or longer video but again seek permission for that with justification.
 Session 1
Role of Information – IT in organizations
Three Waves of evolution
Rise of the Knowledge Worker

“The most important, and indeed the truly unique,

contribution of management in the 20th century was
the fifty-fold increase in the productivity of the
manual worker in manufacturing.

The most important contribution management needs

to make in the 21st century is similarly to increase the
productivity of knowledge work and the knowledge
worker.”

- Peter F. Drucker
The Emerging Digital Firm

• Core business processes are accomplished through technology

• Significant business relationships are digitally enabled and mediated.

• Key corporate assets are managed digitally.

• Digital firms offer greater flexibility in organization and management in terms of time-
shifting & space shifting.
A Flattened World
• Internet has drastically reduced costs of operating
on global scale.

• Increases in foreign trade, outsourcing.

• Presents both challenges and opportunities.

• What are the challenges?

Flattening Organizations
IT flattens organizations

• Decision making is pushed to lower levels.

• Fewer managers are needed (IT enables faster decision making and increases span of
control).

• Organizations flatten because in postindustrial societies, authority increasingly relies

on knowledge and competence rather than formal positions.
• Also, it promotes new idea generation, assessment and adoption.
• Enhances growth potential
Information as a valuable resource

Assets

Information Firm Capital

Human
Resource
Question

What is the difference between

data, information & knowledge?
Data ➜ Information ➜ Knowledge

Data: facts and statistics are collected together for reference or analysis.

When DATA gets formatted, organized, or processed to be useful, it becomes

INFORMATION.

When INFORMATION is used to understand something, form opinions, and make

decisions or predictions based on the information, it gets transformed into
KNOWLEDGE.
From Data to Wisdom
Session 2
IT as a strategy
Strategic Business Objectives of I.S.

1. Operational excellence

2. New products, services, and business models

3. Customer and supplier intimacy

4. Improved decision making

5. Competitive Advantage
1. Operational Excellence

• Improvement of efficiency to attain higher profitability.

• Information systems, technology an important tool in achieving greater

efficiency and productivity.

• Example: Walmart’s Retail Link system links suppliers to stores for superior
replenishment system.
Operational Value

• Routines (standard operating

procedures)
• Precise rules, procedures, and practices
developed to cope with virtually all
expected situations
• Business processes: Collections of
routines
• Business firm: Collection of business
processes
2. New Products, Services, Business Models

• Business model: describes how company produces, delivers, and sells product
or service to create wealth

• Information systems and technology a major enabling tool for new products,
services, business models

• Examples: Apple’s AirPods

• It is more than 200 billion enterprise
3. Customer and Supplier Intimacy

• Serving customers well leads them to return, increasing revenue and profits

• Intimacy with suppliers allows them to provide vital inputs, which lowers costs

• E.g. P&G and Walmart; Automobile and Tier-I suppliers.

 4. Improved Decision Making

• Intuition vs. Data

• Risks of Intuition (best guesses)

• Misallocation of resources
• Poor response times
• Overproduction, underproduction

• Poor outcomes raise costs, lose

customers.
 "Copyright © 2018 Pearson India Education Services Pvt. Ltd".
Porter’s
Competitive
Forces Model

Management Information System: Managing the Digital Firm

By: Kenneth C. Laudon & Jane P. Laudon
Question

• How has digital technology affected

an industry’s competitive forces?
Digital Technology & its Impact on Industry
Competitive Forces

• Transformation or threat to some industries

• Examples: travel agency, printed encyclopedia, media

• Competitive forces still at work, but rivalry more intense

• Universal standards allow new rivals, entrants to market

• New opportunities for building brands and loyal customer bases

Transaction Cost Theory

• Firms seek to economize on transaction costs (the costs of participating in

markets)

• Vertical integration, hiring more employees, buying suppliers and distributors

• IT lowers market transaction costs, making it worthwhile for firms to transact

with other firms rather than grow the number of employees
5. IT and Business Strategy

• IT changes relative costs of capital and the costs of information

• Information systems technology is a factor of production, like capital and labor

• IT affects the cost and quality of information and changes the economics of
information

• Information technology helps firms contract in size because it can reduce

transaction costs (the cost of participating in markets)
 Mc Farlan Strategic Grid
High

FACTORY STRATEGIC
Impact on Operations

SUPPORT TURNAROUND

Low

Low Impact on Strategy High

 FACTORY STRATEGIC

Operations
Impact on
McFarlan Strategic Grid SUPPORT TURNAROUND

Impact on Strategy

• Organizations which want to evaluate their current and future IT

projects can evaluate based on two criteria:

• Y Axis - Impact system has on business operations (sustenance).

• X Axis - Impact system has on the strategy of the business (growth).

 FACTORY STRATEGIC

Operations
Impact on
McFarlan Strategic Grid SUPPORT TURNAROUND

Impact on Strategy

• This grid can be used to align the current and future IT investments
with the strategic goals the organization.

• This grid helps to identify opportunities and organize and manage IT

assets and professionals.

• It also enables assessment of the portfolio of IT projects and

initiatives within the organization.
 FACTORY STRATEGIC

Operations
Impact on
SUPPORT SUPPORT TURNAROUND

• LOW on OPERATIONS and STRATEGY. Impact on Strategy

• In this case, in the event of an IT failure the business impact is

minimal since the organization is not dependent on IT for carrying out
its day-to-day operations or help achieve competitive advantage.

• IT can be used to achieve local improvements in certain business

processes and incremental cost savings.

• Eg. B-Schools in India (TAPMI) [Pre-covid times]

 FACTORY STRATEGIC

Operations
Impact on
STRATEGIC SUPPORT TURNAROUND

• HIGH on OPERATIONS and STRATEGY. Impact on Strategy

• In this case, the foundation of the business has very strong

technology dimension.
• In the event of an IT failure, the impact on operational performance is
very high.
• At the same time, the organization depends heavily on the technology
innovations to help it continue to compete in the marketplace.

• E.g. Uber, E-Commerce companies (Amazon), ICICI Bank

 FACTORY STRATEGIC

Operations
Impact on
FACTORY SUPPORT TURNAROUND

• HIGH on OPERATIONS but LOW on STRATEGY Impact on Strategy

• In this case, IT is used to reduce costs and improve performance of

the core operations of the organization.

• E.g. Hospital Management Systems, Airline reservation system.

 FACTORY STRATEGIC

Operations
Impact on
TURNAROUND SUPPORT TURNAROUND

• HIGH on STRATEGY but LOW on OPERATIONS. Impact on Strategy

• In this case, IT innovations are used to identify strategic opportunities

for growth and business model innovation.

• Often this is accomplished with strategic partnerships with technology

companies.

• e.g. Executive Business Intelligence & Analytics System

Disruptive Innovation

• Concept introduced in the book in 1997.

• Clayton Christensen is an American scholar,

educator, author, business consultant who currently
serves as the Professor of Business Administration
at the Harvard Business School.

• https://www.youtube.com/watch?v=qDrMAzCHFUU
Disruptive Innovation
• Creation of entirely new markets with a very different
value proposition.
• They result in worse product performance and
generally under-perform established products in
mainstream markets.
• But they have other features that are attract a few
fringe and usually new customers.
• However, even if these disruptive innovations
underperform today, there is a possibility that they
may become mainstream products tomorrow.
41
IT Capital Investment

"Copyright © 2018 Pearson India Education Services Pvt. Ltd".

Management Information System: Managing the Digital Firm
By: Kenneth C. Laudon & Jane P. Laudon
Challenges in achieving ROI on IT

• Investing in information technology does not guarantee good returns.

• There is considerable variation in the returns firms receive from systems

investments.

• Factors include adopting the right business model and investing in

complementary assets such as organizational capital (efficient business
processes) and management capital (teamwork and collaborative work
environments).