Designing and Managing the Information-based Organization
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Designing and Managing the Information-based Organization

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  • 1 The 1990s have been a time of major transition in the way business is conducted. In Hodgetts course, you have explored the changing business conditions which are linked to the global political and economic changes. You have looked at the strategic plans that enterprises have adopted in an attempt to reengineer themselves for this new environment. Sherry has focused on the link between the new enterprise and the business environment. I will focus on the technology.
  • 2 A number of recurring business themes are emerging in today’s strategic plans. Each of these demands a new technology paradigm. Productivity: Productivity will dominate management thinking for many decades. Capital and technology of the information age is focused on knowledge and service worker productivity. IT is the foremost tool for making the substantial and ongoing productivity gains that will shape the leaders of the 21st century. Quality: Quality has become a broad theme, encompassing the notions of consistency, predictability, employee motivation, and performance measurements. Responsiveness: Need to react to rapidly changing market conditions, competitive threats, and customer demands is another growing challenge. Better never than late. Outsourcing - focus shifting to vertical and horizontal integration across organizations, including alliance partners, sales and distribution agencies, etc... Parterning - positioning to function in the growing world-wide marketplace by establishing alliances and joint ventures; extended enterprise. Social and Environmental Responsibility - organizations must act responsibility in its relationships with others.
  • 7 “ You don’t need a weatherman to know which way the wind is blowing” Traditional, hierarchical organization is poorly equipped to respond to the new business needs. Today’s enterprise is opening up. Generally accepted that all is achievable because the new enterprise is becoming information-based. IT provides the means whereby organization can be transformed. Tie back to architecture article: Cultural and organizational structures useful for managing traditional, closed integrated business will not work. Architectural competition is stimulating the development of a new form of business organization “Silicon Valley Model.”
  • 8 “ You don’t need a weatherman to know which way the wind is blowing” Traditional, hierarchical organization is poorly equipped to respond to the new business needs. Today’s enterprise is opening up. Generally accepted that all is achievable because the new enterprise is becoming information-based. IT provides the means whereby organization can be transformed. Tie back to architecture article: Cultural and organizational structures useful for managing traditional, closed integrated business will not work. Architectural competition is stimulating the development of a new form of business organization “Silicon Valley Model.”
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  • 13 Just as organizational structures & business environments are being dramatically altered, so is computing infrastructures. The nature and purpose of computing are being radically altered. A new technology era is unfolding - an era that parallels and is inextricably liked to changes in organizations and to the broader world changes. Need to know something about the computing industry and the new IT paradigm that is emerging.
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  • 17 Until recently, computing was primarily based on a single and relatively simple paradigm - that of host computing. The host computing model placed the computer at the center and connected all terminals and other devices as slaves. The isolated and independent nature of host computing became very constraining. New business requirements arrived to challenge the bastions of host computing, especially large mainframe operations. By the early 1980’s two forces were at work to dislodge the degree of centralized control implicit in host computing - distributed computing; PC Now because of the spectacular power of the microprocessor and the price/performance curve, a fundamentally different style of commuting is emerging. A network computing environment provides the means for users to access a wide range of information, applications, and computing resources without worrying about where they are or how they are interconnected. While host-computing dictated a master-slave relationship, network computing heads to a client/server approach.
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  • 20 Cost Savings - Mainframes that cost $3 million do have capabilities that an equivalent PC-based system costing $300,000 does not. But the list of advantages is shrinking - creating a compelling cost argument for network systems. Although it is difficult to agree on appropriate comparative measurements between host computing and network computing, there is absolutely no denying the relative price=performance advantages of powerful microprocessors over their minicomputer and mainframe competitors. Desktop in 1986 had 2 MIPS. Every year since that number has doubled. A machine with 10000 MIPS is projected by 1995.
  • 21 A single microprocessor will substantially outperform a mainframe by the year 2000 Network computing option is becoming considerably less expensive. Counterarguemnt is the added cost of the resources to manage and maintain the decentralized computing resources. Coordinated planning, management, and maintenance are achievable if network computing standards are employed.
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  • 27 Until recently, computing was primarily based on a single and relatively simple paradigm - that of host computing. The host computing model placed the computer at the center and connected all terminals and other devices as slaves. The isolated and independent nature of host computing became very constraining. New business requirements arrived to challenge the bastions of host computing, especially large mainframe operations. By the early 1980’s two forces were at work to disagree the degree of centralized control implicit in host computing - distributed computing; PC Now because of the spectacular power of the microprocessor and the price/performance curve, a fundamentally different style of commuting is emerging. A network computing environment provides the means for users to access a wide range of information, applications, and computing resources without worrying about where they are or how they are interconnected. While host-computing dictated a master-slave relationship, network computing heads to a client/server approach.
  • 28 Client/server computing processes information via two or more computers connected in such a way that users perceive the system as an integrated whole. Client/server applies when the user’s PC - the client - participates i the processing in a meaningful way by distributed presentation, distributed application, or distributed database.
  • 29 In the early days, computers used software created specifically for that computer, one computer, one vendor. Moved to one vendor, multiple computers. Now the computer industry has matured to the point where it is consolidating around standards. Open systems are transforming the computer industry. By 1992, every major computer vendor had adopted open systems as its main approach to technology. Why are standards necessary in an open system environment? In the early days, immaturity of technology and the absence of open standards meant that these four forms of information were separate, with separate technologies. Integration becomes possible with digitization and standards. In the first era, customers were locked in to a given vendor’s product. Vendor had account control over the customer. In t he open systems market, the account relationship breaks down. Vendors must now work to seek partnerships with their customers based on customer choice.
  • 30 In the first era, software development was a craft. Must become engineered - companies need new applications in days or weeks, rather than months or years. Developers use and reuse modules or parts that are standardized and that work together - object-oriented programming. CASE Purchased Software; Shrink-wrapped To describe user interfaces of the first era as unfriendly is to be charitable. Terse cryptic interfaces. PC, standards, and network computing are changing all of this.
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  • 32 Industry leaders changed what customers valued and how it was delivered, then boosted the level of value that customers expected. They have focused on delivering superior customer value in line with one of three value disciplines. They have become champions in one of these disciplines while meeting industry standards in the other two. Succeed because they have aligned their entire operating model - that is, the company’s culture, business processes, management systems, and computer platforms to serve one value discipline. Business systems are similar in firms that pursue the same value discipline, not necessarily in the same industry Choose a value discipline that takes into account its capabilities and culture as well as competitor’s strengths. Sustain that focus, drive that strategy relentlessly through the organization
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  • 35 By operational excellence, we mean providing customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience. Lead in price and convenience Seek ways to minimize overhead costs, eliminate intermediate production steps, reduce transaction costs, optimize business process across functional and organizational boundaries. Competitive prices with minimal inconvenience. Built their operations around information systems that emphasize integration and low-cost transaction processing JC Penney’s Video
  • 36 Industry leaders changed what customers valued and how it was delivered, then boosted the level of value that customers expected. They have focused on delivering superior customer value in line with one of three value disciplines. They have become champions in one of these disciplines while meeting industry standards in the other two. Succeed because they have aligned their entire operating model - that is, the company’s culture, business processes, management systems, and computer platforms to serve one value discipline. Business systems are similar in firms that pursue the same value discipline, not necessarily in the same industry Choose a value discipline that takes into account its capabilities and culture as well as competitor’s strengths. Sustain that focus, drive that strategy relentlessly through the organization
  • 39 Offering customers leading-edge products and services that consistently enhance the customer’s use or application of the product, thereby making rivals’ goods obsolete. Strive to produce a continuous stream of sate-of-the art products and services. Must be creative Innovative companies must commercialize their ideas quickly Relentlessly pursue new solutions AACSB Tape
  • 40 Industry leaders changed what customers valued and how it was delivered, then boosted the level of value that customers expected. They have focused on delivering superior customer value in line with one of three value disciplines. They have become champions in one of these disciplines while meeting industry standards in the other two. Succeed because they have aligned their entire operating model - that is, the company’s culture, business processes, management systems, and computer platforms to serve one value discipline. Business systems are similar in firms that pursue the same value discipline, not necessarily in the same industry Choose a value discipline that takes into account its capabilities and culture as well as competitor’s strengths. Sustain that focus, drive that strategy relentlessly through the organization
  • 42 Segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of those niches. Combine detailed customer knowledge with operational flexibility so they can resound quickie to almost any need.. Engender tremendous customer loyalty Continually tailor and shape products and services to fit an increasingly fine definition of the customer willing to spend now to build customer loyalty for the long term do anything to make sure that each customer gts exactly what he or she really wants Systems that can differentiate quickly and accurately among customers based on both the degree of service they require and the revenues their patronage is likely to generate . Micro-merchandising programs Alignment: business processes are flexibility and responsive; information systems collect data; org structure emphasize empowerment Electronic Direct - Deluxe Corporation
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Transcript

  • 1. Designing and Managing the Information-based Organization New Business Environment Open, competitive, dynamic, global marketplace Open, user-centered network computing New Enterprise Networked, information- based organization New IT Paradigm
  • 2. Designing and Managing the Information-based Organization New Business Environment Open, competitive, dynamic, global marketplace Productivity of Knowledge Workers Quality Responsiveness Globalization Outsourcing & Partnering Social and Environmental Responsibility
  • 3. Strategy Frameworks
    • Miles & Snow’s Business Strategies
    • Porter’s Generic Strategies
    • Competitive Force Model
  • 4. Business Strategies - Miles and Snow
    • Defenders
    • Prospectors
    • Analyzers
  • 5. Generic Strategies - Porter
    • Low Cost Provider
    • Differentiation
    • Focus
  • 6. Competitive Force Model The Business Power, vigor and competence of existing competitors (Intra-industry rivalry) Power, vigor and competence of complementors Power, vigor and competence of customers (Customers) Power, vigor and competence of potential competitors (Barriers to Entry) Power, vigor and competence of suppliers (Suppliers) Possibility that what your business is doing can be done in a different way (Substitute Products & Services)
  • 7. New Enterprise Structure Hierarchical Networked State Static, stable Dynamic, changing Personnel Managers Professionals Key Drivers Reward & Commitment Punishment Basis of Action Control Empowerment Learning Specific skills Achieve team goals Compensation Position in Accomplishment hierarchy Competence Level PAST FUTURE
  • 8. Competing in the Global Marketplace: The New Enterprise High Performance Teams Extended Enterprise Enabling Technology The Promise The Change High Performance Teams Effective Individual Integrated Enterprise Extended Enterprise Internetworked Business “ The Net” Interenterprise Computing Enterprise Infostructure Workgroup Computing Personal Multimedia Wealth Creation, Social Development Recasting External Relationships Organizational Transformation Business Process and Job Redesign Task, Learning, Efficience
  • 9. Basic Organizational Forms
    • Owner-Managed
    • Functional, vertically integrated
      • Machine bureaucracy
      • Professional bureaucracy
    • Diversified, divisionalized
    • Matrix
    • Network
    • Virtual
  • 10. Basic Elements of Structure
    • Complexity
      • Horizontal
      • Vertical
      • Spatial
    • Formalization
    • Centralization
  • 11. Structural Contingency Theory Strategy Technology Environment Size Organization Structure
  • 12. Organizing Framework Environment
        • Strategy
    Mgt Philosophy, Values, Beliefs
            • Information
            • Technology
    Organization
    • Structure
    • Processes
    • Systems (Planning, Control)
    Miles and Snow’s Business Strategies Porter’s Generic Strategies Porter’s Competitive Force Model
  • 13. The New IT Paradigm
    • Mainframe Era to Distributed Era:
      • Management and Technology
  • 14. IT Management Environments Era Administrative Target Justification Framework Mainframe (1950s - 1970s) Regulated Monopoly Automate existing processes Efficiency (ROI) Microcomputer (1970s to 1980s) Free Market Effectiveness Distributed (late 1980s to present) Regulated Free Market Outsourcing Industry/ Organizational transformation Competitive Position Increase individual/ group effectiveness
  • 15. The Old Vertical Computer Industry - Circa 1980 sales and distribution application software operating system computer chips IBM DEC Sperry Wang Univac
  • 16. The New Horizontal Computer Industry - Circa 1995 sales and distribution application software operating system computer chips Retail Stores Superstores Dealers Mail Order Word Word Perfect Etc. DOS and Windows OS/2 Mac UNIX Compaq Dell Packard Bell H-P IBM Etc. Intel Architecture Motorola RISCs
  • 17. The New IT Paradigm Microprocessor Technology Communication Technologies
  • 18. Number of Transistors on a Chip 2 1975 1980 1985 1990 1995 2000 2005 100 10 1 0.1 0.01 0.001 1 3 4 5 6 7 Processor 1 8086 2 80286 3 80386 4 80486 5 Pentium 6 i686 7 i786 Millions of Transistors per Chip Source: Based on data provided by the Intel Corporation.
  • 19. MIPS Forecast 1975 1980 1985 1990 1995 2000 2005 1 10 100 1000 MIPS i786 i686 Pentium 80486 80386 80286 8086 Source: Based on data provided by the Intel Corporation.
  • 20. Price/Performance Trends
  • 21. Communication Technologies 2400 bps 9600 bps 14.4 Kbps 28.8 Kbps ISDN - 128Kbps ATM - 15Mbps up to 1.2 Gbps
  • 22. Key Players in the U.S. Information Superhighway
    • Telecommunications Companies (e.g. AT&T, MCI, Sprint)
    • Cable TV
    • Information Providers (e.g. AOL, Prodigy)
    • Internet Providers
  • 23. Expansion of the Internet: Global Penetration - The Americas Adapted from Time Magazine, Spring 1995 Rating based on a ratio of people to direct Internet connections, from High (200 people or less to each connection) to Low (5,000 or more people to each connection). High Canada Iceland United States Argentina Chile Costa Rica Low Brazil Colombia Ecuador Mexico Nicaragua Panama Peru Puerto Rico Venezuela Medium
  • 24. Expansion of the Internet: Number of Users (in millions) Adapted from Internet Business Advantage, 1995
  • 25. Adapted from Internet Letter, Vol. 2, No. 5, Feb. 1, 1995 *Through August 1994 **Through March 1995 Expansion of the Internet: Growth of Commercial Use
  • 26. The New IT Paradigm Past Future Network Computing System Host-based Client-server
  • 27. Data Management Applications Presentation Display Only Data Management Data Management Data Management Applications Applications Presentation Presentation Presentation Applications Applications Data Management Host-Based Processing Client/Server Cooperative Processing Distributed Presentation Distributed Applications Distributed Databases Server Computer Mainframe Terminal Client Computer Host vs. Client-Server Processing
  • 28. The New IT Paradigm Past Future Open Systems Standards + Rules Limited Single, (Architecture) Vendor- Proprietary Vendor-Proprietary or Neutral Information forms Separate data, text Multimedia voice, image Vendor-customer Relationships Account Control Multi/Vendor Partnerships
  • 29. The New IT Paradigm Past Future Revolution in Software Software Development Craft Engineered User Interface Text Graphical Applications Stand-alone; Integrated Stovepipe
  • 30. IT & the Pursuit of Value Disciplines Information Technology Business Value Supports New Organizational Paradigm Strategy Organization Enables the Pursuit of Strategy
  • 31. IT & the Pursuit of Value Disciplines Operational Excellence Customer Intimacy Product Leadership
  • 32. IT and Operational Excellence: Using Integrated Information for Increased Visibility Logistics Processes Logistics Physical Value Chain Integrated Information Foundation Service Marketing & Sales Outbound Production Inbound
  • 33. IT and Operational Excellence: Emergence of New Business Models Traditional Cut-Flower Industry Chain Calyx’s & Corolla’s New Cut-Flower Industry Chain Calyx & Corolla Participant Grower Jobber Wholesaler Florist Markup 50% 100% 150% Price charged $8.00 $12.00 $24.00 $60.00 Price charged $54.00 Participant Marketplace Marketspace
  • 34. IT & Value Disciplines: Operational Excellence Focus
    • Minimize cost
    • Maximize efficiency
    • across the physical
    • value chain
    • Doing business in a
    • different way
    Measurement
    • Precision
    • Quality
    • Speed
    • Cost
    Computing Emphasis
    • Core operating processes
    • Building an integrated
    • information infrastructure
    • Management processes
    • Coordination processes
    • Implementing new business
    • model
  • 35. IT & the Pursuit of Value Disciplines Product Leadership
  • 36. IT and Product Leadership: Exploiting the Virtual Value Chain Through Mirroring Service Marketing & Sales Outbound Logistics Production Prcesses Inbound Logistics Physical Value Chain Virtual Value Chain Design Service Marketing & Sales Outbound Production Inbound
  • 37. IT and Product Leadership: Creating New Information-based Products Service Marketing & Sales Outbound Logistics Production Processes Inbound Logistics Physical Value Chain New Products New Products New Products New Products
  • 38. IT & Value Disciplines: Product Leadership Focus Create and rapidly introduce new products and services Ethic
    • Creativity
    • Risk
    Computing Emphasis
    • Market and product
    • intelligence
    • Design and engineering
    • tools
    • IT-based products and
    • services
  • 39. IT & the Pursuit of Value Disciplines Customer Intimacy
  • 40. IT and Customer Intimacy: Creating New Customer Relationships in the Virtual Value Chain Logistics Production Service Marketing & Sales Outbound Logistics Production Processes Inbound Logistics Logistics Physical Value Chain Virtual Value Chain
  • 41. IT & Value Disciplines: Customer Intimacy Focus
    • Tailor products
    • and services for
    • customers
    • Make it easy for
    • your customers
    • to do business
    • with you
    Ethic
    • Relationships
    • Empowerment
    • Knowledge
    • Customization
    Computing Emphasis
    • Customer information and
    • analysis
    • Creation of information
    • by-products
    • Product configuration systems
    • Direct communication
    • with customers
  • 42. Organizing Framework Environment
        • Strategy
    Mgt Philosophy, Values, Beliefs
            • IT
    Organization
    • Structure
    • Processes
    • Systems (Planning, Control)
    • IT Architecture
    • IT Development & Implementation
    • IT Organization
    Miles and Snow’s Business Strategies Porter’s Generic Strategies Porter’s Competitive Force Model
  • 43. Designing and Managing the Information-Based Organization
    • Teaching by the Case Method
        • Preparation, Presence, Participation, Prompt
        • Class Discussion
    • Course Materials
    • Weekly Assignments - Case Discussion
    • Individual Assignment - Case Analysis
    • Group Project