What’s Happening?! Quest is negotiating to buy MCI for about $6.2 billion. Bush push to overhaul social security. 76,152 students applied to the UC system this year. Tivo president resigned over vision conflict with founder and CEO.

What’s Happening! Midterm Exam I will provide the exam answer paper. Six essay questions: 1 is worth 25 points 1 of 2 is worth 20 points 1 is worth 15 points – must answer 4 are worth 10 points

Chapter 7 Summary Implementing a Vision: Strategy, Tactics and Business Plan

Important Chapter Topics How to transition a vision into reality through strategy, tactics, and business plans. Fundamentals and guidelines that relate to business strategies. How strategies dictate the role and significance of information systems.

How to transition a vision into reality through strategy, tactics, and business plans.

Fundamentals and guidelines that relate to business strategies.

How strategies dictate the role and significance of information systems.

Defining the Process Elements Vision: Identifies what the organization wants to look like at some logical point in the future. Strategy: How a company will achieve the long-term goal of the vision. Tactics: More specific time-oriented, measurable ways to make a vision a reality. Business Plan: Allocation of funds and other resources.

Vision: Identifies what the organization wants to look like at some logical point in the future.

Strategy: How a company will achieve the long-term goal of the vision.

Tactics: More specific time-oriented, measurable ways to make a vision a reality.

Business Plan: Allocation of funds and other resources.

Business Strategy Focus Competitive Environment: The primary market and major competitors and whether current strategies are producing the intended results. Customer Targets: Are their primary needs being satisfied? Product portfolio: Is it on target or does it need to be changed and/or broadened? Financial Implications: Are current and projected results up to expectations? Resource Allocation: Do changes need to be made?

Competitive Environment: The primary market and major competitors and whether current strategies are producing the intended results.

Customer Targets: Are their primary needs being satisfied?

Product portfolio: Is it on target or does it need to be changed and/or broadened?

Financial Implications: Are current and projected results up to expectations?

Resource Allocation: Do changes need to be made?

Porter Strategy Guidelines Primary Strategies: Differentiation Least Cost Supporting Strategies: Innovation Growth Alliances

Primary Strategies:

Differentiation

Least Cost

Supporting Strategies:

Innovation

Growth

Alliances

Business Strategy Model Guidelines 1. What products and/or services do we intend to offer? 2. What price range of products do we intend to offer? 2. What customer targets do we intend to pursue? 3. What geographic markets do we intend to address? 4. How will we obtain products to sell to our customers? 5. How will we deal with sales to our customers? 6. What company structure do we intend to create? 7. What information systems approach will we take?

Internal Analysis External Analysis

Progressive Corporation Important learning points: Market factors triggered the need for a new vision and supporting strategies. The CEO had problems in getting his employees to accept the fact that a major change was needed. Changes involved refocusing product and service strategies and related business processes and systems. Information systems played a major role in support of the new strategies.

Important learning points:

Market factors triggered the need for a new vision and supporting strategies.

The CEO had problems in getting his employees to accept the fact that a major change was needed.

Changes involved refocusing product and service strategies and related business processes and systems.

Information systems played a major role in support of the new strategies.

IT Based Strategies MARKET PLACE OPERATIONS SIGNIFICANT STRUCTURAL CHANGE TRADITIONAL PRODUCTS AND PROCESSES Federal Express USA Today Charles Schwab Whirlpool Xerox BancOne Boeing Frito-Lay Wal-Mart USAA L.L. Bean McKesson Figure 7-6

Possible Exam Questions Explain the relationship between the vision of a company and the challenge of making things happen. Explain the intent of Figure 7-3 and why it could be difficult to implement such an approach.

Explain the relationship between the vision of a company and the challenge of making things happen.

Explain the intent of Figure 7-3 and why it could be difficult to implement such an approach.

Chapter 8 Summary Evaluating Business Strategies and The Use of Information Systems: The Strategic Option Generator

Chapter Objectives To identify strategic opportunities involving the use of information system. To relate the use of information system to gain a competitive advantage.

To identify strategic opportunities involving the use of information system.

To relate the use of information system to gain a competitive advantage.

Vision Strategy Tactics Business Plan Competitive Options Roles, Roles and Relationships Redefine and/or Define Telecommunications as the Delivery Vehicle Success Factor Profile Figure 1-4 A Systematic Approach

Competitive Options

Roles, Roles and Relationships

Redefine and/or Define

Telecommunications

as the Delivery Vehicle

Success Factor Profile

TARGET CUSTOMER COMPETITOR SUPPLIER THRUST DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE MODE DIRECTION OFFENSIVE DEFENSIVE USE PROVIDE EXECUTION STRATEGIC ADVANTAGE STRATEGIC OPTION GENERATOR Figure 8-1

TARGET CUSTOMER COMPETITOR SUPPLIER THRUST DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE MODE DIRECTION OFFENSIVE DEFENSIVE USE PROVIDE EXECUTION STRATEGIC ADVANTAGE Federal Express Analysis Using the Strategic Option Generator Figure 8-2

TARGET CUSTOMER COMPETITOR SUPPLIER THRUST DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE MODE DIRECTION OFFENSIVE DEFENSIVE USE PROVIDE EXECUTION STRATEGIC ADVANTAGE UPS Analysis Using the Strategic Option Generator Figure 8-3

Conclusions It is necessary to understand and use the Strategic Option Generator properly. Some important guidelines: Target: be sure to identify the correct primary target Thrust: differentiation or cost must be selected, not both. Supporting Strategies: any combination of the three can be selected. Direction: it is confusing and the name of the element is not self-explanatory. The intent is to identify whether the users of the information systems are company employees or external to the company.

It is necessary to understand and use the Strategic Option

Generator properly.

Some important guidelines:

Target: be sure to identify the correct primary target

Thrust: differentiation or cost must be selected, not both.

Supporting Strategies: any combination of the three can be selected.

Direction: it is confusing and the name of the element is not self-explanatory. The intent is to identify whether the users of the information systems are company employees or external to the company.

Possible Exam Questions Explain the elements of the Strategic Option Generator. Explain how the Strategic Option Generator should be used in Section III of the analysis term paper.

Explain the elements of the Strategic Option Generator.

Explain how the Strategic Option Generator should be used in Section III of the analysis term paper.

Chapter 9 Summary The Roles, Roles and Relationships Concept

Important Topics Roles, roles and relationships concept. Managing IS as a business. Technology transfer through organizational learning. Outsourcing.

Roles, roles and relationships concept.

Managing IS as a business.

Technology transfer through organizational learning.

Outsourcing.

IS as a Competitive Resource? Business competitiveness is a top priority. What about Information Systems?

Business competitiveness is a top priority.

What about Information Systems?

Roles, Roles and Relationship Concept *********** 1. The role of information systems is focused on competitive priorities. 2. Senior management plays a major role in positioning and prioritizing the competitive role of information systems. 3. There is an on-going working relationship between senior management and the information systems organization to sustain the successful use of information systems to compete.

The Role of the Senior Executive Provide a long term vision for the future of the business. Recognize the value of information to the organization. Sponsor and participate in determining the role of information systems. The Person that Runs the Business on a Day-To-Day Basis

Provide a long term vision for the future of the business.

Recognize the value of information to the organization.

Sponsor and participate in determining the role of information systems.

Communicate the importance of the information systems role. Provide funding, including R&D, to address the major requirements. Focus on results and benefits. Motivate to make things happen!

Communicate the importance of the information systems role.

Provide funding, including R&D, to address the major requirements.

Focus on results and benefits.

Motivate to make things happen!

Role of Other Senior Management Understand the role of information systems within the organization. Identify and specify requirement for new information systems. Justify and fund existing and new systems. Sponsor their information systems on an on-going basis.

Understand the role of information systems within the organization.

Identify and specify requirement for new information systems.

Justify and fund existing and new systems.

Sponsor their information systems on an on-going basis.

Role of IS Executive Function as a member of the senior management team. Provide an understanding of the realm of the possible, feasible, affordable and achievable with information systems. Posture information systems as a service and support organization in both fact and perception.

Function as a member of the senior management team.

Provide an understanding of the realm of the possible, feasible, affordable and achievable with information systems.

Posture information systems as a service and support organization in both fact and perception.

Roles, Roles and Relationships Leadership in two forms: - Business Leadership - IT Leadership

Managing IS as a Business Important to recognize that the IS organization is really in three different businesses: Designing information systems. Building information systems. Running and maintaining information systems.

Important to recognize that the IS organization is

really in three different businesses:

Designing information systems.

Building information systems.

Running and maintaining information systems.

Information Technology Computer-based Applications Organization Concurrent Learning Curves

Outsourcing Hiring someone whose expertise can perform a business function or activity better, more cost effectively and/or in a more timely manner than can be achieved in-house. Also enables the company to focus on its core competencies and those factors that mean the difference between success and failure.

Possible Exam Questions 1. Explain the importance of the roles, roles and relationships concept if a company has decided that it definitely wants to use information systems to gain a competitive advantage. 2. Can a company successfully use information systems as a competitive resource by outsourcing the management of this resource to an outside company?

Chapter 10 Introduction The Redefine and/or Define Concept and Change Management

Agenda Learning Objectives Redefine and/or Define Concept The Product and Service Delivery Process The Challenge of Change Management Conclusions

Learning Objectives

Redefine and/or Define Concept

The Product and Service Delivery Process

The Challenge of Change Management

Conclusions

Learning Objectives To understand the second of the two core concepts of the structured analysis approach. To appreciate the importance and significance of change management within an organization. To remember that information systems is viewed as a major cause of change within a company.

To understand the second of the two core concepts of the structured analysis approach.

To appreciate the importance and significance of change management within an organization.

To remember that information systems is viewed as a major cause of change within a company.

Redefine and/or Define Concept Redefine = Change Define = Clarify How an organization can change and clarify the role of IS to achieve and sustain competitive advantage?

Redefine = Change

Define = Clarify

How an organization can change and clarify the role of IS to achieve and sustain competitive advantage?

Redefine and/or Define What? Options: The business Products and/or services Business processes Why bother? Value to customer

Options:

The business

Products and/or services

Business processes

Why bother?

Value to customer

Product and Service Delivery Process Is the delivery process of the product more important than the product itself? Delivery Process Product/Service Value to Customer Figure 10-1 Value-Add Process What the Customer Buys Product/Service

Is the delivery process of the product more important than the product itself?

Change Management Four Challenging Factors: The pace and time pressures of change. Financial controls may not allow increase in the number of employees despite growth. Shifting of productivity and other operational objectives to IT. Dramatic improvements in IT price, performance, and function.

Four Challenging Factors:

The pace and time pressures of change.

Financial controls may not allow increase in the number of employees despite growth.

Shifting of productivity and other operational objectives to IT.

Dramatic improvements in IT price, performance, and function.

Conclusions Change is the norm in most businesses. Information technology can be a catalyst or vehicle for change. Organizational change must be carefully managed. Employees and management must understand and accept the need for change.

Change is the norm in most businesses.

Information technology can be a catalyst or vehicle for change.

Organizational change must be carefully managed.

Employees and management must understand and accept the need for change.

Chapter 10 The Redefine and/or Define Concept and Change Management

We live in a word of change, yet we act on the basis of continuity.

The Challenge of Change Millions of ordinary, psychologically normal people will face an abrupt collision with the future. Many of them will find it increasingly painful to keep up with the incessant demand for change that characterizes our time. Alvin Tofler Futurist

Definition of Change Making an essential difference often amounting to a loss of original identity or a substitution of one thing for another.

Equipping a company with the latest technology doesn't mean a thing if you don't alter how your employees think and how management leads them. Chad Frost President Frost Inc.

As we change what computers can do, we must change what we can do with computers. Max Hopper Former CIO Information Systems AMR and American Airlines

Redefine Change Define Clarify

Companies that achieve a sustainable strategic advantage with information technology generally redefine the factors of competition rather than using technology in a traditional way.

Competitive Advantage Through Use of IS? ********* Redefine and/or Define: 1. The Business 2. Products and/or Services 3. Business Processes To Provide Value to Customer

McDonald’s as Concept Source Defined its products. Redefined processes to make the product. Defined customer service as quality, product predictability, fast service, cleanliness and friendliness. Set standards for these and trained its employees accordingly. Redefined the “hamburger business.” Peter Drucker’s Assessment:

Defined its products.

Redefined processes to make the product.

Defined customer service as quality, product predictability, fast service, cleanliness and friendliness.

Set standards for these and trained its employees accordingly.

Redefined the “hamburger business.”

Redefine and/or Define The Business USA Today American Airlines American President Companies Amazon.com eBay

USA Today

American Airlines

American President Companies

Amazon.com

eBay

Redefine and/or Define Products or Services Charles Schwab Banc One Any company that has introduced an E-commerce approach in addition to an existing brick and mortar operation.

Charles Schwab

Banc One

Any company that has introduced an E-commerce approach in addition to an existing brick and mortar operation.

Redefine and/or Define Business Processes Boeing LL Bean All of your ATP companies—intranets, extranets, E-Business processes

Boeing

LL Bean

All of your ATP companies—intranets, extranets, E-Business processes

When making a purchase decision does the delivery process become more important than the product or service?

Value to Customer Product/Service Delivery Process Product/Service Value Add Process What the Customer Buys Figure 10-1

Stock, Bond and Mutual Fund Trades Financial Product Options Competitive Fees Timely Execution of Trades and Money Transfer Personal Service Confidence in Financial Custodial Responsibility Charles Schwab & Co. Computer Based Trades Client Broker Service Street Smart Telebroker Equalizer OneSource Electronic Transfers Trade Risk Analysis Value to Customer Product/Service Delivery Process Brokerage Service What the Customer Buys Value-add Process Figure 10-2 Value to Customer Analysis

Stock, Bond and Mutual Fund

Trades

Financial Product Options

Competitive Fees

Timely Execution of Trades and

Money Transfer

Personal Service

Confidence in Financial

Custodial Responsibility

Computer Based Trades

Client Broker Service

Street Smart

Telebroker

Equalizer

OneSource

Electronic Transfers

Trade Risk Analysis

Point-of-Sale (POS) System Ticketed Merchandise UPC Scanning Price Look-up Credit Card Approval Wireless Portable POS Warehouse System EDI Systems with Vendors Infobot Voice Response Value to Customer Product/Service Delivery Process Product/Service Value Add Process What the Customer Buys Quality Apparel/Home Fashions Competitive Prices High Merchandise Availability Personal Service Fast, Accurate Check-out Fast Credit Approval Access to Credit Information Value to Customer Analysis: Mervyn’s Figure 10-3

Point-of-Sale (POS) System

Ticketed Merchandise

UPC Scanning

Price Look-up

Credit Card Approval

Wireless Portable POS

Warehouse System

EDI Systems with Vendors

Infobot Voice Response

Quality Apparel/Home

Fashions

Competitive Prices

High Merchandise

Availability

Personal Service

Fast, Accurate Check-out

Fast Credit Approval

Access to Credit Information

An aircraft designed for passenger comfort, operational efficiency and safety. Flexible design configuration Competitive price Logistical support Value to Customer Analysis Boeing Commercial Airplane Group CAD design system and review process Customer input through network Co-design process with customer Quality control system Vendor EDI system Value to Customer Product/Service Delivery Process Commercial Aircraft What the Customer Buys Value-add Process Figure 10-4

An aircraft designed for

passenger comfort, operational

efficiency and safety.

Flexible design configuration

Competitive price

Logistical support

CAD design system and

review process

Customer input through network

Co-design process with customer

Quality control system

Vendor EDI system

Value to Customer Product/Service Delivery Process Product/Service Value-Add Process What the Customer Buys

Reengineering Hammer Definition: Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. Key words are fundamental, radical, dramatic and processes.

Michael Hammer Videotape The father of reengineering. At least the term.

Reengineering Business Processes Difference between business functions and business processes? Definition of a business process: A sequence of predefined activities executed to achieve a type or range of desired outcomes. Definition of process engineering: An approach to achieve radical improvements in value to customer and/or business efficiency.

Business Processes New product development. Customer order fulfillment. Customer service. Supply chain management. Budgeting. New employee recruitment and hiring.

New product development.

Customer order fulfillment.

Customer service.

Supply chain management.

Budgeting.

New employee recruitment and hiring.

Reengineering Motivation Improve value to customer. Strengthen alignment of core processes to business strategies. Pursuit of new opportunities. Optimize cross-functional performance. Broaden scope of activities and individual jobs to improve responsiveness or flexibility. Reduce operating costs.

Improve value to customer.

Strengthen alignment of core processes to business strategies.

Pursuit of new opportunities.

Optimize cross-functional performance.

Broaden scope of activities and individual jobs to improve

responsiveness or flexibility.

Reduce operating costs.

Reengineering Guidelines 1. Senior management commitment to adopting a new process. 2. Team empowerment and decision-making. 3. Be careful about how you draw conclusions and create perception. 4. Move toward inquiry, not conclusions. 5. Make the space and time available for the official beginning with a team kickoff. 6. Reward system must be correctly focused.

Reengineering Methodology Institute Continuous Improvements Analyze Leverage Points Identify Process Breakthroughs Design Business Processes Implement Business Processes Critical Success Factors Activity Value Analysis Benchmarks and Surveys Processing Modeling Investment Analysis Process Prototyping and Implementation Performance Reporting Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Source: ISS Corporation

Critical Success Factors

Activity Value Analysis

Benchmarks and Surveys

Processing Modeling

Investment Analysis

Reengineering Success Factors Business Imperative. Strong Sponsorship. Right Team. Clear Objectives with a Well Defined Foundation.

Business Imperative.

Strong Sponsorship.

Right Team.

Clear Objectives with a Well Defined Foundation.

Hewlett-Packard Reengineering Lessons Learned: 1. Goals and accountability must be clear. 2. Process ownership is crucial. 3. Links among business owners, process owners and IS organization are critical.

Avon Reengineering Approach Process Culture 1. Stay Focused 1. Analyze (Opposition) 2. Be Specific 2. Educate (Concerns) 3. Deliver Results 3. Motivate (Buy-in to process)

American Express Methodology Ownership Teams Goals Tracking

Ownership

Teams

Goals

Tracking

Change Management

Resistance to Change? You often don’t have a choice. There are those that content that an organization has two choices: change or die.

Graying of Auto Industry Within the next year, as many as forty to fifty percent of the auto industry workforce will be eligible to retire. Auto companies must decide if they will replace these people with similarly skilled workers or redesign their jobs and recruit more technologically advanced workers. The shortage of skilled workers is partially a result of changes in work requirements as the industry moves from an auto parts or components mentality to a systems mentality. e.g. not an odometer but an entire dashboard.

Impact of Change Change is intensely personal. For change to occur in any organization, each individual must think, feel or do something differently. Even in large organizations, which depend on thousands of employees understanding company strategies well enough to translate them into appropriate action, leaders must win their followers one by one.

Let’s Not Forget Xerox: Invented plain paper copiers but almost needed to file bankruptcy after hemorrhaging financially while trying to become the document company. Eastman Kodak : Basically popularized film photography but struggled to decide if it was in the imaging business. Digital Equipment : Created the minicomputer segment of the computer industry but has disappeared as a company.

Xerox: Invented plain paper copiers but almost needed to

file bankruptcy after hemorrhaging financially while trying to

become the document company.

Eastman Kodak : Basically popularized film photography

but struggled to decide if it was in the imaging business.

Digital Equipment : Created the minicomputer

segment of the computer industry but has disappeared as a

company.

IT Related Change If IT related change could be limited to only affecting the technology, implementation would be relatively simple. Adding human factors increases the complexity of the change process significantly. Successful implementation of change requires an understanding of the human as well as the technical aspects involved in the situation. IT projects and people translate to “here comes the next wave of change.”

Old Paradigms Die Hard! They have built in resistance to their own corresponding attitudes, institutions and cultures.

The Law of Change Achieving change, of any significance within an organization, is in inverse proportion to the success that it has had up to the time that management feels a change is needed. The greater the success of the company, the less likely it is to change.

Selecting a Change Strategy Which strategy to use in approaching a change problem is a decision affected by a number of possible factors. 1.Degree of Resistance. 2.Target Population Size. 3. High, Medium or Low Business Stakes. 4. The Time Window. 5. Expertise Availability. 6. Organization and People Dependency.

Necessary Questions Is the purpose of the new technology clear to its users? Do the users accept the need for the technology change? Were the users involved in planning the new system? Has there been good communication regarding the change? Is there acceptance of the increased cost compared to the benefits of the new system? Is there a perception of organizational support for the new system? Is there compatibility of the new technology with the old way of doing things? Have the social aspects of the new system been assessed?

Is the purpose of the new technology clear to its users?

Do the users accept the need for the technology change?

Were the users involved in planning the new system?

Has there been good communication regarding the change?

Is there acceptance of the increased cost compared to the benefits of the new system?

Is there a perception of organizational support for the new system?

Is there compatibility of the new technology with the old way of doing things?

Have the social aspects of the new system been assessed?

Do the users feel that the new system reflects negatively on their past performance? Have the habit patterns of the users influenced the design of the new system? Is there a lack of respect and trust in the change agents? Has excessive pressure been involved relative to the project? Is the pace of change perceived to be too fast or too slow? 15. Is there a significant amount of user fear of failure? 16. Can the status quo be reestablished if the new technology proves unsuccessful?

Do the users feel that the new system reflects negatively on

their past performance?

Have the habit patterns of the users influenced the design of the new system?

Is there a lack of respect and trust in the change agents?

Has excessive pressure been involved relative to the project?

Is the pace of change perceived to be too fast or too slow?

15. Is there a significant amount of user fear of failure?

16. Can the status quo be reestablished if the new technology

proves unsuccessful?

Change Management Skills People Skills Business Skills System Skills Political Skills Analytical Skills

People Skills

Business Skills

System Skills

Political Skills

Analytical Skills

Middle Management is Key Organizational cultures are easy to establish when a company is young. Middle managers must be enlisted as agents of change for an entire organization to change the way that it operates. This will happen only if top management communicates directly and in depth as to the logic and importance of the proposed change.

Organizational cultures are easy to establish when a company is young.

Middle managers must be enlisted as agents of change for an entire organization to change the way that it operates.

This will happen only if top management communicates directly and in depth as to the logic and importance of the proposed change.

Transition Versus Change 1. It goes on inside a person, not outside. 2. It takes much longer. 3. It starts with an ending. 4. It finishes with a new beginning. 5. In between is a neutral zone. This applies to organizations as well as individuals.

Burning Platform Decision A burning platform type of decision is at hand when the organization is facing a major, disruptive change in which the cost for the status quo is prohibitively high and there is a significant risk that implementation failure could occur.

Celebrate Your Victories Companies often don’t celebrate enough when their people win. They get so caught up in the daily grind of work that they don’t stop to enjoy what they have achieved. Do things that build people’s self confidence. It’s all about praising others and getting excited about their victories. Celebrating success will help to convince people that they are important, doing well and can respond to the next challenge even if it involves significant change.

Companies often don’t celebrate enough when their people win.

They get so caught up in the daily grind of work that they don’t stop to enjoy what they have achieved.

Do things that build people’s self confidence. It’s all about praising others and getting excited about their victories.

Celebrating success will help to convince people that they are important, doing well and can respond to the next challenge even if it involves significant change.

Change Management Guidelines Plan change management like you would change new products. A new process needs to reflect the appropriate culture. A focus on tools can be counter-productive. Expect people unhappiness in a change process. Gear the entire effort to the goals of a new program or process. Structure where possible to have fun.

Plan change management like you would change new products.

A new process needs to reflect the appropriate culture.

A focus on tools can be counter-productive.

Expect people unhappiness in a change process.

Gear the entire effort to the goals of a new program or process.

Structure where possible to have fun.

Conclusions Change has become the norm in most businesses Information systems are often the cause of or the vehicle for change. Change within an organization has to be managed appropriately.