Session 4 it architecture and competitive advantage
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Session 4 it architecture and competitive advantage

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Session 4 it architecture and competitive advantage Session 4 it architecture and competitive advantage Presentation Transcript

  • IT & Strategy
  • 2 things
  • IT-strategy alignment
  • modularization & IT architecture
  • how do I align my technology to my firm’s strategy?
  • TODAY: conventional views
  • 1.0
  • what does a firm do?
  • materials market firm product needs money
  • what is a product?
  • customer’s needs
  • a product is a solution package
  • mobilize commodities to deliver the product
  • 2.0
  • what dose IS do? Accounting Finance Sales Human Production Resources MIS is the “glue” that ties businesses together… …and uses the technology that makes business work.
  • IT reduces communication & coordination cost
  • IT architecture
  • shows how hardware, software, database and network will be coordinated
  • to achieve strategic goal of the firm
  • a master plan that provides a technology vision for the company
  • more than IT architecture “A digital nervous system requires a combination of hardware and software; it's distinguished from a mere network of computers by the accuracy, immediacy, and richness of the information it brings to knowledge workers and the insight and collaboration made possible by the information.” Bill Gates, Business @ The Speed of Thoughts © copyright 2007, youngjin yoo
  • Scott McNealy on Gates “He is right - I would be very nervous if my systems were based on their (Microsoft’s) platforms and products!” © copyright 2007, youngjin yoo
  • also includes
  • organizational control
  • funding model
  • standardization
  • 3.0
  • strategy question how do you build sustainable competitive advantage?
  • 3.1
  • Michael Porter it’s all about positioning five forces three generic strategies
  • Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers existing competitors of buyers Threat of substitute products or services
  • three generic strategies
  • cost leadership
  • differentiation
  • focus
  • 3.2
  • CK Prahalad it is about unique resources capabilities core competencies
  • 3.3
  • Kathleen Eisenhardt it is about ability to innovate dynamic capability hyper competition
  • 4.0
  • how can you exploit IT to build sustainable competitive advantage?
  • it depends!
  • 4.1
  • positioning
  • Wal-Mart and EDI
  • 4.2
  • create unique resources
  • 4.2.1
  • unique IT
  • Mrs. Fields Cookie American Airline City Bank IBM-Mayo Clinic HyperActive Bob
  • 4.2.2
  • technology is a commodity utility
  • others
  • they will copy it
  • if not the same system
  • similar enough is enough
  • IT value will evaporate
  • first mover makes all the mistakes
  • second mover will learn
  • price will go down
  • consumer will benefit
  • ATM Airline reservation systems ERP
  • 4.2.3
  • Managerial Technology Sustainable Capabilities (Efficiency) competitive (Uniqueness) Advantage © copyright 2007, youngjin yoo
  • IT + culture IT + ownership structure IT + access to capital IT + operation excellence IT + brand IT + HR
  • Some statistics © copyright 2007, youngjin yoo
  • 4.3
  • first mover
  • Amazon vs Barns & Noble
  • Me First vs. Me Too
  • Amazon Introducing new feature
  • Barns & Noble integration with inimitable resources (physical stores)
  • Sustainable Competitive IT-enabled Advantage innovation Time & History
  • it’s like a garden
  • time matters!
  • 5.0
  • Modularization & IT architecture
  • 5.1
  • mass production
  • physical machines
  • maximizing the throughputs
  • economy of scale
  • upstream & downstream integration
  • economy of scope
  • diversification
  • vertical integration
  • m-form organization
  • internalization of value activities
  • traditional view Back-end Systems Executives & Managers A firm’s value chain Suppliers Transaction Systems (ERP, MRP, TPS) Customers Enterprise DB © copyright 2005, youngjin yoo
  • control
  • everyone thinks “I am unique!”
  • centralized
  • decentralized
  • hybrid
  • 5.2
  • modularization of products
  • system view of a product
  • subsystems and components
  • design hierarchy and design rules
  • components interfaces
  • stereo system amplifier speakers CD players radio tuner
  • so, what’s the big deal?
  • containing complexity
  • innovation through mix & match
  • agility
  • what does IT have to do with this?
  • reduction of communication and coordination cost
  • making externalization of activities cheaper
  • facilitating modularization
  • disintegration of vertically integrated firms
  • network-centric view (service oriented architecture) for modular organizations CRM support Service Center Sales force Call ERP Manufacturing CRM infrastructure services Distribution Sales and Financials Resource Human RDBMS Middleware EAI Commerce Server ERP infrastructure services Shopping Payment Catalog Cart Application Server RDBMS RDBMS © copyright 2007, youngjin yoo
  • service oriented architecture
  • modular interoperable reusable flexible scalable
  • standards common infrastructure
  • SOA
  • 6.0
  • IT infrastructure is a strategic asset
  • more than a tool
  • not utility
  • no overhead
  • “let’s just have ERP” wouldn’t work
  • it is a strategic decision
  • must be a part of strategic decision- making process
  • aligning business goals to IT
  • how do I really know if IT is a strategic resource in my firm?
  • where is your CIO in your organization?
  • how is IT being funded?
  • is IS a part of corporate G&A?
  • where is IS plan in your strategic planning?
  • who makes the decision?
  • so, why should I care?
  • accelerating technology innovations
  • challenging long-held assumptions
  • new ways of organizing relationship inside
  • new ways of organizing relationship outside
  • agility and innovations
  • it is as strategic as it gets when it comes to information systems