IT Strategy

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  • IT Strategy

    1. 1. Strategy and IS <ul><li>Describe the roles of business, organizational and IS strategy </li></ul><ul><li>Compare and contrast: Porter’s three generic strategies model, D’Aveni’s hypercompetion model, and Brandenburger and Nalebuff’s co-opetition model </li></ul><ul><li>Describe the major components and apply the value chain, competitive forces and strategic thrusts models </li></ul><ul><li>Discuss risks of IS success </li></ul><ul><li>Discuss eras of IT use </li></ul>
    2. 2. Strategic Advantage <ul><li>Does an organization need Information Systems to gain strategic advantage? </li></ul>
    3. 3. Strategy - A Plan <ul><li>Business strategy drives organizational and information systems strategy </li></ul><ul><li>Information systems strategy - plan the organization uses in providing information services </li></ul><ul><li>Information systems strategy is affected by a firm’s business and organizational strategies </li></ul><ul><li>Organizational strategy - organization’s design as well as the choices it makes to define, set up, coordinate and control its work processes </li></ul><ul><li>Remember interdependency! </li></ul>
    4. 4. Porter’s Three Generic Strategies <ul><li>Cost leadership (lowest cost in industry) </li></ul><ul><li>Differentiation of products/services </li></ul><ul><li>Focus (finding a specialized niche) </li></ul><ul><ul><li>cost </li></ul></ul><ul><ul><li>differentiation of product or services </li></ul></ul>
    5. 5. Be Low Cost Producer - IT strategic if it can: <ul><li>Help reduce production costs & clerical work </li></ul><ul><li>Reduce inventory, accounts receivable, etc. </li></ul><ul><li>Use facilities and materials better </li></ul><ul><li>Offer interorganizational efficiencies </li></ul>
    6. 6. Produce Unique Product - IT strategic if it can: <ul><li>Offer significant component of product </li></ul><ul><li>Offer key aspect of value chain </li></ul><ul><li>Permit product customization to meet customer’s unique needs </li></ul><ul><li>Provide higher/unique level of customer service/satisfaction </li></ul>
    7. 7. Fill Market Niche - IT strategic if it can: <ul><li>Permit identification of special needs of unique target market </li></ul><ul><li>Spot and respond to unusual trends </li></ul>
    8. 8. D’Aveni’s Hypercompetition Model <ul><li>Focused on turbulent environment </li></ul><ul><li>Advantages are rapidly created and eroded </li></ul><ul><li>Sustaining an advantage can be a deadly distraction </li></ul><ul><li>The goal is disruption, not sustainability, of advantage </li></ul><ul><li>Initiatives are achieved with a series of small steps </li></ul>
    9. 9. Four Arenas of Competitive Advantage <ul><li>Cost/quality </li></ul><ul><li>Timing/know-how </li></ul><ul><li>Strongholds </li></ul><ul><li>Deep pockets (short-term only) </li></ul>
    10. 10. Seven S’s <ul><li>Superior Stakeholder Satisfaction </li></ul><ul><li>Strategic Soothsaying </li></ul><ul><li>Positioning for Speed </li></ul><ul><li>Positioning for Surprise </li></ul><ul><li>Shifting the rules of competition </li></ul><ul><li>Signaling strategic intent </li></ul><ul><li>Simultaneous and Sequential Strategic Thrusts </li></ul>
    11. 11. Brandenburger and Nalebuff’s Co-opetition <ul><li>Optimally combining cooperation and competition </li></ul><ul><li>Valu Net of competitors and complementors </li></ul>
    12. 12. Strategic Information Systems <ul><li>IS that help gain strategic advantage </li></ul><ul><li>Significantly change manner in which business supported by the system is done </li></ul><ul><li>Outwardly aimed at direct competition </li></ul><ul><li>Inwardly focus on enhancing the competitive position </li></ul><ul><li>Create strategic alliances </li></ul><ul><li>IS can support business strategies </li></ul>
    13. 13. Eras of IT
    14. 14. Eras of IT
    15. 15. Unusual Suspects: Information Resources <ul><li>Information systems infrastructure </li></ul><ul><li>Information and knowledge </li></ul><ul><li>Proprietary technology </li></ul><ul><li>Technical skills of the IT staff </li></ul><ul><li>End users of the information system </li></ul><ul><li>Relationship between IT and business managers </li></ul><ul><li>Business processes </li></ul>
    16. 16. Strategy Axioms <ul><li>Axiom: A scarce resource adds value </li></ul><ul><ul><li>Corollary: only if there is a need </li></ul></ul><ul><li>Altnernative axiom: Value is derived from plentitude </li></ul><ul><ul><li>What good is a single fax machine? </li></ul></ul>
    17. 17. Firm Infrastructure (general management, accounting, finance, strategic planning) Human Resource Management (recruiting, training, development) Technology Development (R&D< product and process improvement) Procurement (purchasing of raw materials, machines, supplies) Support Activities Primary Activities Inbound Logistics (raw materials handling and warehous- ing) Operations (machine assembling, testing) Outbound Logistics (warehous- ing and distribution of finished product) Service (installation, repair, parts) Marketing and Sales (advertising, promotion, pricing, channel relations)
    18. 18. Value Chain Model <ul><li>Chain of basic activities that add to firm’s products or services </li></ul><ul><li>Primary activities </li></ul><ul><li>Secondary activities </li></ul>
    19. 19. Value Chain Primary Activities <ul><li>Inbound </li></ul><ul><li>Outbound </li></ul><ul><li>Operations </li></ul><ul><li>Marketing and Sales </li></ul><ul><li>After-Sale Services </li></ul>
    20. 20. Value Chain Support Activities <ul><li>Technology development </li></ul><ul><li>Procurement </li></ul><ul><li>Human Resources Management </li></ul><ul><li>Management Control </li></ul><ul><ul><li>accounting/finance </li></ul></ul><ul><ul><li>coordination </li></ul></ul><ul><ul><li>general management </li></ul></ul><ul><ul><li>central planning </li></ul></ul>
    21. 21. Competitive Forces <ul><li>Threat of entry of new competition </li></ul><ul><li>Bargaining power of suppliers </li></ul><ul><li>Bargaining power of buyers </li></ul><ul><li>Threat of substitute products or services </li></ul><ul><li>Rivalry among existing firms </li></ul>
    22. 22. Strategies for Competitive Forces <ul><li>Note - strength of force is determined by factors in industry </li></ul><ul><li>Gain a competitive edge </li></ul><ul><li>Build defenses against forces </li></ul><ul><li>Formulate actions to influence forces </li></ul>
    23. 23. Strategic Questions <ul><li>Can IT create barriers to entry? (new entrants) </li></ul><ul><li>Can IT build in switching costs? (buyers) </li></ul><ul><li>Can IT strengthen customer relationships? (buyers) </li></ul>
    24. 24. Strategic Questions (cont) <ul><li>Can IT change the balance of power in supplier relationships? (suppliers) </li></ul><ul><li>Can IT change the basis of competition? (competitors) </li></ul><ul><li>Can IT generate new products?(competitors, substitutes) </li></ul>
    25. 25. Wiseman’s Theory of Strategic Thrusts <ul><li>Strategic purposes that drive the use of the firm’s resources </li></ul><ul><li>Differentiation </li></ul><ul><li>Cost </li></ul><ul><li>Innovation </li></ul><ul><li>Growth </li></ul><ul><li>Alliance </li></ul>
    26. 26. Searching for Specific Opportunities <ul><li>What is the mode of the thrust? (offensive, defensive) </li></ul><ul><li>What is the direction of the thrust? (use, provide) </li></ul><ul><li>What is the strategic target of the thrust? (supplier, customer, competitor) </li></ul>
    27. 27. Risks of IS Success <ul><li>Change the Basis of Competition </li></ul><ul><li>Lower Entry Barriers </li></ul><ul><li>Promote Litigation or Regulation </li></ul><ul><li>Awake Sleeping Giant </li></ul><ul><li>Reflect Bad Timing </li></ul><ul><li>Are Too Advanced </li></ul>

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