Chapter 2 Competing with Information Technology Does IT

Chapter 2 Competing with Information Technology

Does IT provide organizations with a competitive advantage? 2

Long-term competitive strategies Lock in customers/suppliers/partners And lock out competitors Deter them from switching to competitors Build in switching costs Make customers and suppliers dependent on the use of innovative IS Staying a step ahead of competitors Creating “the place” (first mover advantage) Ebay Facebook 3

Competitive Advantage and Competitive Necessity v What is Competitive Advantage? v What is the problem with competitive advantage? v What is Competitive Necessity? v What is the relationship between Competitive Advantage and Competitive Necessity? 4

II. Porter’s Competitive Forces Model 5

II. Competitive Strategy Concepts 6

II. Competitive Strategy Concepts 7

IV. Building A Customer-Focused Business – Strategic Focus on Customer Value v. Recognizing that Quality, not Price, has become the primary factor in a customer’s perception of value v. Internet technologies can make customers the focal point of ebusiness applications 8

V. Porter’s Value Chain and Strategic IS 9

V. The Value Chain and Strategic IS Value Chain – the series/chain/network of activities that add value to products/services v Primary Processes – directly related to manufacture of products or delivery of services v Support Processes – business activities that support daily operations of the firm and indirectly contribute to products/services v 10

II. Reengineering Business Processes 11

II. Reengineering Business Processes v Business Process Reengineering (BPR) High Potential Payback, but High Risk of Failure v Organizational Redesign v v Process Teams v Case Managers v The Role of Information Technology – IT plays a major role in BPR 12

To Build or to Buy – Is That Really the Question? v What is the traditional answer? v Why might reality be more complicated? v Why does VISA custom build in-house? v Why does VISA busy of-the-shelf? 13

III. Becoming An Agile Company v 4 Basic Strategies: v v v Customer Perception of Goods and Services Partnering with Customers, Suppliers, and Even Competitors Organize to Thrive on Change and Uncertainty Leverage Impact of Personnel and Their Knowledge Types of Agility v v v Customer Partnering Operational 14

III. Becoming An Agile Company 15

IV. Creating A Virtual Company v Virtual Company – Uses the Internet, intranets and extranets to create virtual workgroups and support alliances with business partners v Virtual Company Strategies v v v Share infrastructure and risk with alliance partners Link complimentary core competencies Reduce concept-to-cash time through sharing Increase facilities and market coverage Gain access to new markets and share market or customer loyalty Migrate from selling products to selling solutions 16

IV. Creating A Virtual Company 17

IV. Creating A Virtual Company 18

V. Building a Knowledge-Creating Company v Explicit Knowledge – written down or stored on computers v Tacit Knowledge – “how-to” knowledge residing in the workers; very important but little incentive to share this information so it is never written down 19

Types of Knowledge (Nonaka, 1994) 20

V. Building a Knowledge-Creating Company v Knowledge Management – 3 levels: v Enterprise Knowledge v Information Creation, Sharing, and Management v Document Management 21

VI. Knowledge Management Systems v Making personal knowledge available is the central activity of a knowledgecreating company v This takes place continuously at all levels of the organization v Knowledge management has become a major strategic use of information technology 22

VI. Knowledge Management Systems v Goal of Knowledge Management – to create, organize, and disseminate important business knowledge whenever and wherever it is needed in the organization v Knowledge Management systems: v v Facilitate organizational learning and knowledge creation Provide rapid feedback top knowledge workers Encourage employee behavioral change Significantly improve business performance 23