Slide introduction to information ssstem 10th obien chap002 eng

James A. O’Brien

Introduction to Information Systems

1

Chapter

Competing
with
Information Technology

Irwin/McGraw-Hill

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James A. O’Brien

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Introduction to Information Systems

Chapter Objectives
• Identify several basic competitive strategies
and explain how they can be used to confront
the competitive forces faced by a business.
• Identify several strategic uses of information
technology and give examples of how they give
competitive advantages to business.
• Identify several strategic uses of Internet

technologies for electronic business and
commerce, and give examples of each.

Irwin/McGraw-Hill


James A. O’Brien

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Introduction to Information Systems

Chapter Objectives
• Give examples of how business process
reengineering involves the strategic use of
information technology.
• Identify how total quality management differs
from business process reengineering in its use
of information technology.
• Identify how information technology can be
used to help a company be an agile competitor,
or to form a virtual company to meet strategic
business opportunities

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James A. O’Brien

4

Introduction to Information Systems

Chapter Objectives
• Explain how knowledge management systems
can help a business build a knowledge-creating
company.

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James A. O’Brien

5

Introduction to Information Systems

The Competitive Environment
Threat of
New
Entrants
Bargaining Power
of Suppliers
Rivalry
Among
Existing
Competitors
Threat of
Substitutes

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Bargaining Power
of Customers


James A. O’Brien

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Introduction to Information Systems

Fundamental Competitive Strategies
Cost
Cost Leadership
Leadership Strategies
Strategies

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Differentiation
Differentiation Strategies
Strategies
Innovation
Innovation Strategies
Strategies
Growth
Growth Strategies
Strategies
Alliance

Alliance Strategies
Strategies


James A. O’Brien

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Introduction to Information Systems

Strategic Uses of Information Technology

Strategy
IT Role

Outcome

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Improving
Business
Process
Use IT to
reduce costs
of doing
business

Enhance
Efficiency

Promote
Business
Innovation

Use IT to
create new
products or
services

Create New
Business
Opportunities

Locking in
Customers
and Suppliers
•Use IT to
improve quality
•Use IT to link
business to
customers and
suppliers

Maintain Valuable
Customers and
Relationships


James A. O’Brien

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Introduction to Information Systems

Strategic Uses of Information Technology

Strategy
IT Role

Outcome

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Raise
Barriers
to Entry
Increase
amount of
investment or
complexity of
IT needed to
compete

Increase
Market Share

Build a
Strategic IT
Platform

Leverage
investment in
IS resources
from operational uses to
strategic uses

Create New
Business
Opportunities

Build a
Strategic
Information Base
Use IT to
provide
information to
support firm’s
competitive
strategy

Enhance
Organizational
Collaboration


James A. O’Brien

Strategic Positioning of Internet Technologies
Customer Competition Connectivity

High

External Drivers

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Introduction to Information Systems

Global Market
Penetration

Product and Services
Transformation

Strategy

E-Commerce Website
Value-added IT Services

E-Business; Extensive
Intranets and Extranets

Solution

Cost and
Efficiency
Improvements

Performance
Improvements in

Business
Effectiveness

E-Mail, Chat Systems

Low

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Intranets and Extranets

E-Business Processes Connectivity
Internal Drivers

High


James A. O’Brien

The Value Chain

Procurement of Resources
Marketing
Inbound
Outbound
Customer
Operations
and
Logistics
Logistics

Service
Sales

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t it
i ve

Technology Development

t ag
n
va
d
A

Human Resource Management

e

Administrative Coordination & Support Services

Co
mp
e

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Introduction to Information Systems

James A. O’Brien

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1

Introduction to Information Systems

The Internet Value Chain

Internet
Capability

Benefits
to
Company

Opportunity
for
Advantage

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Marketing and
Product
Research
Data for
market
research,

establishes
consumer
responses

Enhance
Efficiency

Sales and
Distribution

Support and
Customer
Feedback

•Low cost
distribution
•Reaches new
customers
•Multiplies
contact points

•Access to
customer comments online
•Immediate response to
customer
problems

Create New
Business
Opportunities

Maintain Valuable
Customers and
Relationships


James A. O’Brien

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Introduction to Information Systems

Customer-Focused E-Business
Let customers
place orders
directly
Let customers
check order history
and delivery status
Build a
community
of customers,
employees,
and partners

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Customer
Database

Give all
employees a
complete view
of customers

Let customers
place orders thru
distribution
partners
Transaction
Database
Link Employees
and distribution
partners


James A. O’Brien

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3

Introduction to Information Systems

Business Reengineering and Quality Management
Business Quality
Improvement

Definition
Target

Potential
Payback
Risk

Business
Reengineering

Incrementally Improving
Existing Processes

Radically Redesigning
Business Systems

Any Process

Strategic Business
Processes

10%-50% Improvements

10-Fold Improvements

Low

High

Same Jobs - More Efficient Big Job Cuts; New Jobs;
What Changes?
Major Job Redesign

Primary
Enablers

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IT and Work Simplification

IT and Organizational
Redesign


James A. O’Brien

The Customer- Focused Agile Competitor

Cu
tim stom
et
o mer’s
ar
ke
t

f
st o ion
Co sact
n
Tra
of ded
st

Co ue-ad
l
Va vices
r
Se

Irwin/McGraw-Hill

Leverage the
Impact of
People and
IS
Resources

Tim
e

Give
GiveCustomers
Customers
Solutions
Solutions
to
toProblems
Problems

Conformance
Organize to
Master
Change

lity

Customization

De
li v
ery

Anticipation of
future needs

Cooperate
Cooperatewith
with
Business
BusinessPartners
Partners
and
andCompetitors
Competitors

Ac
ce
ss
ibi

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4

Introduction to Information Systems


James A. O’Brien

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5

Introduction to Information Systems

Virtual Corporations
Adaptability
Borderless

Excellence
Six
Characteristics
of Virtual
Companies

Technology

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Trust-Based
Opportunism


James A. O’Brien

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Introduction to Information Systems

Knowledge Management Systems
Solution
Knowledge

Technical
Support
Staff

Customers
Development
Engineers

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Intranet

Product
Managers

The
Internet

Other
Vendors

James A. O’Brien

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Introduction to Information Systems

Key Factors for Sustaining Strategic Success

Environment

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• Size
• Geographical scope
• Product scope
• Organization
structure
• Technological
resources
• Knowledge
resources

Firm

• Creating
switching costs
• Exploiting
knowledge

• Developing
response
strategies
• Managing risks
Performance


James A. O’Brien

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8

Introduction to Information Systems

Chapter Summary
• Information systems can play several strategic
roles in business.
• The Internet, intranets, extranets, and other
Internet-based technologies can be used
strategically for E-Business and E-Commerce.
• A key strategic use of Internet technologies is
to build an E-Business which develops its
business value by making customer value its
strategic focus.

Irwin/McGraw-Hill


James A. O’Brien

1
9

Introduction to Information Systems

Chapter Summary (cont)
• IT is a key ingredient in reengineering business
operations, by enabling radical changes to
business processes that dramatically improve
their efficiency and effectiveness.
• IT can be strategically used to improve the
quality of business performance.
• A business can use IT to help it become an
agile company, that can respond quickly to
changes in its environment.

Irwin/McGraw-Hill


James A. O’Brien

2
0

Introduction to Information Systems

Chapter Summary (cont)
• Forming virtual companies has become an
important competitive strategy in today’s
dynamic global market.

• Lasting competitive advantages today can only
come from innovative use and management of
organizational knowledge by knowledge
creating companies and learning organizations.
• Successful strategic information systems are
not easy to develop and implement. They may
require major change in how businesses
operate.

Irwin/McGraw-Hill