Will send team presentation feedback sometime this weekend Summary of last week Will send team presentation feedback sometime this weekend

Update on Alibris Interloc was simple listing service for hard-to-find books Profitable Sustainable?

Alibris 2000 Switched from Oracle to Thunderstone New Revenue Model Smaller company specializing in huge text databases eCommerce site went live in Fall 98 New Revenue Model Percentage of purchase price for all books sold vs dealer listing fees Secured bridge loan Investor’s terms too harsh

Alibris 2000 – cont’d Expanded Sparks facility Centralized inventory Both owned (physical) and consignment (virtual) Created a “catalog and pricing engine” Provides current market information to book dealers and customers Use knowledge gained selling “virtual” inventory to buy books at attractive margins

Oct, 1998 What was status of economy? Dow Jones at 8500 What was major IT issue for firms? “Putting Enterprise into Enterprise System” What was major message from Davenport?

Putting Enterprise into Enterprise System Major Message Why do ERP projects fail? Require significant money, time and expertise Force firms to do business in ways that conflict with their best interest If used by all companies in industry, erasing sources of differentiation and competitive advantage How to prevent failure? Clarify strategic and organizational needs and business implications of integration. Change organizational structures to address information-flow problems Create competitive advantage with your enterprise system Put right people in place Install system gradually

Putting Enterprise into Enterprise System Major Message – cont’d “If the development of an enterprise system is not carefully controlled by management, management may soon find itself under control of the system.” The most successful ERP deployments involved companies that viewed them in strategic terms. “ They stressed the enterprise, not the system.” Main reason for “failures” is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise. “The logic of the system may conflict with the logic of the business.

Mar, 2001 What was going on in the economy? All time high of 11,723 in Jan 2000 Hovering above 11,000 in early 2001 What were the major IT issues? “Strategy and the Internet” What was Porter’s major message?

Strategy and the Internet (Porter) We need to “…see the internet for what it is: an enabling technology…” (pg 64) The “…greatest impact [of the internet] has been to enable the reconfiguration of existing industries that had been constrained by high costs for communicating, gathering information, or accomplishing transactions.” (pg 66) “The great paradox of the Internet is that its [benefits] also make it more difficult for companies to capture those benefits as profits.” (pg 66)

Principles for Internet Strategy (Porter) Strategic Positioning Start with the right goal Deliver a unique value proposition Develop a distinctive value chain Make trade-offs for robust strategy Fit all elements of company to the strategy Maintain continuity of direction

Nov, 2002 What was going on in the economy? On Oct 9th, 2002, Dow Jones falls 215.22 to close at 7,286.27.  The market has declined 4,436.71, or 38%, since January 14, 2000 By Oct 21, closed above 8,500 What were the major IT issues? “Six IT Decisions Your IT People Shouldn’t Make” What was major message?

Six IT Decisions Major Message IT departments should not make choices that determine the impact of IT on business strategy. Senior executives failed to realize that adopting the enterprise systems posed a business challenge Consequentially, did not take responsibility for the organizational and business process changes the systems required. Determine the strategic role that IT will play, and then establish company-wide funding level that will enable technology to fulfill the objective.

May, 2003 What was going on in the economy? On Jun 4th, closes above 9,000 What were the major IT issues? “IT Doesn’t Matter” What was major message?

IT Doesn’t Matter Major Message IT has lost its strategic value. Businesses should manage IT as a commodity. But -- partial standardization does not wipe out opportunities for gaining competitive advantage. Firms using identical IT and spending comparable amounts on IT display enormous variability in profits. IT is diminishing as a source of strategic differentiation. But – creates possibilities and options that did not exist before IT functions will be homogenized, and proprietary applications are therefore doomed. As corporations adopt generic applications, business processes become uniform and without competitive advantage

Oct, 2003 What was going on in the economy? Sep 2nd, closes above 9500 Closes above 10,000 on Dec 11th What were the major IT issues? “The Real New Economy” What was major message?

The Real New Economy Major Message New economy did not spring from internet Rather from intensifying business competition Explains productivity growth in six sectors. Associated with dismantling of regulatory constraints Managers needed to cut costs and increase value to buyers. In industries with complex operating processes, heavy transaction loads, and technically sophisticated products, IT was powerful tool: Enabled development of new products and business processes Facilitated industry-wide diffusion of new innovations To retain an edge, companies must couple diffusing technologies with other distinctive capabilities and processes Strong scale economies

The Real New Economy Major Message Three practices distinguished companies who were successful in IT investments Targeted investment at productivity levers that matter Paid attention to sequencing and timing of investment Example of companies that invest in CRM before they had consistent and reliable repositories of customer data Should only rush investments when it is clear that technology will advance business goals, enable true innovation, and is resistant to imitation Pursued managerial and technological innovations in tandem Managerial practices must adapt to technological innovations

Feb & Apr, 2004 What is going on in the economy? What are the major IT issues? Two articles “Getting IT Right” “Saving IT’s Soul: Human-Centered Information Management”

Getting IT Right Major Message IT can work if you focus on process Presume that IT is a commodity – what should you do? Start with business strategy Develop common underlying infrastructure Develop support staff that ensures infrastructure enables business strategy

Saving IT’s Soul Major Message Railroad Paradox – by Gerald Weinberg Focus on how people use information Managers get 2/3 of information from non-computer based data Strategic data plans focus on information found in computer Global data only results when shared understanding is reached Need information maps and guides to deal with information particularism Changing an IT system will not change the information culture

Insights Extracting value from IT requires innovations in business practice IT Spending rarely correlates with superior financial results. Too many business insert IT without changing business practices.

Insights – cont’d Strategic Impact comes from cumulative effect of sustained initiatives to innovate business practices. Wal-Mart led innovations. As competitors adopted practices, Wal-Mart continued to innovate – maintained productivity advantage. Opportunities for innovation continue because advances in IT create possibilities not previously economically available Opportunity for business practice innovations extend beyond the walls of the enterprise to include relationships with other companies Differentiation is not a result of IT – but the new practices IT enables

Insights – cont’d Big-bang IT-driven initiatives rarely produce expected returns. Successful projects proceed in waves of short-term (6-12 months) operating initiatives designed to test and refine specific innovations in practices. Ties initiative to explicit operating performance metrics – focus on tangible near-term returns

Insights – cont’d Need to look at IT use through several different lenses Efficiency: Improve cost savings and efficiencies Effectiveness & Efficacy: Incremental improvements in products, services, organizational structure Enabling: Creation of strategic advantage through extending competitive scope, partnerships, changing rules of competition, provision of new IT-based services.

Insights Maybe the dinosaur had a valid point! Strategic Positioning Start with the right goal Deliver a unique value proposition Develop a distinctive value chain configuration Make trade-offs for robust strategy Fit all elements of company to the strategy Maintain continuity of direction

Insights – cont’d Must align business and IT strategies

Observed characteristics of well-aligned companies (from Deloitte Survey) Executive agreement on the role of IT – where and how IT adds value Executive agreement on the priorities and focus areas for IT Follow through and delivery on IT expectations

2004 Survey by Deloitte Consulting LLP (Advertising Supplement in CIO Magazine)

Strategic Alignment Model 4 Domains of Strategic Choice Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Organizational Infrastructure Structure Processes Skills IT Infrastructure Architecture Processes Skills

Strategic Alignment Model IT Infrastructure defined by business processes: Business structure and IT Strategy are not aligned Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Organizational Infrastructure Structure Processes Skills IT Infrastructure Architecture Processes Skills IT is not strategic

Strategic Alignment Model Business strategy drives IT Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Organizational Infrastructure Structure Processes Skills IT Infrastructure Architecture Processes Skills IT is not integrated with business operations

Strategic Alignment Model Information is a core product or service Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Organizational Infrastructure Structure Processes Skills IT Infrastructure Architecture Processes Skills IT enables enterprise wide business processes

Strategic Alignment Model IT enables new strategic opportunities Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Organizational Infrastructure Structure Processes Skills IT Infrastructure Architecture Processes Skills

Strategic Alignment Model Alignment is a dynamic and evolving process Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Organizational Infrastructure Structure Processes Skills IT Infrastructure Architecture Processes Skills