Strategic Impact of Information Technology

Enabling technology Information technology allows operations, strategies and competitive advantages not possible before. l Operational dependency occurs when time, volume or other physical conditions makes IT unique to perform a task. It is related to the organization's EFFICIENCY. l Strategic impact occurs when a policy, strategy or product uniquely requires IT for its implementation. It is related to the organization's EFFECTIVENESS.

Strategic impact

Competitive forces Potential new entrants Strategic business unit Substitute products, services Bargaining power suppliers Bargaining power buyers intraindustry competition

Mass Production from

Mass Customization to

Strategic Advantage Cost Leadership Differentia- tion Innovation Growth Alliance Other Strategies Rivalry of Competitors Threat of New Entrants Threat of Substitutes Bargaining Power of Customers Bargaining Power of Suppliers Competitive Forces Competitive Strategies

Value Chain & Strategic IT Support Processes Administrative Coordination and Support Services Human Resources Management Technology Development Procurement of Resources

Value Chain & Strategic IT Primary Business Processes Inbound Logistics Operations Outbound Logistics Marketing and Sales Customer Service

Value Chain & Strategic IT COMPETITIVE ADVANTAGE SUPPORT PROCESSES PRIMARY BUSINESS PROCESSES Administrative Coordination & Support Services Human Resources Management Technology Development Procurement of Resources Collaborative Workflow Intranet Employee Benefits Intranet Product Development Extranet with Partners E-Commerce Web Portals for Suppliers Inbound Logistics AutomatedJust-in-TimeWarehousing Operations Outbound Logistics Marketing & Sales Customer Service Computer-AidedFlexibleManufactu-ring OnlinePoint-of-Sale And Order Processing TargetMarketing CustomerRelation-shipManage-ment The Value Chain of a Firm

Building Customer Value Build a Web Community of Customers, etc. Customers Check Own History Web Personal- ization Builds Loyalty Employee View of Customer is Complete Customer Database Transaction Database Customer Orders Through Partners Customer Database by Preferences & Profitability Customer Place Orders Directly Customers Linked With Distribution Intranets Internet IntranetsExtranets IntranetsExtranets Internet

Reengineering Business Processes Level of Change Process Change Primary Enabler Time Required Path to Execution Risk Business Improvement Business Reengineering IncrementalRadical Improved New Version of Process Brand New Process HighModerate Information TechnologyStatistical Control Clean SlateExisting Processes Broad, Cross- Functional Narrow, Within Functions Typical Scope Long Short CulturalCultural Structural Participation Bottom-upTop-down Horizon Past and PresentFuture Frequency of Change One-time or Continuous Periodic One-time Change Starting Point

The Virtual Company Interenterprise IS Boundary of a Firm Customer Response and Order- Fulfillment Teams Manufacturing Teams Engineering Teams Cross-Functional Teams Alliance - Complementary Services Alliance - Major Customer Alliance - Major Supplier Alliance - Small Suppliers Alliance - Subcontractors Intranets Extranets

Virtual Company Strategies Share Infrastructure and Risk with Alliance Partners Link Complementary 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