PPTTEST 10/30/ :06 1 IT Ron Williams Business Innovation Through Information Technology IT Portfolio

PPTTEST 10/30/ :06 2 IT Ron Williams You Must Develop an Holistic View of IT Strategy Organization Bus. ORG IT Processes JobsBeliefs Incentives Processes Task Relationship Architecture Business Needs Policies Technology IT Investment Portfolio Technology Hardware Software Information Network “Emerging” IS Management Own Source Manage IS Development SDLC Project Mgn’t Business Technology

PPTTEST 10/30/ :06 3 IT Ron Williams Information Systems Classifications Organizational level supported –Personal –Departmental –Enterprise –Inter-organizational Functional area –Finance –Marketing –Operations ….. Support provided –Transaction processing –Management information –Office automation –Groupware –Decision support Activity supported –Operational –Tactical – Strategic Mode of processing –Batch –Real-time

PPTTEST 10/30/ :06 4 IT Ron Williams So What’s Important Support provided – High level –Transaction processing –Information Management –Infrastructure Functional vs. cross functional systems Organization supported - Enterprise & inter-organizational Knowing why the system is being implemented Returning business value

PPTTEST 10/30/ :06 5 IT Ron Williams Traditional IT Investment Portfolio

PPTTEST 10/30/ :06 6 IT Ron Williams Traditional IT Investment Portfolio Communications Data Base Office Automation Groupware MIS Decision Support Knowledge Mgn’t Processing Business Activities Orders Sales Shipment

PPTTEST 10/30/ :06 7 IT Ron Williams The Evolution Operations Marketing Finance Distribution HR Other Operational Tactical Strategic

PPTTEST 10/30/ :06 8 IT Ron Williams The Stovepipes and Levels Must Go OrderCash Single Enterprise View for Customers Manage & Optimize all Resources Strategic View Empowered Employees & Flatter Organizations

PPTTEST 10/30/ :06 9 IT Ron Williams The Result Enterprise Resource Planning Systems ( ERP) Customer Relationship Management (CRM) & Groupware Knowledge Management

PPTTEST 10/30/ :06 10 IT Ron Williams Enterprise Resource Planning (ERP)

PPTTEST 10/30/ :06 11 IT Ron Williams ERP Implementations – Benefits & Problems Who has done it –60% of multi-national firms had implemented ERP by –General survey - 38% had implemented, 26% were implementing according to CIO survey of 10/07/01 Implementations cost & time –Average cost $15 million (can run as high as 2-3% of revenue) 13 Highest - $300 million Lowest - $400,000 Total cost of ownership for heads-down user - $53,000 –Takes on average 21 months to install with benefits starting to accrue after 31 months 3 –Why so long and cost so much? Simultaneous process redesign of multiple functional areas within the firm Need to adapt processes to the capabilities of the software Median annual savings - $1.6 million 13 Many reported problems –Hershey Foods, Nike, Whirlpool –Agilent Technologies, August 19, 2002 Reports that ERP installation problems cost them $105 million in revenue for the quarter $70 million in operating profit 3. Hitt, Wu, Xiaoge 13. Meta Survey of 63 companies in 1998 reported by Hitt, Wu, Xiaoge and CIO Magazine

PPTTEST 10/30/ :06 12 IT Ron Williams Customer Relationship Management What does it do? –Common view of the customer –Call center management –Sales force automation –Marketing analytics –Marketing campaign management Who has or is implementing 1 –40% of high tech, aerospace, retailing, & utilities (US & Europe) –66% of US telecom –>50% of US financial services, pharmaceutical, & transportations Highly complex installations can cost $100 million and take 3 years Results –35% of respondents said met expectations 2 –20% of US retail banks have raised profitability as a result 3 1.AMR Research IDC Study Mc Kinsey Productivity Study 2001

PPTTEST 10/30/ :06 13 IT Ron Williams Traditional Information Technology Portfolio InformationalStrategicTransactional Infrastructure Leveraging the New Infrastructure, Peter Weil and Marianne Braodbent Cut Costs Increase Throughput 25 to 40% ROA Increase Control Better Information & Integration Improve Quality Increase Innovation Increase Sales Competitive Advantage/Necessity Market Positioning Innovative Services 50% Fail 2-3 Year Lead Time Business Integration Business Flexibility Reduce Marginal Cost of Business Unit IT Reduce IT Costs Standardization

PPTTEST 10/30/ :06 14 IT Ron Williams Expenditure of Average Firm (Around 1998) InformationalStrategicTransactional Infrastructure Leveraging the New Infrastructure, Peter Weil and Marianne Braodbent 16% 14% 12% 58% 4.1% of Revenue 7.7% of Expenses