Leveraging Information Systems Gaining Competitive Advantage Copyright © 2016 Curt Hill

Introduction What is competitive advantage? –A company has competitive advantage over rival firms when it can do something better, faster, more economically, or uniquely Chapter 2 is about using information systems to accomplish this However, the lessons learned apply also to governments and non-profits –Enterprises not necessarily in competition in the typical sense Copyright © 2016 Curt Hill

Topics This part can be divided into three pieces –Using Information Systems to implement enterprise strategy –Business models enabled by informational strategy –The importance of innovation in the digital world This is the first of three presentations on this topic Copyright © 2016 Curt Hill

Tiers of management Most businesses have three levels of management Executive/Strategic Level –Top Level Management Managerial/Tactical Level –Middle Management Operational Level –Operational Employees, Foremen, Supervisors Copyright © 2016 Curt Hill

Executive Level Long-term strategic business decisions –Time frame is 1 to 10 years, occasionally longer Strategy on how to compete –Such as price versus quality What countries to do business in What markets to pursue This is the Board of Directors, CEO, President and Vice Presidents Copyright © 2016 Curt Hill

Middle Middle is tactical management Focused on managing the organization in order to meet the strategic goals Medium term time frame –3 to 12 months. Typical decisions might include: –Additional store placement –Supplier contracts Copyright © 2016 Curt Hill

Operational Operational employees and management perform the day-to-day work of the organization –Day-by-day decisions Examples include –Workers in a retail store –Assembly line of a manufacturer –Call center Copyright © 2016 Curt Hill

Walmart Example A shift manager would be operational management Store manager could be operational or middle Regional management would be middle Central headquarters at Bentonville, Arkansas may have some middle but all of the executive level is there Copyright © 2016 Curt Hill

Executive Tools Information systems focused on understand the current business environment Decision support tools Forecasting tools Planning tools Performance analysis We will later talk about these and Data Mining and Data Warehouses Copyright © 2016 Curt Hill

Tactical Tools Automate the monitoring of activities Reporting on what has occurred at the operational level Analyze the reports for tactical insight Exercise control more efficiently and effectively Help make semi-structured decisions with better input and resources Copyright © 2016 Curt Hill

Operational Level This is about process automation Automate routine activities and events Payroll, scheduling, product reorder Consider the inventory control of a retail store Copyright © 2016 Curt Hill

Inventory Products arrive –Their bar codes are scanned into the store database Product is purchased –Point of sale terminal notifies database –Number in stock is decremented –Should the number fall below reorder point transaction notifies regional distribution Number of details are saved for future analysis Copyright © 2016 Curt Hill

Tool Overview Copyright © 2016 Curt Hill

A Loan Process ActivityManual Processing (The Old Way) Automated Processing Complete and submit application 1-2 days (at home)15 minutes (online) Check for errors2-3 days (done in batches) < 1 second (done on web server) Enter into systemNo system, paper pushing Part of above process Assess application10-15 days< 1 second (automated) Committee decides if over certain size 10 – 15 days Notification2-5 days1 minute (results are ed) Total time25 – 40 days20 minutes to 15 days Copyright © 2016 Curt Hill

Loan Process Commentary The manual way and fully automated way are extremes There may be many that are in between –Application is typed into a system and some parts processed by a computer Copyright © 2016 Curt Hill

Which of these could be helped by information systems? Copyright © 2016 Curt Hill

Technology and Strategy Never enough resources to implement every possible IT improvement –Organizations should try to maximize business/IT alignment –Match the IT investment to the company’s strategy Focus on improvements and business process management that help their value creation strategy –This will usually yield the greatest competitive benefit Copyright © 2016 Curt Hill

Assessing IT Value Economic Value –Direct financial impact Architectural Value –Extending business capabilities today and in the future Operational Value –Enhancing ability to meet business requirements Regulatory and Compliance Value –Complying with regulatory requirements Copyright © 2016 Curt Hill

Finally Information technology may be used at all levels of the enterprise The goal is to gain competitive advantage –One way is to make the enterprise more efficient We will still need to look at –Business models –Innovation importance Copyright © 2016 Curt Hill