1. Effective use of IS/IT Dr. V.T. Raja Oregon State University

2. Chapter 13 - Outline Business value added when using IS/IT: –to automate existing business processes –for organizational learning and change in addition to automation –BPR; Competitive Advantage; As a strategic enabler Effect of IS/IT on Competition –Porter’s competitive forces model Value Chain and IS/IT –Internal/External linkages facilitated by IS/IT Strategic Information Systems

3. Class Participation Exercise Examples –IBM Credit Corporation –Retail Store – Diaper Sales –Ford Motor Company –Flower Shop

4. Business Process Reengineering (BPR) BPR - Radical redesign of business process(es): –To achieve dramatic improvements in measures of performance such as quality, cost, speed, and services –To gain competitive advantage or support/change business strategy. IT/IS facilitates BPR –Examples IBM Credit Corporation Ford Flower shop

5. BPR - Characteristics Advantages –Cycle time reduction –Effective communication –Restructuring organization Single point of contact for customer Hierarchical – Flattened – Networked organizations

6. BPR - Characteristics Disadvantages –Laying off employees Voluntary retirement –Retraining employees Retraining costs –Transfer of employees

7. Some Characteristics of a Virtual Organizations An organization composed of several business partners sharing costs and resources for the purpose of producing a product or service Each partner creates a portion of a product or service in an area in which they have special advantage such as expertise or low cost Example: Flower shop and its business partners

8. Example - Virtual Organization (VO) Customer VO - Flower Company Flower Supplier Amex/VISA Master Card FedEx 1. Places Order - Web Sends monthly bill 2. E - validates payment 3. Passes e- order 5. Accepts Order 4. E-acceptance Order 6. Sends pick up info electronically 7. Picks up order 8. Delivers flowers Makes e-payment Makes e-payment Makes e-payment

9. Some Characteristics of a Virtual Organization Excellence - All star winning team Resource Utilization - Competitive advantage Opportunism – Making use of market opportunities Lack of borders - Redefines traditional boundaries Adaptability – to change Trust - Essential between/among business partners Technology - Basic ingredient Resources of business partners remain in their original locations but are integrated via information systems.