1. MASTER OF MANAGEMENT PROGRAM MM46 PPM GRADUATE SCHOOL OF MANAGEMENT January 09, 2010 LECTURER : HENRY CHRISTIANTO., ST., MTI

2. DOES IT MATTER ? INDICATOR OF SUCCESS IT BUSINESS VALUE IT IMPACT ON COMPETITION CASE STUDY ON IT EVALUATION

3.  NICHOLAS CARR: IT DOESN’T MATTER (Spring, 2003) 1st PREMISE IN THE PAST -> IT WERE DEVELOPED IN-HOUSE - COST EXPENSIVE - LONG TIME DEVELOPMENT NOW -> IT APPLICATION DEVELOPED IN MANY WAYS: - BUILD - BUY IT BECOME PROPRIETARY ADVANTAGE - RENT COMMON TECHNOLOGY IT BECOME COMMODITY

4. 2nd PREMISE INVESTMENT NOT DELIVERS THE EXPECTED RETURN IT BECOME COMMODITY EXECUTIVE MAY SINK MONEY INTO RISKY INVESTMENT IN INFRASTRUCTURE EXECUTIVE MAY SINK MONEY INTO RISKY INVESTMENT IN INFRASTRUCTURE

5. 3rd PREMISE WIDESPREAD ADOPTION OF INTERNET-BASED TECHNOLOGY STANDARD WIDESPREAD ADOPTION OF INTERNET-BASED TECHNOLOGY STANDARD DRAMATIC INCREASE IN NETWORK SPEED AND CAPACITY DRAMATIC INCREASE IN NETWORK SPEED AND CAPACITY TENDENCY TO DEVELOP APPLICATION THAT CROSS FIRM BOUNDARIES TENDENCY TO DEVELOP APPLICATION THAT CROSS FIRM BOUNDARIES  NEW VALUE –CREATING IT APPLICATIONS ARE QUICKLY COMMODITIZED  DECREASE ENTRY BARRIERS  LOWER SWITCHING COST THE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSES BEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITED THE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSES BEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITED

6.  SO, CARR CONCLUDE: 1.SPEND AS A LITTLE AS POSSIBLE ON IT 2.CONCENTRATE IT INVESTMENT ON DRIVING COST SAVINGS 3.BE A FAST FOLLOWER 4.FOCUS ON MANAGING RISK RATHER THAN SEARCHING FOR IT OPPORTUNITIES 1.SPEND AS A LITTLE AS POSSIBLE ON IT 2.CONCENTRATE IT INVESTMENT ON DRIVING COST SAVINGS 3.BE A FAST FOLLOWER 4.FOCUS ON MANAGING RISK RATHER THAN SEARCHING FOR IT OPPORTUNITIES WHAT DO YOU THINK ?

7. lliminate implify ntegrated utomated CREATENEWOPPORTUNITY CREATE NEW BUSINESSMODEL EFFICIENCYANDEFFECTIVENESS

8. BUSINESS STRATEGY IS/IT STRATEGY ALIGNMENT RESPONSIBILITIES ? INFLUENCE

9. CAN IT DRIVE COST SAVING ?  Streamline and Integrated nonrevenue-generating process (e.g., payroll, HR, ERP, accounting and finance).  EXAMPLES  Improve productivity, cycle time and effectiveness of nonrevenue-generating process  SAMPLE METRICS  Improve performance of nonrevenue-generating process  Decrease cost of current business operations

10. CAN IT DRIVE REVENUE GROWTH ?  Improve new product development process to increase speed to market and efectiveness of new product launches.  EXAMPLES  Improve productivity, cycle time and effectiveness of revenue-generating process  SAMPLE METRICS  Improve performance of revenue-generating employees  Quantity value of improved decision making  Improve revenue-generating process to increase customer satisfaction, loyalty, lifetime value, and demand  Provide relevant, actionable information and analytical tools to business decision makers  Improve market segmentation and personalization to expand market penetration  Enter new markets or increase market spending from existing customer  Launch new information-based products, services, and solutions  etc

11. CAN IT DRIVE ASSET EFFICIENCY  Create shared services, self-service portals, and center of excellence.  EXAMPLES  Decrease total cost of ownership of current infrastructure and operations  SAMPLE METRICS  Improve asset efficiency (dollars of sales generated by each dollar of IT asset)  Decrease IT infrastructure and operations cost as a percentage of revenues  Outsource and offshore to take advantage of low-cost labor markets and scarce expertise  Build a modular, flexible, open source IT Architecture  Attract, develop, and retain top IT Talent  Create IT development, deployment, and operating process that decrease the cost, time and effort needed to launch new value-creating IT application  Develop best-in-class security and risk management system  Decrease IT Headcount cost as percentage of sales

12. CAN IT CREATE SUSTAINABLE ADVANTAGE  Differentiate product (e.g., Information Value-Added, improve ability to compete on price  EXAMPLES  Increase market share  SAMPLE METRICS  Increase brand reputation and awareness  Increase market value  Launc new IT-enabled products or businessess in high-growth markets and industries  Increase barriers to entry or switching costs  Decrease the time, cost, and success of pursuing incremental and radical innovations  Increase success of innovation process

13. IT DRIVE COST SAVINGSIT DRIVE REVENUE GROWTHIT DRIVE ASSET EFFICIENCY CAPITAL EFFICIENT PROFITABLE GROWTH CREATE SUSTAINABLE ADVANTAGE

14. Threats of New Entrants Rivalry among Exsisting competitors Threats of Subtitute Products Or Services Bargaining Power of suppliers Bargaining Power of buyers

16. SEE APPENDIX 4A ON PAGE 120

17. “The scarce resource never was technology, it always the set of managerial capabilities needed to create value with that technology” (Prof. Vijay Gurbaxani)