1. Effective use of IS/IT (Continued) Strategic Role of Information Systems Dr. V.T. Raja Oregon State University

2. 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 –What is SIS? –Why would some top executives hesitate to invest in SIS or IS/IT in general? –Suggestions to convince top management to invest in SIS or IS/IT?

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

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 that facilitate gaining competitive advantage or enhancing/changing business strategy. IT/IS facilitates BPR –Examples IBM Credit Corporation Ford

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 Company

8. Example - Virtual Organization (VO) Customer VO - Flower Company Flower Supplier Amex 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.

10. Strategic Information Systems (SIS) What is SIS? Why would some top executives hesitate to invest in SIS or IS/IT in general? Suggestions to convince top management to invest in SIS or IS/IT? Examples of risks associated with SIS