1. Will send team presentation feedback sometime this weekend
Summary of last week
Will send team presentation feedback sometime this weekend

2. Update on Alibris
Interloc was simple listing service for hard-to-find books
Profitable
Sustainable?

3. Alibris 2000 Switched from Oracle to Thunderstone New Revenue Model
Smaller company specializing in huge text databases
eCommerce site went live in Fall 98
New Revenue Model
Percentage of purchase price for all books sold vs dealer listing fees
Secured bridge loan
Investor’s terms too harsh

4. Alibris 2000 – cont’d Expanded Sparks facility
Centralized inventory
Both owned (physical) and consignment (virtual)
Created a “catalog and pricing engine”
Provides current market information to book dealers and customers
Use knowledge gained selling “virtual” inventory to buy books at attractive margins

5. Oct, 1998 What was status of economy?
Dow Jones at 8500
What was major IT issue for firms?
“Putting Enterprise into Enterprise System”
What was major message from Davenport?

6. Putting Enterprise into Enterprise System Major Message
Why do ERP projects fail?
Require significant money, time and expertise
Force firms to do business in ways that conflict with their best interest
If used by all companies in industry, erasing sources of differentiation and competitive advantage
How to prevent failure?
Clarify strategic and organizational needs and business implications of integration.
Change organizational structures to address information-flow problems
Create competitive advantage with your enterprise system
Put right people in place
Install system gradually

7. Putting Enterprise into Enterprise System Major Message – cont’d
“If the development of an enterprise system is not carefully controlled by management, management may soon find itself under control of the system.”
The most successful ERP deployments involved companies that viewed them in strategic terms.
“ They stressed the enterprise, not the system.”
Main reason for “failures” is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise.
“The logic of the system may conflict with the logic of the business.

8. Mar, 2001 What was going on in the economy?
All time high of 11,723 in Jan 2000
Hovering above 11,000 in early 2001
What were the major IT issues?
“Strategy and the Internet”
What was Porter’s major message?

9. Strategy and the Internet (Porter)
We need to “…see the internet for what it is: an enabling technology…” (pg 64)
The “…greatest impact [of the internet] has been to enable the reconfiguration of existing industries that had been constrained by high costs for communicating, gathering information, or accomplishing transactions.” (pg 66)
“The great paradox of the Internet is that its [benefits] also make it more difficult for companies to capture those benefits as profits.” (pg 66)

11. Principles for Internet Strategy (Porter) Strategic Positioning
Start with the right goal
Deliver a unique value proposition
Develop a distinctive value chain
Make trade-offs for robust strategy
Fit all elements of company to the strategy
Maintain continuity of direction

12. Nov, 2002 What was going on in the economy?
On Oct 9th, 2002, Dow Jones falls to close at 7,   The market has declined 4,436.71, or 38%, since January 14, 2000
By Oct 21, closed above 8,500
What were the major IT issues?
“Six IT Decisions Your IT People Shouldn’t Make”
What was major message?

13. Six IT Decisions Major Message
IT departments should not make choices that determine the impact of IT on business strategy.
Senior executives failed to realize that adopting the enterprise systems posed a business challenge
Consequentially, did not take responsibility for the organizational and business process changes the systems required.
Determine the strategic role that IT will play, and then establish company-wide funding level that will enable technology to fulfill the objective.

14. May, 2003 What was going on in the economy?
On Jun 4th, closes above 9,000
What were the major IT issues?
“IT Doesn’t Matter”
What was major message?

15. IT Doesn’t Matter Major Message
IT has lost its strategic value.
Businesses should manage IT as a commodity.
But -- partial standardization does not wipe out opportunities for gaining competitive advantage.
Firms using identical IT and spending comparable amounts on IT display enormous variability in profits.
IT is diminishing as a source of strategic differentiation.
But – creates possibilities and options that did not exist before
IT functions will be homogenized, and proprietary applications are therefore doomed.
As corporations adopt generic applications, business processes become uniform and without competitive advantage

16. Oct, 2003 What was going on in the economy?
Sep 2nd, closes above 9500
Closes above 10,000 on Dec 11th
What were the major IT issues?
“The Real New Economy”
What was major message?

17. The Real New Economy Major Message
New economy did not spring from internet
Rather from intensifying business competition
Explains productivity growth in six sectors.
Associated with dismantling of regulatory constraints
Managers needed to cut costs and increase value to buyers.
In industries with complex operating processes, heavy transaction loads, and technically sophisticated products, IT was powerful tool:
Enabled development of new products and business processes
Facilitated industry-wide diffusion of new innovations
To retain an edge, companies must couple diffusing technologies with other distinctive capabilities and processes
Strong scale economies

18. The Real New Economy Major Message
Three practices distinguished companies who were successful in IT investments
Targeted investment at productivity levers that matter
Paid attention to sequencing and timing of investment
Example of companies that invest in CRM before they had consistent and reliable repositories of customer data
Should only rush investments when it is clear that technology will advance business goals, enable true innovation, and is resistant to imitation
Pursued managerial and technological innovations in tandem
Managerial practices must adapt to technological innovations

19. Feb & Apr, 2004 What is going on in the economy?
What are the major IT issues?
Two articles
“Getting IT Right”
“Saving IT’s Soul: Human-Centered Information Management”

20. Getting IT Right Major Message
IT can work if you focus on process
Presume that IT is a commodity – what should you do?
Start with business strategy
Develop common underlying infrastructure
Develop support staff that ensures infrastructure enables business strategy

21. Saving IT’s Soul Major Message
Railroad Paradox – by Gerald Weinberg
Focus on how people use information
Managers get 2/3 of information from non-computer based data
Strategic data plans focus on information found in computer
Global data only results when shared understanding is reached
Need information maps and guides to deal with information particularism
Changing an IT system will not change the information culture

22. Insights
Extracting value from IT requires innovations in business practice
IT Spending rarely correlates with superior financial results.
Too many business insert IT without changing business practices.

23. Insights – cont’d
Strategic Impact comes from cumulative effect of sustained initiatives to innovate business practices.
Wal-Mart led innovations. As competitors adopted practices, Wal-Mart continued to innovate – maintained productivity advantage.
Opportunities for innovation continue because advances in IT create possibilities not previously economically available
Opportunity for business practice innovations extend beyond the walls of the enterprise to include relationships with other companies
Differentiation is not a result of IT – but the new practices IT enables

24. Insights – cont’d
Big-bang IT-driven initiatives rarely produce expected returns.
Successful projects proceed in waves of short-term (6-12 months) operating initiatives designed to test and refine specific innovations in practices.
Ties initiative to explicit operating performance metrics – focus on tangible near-term returns

25. Insights – cont’d
Need to look at IT use through several different lenses
Efficiency: Improve cost savings and efficiencies
Effectiveness & Efficacy: Incremental improvements in products, services, organizational structure
Enabling: Creation of strategic advantage through extending competitive scope, partnerships, changing rules of competition, provision of new IT-based services.

26. Insights Maybe the dinosaur had a valid point!
Strategic Positioning
Start with the right goal
Deliver a unique value proposition
Develop a distinctive value chain configuration
Make trade-offs for robust strategy
Fit all elements of company to the strategy
Maintain continuity of direction

27. Insights – cont’d
Must align business and IT strategies

28. Observed characteristics of well-aligned companies (from Deloitte Survey)
Executive agreement on the role of IT – where and how IT adds value
Executive agreement on the priorities and focus areas for IT
Follow through and delivery on IT expectations

29. 2004 Survey by Deloitte Consulting LLP (Advertising Supplement in CIO Magazine)

30. Strategic Alignment Model
4 Domains of Strategic Choice
Business Strategy Scope Competencies Governance
IT Strategy Scope Competencies Governance
Organizational Infrastructure Structure Processes Skills
IT Infrastructure Architecture Processes Skills

31. Strategic Alignment Model
IT Infrastructure defined by business processes: Business structure and IT Strategy are not aligned
Business Strategy Scope Competencies Governance
IT Strategy Scope Competencies Governance
Organizational Infrastructure Structure Processes Skills
IT Infrastructure Architecture Processes Skills
IT is not strategic

32. Strategic Alignment Model
Business strategy drives IT
Business Strategy Scope Competencies Governance
IT Strategy Scope Competencies Governance
Organizational Infrastructure Structure Processes Skills
IT Infrastructure Architecture Processes Skills
IT is not integrated with business operations

33. Strategic Alignment Model
Information is a core product or service
Business Strategy Scope Competencies Governance
IT Strategy Scope Competencies Governance
Organizational Infrastructure Structure Processes Skills
IT Infrastructure Architecture Processes Skills
IT enables enterprise wide business processes

34. Strategic Alignment Model
IT enables new strategic opportunities
Business Strategy Scope Competencies Governance
IT Strategy Scope Competencies Governance
Organizational Infrastructure Structure Processes Skills
IT Infrastructure Architecture Processes Skills

35. Strategic Alignment Model
Alignment is a dynamic and evolving process
Business Strategy Scope Competencies Governance
IT Strategy Scope Competencies Governance
Organizational Infrastructure Structure Processes Skills
IT Infrastructure Architecture Processes Skills