1. Ch. 07 Strategic Information Systems (SIS) Rev 2: Apr., 2015 Prof. Euiho Suh POSTECH Strategic Management of Information and Technology Laboratory (POSMIT: http://posmit.postech.ac.kr) Dept. of Industrial & Management Engineering POSTECH

2. 2 Strategy Tree (1/2) Information (IT, IS) Automation Innovation ■Use of Information ■Automation ■Strategic Use of Information Automation Work Automation Manufacturing Automation Strategic Information System(SIS) Non-strategic Information System (NSIS) Strategic Use of Information (IT, IS) Success Failure 2. Strategic Information System 1) Introduction

3. 3 Strategy Tree (2/2) Strategic Management (SM) Non-strategic Management (NSM) Strategic Management Success Failure ■Strategic Management ■Information Strategy Tree Information Automation Innovation Work Automation Manufacturing Automation NSIS SIS SM NSM 2. Strategic Information System 1) Introduction

4. 4 SIS ■How can you define SM in terms of P5FCM ? How can you define SIS in terms of P5CFM ? How can you define SIS in terms of VC ?

5. 5 Evaluation on an IS (Reversely, factors in designing an IS) ■When you evaluate an IS… 1.Type of IS ? 2.Process automation or innovation ? 3.If automation, then, work or manufacturing ? 4.If innovation, which Hammer’s principle is applied ? 5.Is it an SIS or not ? 6.If SIS, which competing forces in P5FCM to be affected ? 7.If SIS, which activities in VC to be reinforced ?.

6. 6 Information Technology Strategy Case (1/10) ■Marriott Hotel Saving and managing VIP customers’ information Allowing customers to check in and check out without going to the front desk Usually business people or young couple mind to check in and check out at the hotel front desk Problem “Customer Relationship Management (CRM)”

7. 7 Information Technology Strategy Case (2/10) ■Asiana Airlines Risk of loss Higher likelihood of terrorist attacks Difficulties in tracking and managing baggage RFID: Radio Frequency Identification Automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags or transponders RFID-enabled air baggage tracking and control system

8. 8 Information Technology Strategy Case (3/10) ■G-market Problems E-security Weak payment system Certificate user by ID/password Reliability of transaction Deception of trade Weak warranty of the products quality Solution SSL complementary system (SSL: Secure Sockets Layer) Escrow service Escrow service of G-market CustomerG-marketSeller 1. Purchase/Payment2. Delivery Request 3. Sending Product 5. Transferring Payment 4. Receipt Comfirmation

9. 9 Information Technology Strategy Case (4/10) ■Shinhan Bank Problem Characteristics of Financial Product Intangibility Geographical dispersion Balancing growth with risk Lack of Special Identity Individual Marketing System Inseparability SRMS (2000) Catching Symptom of Customer Secession Scheduling for Salespeople Customized Portfolio Back-end Office System Middle Office System Front Office System Data Collecting and Auditing Mining DB Analysis CRM Mart CRM DB Internal Data External Data Visualized Answer tool Visualized Campaign Evaluating tool Visualized Campaign Design tool Data Mining System OLAP System Campaign Management System Call Center Branch Internet Banking & Tele-Banking CD / ATM Tele- marketer DMI Customers Customer Information Campaign Information Sampling Transformation Transmission “Customer Relationship Management (CRM)”

10. 10 Information Technology Strategy Case (5/10) ■Korail KOVIS PM (Plant Management) SEM (Strategic Enterprise management) AM (Asset Management) CM (Cost Management) FA (Financial Accounting) MA (Management Accounting) MM (Materials Management) ESS (Employee Self Service) Problems Symbol of “Red Tape” Criticism towards the bureaucracy of Korail Opening of KTX, less competitive compared to vehicle transportation Increase in deficit, bad management index “Enterprise Resource Planning (ERP)”

11. 11 Information Technology Strategy Case (6/10) ■HANSSEM Clicks and Bricks To separate on-line business and off-line business To running their own e-commerce site, “HANSSEM mall” To sell on-line only product, “SAM” To expand types of channels to meet customers Problems Economic depression in Korea Construction industry with problems Appearance of new multinational competitors such as IKEA Decrease of the number of marriages that could be potential customers Low price competition through home shopping “E-commerce”

12. 12 Information Technology Strategy Case (7/10) ■SK Energy Communities of Practice (CoP) Seoul Logistics Support Team: Set in the rear in order to prevent shipping excess Seoul oil pipeline team: set in the rear in order to prevent error from occurring due to uneven flow, bubble formation Ulsan refinery production team: set in the rear in order to prevent error from occurring due to uneven flow, bubble formation Ulsan Operations: If certain conditions are met, it makes no difference Problems Busan Logistics center: Set stop valve frontal/rear due to crowded space With the help of KM system (people of diverse backgrounds, geographies) it is concluded that setting up in the rear area is the better way to go

13. 13 Information Technology Strategy Case (8/10) ■Hyundai Capital Multidimensional OLAP (MOLAP) Approach to enable end-users to interactively analyze multidimensional data from multiple perspectives for their decision making Problems High risk in capital business Business cycle frequency is reducing and volatility is increasing Capital company has to predict the risk factors and control them  Prediction is important, but the more important point is accuracy and risk considering “OLAP” MOLAP of Hyundai Capital Result Easily analyze risk factors without additional education Manage risk by using visual aids such as screen Identify the progress from the present to the future Increase the work efficiency

14. 14 Information Technology Strategy Case (9/10) ■jetBlue Airways Problems American low-cost airline Wanted feedback by customer - Too large customers to handle with traditional and low-cost CRM solution - Need to make new competitive advantage against major airlines Solution sCRM - Social CRM(sCRM) is a philosophy and business strategy designed to engage the customer in a mutually beneficial relationship - It’s supported by social technology, business rules, workflow and processes Set up Twitter account in spring of 2007 Monitoring duties became more intensive In 2009 spring, team was organized Make Twitter more conveniently and directly Process Example customer's complaint jetBlue’s answer on customer's complaint + real actions to solve it

15. 15 Greening the data center Information Technology Strategy Case (10/10) ■Google Problems High power consumption for IT devices and data centers Searching on the internet generates carbon dioxide  Cause the global warming 2.26 billion 1.46 million ※ Unit: metric tons Add new CRAC controller Use Free-cooling by evaporation Use thermal modeling with Computer Room Air Conditioner (CRAC) “Green IT” Sustainable Buildings Eliminating pollutants through Google’s Healthy Materials Program Pursuing design and operational strategies that reduce energy and water use

16. 16 Note ■MIT PPT material (SIS) –http://ocw.mit.edu/courses/sloan-school-of-management/15-565j-integrating-esystems-global- information-systems-spring-2002/lecture-notes/lecture02.pdfhttp://ocw.mit.edu/courses/sloan-school-of-management/15-565j-integrating-esystems-global- information-systems-spring-2002/lecture-notes/lecture02.pdf

17. 17 Reference ■O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 1O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 1 ■O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 2O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 2 ■Euiho Suh, “Information & Management (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)Euiho Suh, “Information & Management (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory) ■Euiho Suh, “Role of Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)Euiho Suh, “Role of Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory) ■Euiho Suh, “Strategic Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)Euiho Suh, “Strategic Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)