صفحه 1:
Chapter 2
Strategic Uses of
Information Systems
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صفحه 2:
Learning Objectives
* Explain what business strategy and
strategic moves are
* Illustrate how information systems can
give businesses a competitive
advantage
* Identify basic initiatives for gaining a
competitive advantage
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صفحه 3:
Learning Objectives
(Cont.)
٠ Explain what makes an information
system a strategic information system
* Identify fundamental requirements for
developing strategic information
systems
* Explain circumstances and initiatives
that make one SIS succeed and another
fail
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صفحه 4:
Strategy and Strategic
Moves
* Strategy
- A plan designed to help an organization
outperform its competitors
* Strategic Information Systems
- Information systems that help seize
opportunities
- Can be developed from scratch, or they
can evolve from existing ISs
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صفحه 5:
Strategy and Strategic
Moves (Cont.)
- Strategic advantage:
* Using a strategy to maximize strength
- Competitive advantage:
¢The result of the use of a strategic
advantage
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صفحه 6:
Achieving a Competitive
Advantage
* Increase profits through increased
market share
* Innovation results in advantage
- Strategies that no one has tried before
- Example: Dell using the Web to take
customer orders
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صفحه 7:
Achieving a Competitive
Advantage (Cont.)
Eight basi ways to gan compottve advantage
Reduce costs 'A company can gain advantage ican sell more unis ata lower price while
prosiing quality and maintaining oF increasing its profi mexgin.
Fei barriers 10 ’A company can gain advantage i it deters potential entrants ito te market
market entrants enjoying less compettion and more market potential.
high A company ean gain advantage if creates high switching costs, making i اطع
‘switching cost ‘economically infossble for customers to buy from competitor
Creare new products A company can gan advantage it offers a unique product or serve,
Diferentinie products A company/can gain advantage iit can atiract customers by convincing them its
‘or services product dies from the competition's
Enhance products company can gain advantage fs product or service & better than anyone else's
Eeabien aliances ‘Companies fem dtterent duties can help Gach othar gain advantage by وه
combined packages of goods or services at special prices
Leck in suppliers company can gain advantage if can lock in ether suppliers or buyers, making it
or buyers economically impractical for suppliers or buyers to deal with competiors
Bais ۳۳ ,6 هسوسو
صفحه 8:
Achieving a Competitive
Advantage (Cont.)
Fiaune 2.2
Many strategic moves can work together to achieve a competitive advantage.
صفحه 9:
Initiative #1: Reduce Costs
* Lower costs results in lower price
* Bigger Market Share
* Implement automation to become more
productive
- The Web has made this possible for
many
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صفحه 10:
Initiative #2: Raise Barriers
to Market Entrants
* Patenting
* High expense of entering industry
- State Street, Inc. (Pension fund
management business)
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صفحه 11:
Initiative #3: Establish High
Switching Costs
* Explicit Switching Costs
- Fixed and nonrecurring
* Implicit Switching Costs
- Indirect costs in time and money of
adjusting to a new product
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صفحه 12:
Initiative #4: Create New
Products or Services
¢ Lasts only until competition offers an
identical or similar product or service
for a comparable or lower price
¢ First Mover: Creates assets
- Brand Name
- Better Technology
- Delivery Methods
* Critical Mass: body of clients that
attracts other clients
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صفحه 13:
Initiative #5: Differentiate
Products or Services
Product differentiation
* Brand recognition
Examples of brand name success
- Levi's jeans
- Chanel perfumes
- Gap clothes
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صفحه 14:
Initiative #6: Enhance
Products or Services
* Examples
- Auto manufacturers enticing customers
with a longer warranty
- Real estate agents providing useful
financing information to potential
buyers
- Charles Schwab moving stock trading
services on-line before Merrill Lynch
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صفحه 15:
Initiative #7: Establish
Alliances
Combined service may attract
customers
- Lower cost
- Convenience
Examples
- Travel industry
- HP and FedEx
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صفحه 16:
Establishing Alliances
(Cont)
FiauRE 2.9
Strategic alliances combine services to create synergies.
Before Strategic Alliance After
صفحه 17:
Initiative #8: Lock in
Suppliers or Buyers
¢ Bargaining Power
* Purchase volume
* Strengthen perception as a leader
* Create a standard
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صفحه 18:
Strategic Information
Systems (SIS)
¢ An IS that helps achieve long-term
competitive advantage
* SIS embodies two types of ideas:
- Potentially-winning business move
- How to harness IT to implement that move
* Two conditions for SIS:
- Serve an organizational goal
- Work with the managers of the other
functional units
Bato 18 8 ,سس معا سس
صفحه 19:
Creating an SIS
* Top management involvement
- From initial consideration through
development and implementation
* Must be a part of the overall
organizational strategic plan
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صفحه 20:
20
Steps for Considering a
nar CTC
وج
و
+L Wined وان كاماد ea eravowe way oo Galnian advamtane?
2. Would more accessible or timely information to our employees,
customers, or suppliers help establish a significant advantage? If so...
3. Can an information system be developed that provides more
accessible and timely information?
4. Will the development effort be economically justified?
Can existing competitors afford to fund the development of a و
similar system?
+ How long will it take the competitors to build their own, similar system?
‘+ Can we make our system a moving target to the competition by constantly
enhancing it, so that It always retains its superiority?
5. What is the risk of not developing such a system?
6. Are alternative means of achieving the same goals available, and
if so, how do they compare with the advantages and disadvantages of
anew SIS?
Ourenpremt “brent Gymenrm, 8 Bato
صفحه 21:
Steps to Take in an SIS
Idea-Generated Meeting
FIGURE 2.5
‘Steps to take in an SIS idea-generating meeting
step Activity
1 Present potential strategic moves.
2 Brainstorm different strategic moves.
3 Select the most attractive move.
4 Brainstorm ways to support the selected move
5 Evaluate the viability of an SIS to support
the move.
6 List the general functions the SIS will fulfill.
7 List the major features of the SIS.
Bates اك
صفحه 22:
Re-engineering and
Organizational Change
* To implement an SIS and achieve a
competitive advantage, organization
must rethink entire operation
* Goal of re-engineering
- Achieve efficiency leaps of 100% or
higher
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صفحه 23:
Competitive Advantage as
Moving Target
* SISs developed as strategic advantages
quickly become standard business
- Banking industry (ATMs and banking by
phone)
* Continuous search for new ways of utilizing
information technology to their advantage
- SABRE, American Airlines’ reservation
system
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صفحه 24:
JetBlue: A Success Story
* Gained competitive advantage where
others failed
* Proper technology and management
methods
* Reducing costs resulting in reduced pricing
۰ Improving service
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صفحه 25:
JetBlue: A Success Story
(Cont.)
* Massive Automation
- Automation of services with software
* Combination reservation system and
accounting system
¢ Supports customer services and sales
tracking
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صفحه 26:
JetBlue: A Success Story
(Cont.)
* Massive Automation, continued
- Electronic tickets
* No paper handling or expense
¢ Encourages online ticket purchases
¢ Avoids travel agents
* Significant savings in cost
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صفحه 27:
JetBlue: A Success Story
(Cont.)
٠ Massive Automation, continued
- Maintenance information system
* Logs all airplane parts and time cycles
¢ Reduces manual tracking costs
- Flight planning software
¢ Maximize seats occupied on a flight
٠ Reduced planning costs
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صفحه 28:
JetBlue: A Success Story
(Cont.)
* Massive Automation, continued
- Blue Performance
* In-house software for tracking operational
data
* Updated on a flight by flight basis
* Accessible by airline’s 2,800 employees
- Managers are able to respond immediately
to problems
Bato 28 8 ,سس معا سس
صفحه 29:
JetBlue: A Success Story
(Cont.)
¢ Massive Automation, continued
- Wireless devices for employees
* Report and respond to irregular events
* Quick response
¢ Events recorded for future analysis
- Training records stored electronically
* Easy to update
+ Efficient retrieval
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صفحه 30:
JetBlue: A Success Story
(Cont.)
¢ Away from Tradition
- Decision to not use the hub and spoke
routing method
- Paperless Cockpits
- Laptops for Pilots
~- Harnessing IT to maintain a strategic gap
Bato 30 8 ,سس معا سس
صفحه 31:
JetBlue: A Success Story
(Cont.)
۰ Enhanced Service
- Available on all flights and all class tickets
* Live TV through contract with DirecTV
* Leather Seating
* Excellent on-schedule arrivals and
departures
* Fewest mishandled bags
* Rapid check-in time
* Security upgrades
Bato 31 8 ,سس معا سس
صفحه 32:
JetBlue: A Success Story
(Cont.)
* Impressive Performance
- Maintains excellent statistics
۰ 7 cent cost per available seat-mile (CASM)
* 78% of seats are filled
¢ Late Mover Advantage
* New Technology vs. legacy systems
Bato 32 8 ,سس معا سس
صفحه 33:
Ford on the Web: A Failure
Story
¢ The Ideas
- Wingcast telematics
* Technology in vehicles to enable Web access
- Business to Business: Covisint
¢ Joint venture with General Motors and
DaimelerChrysler
¢ Electronic market for parts suppliers
* Vendor bidding for proposals from
automakers
Bato 33 8 ,سس معا سس
صفحه 34:
Ford on the Web: A Failure
Story (Cont.)
٠ The Ideas (cont.)
- Business to Consumer: FordDirect.com
* Sell vehicles direct to consumers via the Web
* Bypass dealerships
* Provide service while saving dealer fees
* ConsumerConnect
- Special unit to build Web site and handle
direct sales
Bato 34 8 ,سس معا سس
صفحه 35:
Ford on the Web: A Failure
Story (Cont.)
* Hitting the Wall
- Wingcast: Failed
¢ Buyers not interested
* Product eliminated in June 2001
- Covisint: Successful
* Now includes more automakers
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صفحه 36:
Ford on the Web: A Failure
Story (Cont.)
* Hitting the Wall
- FordDirect.com: Failed
* Not a result of faulty technology
¢ Ford failed to consider state laws and
dealership relationships
¢ Dealership relationship was still needed
for purchases not on the Web
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صفحه 37:
Ford on the Web: A Failure
Story (Cont.)
¢ The Retreat
- ConsumerConnect disbanded
- FordDirect.com used by dealerships now
* Sells used cars
- Price tag for failure: $1 billion
- FordDirect.com today results in 10,000
sales transactions a month
Bato 37 8 ,سس معا سس
صفحه 38:
Success and Failure on
the Web
* Being first is not enough for success
* Business ideas must be sound
- An organization must carefully define what
buyers want
- Establishing a recognizable brand name is
important but does not guarantee success;
satisfying needs is more important
Bato 38 8 ,سس معا سس
صفحه 39:
The Bleeding Edge
* Business owners must develop new features
to keep the system on the leading edge
* Adopting a new technology involves great
risk
~ No experience from which to learn
- No guarantee new technology will work or
customers and employees will welcome it
Bato 39 8 ,سس معا سس
صفحه 40:
The Bleeding Edge (Cont.)
* The bleeding edge: failure in an
organization’s effort to be on the
technological leading edge
٠ Allow competitors to assume the risk
~ Risk losing initial rewards
- Can quickly adopt and even improve
pioneer organization’s successful
technology
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صفحه 41:
41
Summary
* Business strategy and strategic moves
can give an organization an advantage
* Basic initiatives for gaining a
competitive advantage
* Strategic information systems require
fundamental elements
* Circumstances and initiatives that
make one SIS succeed and another fail
ططخ + سامت مسح Dusanpremt