Strategic Uses of IT

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Strategic Uses of IT 

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© Strategic Use of IT in Business © Emerging Network * Business Models 

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| What is Stra tegic Use? © ‏و مه ام رجا رتاو و رورورا‎ yout roe, industry, wed revedue 2 ODiizicy the Iotercet to portant busivess bevawe the ‏اه‎ use bE IT 8 Osiegy VT to yor 0 susticed powpetiive odvootage it busicess 2 Ouhe distoction io busicess 

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| Utilizing the Internet ® Ose vf the Totercet kus dhewdy set oPP ‏شام وه‎ bustess © Dke quesiives thot newura ue! 9 es the revohiiog eoded, ‏عت‎ ‎9 Opes oo eved harger ‏را قاس‎ 2 Opes VP stl water?, ord a اون متسه و او ‎Okat sorts oF‏ 

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| Strategic Use of Information Systems مه ول ۶ اه ‎and‏ ور لو لوصو ۵ " ,©" = ۵ ‏مرو‎ he Pirw's products ond rekticeships wil ‏هه‎ ‎۰۰0 ۳ جبصهم ووصمصحا جنا عانب وا لو ور و مرو ۵ Working Business-to- Outward Customer Working Inward Business-to- Employee Business-to- Business. Working Across 

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| History of Strategic Uses of IT (1) ۲ ):( 02: ‏ابص وود لور‎ ۲ ٩ ‏شمه وی‎ dept. to kelp exoplopers ‏اه میا‎ Cs ced ‏سنجمه روصت و‎ ۲ ‏وی :196092 عورا‎ IP ۲ ‏وه من‎ 9 ey. Oeil Lyack cask woot worngewed, OO virtue ticket bookicry 

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| History of Strategic Uses of IT (2) = (990s: reruyueeriay busiiess processes 9 Doral nedesiqa how the euterprise pperaed ۲ ‏ملس‎ oP ERP ۲ Ont-d990Os: Toterce!s poteutal berowien evidedt 9 De techusloyy wus wosty used intercaly! iiroets 

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| History of Strategic Uses of IT (3) ® ‏عورا‎ 990: e-busicess uoderwopy 9° Qurstiog oP the dot cow bubble 0 ‏مرجم‎ DP the Votercet toto how ‏وب مومس‎ kas procerded s Carp SOOOs: ewphusis va workiay ares 9 feveragicg trodiicca pperdives by usiey the ‏واه‎ to work wore dosely with vers © Lichtey to supphers, pustowers und vier portoers ta voe's vote chute or bustuess eoospstew 9 Gtike back oP Brick-cerd-Dortar- 

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| History of Strategic Uses of IT (4) ®= Ont COOOs: sowethiay hos chooged 9 ey used stroteyicaly: * dawad = Outward ۲ Oss 2 Gower st quesiivoiay VP's ubiliy to ove cowpodies a vow petiive edye bu itis ubsvlutely wevessury Por ‏رنه‎ pari. 

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| Whither the Internet Revolution? (1) © riick Ruitvoy Revolaiod — the wood stated it (990s ud expericuved ‏وه‎ crush in (ORS ۵ 40 ۳9 reuse in (OO, OS pears Per the crash © Qunky brow, qed exctewedt ond sal companies Pourshed © ORer oresh, ‏امه سوه مها هط رو و‎ Pull hard works © dedusiry bear orderly ocd proPis beqea to reAeot ned retures 0 4avestoed Preczy Por poceeviiod ‏و اوه‎ Por 0 

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| Whither the Internet ‎Revolution? (2)‏ ‎wise ek;‏ سطس د ب لجر ام باه و1 2 سوه امه شش توس بو تم ‎where‏ لحم و تیوه و ‎Oe‏ 3 ‎thewselves orcued Tetercet techurlogies:‏ ‎wy hey oe‏ ماه لا مب ‎Pearce‏ © ‎® Red yates wil cowe wheo Totercet techoloyy adapts tv pepreizaives cod pevple 9 Oke the tevkuwloy dsuppeors und bevowes port oP iP 2 iil be ‘quiet! powpared to Precay oP 'OO/OO but way thick it wil ‏امه مت و سا‎ ‎ ‎ 

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|The Cheap Revolution ©) De vost of dots processing, storage ocd traasport has dropped ‏راما‎ 2 $POO per 2۳1۳۵ ۰ 19260 > 580 ‏چم‎ 010۵ ۰ 19695 3 5 010۵ ۰ 1996 2 1008/60 ۰ 999 3 6600,00608/606 ۰ 990 < ۰9 = "Ohew Teck" 9 Boode: nee ‏یط 100,۱0 مه‎ servers © "DetPivatics" 2) Opved Prow selien POs to dev selicg servers, printers, storage devices © "Dke ‏"وماك اص ان‎ ts oocurtey ebewhere! 3 ‏وج كيجت عجكات صا كماو فوطنج - عوباور|‎ 2 GpPwore — Lieu Os. Diervenht 3 Deter unicdiogs — Ovice-pver~KP 

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| Does IT Still Matter? (1) = "1D Ovess't Dotter" — article by Dickols Curr it Woved Ousivess Review Day 209 ® Oko wohkes u resource nly stroesic is ot ubiguity but ‏ایو‎ ‎۲ ‏امه مطامم و عو)‎ power ord ubiquiy hove wows, ite strateyio inpportcare kus divicished. 2 Beta ww watoble ood oPPorduble to ol, WP as evolved Prow poteuidhy strueyic resvurves fav poseodiy Pastors oF produviion. 

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| Does IT Still Matter? (2) ۴ (Proprietary huployies OCS. icProstcuctura tevhuvloyies 9° ‏واه رو‎ ۶ ‏مره طارجنه ه نوا لین با ون‎ © @ovedatio Por bropterse steateyio odverctage 9 4ePRrastructucd teckalogy © es wore volve wheo shore thoa used te isvlativa, the raha, telegraphs bce ® Gutk tevkoolyy coo creute u strategic odvaotage Por oa iecdivicdual Pirxy ot the beqicaicg oF its buidout whe if is expeosive ond risky 

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| Does IT Still Matter? (3) ۶ 1۳ ‏موه اه مه و‎ techovlowy, like ruil, Blevirivity, telephour etc. 29D, above di, ts 0 trocspont ‏موی‎ ‎2919 is ight) replicable 99D is subjent to rapid price dePlativd "9D bubdout is wow suck closer te its ead there its 5g 999 is weiter proprietary vr expewsive 

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| Does IT Still Matter? (4) 8 whkeo 0 rescue bevowes esserutd ‏صا‎ cowpe tition but aoousequectal to stroteup, the risks it mercer bevowe wore ‏ما سوت‎ the ‏ذا وله‎ provides 2۲ ‏واه ری‎ 9 Ooeewed oP VP shoud ww Poss wore va risks وعشلد وه من ما ماه ون ‎ued‏ ‏۱ OD Garter of ‏را موجه ۲۳ و‎ show thot ore ‏او وه وا انوا راو مور‎ remus. Ia Poot, he opposite vend he 

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| Assignment © Onte a review va IP Ovesat Dater. 

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@ introduction © stage usec Busi © Emerging Network * Business Models 

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| Working Inward: Business-to- mpl Employee ‏ا ا‎ ‎busivess provesses‏ مرو ۵ اوه رو ور امه بطلان) ۲۳ ‎that use Teerant teckorlodies‏ موه رو مر و وم« سا سا سا راون له ,ام لت ‎ ‎ 

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| VPN Intranet 

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| Benefits of Using Intranets © Oter avess to powpoop ‏ماما‎ ‎® 4otroce!s pew spstesw urchitertune siqaPicccty 5 ‏ف ل‎ 9 Operspstew urchitevture OG. proprietary uetworks © Whe tok to the Votercet ulows powpusies to expand 1" Onowser ioterPace Por web ‏رام موه‎ ‏اه را لول‎ 

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| Fostering a Sense of Belonging 8 detrocets ure evolving ico Very inpportoat ‏وماج واه‎ structures 9 4a sowe euerprises, the itrocet is sero us the euterprise © (ters Pons, rules ond processes ۰ Cua dsv be sero us ool ond iopersoodd 9 Crectioy 0 seuse oP belay موه ره له رم موی ‎Grieg 0 wees oP‏ © = Cor of ewpbpers 

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| Working Outward: Business-to- Customer ® 4a wost iohueties ‏وم‎ eed suphisticated ۲7۳۲7۳۳/۳۲ 5/۱۳۶ ۳ 7 ۲ ‏عصاته جا له مرو ارو و‎ ۲ ‏مرصط لمات وا اوه له ری طسو لممممين‎ ۲ ‏و و ماه له بطلما رعطو)‎ 2 OWG Os iodustry leaders iuoreuse the svphisticaiod oF their عم صا داورو ۲ Oowpetiiors wust do the save or Pied thesoselves oto ‏عع ددم لوطل‎ 

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| Jumping to a New Experience Curve (1) © Gtroteyicdly usta VT to work putvard is hich 9 Deckwlow updates voour Prequediy, Porciey a set of ‏عرص مهو موسر‎ 9 Guck cove represeds ‏هد‎ uew tevkuloyy or ‏اوه‎ ‎there? itu product or service us well us ic its ‏او هجو‎ و ‎requires substoctidl vested‏ عرص تیوه و ‎Dovey to‏ 2 مامتها زره 

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| Jumping to a New Experience Curve (2) . Dke prioviple oP the expeneuse curve is that wornye wed should oot hove tov wouok evwotivcl tockwedl to the pounce expeneure curve urd Pui to see the vex vor © OaPrave woowPucturers iqeored wiviooeputer Pires ® Dke wicicowputer Pires ignored (PO wonPurturers: (OiervevP\) © Dtervsc?! ignored the Iotercet 

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| Case Example: the Shipping بط دحام م[ Point-to-point Trucking Less Than Truckload وا ديلا ‎Package Sorting‏ 255 ‎Delivery Expedited Delivery‏ ee FedEx Industry Overnight Airport Delivery Information Tracking Distribution Network ‘Advanced Logistics Inventory Facilities Global Reach urs | oe Facilties Strategic Choices: Supremacy, Supply Chain Management Time ites Source: Based on Kenneth Primozic, Edward Primozie, and Joe Leben, Survival, or Sayonara (New York: McGraw-Hill, 1991). 

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| The Emergence of "Electronic Tenders" © ‏رات‎ 1۳ hos bee exbedded it products ond services Por its poxpputaiocal capabilities: Oly. iors od elevators to woke thes pperate ‏رای سس‎ ۱ ‏مب‎ vod exobedded systews www low 9 @otectadl uses are coders ced we are just uf the beytcratery ۲ ‏مه مرن‎ codes but the youl is stil to yet closer to the 0 

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| Getting Closer to Customers (1) "= @SC e-business is the wost widely reported Porsn ‏سج اه‎ busivess. 9 Ora) every type oP product cos wow be purckused vale! books, COs, Mowers etc. 9 Oxy sucess stortes — Del, Cheup Dickets, @Prade .... ® Guess is ut eusiy whieved: 2 ‏من‎ hed its busicess viubiliy questicaed Por a hogy tee a ‏وه ها تس سا 3 ۳۱ يور‎ He ‏مجاه"‎ ® Ose vP Totercet kus wow bevowe wuok wore sophisticated. 

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| Getting Closer to Customers (2) © OROs we wed ‏صا‎ feare wore ubout mstowers 9 Okether pou visi their website, val thew (howe, oPPive, wwobite) or buy soevethiay — the Pir is oPteo heepicy track ed ‏تما اوه‎ iePorwalive to peeote a proPie oP pou 9 ‏ماو‎ va Pro BRP ® ERE Posed va totercal dota ۶ CRO Powses va vustower deta, ® @ovc or boc: Great usebul icPorevatiod Os. evasion oP privacy 

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| Getting Closer to Customers (3) © Guovesshdl seliag over the Totercet eutais work wore thoc just setiiog uz a Deb site ord tobi orders ۲ ٩۱ ‏امه‎ orcpeizioy the eure ‏مه ده هط‎ the Iotercet © Dke 6-Ousicess wodel: redePicioy mustower vole O "Ogedewerd" 3 Persvodzaivd oP sence ۲ @oeess to 0 wide rong oP powpetiive prices ued sellers Por products 

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| Getting Closer to Customers © Dhe Votercet is oot ody used to sell to rustowers oolice. tis usu used to provide services tv Dowpinies 9 Gowetves itis coo be diPPicul to ‏مایت تنج‎ is wore valuable — the product or the service © Dke correct Poows is vo stapiey io loser pootact Wits 12015177515 3 ‏عصنادحا جمجداا كوتلمحمو ص صله(])‎ ۲ ‏ول بر ودونفك عصوحدصاصج بوامصصوط ,ناد صر‎ persoudized products wed service 

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| Working Across: Business-to- Business ® Gtreuvivingy processes tho cross powpoay bourrdaries is the cext big wocagewed ‏جو وصامكات‎ 3 Crow streavtotey totercal provesses to chocyay provesses I wesk wits other © ‏منطو‎ waves busicess takes worm Porc ‏رخ و‎ 2 Dorktery wits "oo-supplers" 9 Oorkey wis pustowers ia close wutudly depeudeat nebaticashiy 2 Quidioy @ virtual euterprise, ta Pact, vor thot wight evolve eto oe ‏مساو‎ 

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| Coordinating with Co- Suppliers . Cousuppliers: Pirws thot hove the sawe vustowers ‏انحا‎ Puck viher = (ep ia ‏متسه‎ with cosuppliers 9 Oevkucisws to share iePorewetiod quiohty od easily 8 Revowwered steps Por ‏وستامس م09‎ 9 Gtreucvicicg iotercad process 9 Colaboraicg va ce ivi processes ۶ Chevicate duplicate uctuites, Porous va custower ureds... 

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| Case Example: General Mills and Land O’Lakes ® Geved taxgest OG Pood powpunies supply bout PO% oP superworket shel? space Por dry yoods 9 Ose vw trucks etc. = Ov supply (6% oP rePrigersied 9 Ove truck Por severd supervorkets 9 bess ePPicied, dels Pic. = vahoppy chects ® Lood O'boke cowbiced their deliveries vo Beueral Dil trucks 9 Dow, they ore looking foto foteqratiog their order tabiey ord billy processes 

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| Establishing Close and Tight Relationships (1) ® Oorkiay uress vowpuuies is the wost ‏مه لح(‎ ‏وت و و‎ use vE ID ged Totercet 9 4Aavieg netaiveships wit various payers in poe's busitess ‏وروت‎ ‎© Quchks, adverts ageuries, suppliers, distributors, retulers, BveU ‏اسلاج 07ت‎ © Guck reticeships oPted have useoeepooptery ‏+مقدو صخأو عجكاكنا‎ ‏رد‎ 

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| Establishing Close and Tight Relationships (2) ۲ © bevel OP spstews inteqroive betwerd powpoies 9 Loose: provide a hoo uovess to ictercdl ‏وا‎ ‎© Qu shes provesses reworu detent 9 Close! tuo ponies exchoage inPorewaiivd too Pond wooder = Processes ore dete, bul sowe tosks ore hooded ‏راد‎ ‎۲ ‏تن‎ woe ponies shore ot leust vor busiuess process © ‏مايه ين محل المع سه رسيي ان ييح ان علبلا‎ 

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| Establishing Close and Tight Relationships (3) ‎Or Tg Rk‏ لته ‎as rad‏ ۳ م۳ ع ع 5 ‎Diht Pew‏ ‎ ‎Gus 6 +e +e ۳7 Loose Ou 7 2 * ‏)نا‎ ‎۶ | ‏امه کارت موی‎ detail *** ‏افرص ممح اميد كلابب وه مرلو‎ cord ‏جمدم ج دادم إكوأصكوو‎ ‎ ‎ 

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| Becoming a Customer-Centric Value Chain ® 089 vpowwpo's ude chon poosists oP: 9 Opsireccy supply chor 9 Oowestreud dewoed choc ® Deetiicod woke-to-stock: build products | orecte services ocd theo "pusk" thew to pustowers 9 Guppy-Pusk workd ® Dhe ristog of the reverse — 0 deword-pull workd 9 © wstower's order triquers the oreoiod oP o pustoized product or service the vustower hos dePiced 

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| Case Example: Dell ® Dke Porewost expe oP the deword-pull bustcess wodel Cvstowers vod igure their POs va Del's Oebsite 9 Owe wa order is ivittcted, Dell's suppliers con see the ordericg iePorwativa cod production schedule vo Del's extrrcet ۵ ۳ ‏نمی ای و موی وتو‎ © Oel's extrocet is bevowwicgy 0 privete warket place 9 Cxstowers' orders ure distributed ty suppliers (or even supphers oF suppliers) © Odke cha reporeuy, beter Poremast ۶ 0 deword-pull Piecacid value choir 

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| Pros and Cons of Demand- Pull "= Pros 9 @rtier satsPy the custower's dversiPied ceeds 9 Octue-choic traasporeory = 00,000 wewmy chips Ov. 90,000 ordered’ due ty shortage ۲ Cow 9 deProstructures 9 Crashes coo be wore devastaticry ® Cevowiny custower veutric is ont easy, espevicty Por suppy-pusk powpudies ® Dke hee DP ORO 

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| Getting Back-End Systems in Shape © Oorktoy aoress vPted ceeds foteqrote existiog back-eud systews 2 Qrrouiey, Pouce, sues, worhetony, phromicny... ‏سا موق تا‎ ۶ ‏وم خر« ون‎ 0 «۰ ‏سس‎ ‎۵ ‏ره" یی‎ systews 2 Oodbasr Ooannewed Sysiews (DPOG) 2 ERE ‏سره‎ ‎2) Extracet © Coot exten the cowpoop's back-eud systews tv rerudicerr busiuess provesses extercdl to the cowpody 

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@ introduction © Strategic Use of IT in Busin: cnerarg ete 

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| Classifying Network Producers Cocused distribuprs: rere (© THE WAL, STREET JOURNAL »% 8 8] Xo sae 0 1 EP EX TRADE & ۳ "AIRLINES fe amazoncom Google Oreote cod pacha products, (Baubles buyers aed gelers to ooccent, ‏لت ات شمه لب رس‎ troceart busts Ovwrevers Bull oc te ‘hotercwet ۵ ‏مسا کج اه همع‎ Porte Cisco Systems ۲ ‏تعد يدوع‎ ۱ FS 8 ‏هه قتع‎ 6 ۰ sale: “force. com. ORACLE | IEEE | sles ‏ی‎ ‎Oredte ced package tevlarkyy- ] techaolyy buyers Coble coxeuvers ord breed procucts, services, ord ‏وا ووسیو ما مها انسیا نا اه امن‎ ‏یاس ها مشود‎ servers ‏مه امن‎ Qvwkeses Proudey te kProetrctue 

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| Focused Distributors © @rovide products on services related to ‏وود و‎ ‏روط‎ or wurket viche. © OP Percatate Pooused distbutor busicess wodels ۵ ‏اون‎ oP tueciory 9 Getrag colic 9° rive ‏بل امه نویه‎ ۲ Oistabutioa oP physical products und services 

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| Informediaries طسو موه ‎ey.‏ © ۲ © speci class oP eB ygracguiors that usites sellers und buyers ‏واه و‎ © Revedur wodel ۲ COCO 1ePorwedaries wil charge ‏جلمسصمعصت د موه ن‎ subsoripion Pee 9 @SC iPorwedudes vPeu provide Porsratiod Pree to pustowers ved woke woop based va ‏عم مهو رتض وله‎ © 41oPorveduies Ped seek to quickly evolve Prow siwply ‏ما بطم‎ 

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| Portals = G.y. BOL, ‘’aboo!, Boone 2 Detwork wodel witk rogest history ® Coty Iotercet portas: kelp poosvers to ues pated va DOD 9 Ooceent to the ‏اجه‎ ‎9 @rowse the web 9 Orrevtory ond seurck services 

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| Producers © @roduers use the Votercet to design, produce ond ‏ناو‎ products und services 9 OacuPacturers = Cay Pord, PRO 9 Gernice providers © Gq. Gwerica Brprees, Onpow, 0 9 Educaors © Cay. Warved Ousitess School, OoBra-1il, Katee ‏ریت‎ ‎۲" ‏سل‎ ‏وه سوه وق‎ Olea ۲ ‏له موه‎ ces services = Cy OCI 

Strategic Uses of IT 1 Introduction 2 Strategic Use of IT in Business 3 Emerging Network Business Models What is Strategic Use?  Having a significant, long-term impact on a firm’s growth rate, industry, and revenue   Utilizing the Internet to conduct business became the strategic use of IT Using IT to gain a sustained competitive advantage in business  Make distinction in business Utilizing the Internet  Use of the Internet has already set off a revolution in business  The questions that remain are:     Has the revolution ended, or Does an even larger revolution loom? Does IT still matter?, and What sorts of strategic uses are companies making? Strategic Use of Information Systems  "Working inward"   "Working outward"   Improving a firm's internal processes and structure Improving the firm's products and relationships with customers "Working across"  Improving its processes and relationships with its business partners History of Strategic Uses of IT (1)  Mid 1980s: end user computing (working inward)   End user computing dept. to help employees learn about PCs and user computing language Late 1980s: using IT to gain competitive advantage (working outward)  e.g. Merrill Lynch cash account management, AA airline ticket booking History of Strategic Uses of IT (2)  1990s: reengineering business processes (inward again)    Totally redesign how the enterprise operated Introduction of ERP Mid-1990s: Internet's potential becoming evident  The technology was mostly used internally: intranets   Improve company processes Publish e-forms History of Strategic Uses of IT (3)  Late 1990s: e-business underway    Bursting of the dot com bubble Integration of the Internet into how companies work has proceeded Early 2000s: emphasis on working across  leveraging traditional operations by using the Internet to work more closely with others   Linking to suppliers, customers and other partners in one's value chain or business ecosystem Strike back of Brick-and-Mortar History of Strategic Uses of IT (4)  Mid 2000s: something has changed  Being used strategically:     Inward Outward Across Some start questioning IT's ability to give companies a competitive edge but it is absolutely necessary for competitive parity. Whither the Internet Revolution? (1)  British Railway Revolution – the mania started in 1830s and experienced a crash in 1845  10 fold increase in 1910, 65 years after the crash     During boom, great excitement and small companies flourished After crash, glamour gone, business became serious and full of hard work Industry became orderly and profits began to reflect real returns Investment frenzy for connection technology: "race for space" Whither the Internet Revolution? (2)  Revolution arises only after organization structure their activities around new technologies  We are now in a period where organizations are re-architecting themselves around Internet technologies   Tearing down old structures as they go Real gains will come when Internet technology adapts to organizations and people   When the technology disappears and becomes part of life It will be 'quiet' compared to frenzy of '99/00 but many think it will be a giant revolution The Cheap Revolution  The cost of data processing, storage and transport has dropped relentlessly    "Cheap Tech"   Google: runs on 100,000 cheap servers "Dellification"   $480 per MIPS in 1978  $50 per MIPS in 1985  $4 MIPS in 1995 10m$/GB in 1956  200,000$/GB in 1980  1 $/GB in 2003 Moved from selling PCs to also selling servers, printers, storage devices "The Cheap Revolution" is occurring elsewhere:    Labor – outsourcing to other countries Software – Linux Vs. Microsoft Telecommunications – Voice-over-IP Does IT Still Matter? (1)  "IT Doesn't Matter" – article by Nicholas Carr in Harvard Business Review May 2003  What makes a resource truly strategic is not ubiquity but scarcity   As information technology's power and ubiquity have grown, its strategic importance has diminished. Being now available and affordable to all, IT has evolved from potentially strategic resources into commodity factors of production. Does IT Still Matter? (2)  Proprietary technologies VS. infrastructural technologies  Proprietary technology    Can be owned by a single company Foundation for long-term strategic advantage Infrastructural technology   Has more value when share than used in isolation, like railway, telegraph line Such technology can create a strategic advantage for an individual firm at the beginning of its buildout when it is expensive and risky Does IT Still Matter? (3)  IT is an infrastructure technology, like rail, electricity, telephone etc.     IT, above all, is a transport mechanism IT is highly replicable IT is subject to rapid price deflation IT buildout is now much closer to its end than its beginning  IT is neither proprietary or expensive Does IT Still Matter? (4)  when a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides   e.g. electricity Management of IT should now focus more on risks and vulnerabilities than on opportunities  Greatest risk: overspending  Studies of corporate IT spending consistently show that greater expenditures rarely translate into superior financial results. In fact, the opposite is usually true Assignment  Write a review on IT Doesn’t Matter. 1 Introduction 2 Strategic Use of IT in Business 3 Emerging Network Business Models Working Inward: Business-toEmployee  Strategically using IT inside the enterprise still focuses on using Internet to improve business processes  Building intranets  Intranets are private company networks that use Internet technologies and protocols, and possibly the Internet itself VPN Intranet Benefits of Using Intranets   Wider access to company information Intranet's open-system architecture significantly decrease the cost of providing companywide information and connectivity    Open-system architecture VS. proprietary networks The link to the Internet allows companies to expand intranets worldwide easily and cheaply Browser interface for web applications greatly decreased training costs Fostering a Sense of Belonging  Intranets are evolving into very important enterprise structures  In some enterprises, the intranet is seen as the enterprise   Internal forms, rules and processes Can also be seen as cold and impersonal  Creating a sense of belonging   Giving a means of communicating and creating communities Care of employees Working Outward: Business-toCustomer  In most industries companies need sophisticated computer systems to compete      e.g. reservation systems used in airlines automated order entry and distribution in wholesale industry ATMs., trading and settlement in finance AHS As industry leaders increase the sophistication of their systems to improve  Competitors must do the same or find themselves at a disadvantage Jumping to a New Experience Curve (1)  Strategically using IT to work outward is highly competitive and innovative    Technology updates occur frequently, forming a set of connected experience curves Each curve represents a new technology or combination thereof in a product or service as well as in its manufacture and/or support Moving to a new curve requires substantial investment in a new technology Jumping to a New Experience Curve (2)  The principle of the experience curve is that management should not have too much emotional attachment to the current experience curve and fail to see the next one   Keep up or lose out Historically lessons    Mainframe manufacturers ignored minicomputer firms The minicomputer firms ignored PC manufacturers (Microsoft) Microsoft ignored the Internet Case Example: the Shipping Industry The Emergence of "Electronic Tenders"  Initially IT has been embedded in products and services for its computational capabilities   Internet and embedded systems now allow products/services to be "tended"     e.g. in cars and elevators to make them operate more efficiently e.g. packages / luggage tracking Vehicle diagnostics monitored by car dealer Potential uses are endless and we are just at the beginning Options are endless but the goal is still to get closer to the customer Getting Closer to Customers (1)  B2C e-business is the most widely reported form of ebusiness.    Success is not easily achieved:    Nearly every type of product can now be purchased online: books, CDs, flowers etc. Many success stories – Dell, Cheap Tickets, ETrade …. Amazon.com had its business viability questioned for a long time Levi Strauss, despite encouraging figures, quit selling jeans over the Internet Use of Internet has now become much more sophisticated. Getting Closer to Customers (2)  CRMs are used to learn more about customers   Whether you visit their website, call them (home, office, mobile) or buy something – the firm is often keeping track and combining that information to create a profile of you Followed on from ERP    ERP focused on internal data CRM focuses on customer data Boon or bane: Great useful information Vs. Invasion of privacy Getting Closer to Customers (3)  Successful selling over the Internet entails much more than just setting up a Web site and taking orders   It involves organizing the entire value chain around the Internet The E-Business model: redefining customer value  "On-demand"  Personalization of service  Access to a wide range of competitive prices and sellers for products Getting Closer to Customers (4)  The Internet is not only used to sell to customers online. It is also used to provide services to companies   Sometimes it is can be difficult to know which is more valuable – the product or the service The current focus is on staying in closer contact with customers   Understanding them better Eventually, becoming customer driven by delivering personalized products and service Working Across: Business-toBusiness  Streamlining processes that cross company boundaries is the next big management challenge   From streamlining internal processes to changing processes to mesh with other Working across business takes many forms including:    Working with "co-suppliers" Working with customers in a close mutually dependent relationship Building a virtual enterprise, in fact, one that might evolve into an emarketplace Coordinating with CoSuppliers   Cosuppliers: firms that have the same customers but not compete with each other Key in coordinating with cosuppliers   Mechanisms to share information quickly and easily Recommended steps for cooperation   Streamlining internal process Collaborating on new joint processes  Eliminate duplicate activities, focus on customer needs... Case Example: General Mills and Land O’Lakes  Seven largest US food companies supply about 40% of supermarket shelf space for dry goods   Only supply 15% of refrigerated    Use own trucks etc. One truck for several supermarkets Less efficient, delays etc. = unhappy clients Land O'Lake combined their deliveries on General Mills trucks  Now, they are looking into integrating their order taking and billing processes Establishing Close and Tight Relationships (1)  Working across companies is the most difficult area of strategic use of IT and Internet  Having relationships with various players in one's business ecosystem   Banks, advertising agencies, suppliers, distributors, retailers, even competitors Such relationships often have accompanying linking information systems Establishing Close and Tight Relationships (2)  3 level of systems integration between companies  Loose: provide ad hoc access to internal information   Close: two parties exchange information in a formal manner   Business processes remain distinct Processes are distinct, but some tasks are handled jointly Tight: two parties share at least one business process  High volumes of possibly confidential data are exchanged Establishing Close and Tight Relationships (3) Tight Close Loose Numbers of relationships Few Some Many Potential benefits *** ** * Cost of Integration *** ** * * Basic Conformance ** Intermediate conformance with significant detail *** Advanced conformance with significant detail and ongoing maintenance Risk *** ** * Becoming a Customer-Centric Value Chain  A company's value chain consists of:    Traditional make-to-stock: build products / create services and then "push" them to customers   Upstream supply chain Downstream demand chain Supply-Push world The rising of the reverse – a demand-pull world  A customer's order triggers the creation of a customized product or service the customer has defined Case Example: Dell   The foremost example of the demand-pull business model Customers configure their PCs on Dell's Website    Once an order is initiated, Dell's suppliers can see the ordering information and production schedule on Dell's extranet This information can be grabbed automatically Dell's extranet is becoming a private market place  Customers' orders are distributed to suppliers ( or even suppliers of suppliers)   Value chain transparency, better forecast A demand-pull financial value chain Pros and Cons of DemandPull  Pros   Better satisfy the customer’s diversified needs Value-chain transparency   Cons    10,000 memory chips Vs. 30,000 ‘ordered’ due to shortage Infrastructures Crashes can be more devastating Becoming customer centric is not easy, especially for supplypush companies  The lure of CRM Getting Back-End Systems in Shape  Working across often needs integrate existing back-end systems   Accounting, finance, sales, marketing, planning... Particular challenging    Approaches      Variety of platforms Incompatible Purchase "new" systems Database Management Systems (DBMS) ERP Systems Extranet Goal: extend the company's back-end systems to reengineer business processes external to the company 1 Introduction 2 Strategic Use of IT in Business 3 Emerging Network Business Models Classifying Network Producers Focused distributors Business Models Create and package products, services, and solutions Portals Enable buyers and sellers to connect, communicate, and transact business Businesses Built on the Internet Infrastructure Producers Create and package technologybased products, services, and solutions Infrastructure Distributors Enable technology buyers and sellers to transact business Infrastructure Portals Enable consumers and businesses to access online services and information Businesses Providing the Infrastructure Focused Distributors  Provide products and services related to a specific industry or market niche.  Differentiate focused distributor business models     Control of inventory Selling online Price negotiation and bidding Distribution of physical products and services eRetailers  e.g. Amazon.com     Assume control of inventory Set a nonnegotiable price to the consumers Sell physical products online The primary revenue model is based on product/service sales eMarkets  e.g. Global Healthcare Exchange, which links buyers and sellers allowing them to compare and purchase products online  The revenue model includes a commission and transaction fee on each sale  eMarkets must electronically link to supplier database and order fulfilment system     A second revenue stream Takes no control of physical inventory The physical distribution and logistics costs are lower than that of eRetailer System integration service may bring more risk and cost eAggregators  e.g. InsWeb, which provides information on products or services for sale by others in the channel    Provide electronic catalogs and comparisons of features and pricing They then pass the customer through to the supplier to complete the sale Revenue model: referral fee and advertising Informediaries  e.g. Internet Securities   Revenue model    A special class of eAggragators that unites sellers and buyers of information B2B Informediaries will charge a company a corporate subscription fee B2C informediaries often provide information free to customers and make money based on advertising revenues Informediaries often seek to quickly evolve from simply brokering information Exchanges  e.g. eBay, NASDAQ, FreeMarkets    Key differentiating feature   May or may not take control of inventory May or may not complete the final transaction online Price is not set; negotiated at the time of sale Revenue model varies Portals  E.g. AOL, Yahoo!, Google   Early Internet portals: help consumers to access content on WWW     Network model with longest history Connect to the Internet Browse the web Directory and search services Now portals are recognized as channels through with users access information and services. Producers  Producers use the Internet to design, produce and distribute products and services  Manufacturers   Service providers   E.g. Harvard Business School, McGraw-Hill, Knowledge University Advisors   E.g. American Express, Citigroup, AA Educators   E.g. Ford, P&G E.g. Accenture, Booz Allen Information and news services  E.g. WSJ