Chapter 10

Chapter 10

IS  AND  COMPETITIVE POSITION

Chapter Contents  2

¾ SWOT Analysis  ¾ Turning Business Strategy into Information Strategy  ¾ Developing An Information System Strategy  Developing An Information System Strategy ¾ Competitive advantage  Competitive advantage ¾ IT As A Change trigger  g gg

SWOT Analysis SWOT Analysis  Strength Things that are going well or work well in an information system

Opportunities Events outside information systems t th thatt can b be exploited l it d tto the advantage of the company

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Weaknesses Things going badly or not working in an information system t iincluding l di llack k off k key staff t ff or skills

Threats Events outside the information system that need to be defended against i

IS/IT Strategic Resulting From SWOT Analysis  g g y 4

Op pportuniities Threats

Situattional IT T Faces

Evaluation of IS capability Strength

Weaknesses

Attack “Go for it” Have good IS capability and an opportunity to exploit

Beware “Don’t do it” IS capability weak therefore risk of failure

Explore “If we have time” IS capability strong therefore can protect when want to

Protect “Watch yourself” Weak IS capability – need to obtain resources to counter threat

Turning Business Strategy into Information Strategy  5

Key points: ¾ IS strategy determination recognizes the strategic nature of 

IS in modern businesses.  ¾ IS needs strategic planning to ensure that resources are 

used effectively. 

Turning Business Strategy into Information Strategy‐ 2  6

Benefits of a formal strategy:  ¾ Goal congruence between IS and corporate objectives  ¾ Create competitive advantage   ¾ Expenditure focused on key business areas  ¾ IT development exploited when required  IT development exploited when required Earl recognized three information strategies: Earl recognized three information strategies: ¾ IS, IT and IM strategy 

Developing An Information System Strategy  7

Information system and corporate strategy  Information system can affect corporate strategy as follows: ¾ Providing new opportunities  ¾ Providing information to help formulate corporate strategy Providing information to help formulate corporate strategy ¾ Pursuing competitive advantages 

An IS Planning Model  8

S t corporate Set t strategy t t

IInformation f ti and data architecture Define information requirements by setting output then determining inputs needed to produce those outputs

Define information needs

Set IS strategy gy

IT architecture hit t Defines the hardware, software, Peripherals and networking g requirements for organization

Application architecture Considers applications needed to turn data into information

Competitive Advantage 9

Based on work of Porter Suggested IT affect rules of competition in three areas: IT changes industry structure, and in doing so alters the rules of completion. 2 IT creates competitive advantage by giving companies 2. new ways to outperform, their rivals/ 3. IT spawns new businesses, often from within a company’s existing operations. 1.

Competitive Advantage 10

¾ Competitive Advantage: is the force to put the organization

in a position where it exerts more competitive forces on others they do on it. it ¾ The e Va Value ue Chain: C a : Firm iss regarded ega ded as a se series es o or cchain a o of

activities, which each activity value to the product or service being provided by the firm.

Porter’s Value Chain Model  11 Firm  infrastructure

Planning models  g

Human  resources  management 

Automated employees scheduling 

Technology  development

Electronic market research

Procurement Procurement 

O li On‐line purchasing h i

Support Activities

Automated  warehouse

Flexible  manufacturing

Inbound  logistic

Operation

Automated  order  purchasing

Remote  terminal for  sales staff

Remote  servicing of  equipments

Outbound  logistic 

Marketing and  Sales

Service

Primary Activities

Generic Strategies  g 12

Two main methods competitive advantage can be obtained:  Two main methods competitive advantage can be obtained: 1. Low cost (having the lowest unit production costs in the  industry)  2. Differentiation (persuading customers that the product is  better, different or unique).  ¾ Each strategy used for whole market or focused on a 

g (p ) market segment (pr niche). 

Using Information for Competitive Advantage  13

Products can be classified according to information intensity,  Products can be classified according to information intensity i.e. ¾ How much information is needed to make a product, and ¾ How much information is contained within a finished  h f d h f h d

product. 

Porter and Millar Information Intensity Matrix  14

The model compares: The model compares:  ¾ How much information is in the product (x axis) with p ( ) ¾ Number of information exchanges that take place to make 

product (y axis).  d Can place any industry in the matrix, then determine if and  Can place any industry in the matrix then determine if and how the information system is likely to be critical to the  buskiness. 

Porter and Millar Information Intensity Matrix ‐ y 2 15

LOW HIGH

Info ormation intensity o of value ch hain 

Information intensity y of product p LOW

HIGH

Toys

Fashion  Perishables  Perishables

Oil  refining

Banking Education

IT AS A Change Trigger  16

Zuboff  Model  Zuboff Model ¾ Theory of how computerization affects organizations ¾ There are three main changes:

Automate 2. Informate 3. Transformate T f t 1.

IT AS A Change Trigger ‐ 2  17

Zuboff theory of change

Automate

Automation of costly manual processes . p Main benefit reduce cost for business.

Informate

Transformate

Managers request more or better information, some processes redesigned to meet those requests. Company become more effective and profitable. fit bl

Computer provide the organization with opportunities to change the way processes operate / business carried out. Main benefit is competitive advantage.

Lewin’s 3‐Step Model of Change 18

Lewin’s theory of  Lewin’s theory of change

1‐ Unfreeze

2‐ Change 

Create motivation C i i for change by convincing staff of the undesirability of the current situation. Staff only accept change if company threatened or can see change will make things better.

Move to new behavior. Must identified what that behavior is and then communicate new attitudes culture and concept to staff. Needs: 1- users involvement g 2- management commitment 3- organizational impact analysis

3‐ Re‐freeze

Reinforce new pattern of work or behavior by some y reward system. May still encounter resistance from staff.

Theory of Users Resistance 19

Theory

Explanation

Overcome by:

People-oriented theory

Factors internal to users e.g. fear of new system

User training persuasion (not always effective)

System-oriented theory

Factors inherent in system design e.g. poor interface d design

Involve users in system design. Improve interface

Interaction theoryy

Resistance caused byy Create reward systems. y interaction between people Promote user and systems factors, e.. Fear of participatioin losing power because of new system system.

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