Transparency Strategy and the I-role of the CIO

Transcription

1 Transparency Strategy and the I-role of the CIO Nelson F. Granados, Ph.D. Pepperdine University University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 1 THE PROBLEM University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 2

2 Challenge The T of IT: The Internet, per se, will rarely be a competitive advantage. Porter, HBR, 2001 University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 3 What is the multi-channel strategy? Search CONSUMER PRE-PURCHASE PROCESS Experience Computers Books Food Jewels Clothes Airline tickets Software Stocks Insurance Tax advice Physical Information PRODUCT ATTRIBUTES University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 4

3 University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 5 What is the multi-channel strategy? Search CONSUMER PRE-PURCHASE PROCESS Experience Computers Books Food Jewels Clothes Airline tickets Software Stocks Insurance Tax advice Physical Information PRODUCT ATTRIBUTES University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 6

4 Progressive University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 7 What is the multi-channel strategy? Search CONSUMER PRE-PURCHASE PROCESS Experience Computers Books Food Jewels Clothes Airline tickets Software Stocks Insurance Tax advice Physical Information PRODUCT ATTRIBUTES University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 8

5 The Internet Enables Competition in the Transparency Dimension High Offline Expedia Transparent Orbitz Product Transparency Travelocity Opaque Hotwire Priceline.com Low Price Transparency High Source: Granados, N.F., Gupta, A., and Kauffman, R.F. Designing Internet-Based Selling Mechanisms: Multi-Channel Transparency Strategy, WITS, Las Vegas, NV, University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 9 Leisure vs. Business Leisure Relative Price Elasticities Leisure vs. Business Offline Transparent OTA Opaque OTA Business Source: Granados, N.F., Gupta, A., and Kauffman, R.F. Offline and Online Price Elasticities: Evidence from the Air Travel Industry, working paper, University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 10

6 The Challenges The T of IT: The Internet, per se, will rarely be a competitive advantage. Porter, HBR, 2001 The I of IT: The great paradox of the Internet is that its very benefits making information widely available; reducing the difficulty of purchasing, marketing, and distribution.. also makes it more difficult for companies to capture those benefits as profits. Porter, HBR, 2001 The positive effect of product information Price information can lead to price erosion University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 11 THE LESSONS University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 12

7 IT Strategy: Information and Technology Strategy The I of IT: INFORMATION STRATEGY Transparency: Differentiate from competitors by strategically disclosing or concealing information. Blue Nile, Hotwire, Orbitz The T of IT: TECHNOLOGY STRATEGY Develop, use (smartly), or patent digital and search technologies, in line with the i-strategy. Orbitz developed, Blue Nile and Hotwire used University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 13 Link between Strategy and IT Business Strategy Channel Strategy Information Strategy Transparency Strategy Technology Strategy University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 14

8 Transparency as a strategic choice Transparency strategy: What information do I disclose and to whom? Case #1: Transparent S 1 S 2 Case #2: Case #3: Case #4: Distorted Biased Opaque S 1 S 2 S 1 S 2 S 1 S 2 Product Price Source: Granados, N.F, Ph.D. Dissertation, University of Minnesota, University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 15 Orbitz Strategy: Industry Impacts Airlines, Hotels, Rental Cars OFFLINE ONLINE Global Distribution Systems (GDSs): Amadeus, Sabre, Galileo, Worldspan Pricing and Search Engines: ITA Software Supplier Reservation Offices Offline Travel Agencies Online Travel Agencies (orbitz.com) Supplier Portals (delta.com) Meta-Search Agents (kayak.com) Consumer University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 16

9 Air Travel: Transparency Design Game High Orbitz Product Transparency Airline Portals Expedia Priceline.com Hotwire Travelocity Low Low Price Transparency High Source: Granados, N.F., Gupta, A., and Kauffman, R.F. The Impact of IT on Market Information and Transparency: A Unified Theoretical Framework, Journal of the Association for IS, March University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 17 Air Travel: Transparency Design Game High Orbitz Kayak.com Product Transparency Airline Portals Expedia Priceline.com Hotwire Travelocity Low Low Price Transparency High Source: Granados, N.F., Kauffman, R.F, and King. B. How has Electronic Travel Distribution been Transformed? A Test of the Theory of Newly-Vulnerable Markets, Journal of MIS, 2008, 25(2), University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 18

10 SUMMARY Develop a transparency strategy and an IT strategy that supports the business strategy. Understand the long-term trends in the industry to strategize accordingly Transparency developments Technological developments University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 19 APPENDIX University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 20

11 priceline.com University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 21 Orbitz BACK University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 22

12 BACK Source: Granados, N.F., Gupta, A., and Kauffman, R.F. Transparency Strategy in Internet-Based Selling, in Advances in the Economics of Information Systems (Ed. K. Tomak, UT Texas, Austin), Idea Group, Publishing, PA, University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 23 BACK University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 24

13 OliveSoftware University of Minnesota, MISRC Seminar, November 2009 Copyright Nelson Granados 25