2 Organizational Strategy, Competitive Advantage, and Information Systems 70 slides
[ LEARNING OBJECTIVES] 1. Discuss ways in which information systems enable cross-functional business processes and business processes for a single functional area. 2. Differentiate between business process reengineering, business process improvement, and business process management. 3. Identify effective IT responses to different kinds of business pressures. 4. Describe the strategies that organizations typically adopt to counter Porter s five competitive forces.
2.1 Business Processes Cross-Functional Processes Information Systems and Business Processes
Business Processes A business process is: an ongoing collection of related activities that create a product or service of value to the organization, its business partners, and/or its customers.
Business Processes A business process is: an ongoing collection of related activities that create a product or service of value to the organization, its business partners, and/or its customers. Comprised of three elements: Inputs Resources Outputs
Business Processes A business process is: an ongoing collection of related activities that create a product or service of value to the organization, its business partners, and/or its customers. Comprised of three elements: Inputs Resources Outputs Efficiency vs. Effectiveness
Examples of Business Processes
Examples of Business Processes (Continued)
Cross-Functional Processes No single functional area is responsible steps executed in a coordinated, collaborative way Procurement & Fulfillment Crossfunctional processes
Traveler Plan Trip Check Flights Receive Ticket Order Seats Available YES Reserve Seats Airline Web Site NO Notify Traveler NO NO Seats Available? YES Submit Ticket Order Use Credit Card? Charge Credit Card Charge OK? YES NO NO Frequent Flyer Mileage Sufficient? YES Subtract Mileage Notify Traveler Receive e-ticket YES Confirm Flight(s) Issue e-ticket
Information Systems & Business Processes IS s vital role in three areas of business processes Executing the process Capturing and storing process data Monitoring process performance
Executing the Process IS s help Execute the Process by: Informing employees when it is time to complete a task Providing required data Providing a means to complete the task
Capturing & Storing Process Data Processes generate data Dates, times, product numbers, quantities, prices, addresses, names, employee actions IS s capture & store process data (aka, transaction data) Capturing & storing data provides immediate, real time feedback
Monitoring Process Performance IS evaluates information to determine how well a process is being executed Evaluations occur at two levels Process level Instance level Monitoring identifies problems for process improvement
2.2 Business Process Reengineering, Business Process Improvement, and Business Process Management Reengineering Improvement Management
Measures of Excellence in Executing Business Processes Customer Satisfaction Cost Reduction Cycle and fulfillment time reduction Quality Differentiation Productivity
Business Process Reengineering (BPR) A radical redesign of an organization s business processes to increase productivity and profitability Examines business processes with a clean slate approach
Business Process Improvement (BPI) An incremental approach to move an organization toward business process centered operations Focuses on reducing variation in process outputs by identifying the underlying cause of the variation
Business Process Improvement (BPI) Five basic phases of successful BPI Define As is
Business Process Improvement (BPI) Five basic phases of successful BPI Define As is Measure Numbers, Metrics
Business Process Improvement (BPI) Five basic phases of successful BPI Define As is Measure Numbers, Metrics Analyze causes, trends
Business Process Improvement (BPI) Five basic phases of successful BPI Define As is Measure Numbers, Metrics Analyze causes, trends Improve alternatives, solutions
Business Process Improvement (BPI) Five basic phases of successful BPI Define As is Measure Numbers, Metrics Analyze causes, trends Improve alternatives, solutions Control - stabilize
Business Process Management (BPM) A management system used to support continuous initiatives for core business processes over time Important components of BPM: Process modeling Web-enabled technologies Business Activity Monitoring (BAM)
Business Process Management (BPM) Business Process Management Suite (BPMS) An integrated set of applications used for BPM Emerging Trend of Social BPM Technologies enabling employees to collaborate across functions internally and externally using social media tools
2.3 Business Pressures, Organizational Responses, and Information Technology Support Business Pressures Organizational Responses
Business Pressures Market Pressures
Business Pressures Market Pressures Technology Pressures
Business Pressures Market Pressures Technology Pressures Societal/Political/Legal Pressures
Market Pressures Globalization Changing Nature of the Workforce Powerful Customers
Globalization The integration and interdependence of economic, social, cultural, and ecological facets of life, made possible by rapid advances in IT.
Globalization 1.0 (1 st Era) 1492-1800 Focus: Countries Drivers: Muscle Horse power Wind power Steam power
Globalization 2.0 (2 nd Era) 1800-2000 Focus: Companies Main Driver: Multinational Companies First Half of 2.0 Driver: Falling transport costs Second Half of 2.0 Driver: Falling telecom costs
Globalization 3.0 (3 rd Era) 2000 - Present Focus: Groups & Individuals Drivers: Convergence of 10 forces or Flatteners
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading 5. Outsourcing
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading 5. Outsourcing 6. Offshoring
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading 5. Outsourcing 6. Offshoring 7. Supply Chaining
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading 5. Outsourcing 6. Offshoring 7. Supply Chaining 8. Insourcing
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading 5. Outsourcing 6. Offshoring 7. Supply Chaining 8. Insourcing 9. Informing
The Ten Flatteners 1. 11/9/1989: Berlin Wall Falls 2. 8/9/1995: Netscape Goes Public 3. Development of Workflow Software 4. Uploading 5. Outsourcing 6. Offshoring 7. Supply Chaining 8. Insourcing 9. Informing 10.The Steriods
Changing Nature of the Workforce Workforce is Becoming More Diversified Women Single Parents Minorities Persons with Disabilities IT is Enabling Telecommuting Employees
Powerful Customers Increasing consumer sophistication & expectations Consumer more knowledgeable about Products and services Price comparisons Electronic auctions Customer Relationship Management
Technology Pressures Technological Innovation & Obsolescence Rapid development of both New and Substitute Products & Services
Technology Pressures Technological Innovation & Obsolescence Rapid development of both New and Substitute Products & Services Information Overload Vast stores of data, information, & knowledge Difficulties in managing data for decision making
Societal / Political / Legal Pressures Social Responsibility
Societal / Political / Legal Pressures Social Responsibility Compliance with Government Regulations
Societal / Political / Legal Pressures Social Responsibility Compliance with Government Regulations Protection against Terrorist Attacks Ethical Issues
Societal / Political / Legal Pressures Social Responsibility Compliance with Government Regulations Protection against Terrorist Attacks Ethical Issues
Social Responsibility Green IT Facilities design and management Carbon management International and U.S. state environmental laws Energy management
Social Responsibility Green IT Facilities design and management Carbon management International and U.S. state environmental laws Energy management Digital Divide One Laptop per Child (OLPC)
Organizational Responses Strategic Systems
Organizational Responses Strategic Systems Customer Focus
Organizational Responses Strategic Systems Customer Focus Make-to-Order and Mass Customization
Organizational Responses Strategic Systems Customer Focus Make-to-Order and Mass Customization E-Business & E-Commerce
2.4 Competitive Advantage and Strategic Information Systems Competitive Strategy A statement identifying a business s approach to compete, it s goals, and the plans and policies required to attain those goals.
2.4 Competitive Advantage and Strategic Information Systems Strategic Information Systems (SIS) An information system that helps an organization achieve and maintain a competitive advantages
Porter s Competitive Forces Model
Porter s Value Chain Model Value Chain A sequence of activities through which the organization s inputs are transformed into valuable outputs. Primary Activities Relate to Production & Distribution of Products & Services Support Activities Support Primary Activities Contributing to Competitive Advantage
Primary Activities Five Primary Activities for Manufacturing 1. Inbound Logistics (inputs) 2. Operations (manufacturing & testing) 3. Outbound Logistics (storage & distribution) 4. Marketing & Sales 5. After Sales Services
Support Activities Four Support Activities 1. Firm s Infrastructure (accounting, finance, management) 2. Human Resources Management 3. Product & Technology Development (R&D) 4. Procurement
Strategies for Competitive Advantage Cost Leadership Differentiation Innovation Operational Effectiveness Customer-Orientation
FIGURE 2.5 Strategies for competitive advantage.
2 Organizational Strategy, Competitive Advantage, and Information Systems The End