Chapter 2

Competing with Information Technology

2

Does IT provide organizations

with a competitive advantage?

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Long-term competitive strategies

Lock in customers/suppliers/partners And lock out competitors Deter them from switching to competitors Build in switching costs Make customers and suppliers dependent on

the use of innovative IS

Staying a step ahead of competitors Creating “the place” (first mover

advantage) Ebay Facebook

4

Competitive Advantage and Competitive Necessity

What is Competitive Advantage? What is the problem with

competitive advantage?

What is Competitive Necessity?

What is the relationship between Competitive Advantage and Competitive Necessity?

5

II. Porter’s Competitive Forces Model

6

II. Competitive Strategy Concepts

7

II. Competitive Strategy Concepts

8

IV. Building A Customer-Focused Business – Strategic Focus

on Customer Value

Recognizing that Quality, not Price, has become the primary factor in a customer’s perception of value

Internet technologies can make customers the focal point of e-business applications

9

V. Porter’s Value Chain and Strategic IS

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V. The Value Chain and Strategic IS

Value Chain – the series/chain/network of activities that add value to products/services

Primary Processes – directly related to manufacture of products or delivery of services

Support Processes – business activities that that support daily operations of the firm and indirectly contribute to products/services

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II. Reengineering Business Processes

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II. Reengineering Business Processes

Business Process Reengineering (BPR) High Potential Payback, but High Risk of

Failure Organizational Redesign

Process Teams Case Managers

The Role of Information Technology – IT plays a major role in BPR

13

To Build or to Buy – Is That Really the Question?

What is the traditional answer?

Why might reality be more complicated?

Why does VISA custom build in-house?

Why does VISA busy of-the-shelf?

14

III. Becoming An Agile Company

4 Basic Strategies: Customer Perception of Goods and Services Partnering with Customers, Suppliers, and Even

Competitors Organize to Thrive on Change and Uncertainty Leverage Impact of Personnel and Their

Knowledge

Types of Agility Customer Partnering Operational

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III. Becoming An Agile Company

16

IV. Creating A Virtual Company

Virtual Company – Uses the Internet, intranets and extranets to create virtual workgroups and support alliances with business partners

Virtual Company Strategies Share infrastructure and risk with alliance partners Link complimentary core competencies Reduce concept-to-cash time through sharing Increase facilities and market coverage Gain access to new markets and share market or

customer loyalty Migrate from selling products to selling solutions

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IV. Creating A Virtual Company

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IV. Creating A Virtual Company

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V. Building a Knowledge-Creating Company

Explicit Knowledge – written down or stored on computers

Tacit Knowledge – “how-to” knowledge residing in the workers; very important but little incentive to share this information so it is never written down

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Types of Knowledge

(Nonaka, 1994)(Nonaka, 1994)

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V. Building a Knowledge-Creating Company

Knowledge Management – 3 levels: Enterprise Knowledge Information Creation, Sharing, and Management Document Management

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VI. Knowledge Management Systems

Making personal knowledge available is the central activity of a knowledge-creating company

This takes place continuously at all levels of the organization

Knowledge management has become a major strategic use of information technology

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VI. Knowledge Management Systems

Goal of Knowledge Management – to create, organize, and disseminate important business knowledge whenever and wherever it is needed in the organization

Knowledge Management systems: Facilitate organizational learning and knowledge

creation Provide rapid feedback top knowledge workers Encourage employee behavioral change Significantly improve business performance