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MASTER OF MANAGEMENT PROGRAMMM46
PPM GRADUATE SCHOOL OF MANAGEMENTJanuary 09, 2010
LECTURER : HENRY CHRISTIANTO., ST., MTI
DOES IT MATTER ?
INDICATOR OF SUCCESS
IT BUSINESS VALUE
IT IMPACT ON COMPETITION
CASE STUDY ON IT EVALUATION
NICHOLAS CARR: IT DOESN’T MATTER (Spring, 2003)
1st PREMISE
IN THE PAST -> IT WERE DEVELOPED IN-HOUSE
- COST EXPENSIVE
- LONG TIME DEVELOPMENT
NOW -> IT APPLICATION DEVELOPED IN MANY WAYS:- BUILD
- BUY
IT BECOME PROPRIETARY ADVANTAGE
- RENTCOMMON TECHNOLOGY
IT BECOME COMMODITYIT BECOME COMMODITYIT BECOME COMMODITYIT BECOME COMMODITY
2nd PREMISE
INVESTMENT NOTDELIVERS THE EXPECTED
RETURN
IT BECOME COMMODITY
EXECUTIVE MAY SINK MONEY INTO EXECUTIVE MAY SINK MONEY INTO RISKY INVESTMENT IN INFRASTRUCTURERISKY INVESTMENT IN INFRASTRUCTURE
EXECUTIVE MAY SINK MONEY INTO EXECUTIVE MAY SINK MONEY INTO RISKY INVESTMENT IN INFRASTRUCTURERISKY INVESTMENT IN INFRASTRUCTURE
3rd PREMISE
WIDESPREAD ADOPTIONOF INTERNET-BASED
TECHNOLOGY STANDARD
DRAMATIC INCREASEIN NETWORK SPEED
AND CAPACITY
TENDENCY TO DEVELOPAPPLICATION THAT CROSS
FIRM BOUNDARIES
NEW VALUE –CREATING IT APPLICATIONS ARE QUICKLY COMMODITIZED
DECREASE ENTRY BARRIERS
LOWER SWITCHING COST
THE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESTHE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITEDBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITED
THE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESTHE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITEDBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITED
SO, CARR CONCLUDE:
1. SPEND AS A LITTLE AS POSSIBLE ON IT2. CONCENTRATE IT INVESTMENT ON DRIVING COST SAVINGS3. BE A FAST FOLLOWER4. FOCUS ON MANAGING RISK RATHER THAN SEARCHING FOR IT OPPORTUNITIES
1. SPEND AS A LITTLE AS POSSIBLE ON IT2. CONCENTRATE IT INVESTMENT ON DRIVING COST SAVINGS3. BE A FAST FOLLOWER4. FOCUS ON MANAGING RISK RATHER THAN SEARCHING FOR IT OPPORTUNITIES
WHAT DO YOU THINK ?
lliminate
implify
ntegrated
utomated
CREATECREATENEW NEW
OPPORTUNITYOPPORTUNITYCREATE NEWCREATE NEWBUSINESS BUSINESS
MODELMODEL
EFFICIENCYEFFICIENCYANDAND
EFFECTIVENESSEFFECTIVENESS
BUSINESS STRATEGY
IS/IT STRATEGY
ALI
GN
MEN
T
RESPONSIBILITIES ?
INFLUENCE
CAN IT DRIVE COST SAVING ?
Streamline and Integrated nonrevenue-generating process (e.g., payroll, HR, ERP, accounting and finance).
EXAMPLES
Improve productivity, cycle time and effectiveness of nonrevenue-generating process
SAMPLE METRICS
Improve performance of nonrevenue-generating process
Decrease cost of current business operations
CAN IT DRIVE REVENUE GROWTH ?
Improve new product development process to increase speed to market and efectiveness of new product launches.
EXAMPLES
Improve productivity, cycle time and effectiveness of revenue-generating process
SAMPLE METRICS
Improve performance of revenue-generating employees
Quantity value of improved decision making
Improve revenue-generating process to increase customer satisfaction, loyalty, lifetime value, and demand
Provide relevant, actionable information and analytical tools to business decision makers
Improve market segmentation and personalization to expand market penetration Enter new markets or increase market spending from existing customer Launch new information-based products, services, and solutions
etc
CAN IT DRIVE ASSET EFFICIENCY
Create shared services, self-service portals, and center of excellence.
EXAMPLES
Decrease total cost of ownership of current infrastructure and operations
SAMPLE METRICS
Improve asset efficiency (dollars of sales generated by each dollar of IT asset)
Decrease IT infrastructure and operations cost as a percentage of revenues
Outsource and offshore to take advantage of low-cost labor markets and scarce expertise
Build a modular, flexible, open source IT Architecture
Attract, develop, and retain top IT Talent Create IT development, deployment, and operating process that
decrease the cost, time and effort needed to launch new value-creating IT application Develop best-in-class security and risk management system
Decrease IT Headcount cost as percentage of sales
CAN IT CREATE SUSTAINABLE ADVANTAGE
Differentiate product (e.g., Information Value-Added, improve ability to compete on price
EXAMPLES
Increase market share
SAMPLE METRICS
Increase brand reputation and awareness
Increase market value
Launc new IT-enabled products or businessess in high-growth markets and industries
Increase barriers to entry or switching costs
Decrease the time, cost, and success of pursuing incremental and radical innovations
Increase success of innovation process
IT DRIVE COST SAVINGS
IT DRIVE REVENUE GROWTH
IT DRIVE ASSET EFFICIENCY
CAPITAL EFFICIENT
PROFITABLE GROWTH
CREATE SUSTAINABLE ADVANTAGE
Threats ofNew Entrants
Rivalry among
Exsisting competito
rs
Threats ofSubtitute Products
Or Services
BargainingPower ofsuppliers
BargainingPower ofbuyers
SEE APPENDIX 4A ON PAGE 120
“The scarce resource never was technology, it always the set of managerial capabilities needed
to create value with that technology” (Prof. Vijay Gurbaxani)