Thursday, February 17, 20001 Management of Information Systems: 45-870 Mini-3 Spring 2000.

Thursday, February 17, 2000 1

Management of Information Systems: 45-870

Mini-3Spring 2000


Agenda Schedule Reminders Return of Mid-Term Exam Discussion of IT Exercise III Extending Intranets: Extranets Using IT to create Strategic

Advantage


Schedule Reminders Sonoco I/T Diagnosis

Due no later than Tuesday, 22-Feb, 2000, by start of class

Ford I/T Strategy Analysis No assignment due Article and discussion questions will

be distributed on Tuesday, 22-Feb We will discuss the article and

discussion questions informally in class on 29-Feb


Schedule Reminders Guest Speakers

Feb 22, Mr. Alberto Espinosa, CEO of Mayor Maynot Deliver, Inc. to discuss:

ASP and web databases Technical aspects of IT Exercise III

Feb 24, Mr. Rob Trollinger, Principal, AT Kearney, to discuss:

Developing an I/T Strategy


Return of Mid-Term Exam Grading/Curve Answers to Questions Re-grade request policy:

** Requests for re-grade of any item on the exam are to be made in writing only. Requestors should return the exam to Prof. Slaughter with a brief explanation of why they believe an item should be re-graded. **


IT Exercise III: Web Business Opportunity Scenario:

You (and your team) own a small, high quality restaurant in the East End (of Pittsburgh)

Current focus on individual on-site diners

Decline in on-site dining clientele Offer limited delivery service


IT Exercise III: Web Business Opportunity The Opportunity:

Proposal from Mr. Espinosa, CEO of Mayor Maynot Deliver, Inc.

New Internet Start-up company East End’s only Internet-enabled multi-

restaurant ordering and delivery service Delivers high quality food (generally not fast

food) from best restaurants to homes, offices, and hotels

Customer Profile: higher incomes, professionals, business travelers, graduate students, etc. Also larger groups or corporate customers.


IT Exercise III: Web Business Opportunity Mayor Maynot Deliver, Inc.:

provides its own delivery service (customers charged a flat 15% delivery fee)

Menu items at same prices as in the restaurants Restaurants listed in company’s web directory

(where customers can order online on web pages created by each restaurant)

Restaurants included in company’s delivery service

Restaurants must pay a monthly fee of about (3-5%) of total sales volume ordered over the web each month


Mayor Maynot Deliver, Inc. Website Prototype web site for company at:

http://softrade-11.gsia.cmu.edu/data/restaurants.html

Each restaurant responsible for creating and updating its menu order page and information in the company’s database

Company responsible for creating and maintaining other pages on the web site


Your Assignment Evaluate this business opportunity and

decide whether to accept or reject it Technical Portion:

Register your restaurant name and type on the company’s web site

Register up to 20 different menu items and prices for your restaurant on the company web site

Create a web order page for your restaurant using FrontPage (see and follow exactly the technical instructions!)

Your web page should be attractive to customers and should be functional in terms of taking orders


Your Assignment Technical Portion (cont’d):

Address the following questions Strengths/weaknesses of the company’s

design for the web site What functionality to add and why What technical concerns do you have and

how should Mayor Maynot Deliver, Inc. address them


Your Assignment Strategic Portion

Address the following questions: How could this opportunity improve

competitive advantage for your restaurant What strategic challenges/threats does

this opportunity represent How would your business change if you

accepted this opportunity Will you accept this opportunity What would you want to modify or change

in the proposal


Web Fair Assignment due at the beginning of class on

Thursday, March 2, 2000 Create a web page on your team web with

your answers to the technical and strategic questions. This page should have a hyperlink pointing to your restaurant order page

Your team will demonstrate your restaurant order page at the “web fair” and will explain to Prof. Slaughter whether you’ve decided to accept Mayor Maynot Deliver’s proposal and why


CORPORATEINTRANET

EngineeringServer

Internet Web Sites

Internet Links

Customers

Extranet Links

H.R.Server

Other Company Locations

Intranet Links

Legacy DataServer

MarketingServer

Extranet Links

Suppliers

Linking Intranets to Extranets, the Internet


Extranets What is an Extranet?

Examples:


Extranets Types of Extranets:

VANs:

EDIs:

VPNs:


Extranets How does an Extranet work?


Extranets Tunneling:

Encryption:

Protocols used in Tunneling:


Extranets Firewalls:

How do Firewalls work:


Extranets Benefits of Extranets:

Key Issues of Extranets:


IT for Strategic Advantage

How can IT be used to create competitive advantage Competitive Forces The Value Chain

Using the Internet Strategically


What is a Strategy?

A strategy is a definition of a business.

It specifies the product / service to be provided and the segments of the market to which that product / service is directed. It defines the channels of distribution to the market segments and the kind of production processes that are required. Finally, it defines how the necessary capital will be provided and the kinds of people and organizational structure needed.


Bargaining Powerof Suppliers

Bargaining Powerof Suppliers

Threat of New Entrants

Threat of New Entrants

Rivalry AmongExisting

Competitors

Rivalry AmongExisting

Competitors

Threat ofSubstitutesThreat of

Substitutes

Bargaining Powerof Customers

Bargaining Powerof Customers

The Competitive Environment


Co

mp

eti

tive

Str

ate

gie

s

Competitive Forces

Differentiation

Cost

Innovation

Growth

Alliance

OtherStrategies

Supplier Customer Competitor NewEntrant Substitute


BreakingBusinessBarrierswith IT

TimeBarriers

GeographicBarriers

CostBarriers

StructuralBarriers

How does IT impact Competitive Forces?


How IT can be used to implement competitive strategies

Improve Business Processes Promote Business Innovation Lock in customers and suppliers Create switching costs Raise barriers to entry Leverage a strategic IT platform Develop a strategic information base


Examples IT for cost leadership:

IT to differentiate:

IT to innovate:

IT to expand:

IT to foster alliance:


The Value Chain Value Chain = system of interdependent,

linked activities Competitive Advantage = f(how well value

chain activities are defined, integrated, executed)

Primary Activities: inbound logistics, operations, outbound logistics, marketing & sales, service

Support Activities: firm infrastructure, human resource management, technology development, procurement


INBOUNDLOGISTICS

OPERATIONS OUTBOUNDLOGISTICS

MARKETING AND SALES

SERVICE

PRIMARY ACTIVITIES

PROCUREMENT

TECHNOLOGY DEVELOPMENT

HUMAN RESOURCE MANAGEMENT

FIRM INFRASTRUCTURE

SU

PP

OR

T A

CT

IVIT

IES

Generic Value Chain


INBOUNDLOGISTICS

OPERATIONS OUTBOUNDLOGISTICS

MARKETING AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY DEVELOPMENT

HUMAN RESOURCE

MANAGEMENT

FIRM INFRASTRUCTURE

Information System TechnologyPlanning and Budgeting Technology

Office Technology

Training TechnologyMotivation Research

Product TechnologyComputer-Aided DesignPilot Plant Technology

•Diagnostic and Testing Technology•Communications Technology

•Transportation Technology•Material Handling Technology•Storage and Preservation Technology•Communication System Technology•Testing Technology

Information Systems TechnologyCommunication Systems TechnologyTransportation Systems Technology

Software Development ToolsInformation Systems Technology

•Basic Process Technology•Materials Technology•Machine Tools Technology•Materials Handling Technology•Packaging Technology•Testing Technology

•Transportation Technology•Material Handling Technology•Packaging Technology•Communications Technology

•Multi-Media Technology•Communication Technology

IT in the Value Chain


Level 1: StrategicLevel 1: Strategic

Level 2: OffensiveLevel 2: Offensive

Level 3: DefensiveLevel 3: Defensive

Level 4: Cost-JustifiedLevel 4: Cost-Justified

Level 5: ControlledLevel 5: Controlled

LevelsTowardUse of ITTo CreateCompetitiveAdvantage

Levels of use of IT for Competitive Advantage


How would you classify these organizations in terms of their level of investment in IT? FedEx Ford Amazon.com Walmart Federal Government Pennsylvania State Government PNC Bank Wells Fargo Bank

Question


Sonoco Case For the Sonoco Case, in answering

the last set of questions: How would you classify the role/level

of IT in Sonoco, using these levels of competitive advantage?

In 1980’s/1990’s? With new business strategies? With an e-commerce strategy?


Using the Internet Strategically

LOWER IMPACT

HIGHER IMPACT

HIGHER IMPACT

Global MarketPenetration

Product/ServiceTransformation

Cost and EfficiencyImprovements

PerformanceImprovement

In Business Effectiveness

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Thursday, February 17, 20001 Management of Information Systems: 45-870 Mini-3 Spring 2000.

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