Ch. 07 Strategic Information Systems (SIS)

Rev 2: Apr., 2015

Prof. Euiho Suh

POSTECH Strategic Management of Information and Technology Laboratory(POSMIT: http://posmit.postech.ac.kr)

Dept. of Industrial & Management EngineeringPOSTECH

2

Strategy Tree (1/2)

Information(IT, IS)

Automation

Innovation

■ Use of Information

■ Automation

■ Strategic Use of Information

Automation

Work Automation

Manufacturing Automa-tion

Strategic Information Sys-tem(SIS)

Non-strategic Information System (NSIS)

StrategicUse of Information

(IT, IS)

Success

Failure

2. Strategic Information System1) Introduction

3

Strategy Tree (2/2)

Strategic Management (SM)

Non-strategic Management (NSM)

StrategicManagement

Success

Failure

■ Strategic Management

■ Information Strategy Tree

Information

Automation

Innovation

Work Automa-tion

Manufacturing Automation

NSIS

SIS SM

NSM

2. Strategic Information System1) Introduction

4

SIS

■How can you define SM in terms of P5FCM ?

How can you define SIS in terms of P5CFM ?

How can you define SIS in terms of VC ?

5

Evaluation on an IS (Reversely, factors in designing an IS)

■ When you evaluate an IS…

1. Type of IS ?

2. Process automation or innovation ?

3. If automation , then, work or manufacturing ?

4. If innovation, which Hammer’s principle is applied ?

5. Is it an SIS or not ?

6. If SIS, which competing forces in P5FCM to be affected ?

7. If SIS, which activities in VC to be reinforced ?

.

6

Information Technology Strategy Case (1/10)

■ Marriott Hotel

Saving and managingVIP customers’ information

Allowing customersto check in and check out

without going to the front desk

Usually business people or young couple mind tocheck in and check out at the hotel front desk

Problem

“Customer Relationship Management (CRM)”

7

Information Technology Strategy Case (2/10)

■ Asiana Airlines

• Risk of loss• Higher likelihood of terrorist attacks

Difficulties in tracking and managing baggage

• RFID: Radio Frequency Identification• Automatic identification method, relying on storing and re-

motely retrieving data using devices called RFID tags or transponders

RFID-enabled air baggage tracking and control system

8

Information Technology Strategy Case (3/10)

■ G-market

Problems

E-security • Weak payment system• Certificate user by ID/password

Reliability of transaction

• Deception of trade• Weak warranty of the products

quality

Solution

SSL complementary sys-tem

(SSL: Secure Sockets Layer)

Escrow service

Escrow service of G-market

Customer G-market Seller1. Purchase/Pay-ment

2. Delivery Re-quest

3. Sending Prod-uct

5. Transferring Payment

4. Receipt Comfir-mation

9

Information Technology Strategy Case (4/10)

■ Shinhan Bank

Problem

Characteris-tics of

Financial Product

• Intangibility• Geographical dispersion• Balancing growth with

risk• Lack of Special Identity• Individual Marketing Sys-

tem• Inseparability

SRMS (2000)

• Catching Symptom of Customer Secession• Scheduling for Salespeople• Customized Portfolio

Back-end Office System Middle Office SystemFront Office System

Data Collecting and Auditing Mining

DB

AnalysisCRM Mart

CRMDB

Inter-nal

Data

Exter-nal

Data

Visualized An-swer tool

Visualized Campaign Evaluating tool

Visualized Campaign

Design tool

Data MiningSystem

OLAPSystem

CampaignManagement

System

Call Center

Branch

Internet Banking& Tele-Banking

CD / ATM

Tele-marketer

DMI

Customers

CustomerInformation

CampaignInformation

SamplingTransformationTransmission

“Customer Relationship Management (CRM)”

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Information Technology Strategy Case (5/10)

■ Korail

KOVIS

• PM (Plant Management)• SEM (Strategic Enterprise manage-

ment)• AM (Asset Management)• CM (Cost Management)• FA (Financial Accounting)• MA (Management Accounting)• MM (Materials Management)• ESS (Employee Self Service)

Problems

• Symbol of “Red Tape”• Criticism towards the bureaucracy of

Korail• Opening of KTX, less competitive

compared to vehicle transportation• Increase in deficit, bad management in-

dex

“Enterprise Resource Planning (ERP)”

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Information Technology Strategy Case (6/10)

■ HANSSEM

Clicks and Bricks

• To separate on-line business and off-line business• To running their own e-commerce site, “HANSSEM

mall”• To sell on-line only product, “SAM”• To expand types of channels to meet customers

Problems

• Economic depression in Korea• Construction industry with prob-

lems• Appearance of new multinational

competitors such as IKEA• Decrease of the number of mar-

riages that could be potential cus-tomers

• Low price competition through home shopping

“E-commerce”

12

Information Technology Strategy Case (7/10)

■ SK Energy

Communities of Practice (CoP)

• Seoul Logistics Support Team: Set in the rear in order to prevent shipping excess• Seoul oil pipeline team: set in the rear in order to prevent error from occurring due to uneven

flow, bubble formation• Ulsan refinery production team: set in the rear in order to prevent error from occurring due to

uneven flow, bubble formation• Ulsan Operations: If certain conditions are met, it makes no difference

Problems

• Busan Logistics center: Set stop valve frontal/rear due to crowded space

With the help of KM system (people of diverse backgrounds, geographies) it is concluded that setting up in the rear area is the better way to go

13

Information Technology Strategy Case (8/10)

■ Hyundai Capital

Multidimensional OLAP (MOLAP)

• Approach to enable end-users to interactively analyze multidimen-sional data from multiple perspec-tives for their decision making

Problems

• High risk in capital business• Business cycle frequency is reduc-

ing and volatility is increasing• Capital company has to predict

the risk factors and control them Prediction is important, but the more important point is accuracy and risk considering

“OLAP”

MOLAP of Hyundai Capital

Result

• Easily analyze risk factors without additional education• Manage risk by using visual aids such as screen• Identify the progress from the present to the future• Increase the work efficiency

14

Information Technology Strategy Case (9/10)

■ jetBlue Airways

Problems

• American low-cost airline• Wanted feedback by customer

- Too large customers to handle with traditional and low-cost CRM solu-tion- Need to make new competitive advantage against major airlines

Solution

• sCRM- Social CRM(sCRM) is a philosophy and busi-ness strategy designed to engage the customer in a mutually beneficial relationship- It’s supported by social technology, business rules, workflow and processes

Set up Twit-

ter ac-count

in spring

of 2007

Moni-toring duties

be-came more inten-sive

In 2009

spring, team was

orga-nized

Make Twitter more con-ve-

niently and

di-rectly

Process Process

Exam-ple

customer's complaint

jetBlue’s answer oncustomer's complaint + real actions to solve it

15

Greening the data center

Information Technology Strategy Case (10/10)

■ Google

Problems

• High power consumption for IT devices and data centers

• Searching on the internet gener-ates carbon dioxide Cause the global warming

Electric Power Carbon dioxide0

0.5

1

1.5

2

2.52.26 billion

1.46 million

※Unit: metric tons

Add new CRAC controller

Use Free-coolingby evaporation

Use thermal modelingwith Computer Room

Air Conditioner (CRAC)

“Green IT”

Sustainable Buildings

• Eliminating pollutants through Google’sHealthy Materials Program

• Pursuing design and operational strategiesthat reduce energy and water use

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Note

■ MIT PPT material (SIS)– http

://ocw.mit.edu/courses/sloan-school-of-management/15-565j-integrating-esystems-global-information-systems-spring-2002/lecture-notes/lecture02.pdf

17

Reference

■ O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 1

■ O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”, McGraw – Hill, Chapter 2

■ Euiho Suh, “Information & Management (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)

■ Euiho Suh, “Role of Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)

■ Euiho Suh, “Strategic Information Systems (PPT Slide)”, POSMIT Lab. (POSTECH Strategic Management of Information and Technology Laboratory)