chap02_using it for competitive advantage
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Chapter 2Using Information TechnologyUsing Information Technology
for Competitive Advantagefor Competitive Advantage
Copyright 2001, Prentice-Hall, Inc.
MANAGEMENT INFORMATION SYSTEMS 8/ERaymond McLeod, Jr. and George Schell
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What is a Firm?What is a Firm?
Physical SystemPhysical System ± ± ClosedClosed--looploop
± ± Controlled by managementControlled by management ± ± Uses feedback to ensure objectives metUses feedback to ensure objectives met ± ± Open because of environmental interactionOpen because of environmental interaction
Managed through use of a conceptualManaged through use of a conceptualsystemsystem
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Importance of EnvironmentImportance of Environment
V ery reason for a firm¶s existenceV ery reason for a firm¶s existenceFirm takes resources from environment,Firm takes resources from environment,transforms them, and returns goods andtransforms them, and returns goods andservices to environmentservices to environment
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Society
FinancialCommunity
GovernmentGlobal
Community
Suppliers TheFirm
Laborunions
Stockholdersor owners
Customers
Competitors
The Firm·s Environment
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The Firm Is Connected to ItsThe Firm Is Connected to ItsEnvironment by Resource FlowsEnvironment by Resource Flows
Physical and conceptualPhysical and conceptualSome flows are major Some flows are major Some should not occur at allSome should not occur at all
All resources that enter the firm from theAll resources that enter the firm from theenvironment eventually return to theenvironment eventually return to theenvironmentenvironment
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Competitive AdvantageCompetitive Advantage
Computer field perspectiveComputer field perspective ± ± Use of information to gain leverage inUse of information to gain leverage in
marketplacemarketplace ± ± Relies on more than physical resourcesRelies on more than physical resources
Addressed with strategic objectivesAddressed with strategic objectives
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A Value Chain A Value Chain
Firm Infrastructure
Human resource management
Technology development
Procurement
Inbound
logistics
Operations Outbound
logistics
Marketingand
sales
Service
Support
Activities
Primary Activities2-7Source : Michael E. Porter
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Channelvaluechains
Suppliervaluechains
Buyervaluechains
Firmvaluechain
A Value System A Value System
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The Information ResourcesThe Information Resources
Two views of information managementTwo views of information management
1. Manage data by implementing computer 1. Manage data by implementing computer- - based database management systems based database management systems
(DBMS)(DBMS)
2. Manage resources that produce the2. Manage resources that produce theinformationinformation
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The Information ResourcesThe Information Resources
Facilities
Software Database
Hardware
InformationSpecialists
Users
Information
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The Information ResourceThe Information Resource
ManagerManager ---- the CIO
the CIO
Chief Information Officer (CIO) is notChief Information Officer (CIO) is notsimply a title, but rolesimply a title, but role
Manager of information servicesManager of information servicesContributes managerial skillsContributes managerial skills ± ± Solves information resources problemsSolves information resources problems
± ± Solves problems in other areas of firm¶sSolves problems in other areas of firm¶soperationsoperations
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The CIO AttitudeThe CIO Attitude
The business is what countsThe business is what countsBuild partnerships/ties with the rest of theBuild partnerships/ties with the rest of thefirmfirmImprove basic business processesImprove basic business processesCommunicate in business terms, not ISCommunicate in business terms, not IS
jargon jargonProvide reliable IS servicesProvide reliable IS servicesBe positive, not defensiveBe positive, not defensive
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Strategic PlanningStrategic Planning
L ongL ong--range planningrange planning ± ± Intends to give firm most favorable position inIntends to give firm most favorable position in
its environmentits environment ± ± Specifies strategies for achieving objectivesSpecifies strategies for achieving objectives
Need for each business area to create its Need for each business area to create its
own strategic planown strategic plan
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Strategicplanning for
information resources
Strategicplanning formarketingresources
Strategicplanning for
manufacturing
resources
Strategicplanning for
human
resources
Strategicplanning for
financial resources
The Functional Areas Should CooperateThe Functional Areas Should Cooperatein Developing Their Strategic Plansin Developing Their Strategic Plans
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Strategy Set TransformationStrategy Set TransformationOrgan iz a tio nal s t ra te g y s et
MIS s t ra te g y s et
Mission
Objectives
Strategy
Other strategicorganizationalattributes
System
objectives
Systemconstraints
Systemdesignstrategies
MIS s t ra te g ic p lann i ng pr oce ss
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Strategy Set Transformation:Strategy Set Transformation:
Basic FlawBasic FlawBusiness areas do not always have theBusiness areas do not always have theresources to ensure accomplishment of resources to ensure accomplishment of
strategic objectivesstrategic objectives
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SPIRSPIR
Strategy set transformation; support theStrategy set transformation; support thefirm¶s objectivesfirm¶s objectives
Strategic planning for information resourcesStrategic planning for information resources(SPIR)(SPIR) develops firm and IS strategic plansdevelops firm and IS strategic plansconcurrentlyconcurrently
± ± SPIR contentSPIR content»» 1. What is to be achieved1. What is to be achieved»» 2. What will be required2. What will be required
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Strategic Planning forStrategic Planning forInformation ResourcesInformation Resources
B usinessstrategy
Informationresourcesand
ISstrategy
Influence onB usinessStrategy
Influence onInformationResources
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Strategic Plan Framework forStrategic Plan Framework forInformation Resources
Information Resources
Strategic Planfor Information
Resources
AISObjectives
MISObjectives
DSSObjectives
V irtualOffice
Objectives
Knowledge- based systems
Objectives
RequiredInformationResources
RequiredInformationResources
RequiredInformationResources
RequiredInformationResources
RequiredInformationResources
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The Strategic Implications ofThe Strategic Implications of
EndEnd--User Computing (EUC)User Computing (EUC)L evels of end users in terms of capabilitiesL evels of end users in terms of capabilities ± ± menumenu--level end userslevel end users
± ± commandcommand--level end userslevel end users ± ± endend--user programmersuser programmers ± ± functional support personnelfunctional support personnel
EUC application considerationsEUC application considerations ± ± shifts workload so that endshifts workload so that end- -users andusers and
information specialists¶ talents are better usedinformation specialists¶ talents are better used ± ± reduces communications gapreduces communications gap 2-20
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EUC RisksEUC Risks
Poorly aimed systemsPoorly aimed systemsPoorly designed/ documented systemsPoorly designed/ documented systemsInefficient use of information resourcesInefficient use of information resourcesL oss of data integrityL oss of data integrityL oss of securityL oss of securityL oss of controlL oss of control
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Information ResourcesInformation ResourcesManagement ( IRM) ConceptManagement ( IRM) Concept
Realization that firm¶s informationRealization that firm¶s informationresources go far beyond the informationresources go far beyond the information
itself itself Activity pursued by managers at all levelsActivity pursued by managers at all levelsIdentifying, acquiring, and managingIdentifying, acquiring, and managing
information resources needed to satisfyinformation resources needed to satisfyinformation needsinformation needs
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IRMIRM -- Required ElementsRequired Elements
A recognition that competitive advantageA recognition that competitive advantagecan be achieved by means of superior can be achieved by means of superior
information resourcesinformation resourcesA recognition that information services is aA recognition that information services is amajor functional areamajor functional area
A recognition that the CIO is a topA recognition that the CIO is a top- -levellevelexecutiveexecutive
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IRMIRM--Required Ingredients (cont.)Required Ingredients (cont.)
A consideration of the firm¶s informationA consideration of the firm¶s informationresources when engaging in strategicresources when engaging in strategic
planning planningA formal strategic plan for informationA formal strategic plan for informationresourcesresources
A strategy for stimulating and managingA strategy for stimulating and managingendend--user computinguser computing
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The firm¶s executivesC IO Other executives
C entral computingresources
Disbursed computingresources
FUN CT IONAL AREASFUN CT IONAL AREAS
Users engaged inend-user computing Other users
ENVIRONMEN TAL INFLUEN C ESENVIRONMEN TAL INFLUEN C ES
Internal influences Firm¶s strategic plan
INFORMA T ION RESOUR C ESINFORMA T ION RESOUR C ES
DATA AND INFORMA T IONDATA AND INFORMA T ION
The IRM ModelThe IRM Model
Informationservices
Humanresources
Manufacturing MarketingFinance
The environment of the firm
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IRM Model: Firm EnvironmentIRM Model: Firm Environment
Provides setting for achieving competitiveProvides setting for achieving competitiveadvantageadvantage
Executives are aware of need to manageExecutives are aware of need to manageresource flows to meet needs of resource flows to meet needs of environmental elementsenvironmental elements
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IRM Model: Firm·s ExecutivesIRM Model: Firm·s Executives
Includes CIOIncludes CIOGuides firm toward objectivesGuides firm toward objectivesKey activity is strategic planningKey activity is strategic planning
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IRM Model: Business AreasIRM Model: Business Areas
Information services is a major businessInformation services is a major businessareaarea
Each area develops own strategic plansEach area develops own strategic plansOne business area strategic plan is for One business area strategic plan is for information resourcesinformation resources
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IRM Model:InformationIRM Model:InformationResourcesResources
Strategic plan for information resourcesStrategic plan for information resourcesdetails acquisition and managementdetails acquisition and management
Information resourcesInformation resources ± ± CentralizedCentralized ± ± Dispersed throughout firmDispersed throughout firm
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IRM Model: UsersIRM Model: Users
Details data and information flows betweenDetails data and information flows betweenresources and usersresources and users
Some users engage in endSome users engage in end- -user computinguser computing
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SummarySummaryEnvironment of a firm consists of eightEnvironment of a firm consists of eightelementselementsFirms attempt to achieve competitiveFirms attempt to achieve competitive
advantageadvantage ± ± MarginMargin -- value of products and services over value of products and services over
costcost ± ± V alue chainV alue chain
Information resourcesInformation resources ± ± Hardware, software, facilities, database,Hardware, software, facilities, database,
information specialists, information, and usersinformation specialists, information, and users2-31
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Summary [cont.]Summary [cont.]
Executives perform strategic planningExecutives perform strategic planning ± ± SPIR SPIR
All firm¶s managers need to engage in IRMAll firm¶s managers need to engage in IRM ± ± Recent revelationRecent revelation ± ± Integrating conceptIntegrating concept
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