the universal solvent
DESCRIPTION
The Universal Solvent. Carr, Chapter 5 Richard T. Christoph INFS 780. Technical advances often destroy. Railroad eliminated locational advantages firms had Suddenly, it was easy to ship goods over long distance Telephone halted advantages of long-term relationships - PowerPoint PPT PresentationTRANSCRIPT
The Universal Solvent
Carr Chapter 5
Richard T Christoph
INFS 780
Technical advances often destroy
Railroad eliminated locational advantages firms had Suddenly it was easy to ship goods over
long distance
Telephone halted advantages of long-term relationships I could talk about products anywhere
IT is doing the same Consider on-line investing
Carr notes (pg 88)
IT can corrode advantages not just in one or a few areas but across many aspects of a companyrsquos business Traditional advantages tend to dissipate as
the function is automated
Is this right
Software impact
Automated systems in customer service (or other areas) removes differences in response times All players in the industry will have about
the same response parameters Not possible to achieve distinction when
using the same software
This is great if this function is not your basis for advantage
Homogenization
Functions become the same from firm to firm
The Internet has dramatically increased this impact Advantages based in proprietary networks
are gone Carr suggests the Internet has pushed
power away from firms and into customers
Compare catalog order vs Internet
The catalog places premium on Catalog size quality
Allows my store to differentiate Cost of distribution is high
mailing list management critically important
Internet Focus on speed
Customer can ldquodroprdquo my store for another Cheap distribution costs All internet sites look alike ndash no advantage for size
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Technical advances often destroy
Railroad eliminated locational advantages firms had Suddenly it was easy to ship goods over
long distance
Telephone halted advantages of long-term relationships I could talk about products anywhere
IT is doing the same Consider on-line investing
Carr notes (pg 88)
IT can corrode advantages not just in one or a few areas but across many aspects of a companyrsquos business Traditional advantages tend to dissipate as
the function is automated
Is this right
Software impact
Automated systems in customer service (or other areas) removes differences in response times All players in the industry will have about
the same response parameters Not possible to achieve distinction when
using the same software
This is great if this function is not your basis for advantage
Homogenization
Functions become the same from firm to firm
The Internet has dramatically increased this impact Advantages based in proprietary networks
are gone Carr suggests the Internet has pushed
power away from firms and into customers
Compare catalog order vs Internet
The catalog places premium on Catalog size quality
Allows my store to differentiate Cost of distribution is high
mailing list management critically important
Internet Focus on speed
Customer can ldquodroprdquo my store for another Cheap distribution costs All internet sites look alike ndash no advantage for size
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Carr notes (pg 88)
IT can corrode advantages not just in one or a few areas but across many aspects of a companyrsquos business Traditional advantages tend to dissipate as
the function is automated
Is this right
Software impact
Automated systems in customer service (or other areas) removes differences in response times All players in the industry will have about
the same response parameters Not possible to achieve distinction when
using the same software
This is great if this function is not your basis for advantage
Homogenization
Functions become the same from firm to firm
The Internet has dramatically increased this impact Advantages based in proprietary networks
are gone Carr suggests the Internet has pushed
power away from firms and into customers
Compare catalog order vs Internet
The catalog places premium on Catalog size quality
Allows my store to differentiate Cost of distribution is high
mailing list management critically important
Internet Focus on speed
Customer can ldquodroprdquo my store for another Cheap distribution costs All internet sites look alike ndash no advantage for size
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Software impact
Automated systems in customer service (or other areas) removes differences in response times All players in the industry will have about
the same response parameters Not possible to achieve distinction when
using the same software
This is great if this function is not your basis for advantage
Homogenization
Functions become the same from firm to firm
The Internet has dramatically increased this impact Advantages based in proprietary networks
are gone Carr suggests the Internet has pushed
power away from firms and into customers
Compare catalog order vs Internet
The catalog places premium on Catalog size quality
Allows my store to differentiate Cost of distribution is high
mailing list management critically important
Internet Focus on speed
Customer can ldquodroprdquo my store for another Cheap distribution costs All internet sites look alike ndash no advantage for size
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Homogenization
Functions become the same from firm to firm
The Internet has dramatically increased this impact Advantages based in proprietary networks
are gone Carr suggests the Internet has pushed
power away from firms and into customers
Compare catalog order vs Internet
The catalog places premium on Catalog size quality
Allows my store to differentiate Cost of distribution is high
mailing list management critically important
Internet Focus on speed
Customer can ldquodroprdquo my store for another Cheap distribution costs All internet sites look alike ndash no advantage for size
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Compare catalog order vs Internet
The catalog places premium on Catalog size quality
Allows my store to differentiate Cost of distribution is high
mailing list management critically important
Internet Focus on speed
Customer can ldquodroprdquo my store for another Cheap distribution costs All internet sites look alike ndash no advantage for size
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Porterrsquos Comments on the Internet
Internet provides easy access for buyers to information
Buyer power rises Traditional Sales force not as critical
Reduces barriers to entry Proprietary systems decrease
Rivalry increases The main benefits from the Internet
(access information) reduce the transaction costs and profitability to many firms
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Competitive Advantage
Sustainable advantage Firm can build a long-term advantage over
peers IT likely will not do this today
Leverageable Advantage A fleeting advantage that will be quickly
copied by competitors IT can certainly provide this ndash but not for long
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Value Innovation
Why do firms exist Economists state that markets are the
most efficient way to distribute goods Think of commodities markets for oil wheat corn
etc If this is true why create a firm to
distribute goods in place of a market Firms must add expense over a plain market
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Why do firms exist
Remember Ronald Coase He suggested that transaction costs were the reason firms are created
Transaction costs are all costs buyer and seller incur as they gather information and negotiate a sale These quickly add up Consider trying to buy a car ndash what do you have to
do
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Transaction costs
Costs are higher when the product is complex and varied conversely costs are lower when the product is a commodity Corn futures markets work well since there are low
transaction costs Home sales have high transaction costs so firms
(Realtors) have developed
When firms are created functions are ldquoaggregatedrdquo together
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
What about technology
How has technology changed transaction cost over time More information is quickly available This lowers transaction costs Reduces need for the middle firm
Some argue that firms will disappear and all of us become contractors Technology allows dis-aggregation
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Disaggregation Trends
What does this meanWhy do itIs this not the exact opposite of
verticalhorizontal integration Which is right
How do transaction costs enter in this
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Transaction Costs could Cause larger firms
Carr notes that as IT lower transaction costs vertical integration could increase leading to larger and larger firms
This is normal in maturing markets Lower transaction costs allow easier
management Consider WalMart
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
Bottom line
Do not confuse the business with the Information system As information becomes easily available it
become less costly and possibly worth less (since all have about the same information)
Consider ERP systems
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoImproved Cost-Effectiveness
Proactive management and support means that problems are prevented before they decrease ROI customers report lower maintenance and operating costs often with a savings of 20 percent or morerdquo
Would Drucker say this focuses on effectiveness or efficiency
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage
1048708 ldquoIncreased Efficiency A first-call resolution up to 50 percent for user functionality questions increases the productivity of customers freeing them to focus on managing and aligning workforce with corporate needs and increasing employee partner and customer satisfactionrdquo
Does Porter note this type of saving as a strategic one
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
ERP amp Strategy From Peoplesoft Managing ERP Applications for Strategic Advantage 1048708 ldquoExpanded Strategic Focus With all
of the routine and mundane tasks covered clients have the greater ability to leverage new capabilities within their ERP systems like self-service functions for managers and employeesrdquo
Would Carr state that these ldquostrategicrdquo benefits are able to build a proprietary competitive advantage
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
What do these mean
I suggest that these are really efficiency based This means such benefits while valuable are NOT
strategic Could these sorts of benefits be infrastructural in
nature
Consider the electricity grid or highway system Could we not point to similar benefits If so they
are certainly NOT strategic
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
IT examples
Carr notes that ERP systems allow all firms to be equally efficient Eliminates the efficient firm advantage Best practices become universal practices
What does this mean
How do we compete now Is strategy dead What does this mean for IT
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
My Conclusions
ERP systems will tend to increase rivalry since all firms become more efficient No longer can an unusually effective IT
Dept provide unique apps the yield competitive advantage
Many ERP customization is done by 3rd parties ndash available to all firms
Customer clearly wins ndash but firmrsquos profit will probably not increase
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
My Conclusions
ERP may remove IT as a source of competitive advantage for a single firm ERP enforces discipline ndash you must do it
their way IT groups focus on the install of the ERP
ERP systems are so big that they tend to use all available IT resource
After ERP install what is the difference between Firm 1rsquos and firm 2rsquos information capability
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
My Conclusions
Differentiation will be harder to achieve since more firms can do it If ERP allows firms to customize marketing
(or any other aspect of business) it is logical that more firms will try to do it
Thus differentiated marketing will become the norm
Consider ldquoWeb-based marketingrdquo ndash everyone now does it How can you build a sustainable advantage on that
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
My Conclusions
ERP systems are infrastructural Given the prior issues I believe that ERP
systems are becoming an infrastructural technology
This means that all firms need it to compete at all
Similar to electricity telephone cash registers etc
If this is true it means a fundamental change in the IT profession
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there
IT Changes
I submit that IT will change and that successful IT pros must Focus increasingly on the business side ndash
not the technology side Carefully build accurate cost justification
models Assume that basic IT issues will be
outsourced Find the IT components that may have
strategic value and build a business case there