Information Technology and
Competitive Advantage
“Spend sufficient time confirming the need and the need will disappear. “
Ed's Fifth Rule of Procrastination
Information Systems for Managers - Information Technology and Competitive Advantage
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The Imperative
Global competition
A more perfect market
for information
– Customers
– Suppliers
– Competitors
– Investors
Transformation from
industrial to
information economy
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What To Do?
Flattening the hierarchy
Decentralization
Driving decisionmaking
downward
Collaborative working
Downsizing and
outsourcing
Moving more rapidly
Information Systems for Managers - Information Technology and Competitive Advantage
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What Information Systems Can
Do
Computation and
manipulation
Communication
Data storage
Data access
Data organization
Data presentation
Information Systems for Managers - Information Technology and Competitive Advantage
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New Organizational Capabilities
“Waves of Innovation”
(Primozic & Leben,
1991)
– Reducing costs
– Leveraging investments
– Enhancing products &
services
– Enhancing executive
decision-making
– Reaching the consumer
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Supply Chain
Upstream Internal Downstream
2nd Tier
Supplier
1st Tier
Supplier
2nd Tier
Supplier
Assembly, mfg,
Dist. Retail Cust.
pkg
1st Tier
Supplier
2nd Tier Supplier
Information Systems for Managers - Information Technology and Competitive Advantage
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Supply Chain Problems
Uncertainty of demand
Coordination problems
Product shortages
Too much (or the wrong kind of)
inventory
Quality problems (caught late)
Poor customer service
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Early Solutions
Vertical integration
– Control of the entire chain
– Can be costly, distracting
Building inventories
– “Just in case” vs. “just in time”
– Also costly
– No guarantees
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Supply Chain Management
Coordination of activities in the supply
chain
Use sales data for forecasting
JIT purchasing – lower inventories
Strategic partnerships
Build-to-order rather than build-to-
inventory
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How IT Can Help
Rapidly communicate orders
Track order status
Check and maintain inventory availability
Plan production based on demand and
forecasts
Rapidly communicate design specifications
and changes
Share info about defects, returns
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Enterprise Resource
Management
Sales Sales Sales
Office Office Office
Central database
And servers
Factory Warehouse Acctg Hdqtrs
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ERP - Advantages
Firm structure
– Unified processes
– “One firm”
Management control
– Rapid access to up-to-date information
– Cross-functional information
– Aid in decision making
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ERP - Advantages
Technology
– Unified platform
– Data standardization (definitions and formats)
Business
– Cross-functional integration
– Efficient response to customer requests for
information
– Flexible manufacturing
– Smart procurement, lessen inventory
– Better data leading to better forecasts
Information Systems for Managers - Information Technology and Competitive Advantage
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ERP - Challenges
Massive implementation
– Costly
– Requires lots of user input
– Changes to organizational culture
Larger benefits are down the road
Inflexibility?
Failure to reap benefits
Information Systems for Managers - Information Technology and Competitive Advantage
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The Virtual Corporation
Also known as virtual organization,
virtual enterprise
Set of alliances among various
organizations
Each partner contributes unique
capability
Temporary or permanent
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IT-enabled Phenomenon
EDI (early technology)
Interorganizational systems
Ecommerce (B2B)
Mass customization technology
Internet (intranet, extranet)
Groupware
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VC - Caveats
Carefully define core competency
Make vs. buy decisions
Relationship of trust with partners
Aggressively use IT capabilities
Softer issues
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Electronic Commerce
Use of telecomm networks to conduct
business transactions
eCommerce vs. eBusiness
Differing definitions
Business-to-business (B2B)
Business-to-consumer (B2C)
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B2C - Using the Web to Make
$$$
Advertising (Yahoo)
Selling information (Consumer Reports)
Selling goods and services (Amazon)
Referrals (Autobytel)
Razors/blades (Adobe Acrobat)
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B2B Applications
To save money, realize efficiencies
Three types of marketplaces
– Supplier-oriented marketplace
– Buyer-oriented marketplace
– Intermediary-oriented marketplace
Use of EDI in private VANs and via
Internet
XML
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Knowledge Management
Enhance strategic
flexibility
Only lasting
advantage
The “learning
organization”
The knowledge
economy
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Types of Knowledge
Tacit vs. explicit
– Implicit (Tacit) –
know but can’t
explain
– Explicit – can be
expressed
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The Knowledge Management Life-
Cycle
Create/ Refine/ Manage/
Apply
Capture Store Disseminate
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IT Applications
Knowledge bases
– As opposed to database
– Computerized repository
Factual/procedural knowledge (manuals)
Bestpractices
Discussion databases
Corporate yellow pages/directories
Organizational experience
Expert systems
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IT Applications
Groupware
– Enable online collaboration, communication
– Document sharing
– Indexing and archiving
– Lotus Notes
Internet
– Standard technology base for building
applications
– World Wide Web (knowledge creation)
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Does IT Matter?
Nicholas Carr (HBR, 2003)
– IT as a commodity, available to all
– Price to pay to play
– Any IT-based advantage can be imitated
Opposing(?) points of view
– New technologies
– Continuous innovation
– IT and management
Ongoing debate
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