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Phase 12 Information Systems to get Strategic Benefit V. NOTES FROM A CLASS SECTION I: Fundamentals of Strategic Benefit Information technology can adjust the way businesses compete. That is why, you should look at information systems strategically, that may be, as vital competitive networks, as a way of company renewal, and as a necessary investment in technology that support an venture achieve the strategic targets.
Analysing GATX Capital We are able to learn a lot about the strategic utilization of information technology pertaining to competitive advantage from the Real World Case of GATX Capital.
Have a few minutes to study it, and we will discuss that (See GATX Capital City in section XI). 12-1Competitive Strategy Ideas: [Figure 12. 2] The strategic function of information systems involves using information technology to develop products, solutions, and capabilities that give a company strategic advantages over the competitive forces it faces in the global market place. This produces strategic information systems, information systems that support or shape the competitive location and strategies of an organization. So a strategic information system can be any kind of information program (TPS, LOS, DSS, etc . that helps a business: 1 . Gain a competitive advantage 2 . Reduce a competitive downside 3. Satisfy other strategic enterprise goals According to Michael Avoir, a firm can survive and achieve the long run whether it successfully grows strategies to confront five competitive forces that shape the structure of competition in its industry. Included in this are: 1 . Rivalry of opponents within their industry 2 . Threat of new entrants three or more. Threat of substitutes 4. Bargaining benefits of customers 5. Bargaining power of suppliers Various competitive tactics can be designed to help a strong confront these competitive forces.
These include [Figure 12. 3]: Cost Leadership Strategy- Become a lowcost producer of products and companies , Get ways to help suppliers or perhaps customers decrease their costs , Raise the costs of competitors. Difference Strategy-Develop approaches to differentiate product or service from competitors. , Reduce the differentiation benefits of competitors. Development Strategy- Find new ways to do business: a) develop new releases , services b) enter into new markets or promoting segments. c) establish new company alliances ) find new ways of producing products/services e) discover new ways of distributing products/services Growth Strategies-Significantly expand the company=s ability to produce services and goods. , Broaden into global markets , Diversify in to new products and services , Integrate in related products. Alliance StrategiesEstablish new business entrave and alliances with clients, suppliers, opponents, consultants and other companies (mergers, acquisitions, joint ventures, developing virtual corporations, etc . ). 12-2Strategic Functions for Information Systems:
How can the preceding competitive strategy principles be applied to the strategic position of information systems? Information technology can be used to implement a number of competitive strategies. These include the five simple competitive strategies (differentiation, expense, innovation, progress, alliance), along with other ways that businesses can use details systems strategically to gain a competitive advantage. For example: 1 ) Lower Costs installment payments on your Differentiate a few. Innovate 4. Promote Development 5. Develop Alliances 6. Improve top quality and effectiveness 7. Build an THIS platform eight. Other approaches use interorganizational information systems to create switching costs that lock in customers and suppliers. , work with investments in THAT to build limitations to access against market outsiders. , use IT elements to make replacement of competing products less attractive. Improving Business Processes: Investments in information technology can assist make a firm’s operational processes considerably more efficient, and its particular managerial operations much more successful. By making this kind of improvements to its organization processes a strong may be able to: 1 ) Dramatically save money 2 .
Improve the quality and customer service several. Develop innovative products achievable markets Endorsing Business Development Investments in details systems technology can result in the introduction of new products, providers, and processes. This can: 1 ) Create start up business opportunities installment payments on your Enable a strong to enter new markets three or more. Enable a firm to enter in to new industry segments of existing marketplaces. Lock In Buyers , Suppliers Investments in i . t can also let a business to lock in buyers and suppliers (and do away with competitors) because they build valuable new relationships with them.
This is often accomplished by: 1 ) Deters the two customers and suppliers by abandoning a firm for its competition or intimidating a firm in accepting less profitable human relationships. 2 . Offer better-quality service to customers permits a company to differentiate themselves from their competitors. 3. Generate interorganizational data systems in which telecommunications systems electronically hyperlink the ports and computer systems of businesses with their customers and suppliers, resulting in new business units and relationships.
Creating Transitioning Costs A significant emphasis in strategic info systems is always to build turning costs in the relationships among a firm as well as its customers or perhaps suppliers. That is, investments in information systems technology can make clients or suppliers dependent on the continued use of innovative, mutually beneficial interorganizational information systems. Then, they become reluctant to pay the cost with time, money, effort, and difficulty that it might take to in order to a firm’s competitors.
Model: APOLLO (USA) airline booking system, and GEMNI (CAN) airline booking system Elevating Barriers to Entry Expenditure in details technologies that increase operational efficiency can easily erect limitations to access for new players in the industry, and will discourage businesses already in the market. This can be accomplished by: 1 . Increasing the amount of expense or the complexness of the technology required to remain competitive in a marketplace segment. 2 . Discourage businesses already in the marketplace and prevent external businesses from getting into the sector. Leveraging a Strategic IT Program
Information technology allows a firm to build a strategic THAT platform that allows it to fully make use of strategic options. Typically, what this means is acquiring software and hardware, developing telecoms networks, selecting information system specialists, and training customers. A firm can then leverage expenditure in i . t by expanding new products and services. Making a Strategic Details Base Details systems allow a firm to produce a strategic information base that could provide information to support the firm’s competitive strategies.
A firms’ data source is considered an organized resource that is used to support strategic planning, advertising, and other ideal initiatives.
Break time boundaries. 2 . Break geographic barriers. 3. Break cost boundaries. 4. Break structural boundaries. Breaking Time Barriers Information technology is used to shorten the intervals between various essential steps in an enterprise process. Telecoms is a lot quicker than most other forms of sales and marketing communications, thus, it offers information to remote spots immediately after it truly is requested. Disregarding Geographic Obstacles Telecommunications sites enable you to get in touch with people nearly anywhere in the world.
Telecommunications and computing technologies have the ability to disperse key business activities to where they can be needed, in which they are finest performed, or perhaps where that they best support the competitive advantage of a small business. Breaking Expense Barriers Pcs and telecoms can often drastically reduce the expense of business operations when compared with various other means of information processing and communications. For instance , they can keep costs down in this sort of areas as production, products on hand, distribution, or perhaps communications.
Data technologies have also helped businesses cut time costs, decrease inventory amounts, reduce the quantity of distribution zones, and decrease communications costs. The New Economies of Information: The internetworking of businesses and customers via the Internet, intranets, and extranets is smashing the cost barriers raised by traditional monetary trade-offs in information articles and delivery. In communicating with each other and consumers, businesses have had to make trade-offs among: Reach: The amount of people receiving or exchanging information.
Richness: The bandwidth, customization, and interactivity info. Bandwidth is the amount details content sent within a offered time period. Personalization is the level to which information content is usually customized for its recipient. Interactivity is the volume of conversation between the information provider as well as the recipient. Disregarding Structural Boundaries Computers and telecommunications networks can help a business develop tactical relationships by simply establishing fresh electronic linkages with clients, suppliers, and also other business organizations.
For example , telecommunications networks can support innovations inside the delivery of services, increase the scope and penetration of markets, and create proper alliances with customers, suppliers, and even a firm’s competitors. 12-4The Benefit Chain and Strategic CAN BE: [Figure 12-10] An important strategy that can help a manager determine opportunities to get strategic info systems is the value chain concept because developed by Jordan Porter. This concept: 1 . Views a firm being a series or “chain, of standard activities that add value to its products and providers and thus, add a margin of value to the organization. 2 .
A lot of business activities are seen as primary activities, and others happen to be support activities. This structure can emphasize where competitive strategies can easily best be used in a organization. 3. Managerial end users need to develop tactical information devices for those actions that add the most value to a industry’s product or perhaps services, and so to the total business worth of the organization. SECTION 2: Strategic Applications and Problems in Information Technology: [Figure 12-11] Figure 12-11 illustrates other ways in which organizations view and use i . t. These include: 1 . Strategic. Unpleasant 3. Shielding 4. Cost-justified 5. Handled 12-5Reengineering Organization Processes One of the most popular competitive strategies today is business process reengineering (BPR), generally simply named reengineering. Reengineering is the important rethinking and radical redesign of business processes to accomplish dramatic improvements in price, quality, acceleration, and services. BPR combines a strategy of promoting business innovation with a strategy of getting major advancements to organization processes to ensure that a company could become a much stronger and more powerful competitor in the marketplace.
The potential repayment of reengineering is excessive, but is also its level of risk and disruption for the organizational environment. The Role of Information Technology Information technology performs a major part in reengineering business operations. The speed, information processing power, and ease-of-use of modern computer hardware, application, and systems can considerably increase the performance of organization processes, and communications and collaboration among the list of people in charge of their procedure and administration. 12-6Improving Organization Quality Not one approach to company change is suitable for all circumstances.
One crucial strategic pushed is ongoing quality improvement, popularly named total top quality management (TQM). Previous to TQM, quality was defined as appointment established requirements or specifications for a services or products. Statistical top quality control programs were utilized to measure and address any deviations from specifications. Total Quality Management: Quality is defined as conference or going above the requirements and expectations of shoppers for a products or services. This may require many features and features such as: 1 . Performance installment payments on your Reliability several. Durability some.
Responsiveness your five. Aesthetics 6. Reputation Total quality supervision uses a various tools and methods to seek continuous improvement of top quality, productivity, versatility, timeliness, and customer responsiveness. 12-7Becoming a great Agile Competition: [Figure 12-20] Agility in competitive performance is the ability of a business to be successful in rapidly changing, continuously fragmenting global markets intended for high-quality, high-performance, customer-configured product or service. An acuto company may: 1 . Generate income in market segments with extensive product runs and short model lifetimes 2 .
Procedure orders in arbitrary lot sizes three or more. Offer individualized products while keeping high volumes of creation. Agile businesses depend heavily on i . t to: 1 . Enriched their customers with customized strategies to their needs. 2 . Cooperate to businesses to create products to sell as swiftly and economical as possible. a few. Combine the flexible, multiple organizational constructions it uses. some. Leverage the competitive impact of its people and information solutions. The Position of Information Technology IT is a ideal requirement for souple product development and delivery.
Info systems supply the information we all need to support agile operations, as well as the information included in products and services. 12-8Creating a Electronic Company: [Figure 12-21] A virtual business is a business that uses information technology to link people, assets, and ideas. Half a dozen basic attributes of effective virtual corporations include: 1 . Adaptability 2 . Opportunism (opportunity-exploiting organization) a few. Excellence 4. Technology your five. Borderless six. Trust-based Online Company Strategies: Forming virtual companies are getting to be an important competitive strategy in today=s energetic global markets.
Information technology plays an important function in offering computing and telecommunications solutions to support the communications, coordination, and data flows necessary. Managers of a virtual company depend on THIS to help them take care of a network of people, know-how, financial, and physical assets provided by various business lovers to quickly take advantage of swiftly changing style opportunities. Organization strategies of virtual companies consist of: 1 . Discuss infrastructure and risk installment payments on your Link supporting core competencies 3. Reduce concept to cash time through showing 4.
Enhance facilities and market insurance coverage. 5. Gain access to new marketplaces and share market or buyer loyalty 6th. Migrate coming from selling products to selling alternatives. 12-9Building the Knowledge-Creating Firm To many businesses today, long-term competitive edge can only always be theirs in the event they become knowledge-creating companies or perhaps learning companies. That means consistently creating new business knowledge, distributing it generally throughout the organization, and quickly building the newest knowledge into their products and services. Knowledge-creating companies take advantage of two kinds of technology: 1 .
Explicit Knowledge- data, files, things drafted down or stored on computers. 2 . Tacit Knowledge- “how-tos expertise, which live in workers. Good knowledge management creates tactics, technologies, and rewards to get employees to talk about what they know and to make better use of built up workplace knowledge. Knowledge Managing Systems Expertise management is now one of the major strategic uses info technology. Many companies are building knowledge management systems to handle organizational learning and business know-how.
The goal of KMS’s is to help knowledge workers produce, organize, and make available crucial business knowledge, wherever and whenever is actually needed in an organization. Including processes, procedures, pattens, reference point works, formulations, “best procedures, forecasts, and fixes. Internet and intranet websites, groupware, info mining, understanding bases, discussion forums, and videoconferencing are some of the key information technologies for gathering, saving, and distributing this know-how. Characteristics of KMS’s: 1 ) KMS’s will be information devices that assist in organizational learning and understanding creation.. KMS’s use a variety of information systems to collect and edit information, assess their value, share it in the organization, and apply it while knowledge towards the processes of a business. three or more. KMS’s are sometimes called adaptive learning systems. That’s because they generate cycles of organizational learning called learning loops, in which the creation, dissemination, and application of knowledge makes an adaptive learning procedure within a organization. 4. KMS’s can provide rapid feedback to knowledge staff, encourage conduct changes by employees, and significantly increase business performance.. As an organizational learning process carries on and its know-how base grows, the knowledge-creating company combines its expertise into its organization processes, items, and companies. This makes it a very innovative and agile supplier of high quality companies customer companies, and a formidable rival in the marketplace. 12-10Using the Internet Strategically In the past the world wide web has been used as a advertising channel pertaining to companies who would like to publish details about themselves and their products. Recently, this has given way to more impressive uses in the Internet.
Companies have realized that the Internet works extremely well strategically pertaining to competitive benefit. However , to be able to optimize this kind of strategic influence, a company need to continually assess the strategic placement of the Internet-based applications. A strategic position matrix may help a company recognize where to focus its make use of the Internet to gain competitive advantage. These tactics include: ¢ Cost and Efficiency Improvements , this kind of quadrant symbolizes a low sum of interior company, consumer, and competition connectivity and use of IT via the Internet and also other networks.
Approach: Focus on increasing efficiency and lowering costs by using the Net and the The net as a fast, low cost method to speak with customers, suppliers, and organization partners. Case: The use of Email and a firm Web site. ¢ Performance Improvement in Business Success , in this article a company provides a high degree of internal online connectivity and demands to significantly improve their business procedures, but exterior connectivity by simply customers and competitors is still low. Strategy: Make key improvements running a business effectiveness.
Example: Widespread inner use of Internet-based technologies like intranets may substantially boost information posting and effort within the organization. ¢ Global Market Transmission , a business that makes its way into this installment of the matrix must make profit on a large degree of client and rival connectivity and use of THIS. Strategy: Develop Internet-based applications to boost interaction with customers and make market share. Case in point: Outstanding Web sites with value-added information companies and on the web customer support. Item and Service Transformation below a company as well as its customers, suppliers, and competitors are substantially networked. Web-based technologies, including Web sites, intranets, and extranets, must now be implemented over the company’s operations and organization relationships. Strategy: Develop proper electronic business applications to produce and deploy new Internet-based products and services that strategically reposition it available on the market. Example: Use the Internet for on the net transaction digesting of sales of products and services by company Internet sites, and electronic document interchange (EDI) with suppliers.
Internet Value Stores: The value chain concept assists a company assess how to use technology strategically. Worth chains can also be used to strategically position a company’s Web-based applications to find competitive benefits. The value chain model may be used to outline several ways that a: 1 . Provider’s Internet connections having its customers could provide business benefits and opportunities pertaining to competitive benefits. 2 . Industry’s Internet connections using its suppliers could be used for competitive advantage. 3.
Company’s inner operations may benefit strategically coming from Internet-based applications. 12-11The Issues of Ideal IS The IS USUALLY function can assist managers develop competitive weapons that use information technology to apply a variety of competitive strategies to fulfill the challenges in the competitive pushes that deal with any business. Successful tactical information systems are not easy to develop and implement. They could require key changes in the way a business works, and in their particular relationships with customers, suppliers, competitors, internal and external stakeholders, yet others. 2-12Sustaining Proper Success: [Figure 12-34] Accomplishment and support ability depends upon many environmental and primary business factors, and especially on the actions and strategies of a company’s supervision team. Suffered success in using technology strategically appears to depend on 3 sets of factors: ¢ The planet , a major environmental component is the composition of an market. ¢ Basis Factors , unique sector position, connections, assets, scientific resources, and expertise will be foundation factors that give a business a competitive edge available in the market. Management Activities and Strategies , a company’s management must develop and initiate successful actions and tactics that condition how technology is actually applied in the marketplace. Examples include: a. Preempting the market if it is first and way before competitors in a strategic business use of IT. b. Creating switching costs and limitations to entry c. Producing strategies to reply to the catch-up moves of competitors m. Managing the organization risks natural in any proper IT projects
