C3 Information Systems, Organizations, and Strategy

• Understand organizations to build/use IS• Use Porter’s model and IS for strategy

• Value chain and value web to identify opportunities • IS to use synergies, core competencies, and

network-based strategies• Challenges posed by IS

AT&T Vs. Verizon | Grameen Phone Vs. XXX?

Competitive Advantage Vs. Technology!

IS and the Org. influences each other

Benefit from new technologies!IT changes Org.

rights, responsibilitieswho owns informationwho has access to and can update informationwho makes decisions about whom, what, when and how

Understanding Organizations

Features• Routines and business

processes• Organizational politics• Organizational culture• Organizational

environments• Organizational structure

Difference• Size and types

– large, small firms

• Environments– government, competitors,

customers, financial institutions

• Organizational culture– set of fundamental

assumptions about what products organization should produce how they might be changed or

replaced by using IT to achieve greater efficiency

3-11

IS Impact

• Economic impacts– Transaction costs, agency costs

• Organizational and behavioural impacts– IT flattens organizations

• Post-industrial organizations• Organizational resistance to change• The Internet and organizations

– Implications for the design and understanding of information systems

3-13

as transaction costs decrease, firm size shrink

More and more effort supervising and managing employees

IT Makes an Organization Flat! Balance all 4!

Organizational Resistance• cultural

assumptions• strains on

culture, politics and people

Businesses are rapidly rebuilding some of their key business processes based on Internet technology and making this technology a key component of their IT infrastructures.

Internet changed IS

Impact Of The Internet On Competitive Forces And Industry Structure

IS for Competitive Advantage

Porter’s competitive forces model

Four Basic Competitive Strategies

Porter’s Competitive Forces Model

Traditional competitors

New market entrants

Substitute products and services

Customers

Suppliers

3-19

Value chain model highlights specific activities in the business wherecompetitive strategies can best be applied.

Figure 3-13 3-25

The value web

• The value web is a networked system that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand.

Develop industry-wide standards for exchanging information or business transactions electronically

3-26

IS for Competitive Advantage …

• Synergies– Mergers!

• Enhancing core competencies– P&Gs InnovationNet (a KMS)

• Network-based strategies– Network Economics

• The social network effect!

– Virtual Company Model• Hong Kong-based Li & Fung

– Business Ecosystems: Keystone and Niche Firms

The digital firm era requires a more dynamic view of the boundaries among industries, firms, customers and suppliers with competition occurring among industry sets in a business ecosystem. In the ecosystem model, multiple industries work together to deliver value to the customer.IT plays an important role in enabling a dense network of interactions among the participating firms.

Management Issues

• Sustaining Competitive Advantage • Aligning IT With Business Objectives• Management Checklist

– Details in the textbook

• Managing Strategic Transitions

IS and business strategy

Businessa single firm producing a set of related products and services

Firma collection of businesses that make up a single, multidivisional firm

Industrya collection of firms that make up an industrial environment or ecosystem

Firm Level Strategy• firm as collection of

businesses • IT to improve each

business unit • synergies • core competencies

Industry Level Strategy• firms together --> industry • information partnerships:

eg Air Canada, CIBC (Aeroplan)

?@#$%^&??

!@#$$#@@#!

IT resistance

• New technology puts strains on culture, politics and people

• if IT change threatens commonly held --> resistance

Figure 3-5

3-11

Implications For The Design And UnderstandingOf Information Systems

• The environment in which the organization must function• The structure of the organization: hierarchy,

specialization, routines, and business processes • The organization’s culture and politics• The type of organization and its style of leadership• The principal interest groups affected by the system and

the attitudes of workers who will be using the system• The kinds of tasks, decisions, and business processes

that the information system is designed to assist

Characteristics of IT

• They are flexible and provide many options for handling data and evaluating information

• They are capable of supporting a variety of management styles, skills, and knowledge

• They are sensitive to the organization’s bureaucratic and political requirements

Keep in mind when designing systems: