Defining Practice, Power and Relationships in Virtual

Session 1

World Med MBA

Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy

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Introduction

• World med MBA …

– To make informed decisions in a responsiblemanner, encompassing ethical, social,environmental dimensions.

• This course …

– To give you an understanding of therelationship between information systems /information technology strategy and businessstrategy that you can apply to any situation.


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Introduction

• The course involves:

– Developing concepts and thinkingconceptually.

– Developing frameworks and models to makesense of examples from the real world.

– Applying your knowledge to specific instancesof real world and drawing inferences andconclusions from them.


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Introduction

• Concepts provide an internally coherentset of assumptions about the world. Theyare templates that you use make sense ofyour environment.

– Concepts are built on past experience; theyare used to classify objects and to allow youto interpret them and take appropriate action.

– Normally concepts are built up intuitively andover time.


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Introduction

• This course will provide a framework foryou to model the relationship betweenIS/IT and strategy.

– Framework = a conceptual structure that isdeveloped in order to be able to buildcoherent models of the real world.

– Model = a representation of the real world thatis created by only focusing on those aspectsof it that are considered to be important


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Overview

• Basic terminology

– Organizations and Work

– Data, Information and Knowledge

– Technology, Information Technology and InformationSystems

– Strategy, Corporate Strategy and Business Strategy

• The alignment of IS and business strategies

– Types of IS

– Convergence

– Business Models


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Organizations and Work


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• We have all said "I work for ..." but whatdo we mean by this?

• How do we describe what work is and theorganizations we work in?


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Organizations

• Some definitions– Organizations are closed social arrangements

for the controlled execution of collective goals.

– Organization: a group of people broughttogether for the purpose of coordinating theiractivities to achieve a shared objective.

– The basic unit of an organization is the rolerather than the person; an organization canremain in place despite changes in itsmembership.


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The meaning of organization

• A typical definition of an organizationmight say it has:

– a boundary, so that some are consideredinside while others are considered outside

– a goal, purpose or objective which is, to someextent, shared by its members

– a structure which is, to some extent,independent of its members


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Work

Work involves individuals:– Collaborating with each other to ensure that

their activities are coordinated

– Expending their time and their physical,intellectual and emotional energy

• Work also involves groups that:– Define identities, provide principles and give

meaning to actions

– Are political and the source of disputes andconflicts


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• Organizations and work are not asstraightforward as they might seem– constructed by people but existing

independently of any one individual

– consisting of individuals but acting as acollective

– existing to achieve shared objectives but alsothe source of conflict

– existing within boundaries but influencing lifeoutside those boundaries


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Data, Information and Knowledge


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• Data are a set "facts" without context:meaningless characters

• 'A series of observations, measurements,or facts'

– Collins concise dictionary


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• Information is data which has beenprocessed to turn it into a usefulstatement: something that informs

• 'The meaning given to data by the way it isinterpreted'

– Collins concise dictionary


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Data, information and knowledge

– Explicit Knowledge

• "… formal and systematic … easily communicatedand shared in a product … or a computerprogram."

» Ikujiro Nonaka, The knowledge Creating Company.HBR, Dec 1991, pp. 96 - 104

– Tacit Knowledge

• "… highly personal … hard to formalize andtherefore difficult to communicate."

» Ikujiro Nonaka, The knowledge Creating Company.HBR, Dec 1991, pp. 96 - 104


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Data, Information and Knowledge:View 1

Information

Knowledge

Data

Filters Data

Builds Knowledge

Manager

Action

Objective World

Subective World


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Information

Knowledge

Data

Filters Data

Extends Knowledge

ManagerAction

Objective WorldSubective World


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Data

IndividualKnowledge

Information

SocialKnowledge

Learning


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Data

TacitKnowledge

Information

ExplicitKnowledge

Action

Event


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Technology, Information Technology

and Information Systems


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Tools and Techniques

• Probably the broadest definition of technology is"the way things are done"

– "The sum of knowledge, received information, whichallows things to be done" (technology beyond machines, Macdonald

1985)

• Thus, technological developments become theaddition of new knowledge to old: a process:

– " of which the encapsulation of information inmachinery can be only a part" (technology beyond machines,

Macdonald 1985)

• Technology is a blend of tools and techniques


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Information Technology

What is information Technology?

• "Any means by which information iscreated, manipulated and distributed to arecipient."

Collect Process Distribute

Store


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Information Systems

What is an Information system?

• "An Information System is any related setof elements that collect data, process,store it and disseminate it"

Input Process Output

Store


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Technology, Information Technologyand Information Systems

abstract concrete

concrete

Machines / Tools

People /Techniques

Information systems

Information technology

Technology


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Strategy, Corporate Strategy andBusiness Strategy


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The vision thing

• George H Bush admitted in1987 that he lacked "thevision thing" – meaning thathe found it hard to see pastthe immediate tactics of thecampaign to the longerterm objectives.

• One way to think ofstrategy is that it is a "visionthing" knowing where youwant to be and planninghow to get there.


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28

"I think there's a worldmarket for maybe five

computers."Thomas Watson,

Chairman of IBM, 1943

"There is no reasonanyone would want a

computer in their home."Ken Olson, President,

Chairman and Founder ofDigital EquipmentCorporation, 1977

"Heavier-than-air flying machinesare impossible."

Lord Kelvin, President of TheRoyal Society, 1895

The vision thing ...


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... and events

The Right HonourableHarold Macmillan,The Earl of Stockton(1894 – 1986)

Harold Macmillan was the PrimeMinister of the UK from 1957 until1963 during a period that sawseveral political scandals andpolicy debacles.

When he resigned he was askedby a reporter what the greatestchallenge was that he had facedas the leader of the country, hewas alleged to have said:

"Events dear boy,events"

Strategy is more than just vision


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What is strategy?

• Strategy

– The determination of long term objectives,actions, alternatives and resources

– A set of actions to accomplish a particularhigh level objective

– A programme that sets out objectives, policiesand resource allocations


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Corporate and Business Strategy

• Corporate strategy

– which industries and markets to compete in,growth, diversification or retrenchment,acquisitions, new ventures, divestments ...

• Business strategy

– how firm competes within a particular industryor market and how to achieve a competitiveadvantage over rivals, cost leadership,differentiation, added value ...


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32


RATE OF RETURNABOVE COST OF

CAPITAL

How do wemake

money?

INDUSTRYATTRACIVENESS

Whichindustries?

COMPETITIVEADVANTAGE

How tocompete?

CORPORATESTRATEGY

BUSINESSSTRATEGY

Grant 2008


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• We will focus on Business Strategy and inparticular the links between informationtechnology and information systems andthe setting and achieving of a businessesstrategic objectives.


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Types of Information Systems


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The organization as a pyramid


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Systems and levels

StrategicLevel

OperationalLevel

Office WorkLevel

ManagementLevel


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The 'classic' information systems

Operational level (Data)

• Transaction Processing System

– Process large amounts of data for routinebusiness transactions

– Boundary-spanning

– Support the day-to-day operations of thecompany


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Office level (Information)

– Office Automation System (OAS)

• Supports workers who share information, but donot usually create new knowledge

– Knowledge Work System (KWS)

• Supports professional workers who need tomanage complex and interrelated information suchas scientists, engineers or doctors


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Management level (Information / knowledge)

• Management Information System (MIS)

– Support a broad spectrum of organizationaltasks including decision analysis and decisionmaking

• Decision Support System (DSS)

– Aids decision makers in creating scenariosand making of decisions


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Strategic level (Knowledge)

• Executive Information System (EIS)

– Provides up to date overview of firm's positionwith the ability to 'drill down'

– Used for non-routine decisions requiringjudgment, evaluation and insight

– Helps executives to make strategic decisionsin a structured and informed way


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The 'classic' IS

The 'classic' IS just as much an invention as the classic malts, butlike the classic malts it does help to highlight the key features ofhow IS are used in organizations.


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Convergence


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Early computers (Manchester mark 1, 1948)


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Early computers (Ferranti Mark 1, 1951)


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Changing Technology– Computers

• 1st generation (1950's) - Large (30 tonnes), unreliable (meantime between failures < 15 min), expensive ($400,000 at1946 prices)

• 2nd generation (1960's) - Smaller, faster and more reliablebut still expensive. Services often rented, use restricted tolarge businesses

• 3rd generation (1970's) - Smaller, faster and more reliable.Low cost mini-computer stimulates many new businessapplications

• 4th Generation (1980's) - Development of personalcomputing erodes mainframe market. Low cost, "userfriendly" computing for all

• ...


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Generations in a family tree

Information

First Generation

Second Generation

Third Generation

Fourth Generation

Fifth generation

Information Systems

Knowledge Systems

Mini Computers

Personal Computers

Laptop Computers

Data

?


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Convergence

• A term used to describe the comingtogether of IT, telecoms, content, andother related industries because ofcommon technology developments andmarket aspirations.

– IMO secretariat, European Commission.


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Convergence

• IT and telecommunications

– Client level convergence: Handhelds / Cellphones

– Server / network level convergence: Skype,Internet telephony

– Cloud Computing: Network become thesource of computing power


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Convergence


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Business Models


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Change and Complexity

• The rate of technological change iscontinuing and accelerating

• There is also an unprecedented growth intechnological complexity in terms of

– Range and diversity of applications

– Interdependence of applications


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How to deal with complexity?


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Business Models

• A 'narrative with numbers' which originatedin the dot-com era and was used to:

– "... to glorify all manner of half-baked plans. Acompany did not need a strategy or a specialcompetence, or even any customers, all itneeded was a web-based business modelthat promised wild profits in some distant, illdefined future" (Magretta, 2002)


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Models

• A model is a substitute for a real systemthat is easier to work with than the actualsystem.

• They are simplified and abstractconstructs created to help us understandreal world systems by only representingcertain aspects of the actual system thatare deemed to be important.


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Business Models

• Business models are an effective way forpeople to plan and to communicate goals,ideas and objectives

• Business models also capture the'business logic' of a company in a way thatmakes it easier to translate into IS models


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A Simple Modelof a Business Model

Value Proposition

Customer

Product / service

Partners

Value Architecture

Resources

Internal value chain

External value chain

Revenue Generation

Capturing Value

Reducing costs

Profitability


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An example of a Business Model

Value Proposition

A 'one stop shop' forwedding planning

Value Architecture

Role as an intermediarybrings substantial

discounts

Revenue Generation

Commission from storesand loyalty card

(See 1001 Listes)


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Types of Business Model

• Just like Information systems, there havebeen many attempts to classify businessmodels into different types of model thatcan be adapted for and used in differentsituations

• These are often expressed as a hierarchywhere one type of model is broken downinto subcategories


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Types of Business ModelBusiness

model

Brokerage AdvertisingInfomediar

y

DemandCollection

Auction

Englishauction

Dutchauction

Sealed-bidauction

...

... ... ... ... ... ......


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Brokerage

• Marketplace Exchange

• Buy/Sell Fulfilment

• Demand Collection System

• Auction Broker

• Transaction Broker

• Distributor

• Search Agent

• Virtual Marketplace


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Brokerage

• Auction Broker

– English auction

– Dutch auction

– Sealed-bid auction

– Combinatorial auction


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Business Models

• The use of business models within IT:

– "A business model is a conceptual toolcontaining a set of objects, concepts and theirrelationships with the objective to express thebusiness logic of a specific firm." (Osterwalderet al. 2005)


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Another view of a Business Model

(Gordijn, Akkermans et al. 2001)


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Another view of a Business Model

Valueactivity

Valueconfiguration

Actorby

DescriptionReasoningCategory {Value chain, Value shop, Value network …}

needs (in)implements

Resource Value proposition

refined byis a

Category {principal, support …}

creates (out)

(Osterwalder and Pigneur, 2006)


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Next session

• Evaluation of the different types andcategories of information system available

• Review of the different approaches andtechniques for the acquisition ofinformation systems

• An analysis of the choices (strategic /tactical / social / ethical) faced wheninvesting in IS / IT

Documents

Defining Practice, Power and Relationships in Virtual