Information Technology and Competition

1
Information Technologyand Competition

• Commerce 438
• Fall 1999

2
Strategic Information Systems

• Competitive advantage
• Is the firm missing opportunities that would give
  it a competitive edge?
• Competitive necessity
• Is the firm being affected competitively by
  failing to implement necessary IT applications?

3
Context of Strategic IT
4
Strategic IS Planning (SISP)

• A process during which an organization defines
  its intended usage of IT in the future.

5
Objectives of SISP

• understand external and internal business
  environment and IT environment and business
  goals, to
• define applications portfolio to meet current
  business needs
• define systems data architecture
• search for innovative, strategic opportunities as
  part of the future portfolio

6
Four Stage Model of IS Planning
7
The Porter Competitive Forces Model
8
Identifying Strategic IT Opportunities

• What are the implications of each force for the
  competitiveness of a firm?
• How can the use of IT alter the competitive
  dynamics of each force?

9
IT Impact on Threat of New Entrants

10
IT Impact on Buyers Bargaining Power

11
IT Impact on Suppliers Bargaining Power

12
IT Impact on Intra-industry Rivalry

13
IT Impact on Substitutes

14
Strategic IS Alteration of Basis of Competition

• Can IT build barriers to entry?
• Can IT build switching costs?
• Can IT strengthen customer relationships?
• Can IT change the balance of power in supplier
  relationships?
• Can IT change intra-industry competitive balance?
• Can IT change the basis of competition?
• Can IT generate new products/markets?

15
The Value Chain
16
SIS Critical Success Factors

• external not internal focus
• adding value (not cost reduction)
• sharing the benefits
• understanding the customer
• business-driven innovation
• incremental development
• use of the information gained

17
Risks of Strategic IS

• Failed systems
• fail to meet on-going customer need
• fail to be defensible
• rejected by customer or organization culture
• Successful systems with negative impact
• change the basis of competition to a firms
  disadvantage
• lower entry barriers
• bring in litigation or regulation
• increase buyers/suppliers power