What

1
Whats Happening?!

• Quest is negotiating to buy MCI for about 6.2
  billion.

Bush push to overhaul social security.
76,152 students applied to the UC system this
year.
Tivo president resigned over vision conflict with
founder and CEO.
2
Whats Happening!
Midterm Exam
I will provide the exam answer paper.
Six essay questions 1 is worth 25 points 1 of
2 is worth 20 points 1 is worth 15 points
must answer 4 are worth 10 points
3
Chapter 7 Summary

• Implementing a Vision
• Strategy, Tactics and Business Plan

4
Important Chapter Topics

• How to transition a vision into reality through
  strategy, tactics, and business plans.
• Fundamentals and guidelines that relate to
  business strategies.
• How strategies dictate the role and significance
  of information systems.

5
Defining the Process Elements

• Vision Identifies what the organization wants to
  look like at some logical point in the future.
• Strategy How a company will achieve the
  long-term goal of the vision.
• Tactics More specific time-oriented, measurable
  ways to make a vision a reality.
• Business Plan Allocation of funds and other
  resources.

6
Business Strategy Focus

• Competitive Environment The primary market and
  major competitors and whether current strategies
  are producing the intended results.
• Customer Targets Are their primary needs being
  satisfied?
• Product portfolio Is it on target or does it
  need to be changed and/or broadened?
• Financial Implications Are current and projected
  results up to expectations?
• Resource Allocation Do changes need to be made?

7
Porter Strategy Guidelines

• Primary Strategies
• Differentiation
• Least Cost
• Supporting Strategies
• Innovation
• Growth
• Alliances

8
Business Strategy Model Guidelines
1. What products and/or services do we intend to
offer? 2. What price range of products do we
intend to offer? 2. What customer targets do we
intend to pursue? 3. What geographic markets do
we intend to address? 4. How will we obtain
products to sell to our customers? 5. How will we
deal with sales to our customers? 6. What company
structure do we intend to create? 7. What
information systems approach will we take?
9
External Analysis
Internal Analysis
10
Progressive Corporation

• Important learning points
• Market factors triggered the need for a new
  vision and supporting strategies.
• The CEO had problems in getting his employees to
  accept the fact that a major change was needed.
• Changes involved refocusing product and service
  strategies and related business processes and
  systems.
• Information systems played a major role in
  support of the new strategies.

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(No Transcript)
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IT Based Strategies
MARKET PLACE
OPERATIONS
Federal Express USA Today Charles Schwab
Whirlpool Xerox
SIGNIFICANT STRUCTURAL CHANGE
BancOne Boeing Frito-Lay Wal-Mart
USAA L.L. Bean McKesson
TRADITIONAL PRODUCTS AND PROCESSES
Figure 7-6
13
Possible Exam Questions

• Explain the relationship between the vision of a
  company and the challenge of making things
  happen.
• Explain the intent of Figure 7-3 and why it
  could be difficult to implement such an approach.
  

14
Chapter 8 Summary
Evaluating Business Strategies and The Use of
Information Systems The Strategic Option
Generator
15
Chapter Objectives

• To identify strategic opportunities involving the
  use of information system.
• To relate the use of information system to gain a
  competitive advantage.

16
A Systematic Approach
Vision Strategy Tactics Business Plan

• Competitive Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
• as the Delivery Vehicle
• Success Factor Profile

Figure 1-4
17
STRATEGIC OPTION GENERATOR
TARGET
CUSTOMER
COMPETITOR
SUPPLIER
THRUST
DIFFERENTIATION COST
INNOVATION GROWTH ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC ADVANTAGE
Figure 8-1
18
Federal Express Analysis Using the Strategic
Option Generator
TARGET
CUSTOMER
COMPETITOR
SUPPLIER
THRUST
DIFFERENTIATION COST
INNOVATION GROWTH ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC ADVANTAGE
Figure 8-2
19
UPS Analysis Using the Strategic Option Generator
TARGET

CUSTOMER
COMPETITOR
SUPPLIER
THRUST
DIFFERENTIATION COST
INNOVATION GROWTH ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC ADVANTAGE
Figure 8-3
20
Conclusions

• It is necessary to understand and use the
  Strategic Option
• Generator properly.
• Some important guidelines
• Target be sure to identify the correct primary
  target
• Thrust differentiation or cost must be selected,
  not both.
• Supporting Strategies any combination of the
  three can be selected.
• Direction it is confusing and the name of the
  element is not self-explanatory. The intent is
  to identify whether the users of the information
  systems are company employees or external to the
  company.

21
Possible Exam Questions

• Explain the elements of the Strategic Option
  Generator.
• Explain how the Strategic Option Generator should
  be used in Section III of the analysis term
  paper.

22
Chapter 9 Summary

• The Roles, Roles
• and
• Relationships Concept

23
Important Topics

• Roles, roles and relationships concept.
• Managing IS as a business.
• Technology transfer through organizational
  learning.
• Outsourcing.

24
IS as a Competitive Resource?

• Business competitiveness is a top priority.
• What about Information Systems?

25
Roles, Roles and Relationship Concept
1. The role of information systems is focused on
competitive priorities.
2. Senior management plays a major role in
positioning and prioritizing the competitive
role of information systems.
3. There is an on-going working relationship
between senior management and the
information systems organization to sustain
the successful use of information systems to
compete.
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The Role of the Senior Executive
The Person that Runs the Business on a Day-To-Day
Basis

• Provide a long term vision for the future of the
  business.
• Recognize the value of information to the
  organization.
• Sponsor and participate in determining the role
  of information systems.

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• Communicate the importance of the information
  systems role.
• Provide funding, including RD, to address the
  major requirements.
• Focus on results and benefits.
• Motivate to make things happen!

28
Role of Other Senior Management

• Understand the role of information systems within
  the organization.
• Identify and specify requirement for new
  information systems.
• Justify and fund existing and new systems.
• Sponsor their information systems on an on-going
  basis.

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Role of IS Executive

• Function as a member of the senior management
  team.
• Provide an understanding of the realm of the
  possible, feasible, affordable and achievable
  with information systems.
• Posture information systems as a service and
  support organization in both fact and perception.

30
Roles, Roles and Relationships
Leadership in two forms
- Business Leadership - IT Leadership
31
Managing IS as a Business

• Important to recognize that the IS organization
  is
• really in three different businesses
• Designing information systems.
• Building information systems.
• Running and maintaining information systems.

32
Concurrent Learning Curves
Information Technology
Computer-based Applications
Organization
33
Outsourcing

• Hiring someone whose expertise can perform a
  business function or activity better, more cost
  effectively and/or in a more timely manner than
  can be achieved in-house.

Also enables the company to focus on its core
competencies and those factors that mean the
difference between success and failure.
34
Possible Exam Questions
1. Explain the importance of the roles, roles and
relationships concept if a company has decided
that it definitely wants to use information
systems to gain a competitive advantage.
2. Can a company successfully use information
systems as a competitive resource by outsourcing
the management of this resource to an
outside company?
35
Chapter 10 Introduction

• The Redefine and/or Define Concept
• and
• Change Management

36
Agenda

• Learning Objectives
• Redefine and/or Define Concept
• The Product and Service Delivery Process
• The Challenge of Change Management
• Conclusions

37
Learning Objectives

• To understand the second of the two core concepts
  of the structured analysis approach.
• To appreciate the importance and significance of
  change management within an organization.
• To remember that information systems is viewed as
  a major cause of change within a company.

38
Redefine and/or Define Concept

• Redefine Change
• Define Clarify
• How an organization can change and clarify the
  role of IS to achieve and sustain competitive
  advantage?

39
Redefine and/or Define What?

• Options
• The business
• Products and/or services
• Business processes
• Why bother?
• Value to customer

40
Product and Service Delivery Process

• Is the delivery process of the product more
  important than the product itself?

Delivery Process
Product/Service
Value to Customer
Figure 10-1
41
Change Management

• Four Challenging Factors
• The pace and time pressures of change.
• Financial controls may not allow increase in the
  number of employees despite growth.
• Shifting of productivity and other operational
  objectives to IT.
• Dramatic improvements in IT price, performance,
  and function.

42
Conclusions

• Change is the norm in most businesses.
• Information technology can be a catalyst or
  vehicle for change.
• Organizational change must be carefully managed.
• Employees and management must understand and
  accept the need for change.

43
Chapter 10

• The Redefine and/or Define Concept
• and Change Management

44
We live in a word of change, yet we act on the
basis of continuity.
45
The Challenge of Change
Millions of ordinary, psychologically normal
people will face an abrupt collision with the
future. Many of them will find it increasingly
painful to keep up with the incessant demand
for change that characterizes our time.
Alvin Tofler Futurist
46
Definition of Change
Making an essential difference often amounting
to a loss of original identity or a substitution
of one thing for another.
47
Equipping a company with the latest technology
doesn't mean a thing if you don't alter how your
employees think and how management leads
them. Chad Frost President Frost
Inc.
48
As we change what computers can do, we must
change what we can do with computers.
Max Hopper
Former CIO
Information Systems
AMR and American Airlines
49
Redefine Change Define Clarify
50
Companies that achieve a sustainable strategic
advantage with information technology generally
redefine the factors of competition rather than
using technology in a traditional way.
51
Competitive Advantage Through Use of IS?
Redefine and/or Define 1. The
Business 2. Products and/or Services 3.
Business Processes To Provide Value to Customer
52
McDonalds as Concept Source
Peter Druckers Assessment

• Defined its products.
• Redefined processes to make the product.
• Defined customer service as quality, product
  predictability, fast service, cleanliness and
  friendliness.
• Set standards for these and trained its employees
  accordingly.
• Redefined the hamburger business.

53
Redefine and/or Define The Business

• USA Today
• American Airlines
• American President Companies
• Amazon.com
• eBay

54
Redefine and/or Define Products or
Services

• Charles Schwab
• Banc One
• Any company that has introduced an
  E-commerce approach in addition to an existing
  brick and mortar operation.

55
Redefine and/or Define Business Processes

• Boeing
• LL Bean
• All of your ATP companiesintranets, extranets,
  E-Business processes

56
When making a purchase decision does the
delivery process become more important than the
product or service?
57
Product/Service


Product/Service
Delivery Process
What the Customer Buys
Value Add Process
Value to Customer
Figure 10-1
58
Value to Customer Analysis
Charles Schwab Co.
Product/Service

• Stock, Bond and Mutual Fund
• Trades
• Financial Product Options
• Competitive Fees
• Timely Execution of Trades and
• Money Transfer
• Personal Service
• Confidence in Financial
• Custodial Responsibility

• Computer Based Trades
• Client Broker Service
• Street Smart
• Telebroker
• Equalizer
• OneSource
• Electronic Transfers
• Trade Risk Analysis

Brokerage Service
Delivery Process
What the Customer Buys
Value-add Process
Value to Customer
Figure 10-2
59
Value to Customer Analysis Mervyns
Product/Service

• Point-of-Sale (POS) System
• Ticketed Merchandise
• UPC Scanning
• Price Look-up
• Credit Card Approval
• Wireless Portable POS
• Warehouse System
• EDI Systems with Vendors
• Infobot Voice Response

• Quality Apparel/Home
• Fashions
• Competitive Prices
• High Merchandise
• Availability
• Personal Service
• Fast, Accurate Check-out
• Fast Credit Approval
• Access to Credit Information

Product/Service
Delivery Process
Value Add Process
What the Customer Buys
Value to Customer
Figure 10-3
60
Value to Customer AnalysisBoeing Commercial
Airplane Group
Product/Service

• An aircraft designed for
• passenger comfort, operational
• efficiency and safety.
• Flexible design configuration
• Competitive price
• Logistical support

Commercial Aircraft

• CAD design system and
• review process
• Customer input through network
• Co-design process with customer
• Quality control system
• Vendor EDI system

Delivery Process
What the Customer Buys
Value-add Process
Value to Customer
Figure 10-4
61
Product/Service


Product/Service
Delivery Process
Value-Add Process
What the Customer Buys
Value to Customer
62
Reengineering

• Hammer Definition Reengineering is the
• fundamental rethinking and radical redesign of
• business processes to achieve dramatic
• improvements in critical, contemporary
• measures of performance, such as cost, quality,
• service and speed.

Key words are fundamental, radical, dramatic and
processes.
63
Michael Hammer Videotape
The father of reengineering.
At least the term.
64
Reengineering Business Processes
Difference between business functions and
business processes?
Definition of a business process A sequence of
predefined activities executed to achieve a type
or range of desired outcomes.
Definition of process engineering An approach
to achieve radical improvements in value to
customer and/or business efficiency.
65
Business Processes

• New product development.
• Customer order fulfillment.
• Customer service.
• Supply chain management.
• Budgeting.
• New employee recruitment and hiring.

66
Reengineering Motivation

• Improve value to customer.
• Strengthen alignment of core processes to
  business strategies.
• Pursuit of new opportunities.
• Optimize cross-functional performance.
• Broaden scope of activities and individual jobs
  to improve
• responsiveness or flexibility.
• Reduce operating costs.

67
Reengineering Guidelines
1. Senior management commitment to adopting a new
process. 2. Team empowerment and
decision-making. 3. Be careful about how you draw
conclusions and create perception. 4. Move toward
inquiry, not conclusions. 5. Make the space and
time available for the official beginning with a
team kickoff. 6. Reward system must be correctly
focused.
68
Reengineering Methodology
Institute Continuous Improvements
Analyze Leverage Points
Identify Process Breakthroughs
Design Business Processes
Implement Business Processes
Phase 6
Phase 1
Phase 2
Phase 3
Phase 4
Phase 5
Process Prototyping and Implementation
Performance Reporting

• Critical Success Factors
• Activity Value Analysis
• Benchmarks and Surveys
• Processing Modeling
• Investment Analysis

Source ISS Corporation
69
Reengineering Success Factors

• Business Imperative.
• Strong Sponsorship.
• Right Team.
• Clear Objectives with a Well Defined Foundation.

70
Hewlett-Packard
Reengineering Lessons Learned 1. Goals and
accountability must be clear. 2. Process
ownership is crucial. 3. Links among business
owners, process owners and IS organization
are critical.
71
Avon Reengineering Approach
Process Culture 1. Stay Focused 1. Analyze
(Opposition) 2. Be Specific 2. Educate
(Concerns) 3. Deliver Results 3. Motivate (Buy-in
to process)
72
American Express Methodology

• Ownership
• Teams
• Goals
• Tracking

73
Change Management
74
Resistance to Change?
You often dont have a choice. There are those
that content that an organization has two
choices change or die.
75
Graying of Auto Industry
Within the next year, as many as forty to fifty
percent of the auto industry workforce will be
eligible to retire.
Auto companies must decide if they will replace
these people with similarly skilled workers or
redesign their jobs and recruit more
technologically advanced workers.
The shortage of skilled workers is partially a
result of changes in work requirements as the
industry moves from an auto parts or components
mentality to a systems mentality. e.g. not an
odometer but an entire dashboard.
76
Impact of Change
Change is intensely personal. For change to
occur in any organization, each individual must
think, feel or do something differently. Even
in large organizations, which depend on thousands
of employees understanding company strategies
well enough to translate them into appropriate
action, leaders must win their followers one by
one.
77
Lets Not Forget

• Xerox Invented plain paper copiers but almost
  needed to
• file bankruptcy after hemorrhaging financially
  while trying to
• become the document company.
• Eastman Kodak Basically popularized film
  photography
• but struggled to decide if it was in the
  imaging business.
• Digital Equipment Created the minicomputer
• segment of the computer industry but has
  disappeared as a
• company.

78
IT Related Change
If IT related change could be limited to only
affecting the technology, implementation would be
relatively simple. Adding human factors increases
the complexity of the change process
significantly. Successful implementation of
change requires an understanding of the human as
well as the technical aspects involved in the
situation. IT projects and people translate to
here comes the next wave of change.
79
Old Paradigms Die Hard!
They have built in resistance to their own
corresponding attitudes, institutions and
cultures.
80
The Law of Change
Achieving change, of any significance within an
organization, is in inverse proportion to the
success that it has had up to the time that
management feels a change is needed. The
greater the success of the company, the less
likely it is to change.
81
Selecting a Change Strategy
Which strategy to use in approaching a change
problem is a decision affected by a number of
possible factors. 1.Degree of Resistance.
2.Target Population Size. 3. High, Medium or
Low Business Stakes. 4. The Time Window. 5.
Expertise Availability. 6. Organization and
People Dependency.

82
Necessary Questions

• Is the purpose of the new technology clear to its
  users?
• Do the users accept the need for the technology
  change?
• Were the users involved in planning the new
  system?
• Has there been good communication regarding the
  change?
• Is there acceptance of the increased cost
  compared to the benefits of the new system?
• Is there a perception of organizational support
  for the new system?
• Is there compatibility of the new technology with
  the old way of doing things?
• Have the social aspects of the new system been
  assessed?

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• Do the users feel that the new system reflects
  negatively on
• their past performance?
• Have the habit patterns of the users influenced
  the design of the new system?
• Is there a lack of respect and trust in the
  change agents?
• Has excessive pressure been involved relative to
  the project?
• Is the pace of change perceived to be too fast or
  too slow?
• 15. Is there a significant amount of user fear of
  failure?
• 16. Can the status quo be reestablished if the
  new technology
• proves unsuccessful?

84
Change Management Skills

• People Skills
• Business Skills
• System Skills
• Political Skills
• Analytical Skills

85
Middle Management is Key

• Organizational cultures are easy to establish
  when a company is young.
• Middle managers must be enlisted as agents of
  change for an entire organization to change the
  way that it operates.
• This will happen only if top management
  communicates directly and in depth as to the
  logic and importance of the proposed change.

86
Transition Versus Change
1. It goes on inside a person, not outside. 2. It
takes much longer. 3. It starts with an
ending. 4. It finishes with a new beginning. 5.
In between is a neutral zone. This applies to
organizations as well as individuals.
87
Burning Platform Decision
A burning platform type of decision is at hand
when the organization is facing a major,
disruptive change in which the cost for the
status quo is prohibitively high and there is a
significant risk that implementation failure
could occur.
88
Celebrate Your Victories

• Companies often dont celebrate enough when their
  people win.
• They get so caught up in the daily grind of work
  that they dont stop to enjoy what they have
  achieved.
• Do things that build peoples self confidence.
  Its all about praising others and getting
  excited about their victories.
• Celebrating success will help to convince people
  that they are important, doing well and can
  respond to the next challenge even if it involves
  significant change.

89
Change Management Guidelines

• Plan change management like you would change new
  products.
• A new process needs to reflect the appropriate
  culture.
• A focus on tools can be counter-productive.
• Expect people unhappiness in a change process.
• Gear the entire effort to the goals of a new
  program or process.
• Structure where possible to have fun.

90
Conclusions
Change has become the norm in most businesses
Information systems are often the cause of or the
vehicle for change.
Change within an organization has to be managed
appropriately.