Challenges of Managing in a Network Economy

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Challenges of Managing in a Network Economy
GBA 673 Intro and Chapter 1 and 2
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Theme 1 Market Structure and Industry Dynamics

• Faster communications and computing
• Databases and access to information
• IT applications to support operations
• _______________________________
• New ways to organize the business
• Note parts of the business are outside
  organiztional boundaries

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Theme 1 Market Structure and Industry Dynamics
(continued)

• Integrating IT into the rest of the organization
  is a challenge. Why?
• Technological growth (obsolescence)
• Specialization (IT staffing insource vs
  outsource)
• IT-Client relationships (culture gap)
• IT management is a young discipline
• Shift in IT development focus (from transaction
  processing to decision support and e-commerce)

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Theme 2 Evolving Business Model

• Three Components are
• Concept
• Value
• Capabilities
• What business are you in? ? What is your
  business model?
• Suppliers, products, customers, etc. all remain,
  but options for organizing these activities and
  managing relationships have multiplied

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Theme 3 IT Impact

• Strategic Relevance Impact to core operations
  and/or core strategy
• strategic impact of IT varies among
  organizations
• does IT enhance operations or enable strategy?
• it is important to understand the wide diversity
  of practices used to manage integrate IT
• In exploring Strategic Relevance, consider
• Proportion of new products from leading companies
• Where companies are on the strategic grid, and
  where they are moving on that grid
• Example companies K-Mart and WalMart AMEX

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Theme 4 Prioritizing IT Investments

• Benefits of IT Investments fall in these
  categories
• Functionality and flexibility building the
  infrastructure (not just cables, but people,
  systems, experience, etc.) will open new
  opportunities
• Commerce improve efficiency quality
• Content/Knowledge support knowledge workers
• Community build and strengthen relationships

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Theme 4 Prioritizing IT Investments (continued)

• Company data and IT capabilities are a corporate
  resource, not (merely) a tool to address
  operational problems or improve efficiency
• Consequently, businesses need
• Infrastructure (broadly defined)
• Business functions that take advantage of these
• Impetus for IT investment
• Bottom-up (i.e., grass roots effort)
• Top-down

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Theme 5 Assimilation and Organizational Learning

• Phases (see figure 1.5)
• Phase 1 Opportunity Identification and
  Investment localized application
• Phase 2 - Organizational Learning and Adaptation
  expanding integration including across
  boundaries
• Phase 3 Rationalization and Continuous
  Evolution part of core operations and/or
  strategy
• Note text suggests most initiatives start
  bottom-up with localized experimentation, but

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Theme 6 Make or Buy

• When needs are identified, the question is how to
  best meet these
• Many new options have emerged - develop,
  purchase, purchase services, etc.
• Traditional patterns of acquiring capabilities
  are changing!
• Many factors (including many which are not
  technical) need to be considered
• Sometimes choice is easy

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Theme 6 Make or Buy (continued)

• Technology Transfer Strategies/Outsourcing (See
  Table 1.2)
• IT has the ability to change the technical
  infrastructure of the company
• poorly managed technologies result in islands of
  automation
• strategies of IT integration and commitment to IT
  assimilation are important

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Theme 7 Partnership Among Key Constituencies as
IT Evolves

• Eras of Evolution (See figure 1.6)
• Era I - Mainframe
• Era 2 - Microcomputer
• Era 3 Internetworking
• 4 Partners understand roles, responsibilities,
  experience, goals and typical attitudes
• Senior (general) management
• IT Execs (also consider technical people)
• IT Users
• IT Vendors Partners

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Theme 8 Protecting IT Assets and Managing Risks

• New opportunities (business model,
  infrastructure, alliances, technology) bring new
  risks
• The IT Risks
• Impact to Profitability
• Impact to Service
• Impact to Corporation Image
• New Laws
• www.technet.org
• The U.S. Presidents Plan for Securing Cyberspace

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Theme 9 Pervasive Computing Opportunities and
Risks

• We are in a technological age, with implications
  for
• People individually
• Society
• Business
• Government
• Rate of change accelerating
• How do you see the future and how is technology
  involved in that vision
• What are the key implications of realizing that
  vision, to you, your company, your society, the
  world

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Questions from Senior Management (p19)

• Does our IT function measure up?
• Is the firm being affected competitively either
  by failing to implement required IT applications
  or by faulty implementation of strategic
  applications?
• Is the Firm targeting its application development
  efforts effectively?
• Note these could serve as the basis for your
  research or application report

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S M Questions - Continued

• Is the IT Asset of a firm being managed
  efficiently?
• Is the firms IT activity sufficiently insulated
  against the risks of a major operational
  disaster?
• Are IT and Business Leaders capable of dealing
  with IT related management Challenges?
• Are the IT Resources appropriately placed in the
  Firm?

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Key IT Issues

• IT Environment
• different roles of IT in 2000 vs. 1990s vs 1970s
• from efficiency to org effectiveness
• the three eras of IT environment
• IT Strategy
• IT Architecture and Organization
• Are the IT resources appropriately organized?
• Management Processes
• appropriateness of IT planing and control
  processes
• Project Management

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IT is a Business
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Chapter 1 Creating Business Advantage with IT

• Forces that Shape Business Strategy
• Analyzing the Impact of IT on Strategic Decision
  Making

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Forces that Shape Business Strategy

• Value Chain Analysis
• Industrial and Competitive Analysis
• Strategic Grid Analysis

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Analyzing the Impact of IT On Strategic Decision
Making

• Can IT be used to reengineer core value
  activities and change the basis of competition
• Strategic Grid framework is useful to determine
  IT impact on the organization
• classifies the company in regard to the impact of
  its current / future applications
• answers the questions on IT importance and
  prescribes strategies for managing IT assets

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Strategic Impact

• Strategic impact of existing systems vs strategic
  impact of future systems
• Strategic (high/high)
• IT investments IT-business relationships IT
  strategy
• Turnaround (low/high)
• Increasing investments and IT importance (Y2K
  apps)
• Factory (high/low)
• Cost effectiveness, system reliability, old
  technologies
• Support (low/low)

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Analyzing the Impact of IT (cont.)

• Can IT change the Nature of relationships and the
  balance of Power among buyers and suppliers
• Can IT Build or Reduce Barriers to Entry?
• Can IT Increase or Decrease Switching costs?
• Can IT Add Value to Existing Products and
  Services and Create New Ones?

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Sourcing Policies IT Value Chain

• Make/Own vs buy dichotomy
• Decision Criteria
• business strategy
• core competencies
• availability of partners
• availability of software
• cost benefit analysis, etc.

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Application Development Process

• SDLC (Systems Development Life Cycle)
• Problem Identification
• Feasibility Study
• Systems Analysis
• System Design
• System Development
• System Implementation
• Operations, maintenance

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IT-Business Partnership
Successful IT management and use is contingent
upon effective partnership of three
constituencies
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Chapter 2 Crafting Business Models

• Business Models Something New and Something Old
• Classifying Business Models
• Businesses Built on Network Infrastructure
• Businesses That Provide Network Infrastructure
• Evolving Business Models

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Business Models Something new and Something Old

• Business Concept
• Capabilities
• Value

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Classifying Business Models

• Is your company a producer?
• Is your company a distributors?

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Businesses Built on a Networked Infrastructure

• Focused Distributor (Retailers, marketplaces,
  Aggregators, Infomediaries, exchanges)
• Portals
• Horizontal
• Vertical
• Affinity Portals
• Producers (Manufacturers, services providers,
  educators, advisers, information and news
  services, etc.

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Businesses That Provide Network Infrastructure

• Infrastructure Distributors
• Infrastructure Portals
• Infrastructure Producers
• Infrastructure Service Providers

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Evolving Business Models

• American Express
• Amazon. Com