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What’s Happening!What’s Happening!

Midterm Exam

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Six essay questions:

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1 of 2 is worth 20 points

1 is worth 15 points – must answer

4 are worth 10 points

Chapter 7 SummaryChapter 7 Summary

Implementing a Vision: Implementing a Vision:

Strategy, Tactics and Business PlanStrategy, Tactics and Business Plan

Important Chapter TopicsImportant Chapter Topics

1.1. How to transition a vision into reality through strategy, How to transition a vision into reality through strategy,

tactics, and business plans.tactics, and business plans.

2.2. Fundamentals and guidelines that relate to business Fundamentals and guidelines that relate to business

strategies.strategies.

3.3. How strategies dictate the role and significance of How strategies dictate the role and significance of

information systems.information systems.

Defining the Process ElementsDefining the Process Elements

Vision:Vision: Identifies what the organization wants to Identifies what the organization wants to look like at some logical point in the future.look like at some logical point in the future.

Strategy:Strategy: How a company will achieve the long- How a company will achieve the long-term goal of the vision.term goal of the vision.

Tactics:Tactics: More specific time-oriented, measurable More specific time-oriented, measurable ways to make a vision a reality.ways to make a vision a reality.

Business Plan:Business Plan: Allocation of funds and other Allocation of funds and other resources.resources.

Business Strategy FocusBusiness Strategy Focus Competitive Environment:Competitive Environment: The primary market and The primary market and

major competitors and whether current strategies are major competitors and whether current strategies are producing the intended results.producing the intended results.

Customer Targets:Customer Targets: Are their primary needs being Are their primary needs being satisfied?satisfied?

Product portfolio:Product portfolio: Is it on target or does it need to be Is it on target or does it need to be changed and/or broadened?changed and/or broadened?

Financial Implications:Financial Implications: Are current and projected results Are current and projected results up to expectations?up to expectations?

Resource Allocation:Resource Allocation: Do changes need to be made? Do changes need to be made?

Porter Strategy GuidelinesPorter Strategy Guidelines

Primary Strategies:

1. Differentiation

2. Least Cost

Supporting Strategies:

1. Innovation

2. Growth

3. Alliances

Business Strategy Model Business Strategy Model GuidelinesGuidelines

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?

Strategic Management ProcessEnvironmental Analysis

General Environment

Operating Environment

Competitive Positioning

Directions for Development

Company Analysis

Structure

Values/Culture

Skills

Resources

CompanyStrategic History

CurrentStrategy

StakeholderAnalysis

Vision &Strategy

ChosenStrategy

RealizedStrategy

CompanyVision

Reprinted with permission fromThe Strategic Management BlueprintCambridge, Ma: Blackwell, 1993.Figure 7-2

Internal Analysis

External Analysis

Progressive CorporationProgressive Corporation

Important learning points:Important learning points:

1.1. Market factors triggered the need for a new vision and Market factors triggered the need for a new vision and supporting strategies.supporting strategies.

2.2. The CEO had problems in getting his employees to The CEO had problems in getting his employees to accept the fact that a major change was needed.accept the fact that a major change was needed.

3.3. Changes involved refocusing product and service Changes involved refocusing product and service strategies and related business processes and systems.strategies and related business processes and systems.

4.4. Information systems played a major role in support of Information systems played a major role in support of the new strategies.the new strategies.

Senior Management

Strategy ImplementationStrategy Implementation

Visionand MacroStrategies

Empowered Implementers

MicroStrategies

and Tactics

Company Culture

Risks to be Avoided

Business Uncertainties

Critical PerformanceFactors

Key EnterpriseBusiness Processes

Figure 7-3

IT Based StrategiesIT Based Strategies

MARKET PLACE OPERATIONS

SIGNIFICANTSTRUCTURALCHANGE

TRADITIONALPRODUCTSAND PROCESSES

Federal ExpressUSA TodayCharles Schwab

WhirlpoolXerox

BancOne Boeing Frito-Lay Wal-Mart

USAA L.L. Bean McKesson

Figure 7-6

Possible Exam QuestionsPossible Exam Questions

1.1. Explain the relationship between the vision of a Explain the relationship between the vision of a company and the challenge of making things company and the challenge of making things happen.happen.

2.2. Explain the intent of Figure 7-3 and why it Explain the intent of Figure 7-3 and why it could be difficult to implement such an could be difficult to implement such an approach. approach.


Evaluating Business Strategies

and

The Use of Information Systems:

The Strategic Option Generator

Chapter ObjectivesChapter Objectives

To identify strategic opportunities involving the use of information system.

To relate the use of information system to gain a competitive advantage.

VisionStrategyTactics

Business Plan

• Competitive Options• Roles, Roles and Relationships• Redefine and/or Define• Telecommunications

as the Delivery Vehicle• Success Factor Profile

A Systematic Approach

TARGET

CUSTOMER COMPETITORSUPPLIER

THRUST

DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE

MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE

STRATEGIC OPTION GENERATOR

Figure 8-1

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE

Federal Express Analysis Using the Strategic Option Generator

Figure 8-2

TARGET


THRUST


MODE

DIRECTION

OFFENSIVE DEFENSIVE

USE PROVIDE

EXECUTION

STRATEGICADVANTAGE

UPS Analysis Using the Strategic Option Generator

Figure 8-3

ConclusionsConclusionsIt 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.


1.1. Explain the elements of the Strategic Option Explain the elements of the Strategic Option Generator. Generator.

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


The Roles, Roles and

Relationships Concept

Important TopicsImportant Topics

1.1. Roles, roles and relationships concept.Roles, roles and relationships concept.

2.2. Managing IS as a business.Managing IS as a business.

3.3. Technology transfer through organizational Technology transfer through organizational learning.learning.

4.4. Outsourcing.Outsourcing.

IS as a Competitive Resource?IS as a Competitive Resource?

• Business competitiveness is a top priority.

• What about Information Systems?

Roles, Roles and Relationship ConceptRoles, 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.

The Role of the Senior ExecutiveThe Role of the Senior Executive

• 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.

The Person that Runs the Business on a Day-To-Day Basis

• Communicate the importance of the information systems role.

• Provide funding, including R&D, to address the major requirements.

• Focus on results and benefits.

• Motivate to make things happen!

Role of Other Senior ManagementRole 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.

Role of IS ExecutiveRole 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.

Leadership in two forms:

- Business Leadership

- IT Leadership

Roles, Roles and RelationshipsRoles, Roles and Relationships

Managing IS as a BusinessManaging IS as a Business

Important to recognize that the IS organization is Important to recognize that the IS organization is

really in three different businesses:really in three different businesses:

1.1. Designing information systems.Designing information systems.

2.2. Building information systems.Building information systems.

3.3. Running and maintaining information systems.Running and maintaining information systems.

Information Technology

Computer-based Applications

Organization

Concurrent Learning Curves

OutsourcingHiring 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.

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?

ChapterChapter 1010 IntroductionIntroduction

The Redefine and/or Define Concept

and

Change Management

AgendaAgenda

Learning ObjectivesLearning Objectives Redefine and/or Define ConceptRedefine and/or Define Concept The Product and Service Delivery ProcessThe Product and Service Delivery Process The Challenge of Change ManagementThe Challenge of Change Management ConclusionsConclusions

Learning ObjectivesLearning Objectives

1.1. To understand the second of the two core To understand the second of the two core concepts of the structured analysis concepts of the structured analysis approach.approach.

2.2. To appreciate the importance and To appreciate the importance and significance of change management significance of change management within an organization.within an organization.

3.3. To remember that information systems is To remember that information systems is viewed as a major cause of change within viewed as a major cause of change within a company.a company.

Redefine and/or Define ConceptRedefine 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?

Redefine and/or DefineRedefine and/or Define What?What?

Options:Options: The businessThe business Products and/or servicesProducts and/or services Business processesBusiness processes

Why bother?Why bother? Value to customerValue to customer

Product and Service Delivery Product and Service Delivery ProcessProcess

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

Value-Add ProcessWhat the Customer

Buys

Product/Service

Del

iver

y P

roce

ss

Pro

duct

/Ser

vice

Value to CustomerFigure 10-1

Change ManagementChange Management

Four Challenging Factors:Four Challenging Factors: The pace and time pressures of change.The pace and time pressures of change. Financial controls may not allow increase in Financial controls may not allow increase in

the number of employees despite growth.the number of employees despite growth. Shifting of productivity and other Shifting of productivity and other

operational objectives to IT.operational objectives to IT. Dramatic improvements in IT price, Dramatic improvements in IT price,

performance, and function.performance, and function.

ConclusionsConclusions

Change is the norm in most businesses.Change is the norm in most businesses. Information technology can be a catalyst or Information technology can be a catalyst or

vehicle for change.vehicle for change. Organizational change must be carefully Organizational change must be carefully

managed.managed. Employees and management must Employees and management must

understand and accept the need for change.understand and accept the need for change.

Chapter 10Chapter 10

The Redefine and/or Define Concept

and Change Management

We live in a word of change, yet we act on the basis of continuity.

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 ToflerFuturist

Definition of ChangeDefinition of Change

Making an essential difference often

amounting to a loss of original identity

or a substitution of one thing for another.

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.

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

Redefine Change

Define Clarify

Companies that achieve a sustainable

strategic advantage with information

technology generally redefine the

factors of competition rather than using

technology in a traditional way.

Competitive Advantage Competitive Advantage Through Use of IS?Through Use of IS?

******************Redefine and/or Define:

1. The Business

2. Products and/or Services

3. Business Processes

To Provide Value to Customer

McDonald’s as Concept Source

• 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.”

Peter Drucker’s Assessment:

Redefine and/or Define Redefine and/or Define The BusinessThe Business

USA Today

American Airlines

American President Companies

Amazon.com

eBay

Redefine and/or Define Redefine and/or Define Products or ServicesProducts or Services

Charles Schwab Banc One Any company that has introduced an

E-commerce approach in addition to an existing brick and mortar operation.

Redefine and/or Define Redefine and/or Define Business ProcessesBusiness Processes

Boeing

LL Bean

All of your ATP companies—intranets, extranets, E-

Business processes

When making a purchase decision does the delivery process become more important than the product or service?

Value to Customer

Product/Service

Del

iver

y Pr

oces

s

Prod

uct/

Serv

ice

Value Add Process What the Customer Buys

Figure 10-1

• 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

Charles Schwab & Co.

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

Value to Customer

Product/Service

Del

iver

y Pr

oces

s

Bro

kera

ge S

ervi

ceWhat the Customer BuysValue-add Process

Figure 10-2

Value to Customer Analysis

• 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

Value to Customer

Product/Service

Del

iver

y Pr

oces

s

Prod

uct/

Serv

ice

Value Add Process What the Customer Buys

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

Value to Customer Analysis:Mervyn’s

Figure 10-3

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

Value to Customer AnalysisBoeing Commercial Airplane Group

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

Value to Customer

Product/Service

Del

iver

y Pr

oces

s

Com

mer

cial

Air

craf

t

What the Customer BuysValue-add Process

Figure 10-4

Value to Customer

Product/Service

Del

iver

y Pr

oces

s

Prod

uct/

Serv

ice

Value-Add Process What the Customer Buys

ReengineeringReengineering

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.

Michael Hammer VideotapeMichael Hammer Videotape

The father of reengineering.

At least the term.

Reengineering Business Reengineering Business ProcessesProcesses

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.

Business ProcessesBusiness Processes

• New product development.

• Customer order fulfillment.

• Customer service.

• Supply chain management.

• Budgeting.

• New employee recruitment and hiring.

Reengineering MotivationReengineering 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.

Reengineering GuidelinesReengineering 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.

Reengineering MethodologyReengineering Methodology

InstituteContinuousImprovements

AnalyzeLeveragePoints

IdentifyProcessBreakthroughs

Design Business Processes

ImplementBusinessProcesses

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

Process Prototyping

and Implementation

PerformanceReporting

Pha

se 1

Pha

se 2

Pha

se 3

Pha

se 4

Pha

se 5

Pha

se 6

Source: ISS Corporation

Reengineering Success FactorsReengineering Success Factors

• Business Imperative.

• Strong Sponsorship.

• Right Team.

• Clear Objectives with a Well Defined

Foundation.

Hewlett-PackardHewlett-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.

Avon Reengineering ApproachAvon 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)

American Express MethodologyAmerican Express Methodology

• Ownership

• Teams

• Goals

• Tracking

Change ManagementChange Management

Resistance to Change?Resistance to Change?

You often don’t have a choice.

There are those that content that an organization has two choices: change or die.

Graying of Auto IndustryGraying 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.

Impact of ChangeImpact 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.

Let’s Not ForgetLet’s 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.

IT Related ChangeIT 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.”

They have built in resistance to their own corresponding attitudes, institutions and cultures.

Old Paradigms Die Hard!Old Paradigms Die Hard!

The Law of ChangeAchieving 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.

Selecting a Change StrategySelecting 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.

Necessary QuestionsNecessary Questions1. Is the purpose of the new technology clear to its users?

2. Do the users accept the need for the technology change?

3. Were the users involved in planning the new system?

4. Has there been good communication regarding the change?

5. Is there acceptance of the increased cost compared to the benefits of the new system?

6. Is there a perception of organizational support for the new system?

7. Is there compatibility of the new technology with the old way of doing things?

8. Have the social aspects of the new system been assessed?

9. Do the users feel that the new system reflects negatively on

their past performance?

11. Have the habit patterns of the users influenced the design of the new system?

12. Is there a lack of respect and trust in the change agents?

13. Has excessive pressure been involved relative to the project?

14. 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?

Change Management SkillsChange Management Skills

• People Skills

• Business Skills

• System Skills

• Political Skills

• Analytical Skills

Middle Management is KeyMiddle 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.

Transition Versus ChangeTransition 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.

Burning Platform DecisionBurning 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.

Celebrate Your VictoriesCelebrate Your Victories

1. Companies often don’t celebrate enough when their

people win.

2. They get so caught up in the daily grind of work that they

don’t stop to enjoy what they have achieved.

3. Do things that build people’s self confidence. It’s all

about praising others and getting excited about their

victories.

4. 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.

Change Management Change Management GuidelinesGuidelines

1. Plan change management like you would change new products.

2. A new process needs to reflect the appropriate culture.

3. A focus on tools can be counter-productive.

4. Expect people unhappiness in a change process.

5. Gear the entire effort to the goals of a new program or process.

6. Structure where possible to have fun.

ConclusionsConclusions

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.

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