Strategy Models for IS

Competitive Advantage From Information Systems

Objectives Understand strategy models for IS Think about how they might be used

by managers to evaluate ideas for information systems

What is Strategy? Strategy has to do with the basic

objectives and mission of the firm What are the products? Who are the customers? What pricing, positioning What resources? What does the firm do in-house or outside?

Plan Pattern of behavior (emergent)

Strategic Models for IS Critical Success Factors Strategic Grid Analysis Generic Strategies Five Forces Value Chain Customer Resource Life Cycle

Critical Success Factors

CSFs = the handful of things that have to go right for the organization to flourish

Critical Success Factors Avis Rent-a-Car

Availability of a clean, mechanically sound car when the customer arrives

Citicorp Accuracy of the information provided to

customer about accounts

Critical Success Factors Use CSFs to determine functions for

IS investment

Strategic Grid Analysis

FactoryGoal: improve performance of systemsProjects: consider re-engineering processes

Example: Hong Kong government

StrategicGoal: transform the industryProject management: change management

Example: HSBC

SupportGoal: Improve local performance to control costsProject management: grassroots experimentationExample: UNLV

TurnaroundGoal: identify and launch new systems and venturesProject management: New venture developmentExample: Caregroup

IT Im

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IT Impact on Future Strategy of the Firm

Generic Strategies

Generic Strategies

Texas Tech Univ of Penn.

Oberlin Music Academy

Haynes Barber School

FiveForcesModel

Affect value distribution?

Five Forces Model Look for opportunities to use IT to:

Increase bargaining power with customers—lock them in

Reduce bargaining power of suppliers—market search capability

Create barriers to new entrants Differentiate product from potential

substitutes

Value Chain

Unbundle?

Link to customers?Link to suppliers?New channels?

New infrastructure?

Value Chain Look for opportunities to

Convert physical activities to information flow—save costs

Add information value to the product—revenue, market share

Customer Resource Life Cycle Requirements Acquisition Stewardship Retirement

Ives and Learmonth, 1984

Requirements

Establish requirements—to determine how much of a resource is required Levi’s style finder

• Customers asked to rate interests in music, fashion and entertainment

• http://store.us.levi.com/store/home.asp

Requirements Specify—to determine a

resource’s attributes Benjamin Moore-tools for

selecting the appropriate paint

http://www.benjaminmoore.com/

Saturn site allows buyers to “build a car”

Acquisition

Select source—to determine where customers will buy a resource BMW site locates the dealer closest to

you with the car you specify Ordering—to order a quantity of a

resource from the supplier Office Depot allows the customer to

create standing order for repeat purchases

Acquisition Authorize and pay for—to

transfer funds or extend credit American Express provides

protection against theft and damage of the merchandise purchased

The NY Times gives its online version away.

Acquisition

Acquire—to take possession of a resource The encyclopedia Britannic

a has made its CD version available at $149 vs $1250 for the print version

Test and accept—To ensure that a resource meets specifications Herman Miller lets

customer layout a room full of furniture on screen

Stewardship

Integrate—to add to an existing inventory FedEx interNetShip allows customers to

create and edit their own directory of frequent customers

Monitor—to control access and use of a resource FedEx and UPS systems allow customer to

track parcels while in route

Stewardship Upgrade—to upgrade a resource if

conditions change Netscape customers learn of need for

upgrade with email containing a URL Maintain—to repair a resource, if

necessary Ford Motor Company’s site allows

customers to create personalized car page

Retirement

Transfer and dispose—to move, return or dispose of inventory as necessary Dell computers Value Recovery Services helps

firms recoup salvage value for old computers Account for—to monitor where and how

much is spent on a resource Office Depot--online purchase history report

How to use the CRLC Each element in the CRLC

represents a way to provide value to customers through information

Incorporate into a business model where customers pay for the value in some manner