summary of last week will send team presentation feedback sometime this weekend

Summary of last week

Will send team presentation feedback sometime this weekend

Update on Alibris

Interloc was simple listing service for hard-to-find books Profitable Sustainable?

Alibris 2000

Switched from Oracle to Thunderstone Smaller company specializing in huge text

databases eCommerce site went live in Fall 98

New Revenue Model Percentage of purchase price for all books sold vs

dealer listing fees Secured bridge loan

Investor’s terms too harsh

Alibris 2000 – cont’d

Expanded Sparks facility Centralized inventory

Both owned (physical) and consignment (virtual)

Created a “catalog and pricing engine” Provides current market information to book

dealers and customers Use knowledge gained selling “virtual” inventory to

buy books at attractive margins

Oct, 1998

What was status of economy? Dow Jones at 8500

What was major IT issue for firms? “Putting Enterprise into Enterprise System”

What was major message from Davenport?

Putting Enterprise into Enterprise System Major Message Why do ERP projects fail?

Require significant money, time and expertise Force firms to do business in ways that conflict with their best

interest If used by all companies in industry, erasing sources of

differentiation and competitive advantage How to prevent failure?

Clarify strategic and organizational needs and business implications of integration.

Change organizational structures to address information-flow problems

Create competitive advantage with your enterprise system Put right people in place Install system gradually

Putting Enterprise into Enterprise System Major Message – cont’d “If the development of an enterprise system is not

carefully controlled by management, management may soon find itself under control of the system.”

The most successful ERP deployments involved companies that viewed them in strategic terms. “ They stressed the enterprise, not the system.”

Main reason for “failures” is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise. “The logic of the system may conflict with the logic of the

business.

Mar, 2001

What was going on in the economy? All time high of 11,723 in Jan 2000 Hovering above 11,000 in early 2001

What were the major IT issues? “Strategy and the Internet”

What was Porter’s major message?

Strategy and the Internet (Porter) We need to “…see the internet for what it is: an

enabling technology…” (pg 64) The “…greatest impact [of the internet] has been to

enable the reconfiguration of existing industries that had been constrained by high costs for communicating, gathering information, or accomplishing transactions.” (pg 66)

“The great paradox of the Internet is that its [benefits] also make it more difficult for companies to capture those benefits as profits.” (pg 66)

Principles for Internet Strategy (Porter)

Strategic Positioning Start with the right goal Deliver a unique value proposition Develop a distinctive value chain Make trade-offs for robust strategy Fit all elements of company to the strategy Maintain continuity of direction

Nov, 2002

What was going on in the economy? On Oct 9th, 2002, Dow Jones falls 215.22 to close

at 7,286.27. The market has declined 4,436.71, or 38%, since January 14, 2000

By Oct 21, closed above 8,500 What were the major IT issues? “Six IT Decisions Your IT People Shouldn’t

Make” What was major message?

Six IT Decisions Major Message IT departments should not make choices that

determine the impact of IT on business strategy.

Senior executives failed to realize that adopting the enterprise systems posed a business challenge Consequentially, did not take responsibility for the

organizational and business process changes the systems required.

Determine the strategic role that IT will play, and then establish company-wide funding level that will enable technology to fulfill the objective.

May, 2003

What was going on in the economy? On Jun 4th, closes above 9,000

What were the major IT issues? “IT Doesn’t Matter”

What was major message?

IT Doesn’t MatterMajor Message IT has lost its strategic value. Businesses should manage IT as a commodity.

But -- partial standardization does not wipe out opportunities for gaining competitive advantage.

Firms using identical IT and spending comparable amounts on IT display enormous variability in profits.

IT is diminishing as a source of strategic differentiation. But – creates possibilities and options that did not exist before

IT functions will be homogenized, and proprietary applications are therefore doomed.

As corporations adopt generic applications, business processes become uniform and without competitive advantage

Oct, 2003

What was going on in the economy? Sep 2nd, closes above 9500 Closes above 10,000 on Dec 11th

What were the major IT issues? “The Real New Economy”

What was major message?

The Real New EconomyMajor Message New economy did not spring from internet

Rather from intensifying business competition Explains productivity growth in six sectors. Associated with dismantling of regulatory constraints

Managers needed to cut costs and increase value to buyers. In industries with complex operating processes, heavy

transaction loads, and technically sophisticated products, IT was powerful tool: Enabled development of new products and business processes Facilitated industry-wide diffusion of new innovations

To retain an edge, companies must couple diffusing technologies with other distinctive capabilities and processes

Strong scale economies

The Real New EconomyMajor Message Three practices distinguished companies who were

successful in IT investments Targeted investment at productivity levers that matter Paid attention to sequencing and timing of investment

Example of companies that invest in CRM before they had consistent and reliable repositories of customer data

Should only rush investments when it is clear that technology will advance business goals, enable true innovation, and is resistant to imitation

Pursued managerial and technological innovations in tandem Managerial practices must adapt to technological innovations

Feb & Apr, 2004

What is going on in the economy? What are the major IT issues? Two articles

“Getting IT Right” “Saving IT’s Soul: Human-Centered Information

Management”

Getting IT RightMajor Message IT can work if you focus on process

Presume that IT is a commodity – what should you do? Start with business strategy Develop common underlying infrastructure Develop support staff that ensures infrastructure

enables business strategy

Saving IT’s SoulMajor Message Railroad Paradox – by Gerald Weinberg

Focus on how people use information Managers get 2/3 of information from non-computer based

data Strategic data plans focus on information found in

computer Global data only results when shared understanding

is reached Need information maps and guides to deal with information

particularism Changing an IT system will not change the

information culture

Insights

Extracting value from IT requires innovations in business practice IT Spending rarely correlates with superior

financial results. Too many business insert IT without changing

business practices.

Insights – cont’d

Strategic Impact comes from cumulative effect of sustained initiatives to innovate business practices. Wal-Mart led innovations. As competitors adopted

practices, Wal-Mart continued to innovate – maintained productivity advantage.

Opportunities for innovation continue because advances in IT create possibilities not previously economically available

Opportunity for business practice innovations extend beyond the walls of the enterprise to include relationships with other companies

Differentiation is not a result of IT – but the new practices IT enables


Big-bang IT-driven initiatives rarely produce expected returns. Successful projects proceed in waves of short-

term (6-12 months) operating initiatives designed to test and refine specific innovations in practices. Ties initiative to explicit operating performance metrics –

focus on tangible near-term returns


Need to look at IT use through several different lenses Efficiency: Improve cost savings and efficiencies Effectiveness & Efficacy: Incremental

improvements in products, services, organizational structure

Enabling: Creation of strategic advantage through extending competitive scope, partnerships, changing rules of competition, provision of new IT-based services.

InsightsMaybe the dinosaur had a valid point! Strategic Positioning

Start with the right goal Deliver a unique value proposition Develop a distinctive value chain configuration Make trade-offs for robust strategy Fit all elements of company to the strategy Maintain continuity of direction


Must align business and IT strategies

Observed characteristics of well-aligned companies (from Deloitte Survey) Executive agreement on the role of IT –

where and how IT adds value Executive agreement on the priorities and

focus areas for IT Follow through and delivery on IT

expectations

2004 Survey by Deloitte Consulting LLP (Advertising Supplement in CIO Magazine)

Strategic Alignment Model

4 Domains of Strategic Choice

Business StrategyScope

CompetenciesGovernance

Organizational InfrastructureStructure

ProcessesSkills

IT StrategyScope


IT InfrastructureArchitectureProcesses

Skills

Strategic Alignment Model IT Infrastructure defined by business processes:

Business structure and IT Strategy are not aligned




ProcessesSkills

IT StrategyScope



Skills

IT is not strategic


Business strategy drives IT




ProcessesSkills

IT StrategyScope



Skills

IT is not integrated with business operations


Information is a core product or service




ProcessesSkills

IT StrategyScope



Skills

IT enables enterprise wide business processes


IT enables new strategic opportunities




ProcessesSkills

IT StrategyScope



Skills


Alignment is a dynamic and evolving process




ProcessesSkills

IT StrategyScope



Skills

summary of last week will send team presentation feedback sometime this weekend

Documents