Pearlson_PPT_01.pdf

Managing and Using Information Systems Eighth Edition Keri E. Pearlson, Carol S. Saunders, Dennis F. Galletta Chapter 1 The Information Systems Strategy Triangle Southwest Airlines Opening Case On December 22, 2022, Southwest had to canc...

Managing and Using Information Systems Eighth Edition Keri E. Pearlson, Carol S. Saunders, Dennis F. Galletta Chapter 1 The Information Systems Strategy Triangle Southwest Airlines Opening Case On December 22, 2022, Southwest had to cancel more than 16,700 flights, leaving more than a million holiday travelers stranded in airports across the country They also had to fly flew more than 500 flights without any paying customers The cost of the meltdown is estimated to be a whopping $1 billion CEO Jordan apologized profusely and blamed the winter storm The causes included… o Obsolete technology—most notably the crew scheduling system o Southwest’s business strategy based on a point-to-point network vs. the hub and spoke system used by most major airlines o CEO Jordan and past CEO Gary Kelly 1-2 Information Systems Strategy Triangle 1. Successful firms have an overriding business strategy that drives both organizational strategy and IS strategy 2. IS strategy can itself affect and is affected by changes in a firm’s business and organizational design 3. IS strategy always involves consequences within business and organizational strategies 1-3 Introduction (1 of 2) Alignment is when a company’s current and emerging business strategy is enabled and supported, yet unconstrained, by technology To date, IS strategy has been viewed as a functional-level strategy that is subordinate to the chosen business strategy Digital transformation is the use of digital technology by an organization to redefine its value proposition and which leads the organization to identify itself in a new way o Digitalization o An example would be when a firm known for selling customized, top-quality manufacturing equipment became the provider of control software systems for manufacturing companies instead 1-4 Introduction (2 of 2) Digital transformation is about exchanging bricks for bits o Not just in the products/services but in many of the processes, too o Car insurance Studying IS alone does not provide general managers with the appropriate s perspective 1-5 Brief Overview of Business Strategy Frameworks Strategy A coordinated set of actions to fulfill objectives, purposes, and goals Mission A clear and compelling statement that unifies an organization’s effort and describes what the firm is all about It sums up what is unique about the firm Business strategy A plan articulating where a business seeks to go and how it expects to get there Digital business strategy A business strategy inspired by the capabilities of powerful, readily accessible digital technologies, intent on delivering unique, integrated business capabilities in ways that are responsive to constantly changing market conditions SMACIT Social media, mobile, analytics, cloud, and Internet of Things Operational backbone The technology and business capability to deliver efficient and reliable core operations Digital service platform The technology and business capability to pave the way for developing and implementing digital innovations 1-6 Mission Statements of Three Retail Businesses Company Mission Statement Zappos Since our humble beginnings. Zappos has been a customer-obsessed company that focuses on delivering a WOW experience. We aim to inspire the world by showing it's possible to simultaneously deliver happiness to customers, as well as employees, vendors, shareholders, and the community, in a long-term, sustainable way. Amazon “being Earth's most customer-centric company, best employer, and safest place in work.” L.L. Bean Being outside brings out the best in us. That's why we design products that make it easier to take longer walks, have deeper talks, and never worry about the weather. 1-7 Business Models vs. Business Strategy (1 of 2) Business model The blueprint of how a company does business Value proposition Focused on a firm’s market offerings and targeted customer group(s) Value architecture Describes the configuration of core resources and capabilities that a firm needs to create its market offerings Value network Involves interfirm relationships and interactions with key external partners and stakeholders Value finance Primarily focuses on a firms revenue model, pricing strategies, and cost structure Servitization The business model involving the shift from selling products to selling product- service systems 1-8 Example Pricing Strategies Selling products or services Customers make purchases Subscription Customers pay a recurring fee for the product or service Advertising Customers access the product or service for “free,” and sponsors or vendors pay fees for advertising that goes with the product or service Renting/Licensing Customers pay a fee to use the product or service for a specified period or number of times Freemium 1-9 Business Models vs. Business Strategy (2 of 2) A business model can create value without bringing in new revenue from customers o For example, it can use cost displacement, in which case a firm funds a project or creates a new service by cost savings, such as replacing personnel by adding new customer self-service options Big data is a term used to describe exceptionally large data sets of structured, semi-structured, and unstructured data used in computational analysis 1. Data users are companies that leverage big data for internal purposes to improve their operations or develop new products and services for its customers 2. Data suppliers are companies that sell big data that they have harvested 3. Data facilitators are companies that supply data users and suppliers with big data infrastructure solutions 1-10 The Competitive Advantage Strategies Framework Porter claims that the “fundamental basis of above-average performance in the long run is sustainable competitive advantage” He identified three primary strategies for achieving competitive advantage: 1. Cost leadership results when the organization aims to be the lowest-cost producer in the marketplace 2. Through differentiation, the organization offers its product or service in a way that appears unique in the marketplace 3. Focus allows an organization to limit its scope to a narrower segment of the market and tailor its offerings to that group of customers 1. Cost focus is when the organization seeks a cost advantage within its segment 2. Differentiation focus is when the organization seeks to distinguish its products or services within the segment 1-11 Dynamic Environment Strategies The Porter model was developed at a time when competitive advantage was sustainable because the rate of change in any given industry was relatively slow and manageable The hyper competition frameworks suggest that the speed and aggressiveness of the moves and countermoves in a highly competitive and turbulent market create an environment in which advantages are rapidly created and eroded Dynamic capabilities allow a firm to orchestrate its resources in the face of turbulent environments o Creative destruction 1-12 Summary of Strategic Approaches and IT Applications Strategic Approach Key Idea Application to Information Systems Porter's competitive advantage Finns achieve competitive Understanding which strategy is strategies advantage chosen by a firm is critical to through cost leadership, choosing IS to complement the differentiation, or focus. strategy. Dynamic environment strategies Speed, agility, and aggressive The speed of change is too fast for moves and countermoves by a manual response, making IS firm create and sustain critical to achieving business goals. competitive advantage. 1-13 Why Are Strategic Advantage Models Essential to Planning for Information Systems? 1. What is the business goal or objective? 2. What is the plan for achieving it? What is the role of IS in this plan? 3. Who are the crucial competitors and partners, and what is required of a successful player in this marketplace? 4. What are the industry forces in this marketplace? 5. How can dynamic capabilities be developed and used in a rapidly changing business environment? 1-14 Brief Overview of Organizational Strategies Organizational strategy includes the organization’s design as well as the choices it makes to define, set up, coordinate, and control its work processes The organizational, control, and cultural variables are managerial levers used by decision makers to effect changes in their organizations 1-15 Understanding Organizational Design 1. What are the important structures and reporting relationships within the organization? 2. Who holds the decision rights to critical decisions? 3. What are the important people-based networks (social and informational), and how can we use them to get work done better? 4. What control systems (management and measurement systems) are in place? 5. What are the culture, values, and beliefs of the organization? 6. What is the work that is performed in organizations, who performs it, and where and when is it performed? 7. What are the key business processes? 1-16 Brief Overview of Information Systems Strategy IS strategy is a plan an organization uses to provide information services Applications or apps are self-contained software programs that fulfill a specific purpose and run on a platform o Business activities are supported by, and in some cases support, platforms and apps Data are the bits and bytes stored in the system 1-17 IS Strategy Matrix What Who Where Platforms The "orchestrator" that calls into action System users and managers: Physical location of devices apps that record, report, or transform vendors: platform partners (cloud, data center, etc.) data. Applications The components that generally work on a System users and managers: The platform il resides on (apps) particular platform. They request data for app providers and and physical location of that recording or reporting, and also transform developers platform data by performing calculations and making updates as needed. Networks Platform and app components for local or System users and managers: Where the nudes, the wires, long-distance networking. company that provides the and other transport media service are located Data Electronic representation of facts or Owners of data: data Where the information observations. administrators resides 1-18 Copyright Copyright © 2024 John Wiley & Sons, Inc. John Wiley & Sons, Inc. or the author, all rights reserved. Instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. Except as permitted herein or by law, no part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. 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