Ch 1 - Introduction

Report
What’s Happening?!
Bill Gates wants to entertain you with digital devices and
services – keynote speaker at the Consumer Electronics
Show.
Tsunami business and political implications?
Bush attempt to limit liability law suit awards.
The governator’s latest plans and strategies.
ISM Thought for the Day
This IT stuff is hard.
What a company really wants is somebody
that can help implement it.
Lou Gerstner, retired CEO
IBM Corp.
Presentation Assignments
1. Introduce Chapter 1 – James Hendrix
2. Summarize Chapter 1 – Rebecca Sherrill
3. Introduce Chapter 2 – Mitchell Paulsen
4. Summarize Chapter 2 – Jonathan Gregorio
5. Introduce Chapter 3 – James Schultz
6. Summarize Chapter 3 – Kim Nguyen
7. Introduce Chapter 4 – Michael Arias
8. Summarize Chapter 4 – Jason Demant
Oral Presentations
9. Introduce Chapter 5 – Cyrus Semnani
10. Summarize Chapter 5 – Tan Nguyen
11. Introduce Chapter 6 – Jackey Liu
12. Summarize Chapter 6 – Adam Thompson
13. Introduce Chapter 7 – Chris Johnson
14. Summarize Chapter 7 – Vladimir Gorenshteyn
15. Introduce Chapter 8 – Rashi Sinha
16. Summarize Chapter 8 – Li Zhu
17. Introduce Chapter 9 – Daniel Lifschitz
18. Summarize Chapter 9 – Kevin Wang
FYI
If you email me send it to my school address
which is automatically forwarded to me at
home.
Only two people indicated an interest in
Toastmasters.
Due Today
1. Introduction Letters and personal resumes.
2. Requests for the company that you will base
your analysis term paper on in priority sequence.
Given your understanding of
the content of this course
Let’s begin.
Chapter 1 Introduction
Business
and
Information Systems Management
Challenges
By James Hendrix
Objective of the Chapter
To introduce the major business issues that
must be addressed to successfully manage a
business and factors that would influence the
possible role of information systems as an
enabler of business success.
Important to remember that this chapter is an
overview of the entire class.
Major Chapter Topics
1.
Business Success Factors.
2.
Three Necessary Perspectives.
3.
The Many Simultaneous Revolutions in the
Business Environment
4.
A Business Driver Model.
5.
A Systematic Approach for the Use of Information
Systems.
6.
Three Roles of Information Systems.
Business Success Factors

The chapter cites eight such factors with an
emphasis on business leadership, company
culture and effective communication.

The list would undoubtedly vary in order of
importance from one executive to another, one
company to another and between different
industries.
Three Necessary Perspectives
•Business Environment
Specific Industry
•Enterprise Environment
The Company Itself
•IT Environment
Used for a competitive advantage
Business
Success
Simultaneous
Revolutions
New
Competitors
New Rules
of Competition
Industry Structure
Changes
New Political
Agendas
The
Business
New Technologies
New Employees
and New Values
New Regulatory
Environment
Increasing
Customer Expectation
Business Drivers
Market
Technology
Employees/
Work
Regulation
Organization
Business Processes
Solutions to Business Requirements
Figure 1-3
Three Roles of Information Systems
 Efficiency: Doing things better.
 Effectiveness: Doing better things within
the organization.
 Competitive Advantage: Doing better
and new things for customers.
Systematic Approach to IS
Vision
Strategy
Tactics
Business Plan
•Competitive Options
•Roles, Roles, and Relationships
•Redefine/Define
•Telecommunications as the Delivery Vehicle
•Success Factor Profile
In Conclusion
The journey of a thousand miles begins with a single step.
-- Chinese Proverb
Here is our roadmap, let the journey begin.
Vision
Strategy
Tactics
Business Plan
•Competitive Options
•Roles, Roles, and Relationships
•Redefine/Define
•Telecommunications as the Delivery Vehicle
•Success Factor Profile
Chapter 1
Business
and
Information Systems
Management
Three Necessary Perspectives
• Business Environment
• Enterprise Environment
Business
Success
• IT Environment
Figure 1-1
Why 3 perspectives?
Business Today Moves in a
Nonlinear Way

There is no continuity in the flow of competition.

It is very difficult to predict which products will succeed.

It is very difficult to predict which companies will succeed.

Competitive advantage is often fleeting.

Technology and markets change so frequently and
radically that yesterday’s assets can become today’s dead
weight.
Are Managers Obsolete?
Complexity theorists argue that management counts for little
in a world of radical discontinuity.
In such an environment things happen so quickly that
employees must be empowered to make decisions and to act
upon circumstances as they occur.
So why do the best-led companies so often prevail?
A Fundamental Premise
Innovative Uses
of Information Systems
Requires a Systematic
Approach
A Systematic Approach
Vision
Strategy
Tactics
Business Plan
• Competitive Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
as the Delivery Vehicle
• Success Factor Profile
A Logical Premise
Competing with
Information Technology
through People.
IS Roles (Objective)
1. Efficiency--doing things better.
2. Effectiveness--broadening the scope of
individual tasks, jobs or processes.
3. Competitive Advantage--doing better or
new things for the customer.
Are each of these roles measurable?
Key to Business Success
Competitiveness is often the pivotal issue
in the current business environment.
Global competitiveness has often become
an integral part of this issue.
(an offense/defense decision)
Competitiveness
How does a business compete?
What benefits does a business gain if it
competes successfully to the point of
being a market leader?
Market Leader Benefits?
Increased
volumes.
Lower unit
cost.
Higher profit
margins.
Ability to invest in product development and market
exploitation.
Increased brand strength.
Satisfied customers.
Customers less likely to substitute.
Lower probability of new entrants.
Happy, motivated employees and other stakeholders.
Purpose of a Business
The purpose of a business is to create a customer.
For this reason a business has a basic function and a
need to emphasize:
1. Marketing.
2. Innovation.
This demands that a business define its goal as the
satisfaction of customer needs.
Who is the Customer?
Not a simple or intuitively obvious question.
There is never the customer but multiple customers
that are frequently different.
Each customer has possible different expectations
and values and may think that it is buying something
different or for a different reason.
Where is the Customer?
An increasingly important question.
Greatly influenced by increasing mobility on a
global basis.
What does the Internet do to questions regarding
where is the customer?
A Successful Business
The right business model now and for the future.
• Is responsive, flexible, adaptable, innovative,
resilient, talented and financially strong.
• Provides value to customers.
Is anything else necessary to achieve and sustain
business success?
Running a successful business is like
doing a jigsaw puzzle. The problem
is that the pieces and the picture are
both changing.
Cyril J. Yansouni
Chairman and CEO
Read-Rite Corp.
Using IS to Compete
1. Not a new topic.
2. Was relatively new in 1984.
3. The American Hospital Supply story goes
back to the 1960’s.
My Selection Criteria
Started with the list of companies in the In Search of
Excellence book.
Frito-Lay, American Airlines, Boeing
Emphasized the role of senior management to focus the role
of information systems on key business strategies from the
very beginning. Also how IS was used to make significant
changes.
Quickly discovered that good companies could point me
to other good companies.
Wal-Mart, USAA, Federal Express, Schwab, L.L. Bean
Using IS to Compete
• American Airlines
• L.L. Bean
• Boeing
• National Institutes of Health
• Federal Express
• Progressive Corp.
• Frito-Lay
• Charles Schwab
• Frost Inc.
• Security Pacific Bank
• IBM Canada
• USAA
• Marion Laboratories
• University of South Carolina
• McKesson Corp.
• Wal-Mart Stores
Business Success Factors
1. Business Leadership.
2. The Ability to Fit the Pieces into the Increasingly
Bigger Business Picture.
3. Organizational Responsiveness and Resilience.
4. Realizing That Most Major Customer Problems
Are Solved Through a Combined Organizational
Effort.
Business Success Factors
5. A Strong Company Culture.
6. Ability and Willingness to Innovate, Change and
Take Risks.
7. Accomplishing All of These Factors While
Maintaining a Necessary Balance.
8. Effective and Timely Communication Across
the Entire Organization.
Books on Business Success
In Search of Excellence: Lessons from America's
Best-Run Companies by Tom Peters and Robert
Waterman, 1982 (43 companies)
Built to Last by Jim Collins and Jerry Porras, 1994
(20 companies)
Good to Great by Jim Collins, 2001 (11 companies)
Built to Last
The objective in a six year study was to
systematically identify visionary companies, to
examine how they differed from comparison
companies to understand the underlying factors
that account for their extraordinary long term
position.
Visionary companies were identified based on
their having distinguished themselves as a very
special and elite breed of institutions.
Built to Last Companies
3M
Marriott
American Express
Merck
Boeing
Motorola
Citicorp
Nordstrom
Ford
Phillip Morris
General Electric
Procter & Gamble
Hewlett-Packard
Sony
IBM
Wal-Mart Stores
Johnson & Johnson
Walt Disney
Good to Great Companies
• Abbott
• Nucor
• Circuit City
• Philip Morris **
• Fannie Mae
• Pitney Bowes
• Gillette
• Walgreens
• Kimberly-Clark
• Wells Fargo
• Kroger
Selection Criteria
• Premier institution in its industry.
• Widely admired by knowledgeable businesspeople.
• Made an indelible imprint on the world in which we
live.
• Had multiple generations of chief executives.
• Been through multiple product (or service) cycles.
• Founded before 1950.
Selection Criteria
Started with Fortune 500 ranking of 1,435 largest publicly
traded US companies in 1965, 1975, 1985 and 1995.
Did a sophisticated analysis of compounded annual return
looking for companies that showed a pattern of above average
returns preceded by average or below average returns. This
reduced the list to 126 companies.
Analyzed the cumulative stock return relative to the general
market looking for good-to-great stock return patterns.
Reduced the list to 19 companies.
Dow Jones Industrial List
•Alcoa
•Exxon Mobil
•McDonald’s
•Honeywell
•General Electric
•Merck
•American Express
•General Motors
•Microsoft
•AT&T
•Hewlett-Packard
•3M
•Boeing
•Home Depot
•Philip Morris
•Caterpillar
•Intel
•Procter & Gamble
•Citigroup
•IBM
•Coca-Cola
•International Paper
•SBC
Communication
•DuPont
•JP Morgan
•Eastman Kodak
•Johnson & Johnson
•United Technology
•Wal-Mart Stores
•Walt Disney
Business Challenges
1. Regardless of whose list of successful companies one
relates to, what role should (better yet, did)
information systems play?
2. How do you determine relevance regarding any of
these factors?
SIMULTANEOUS REVOLUTIONS
NEW
COMPETITORS
NEW RULES
OF
COMPETITION
INDUSTRY
STRUCTURE
CHANGES
NEW POLITICAL
AGENDAS
THE
BUSINESS
NEW REGULATORY
ENVIRONMENT
EVER INCREASING
CUSTOMER EXPECTATIONS
NEW
TECHNOLOGIES
NEW EMPLOYEES
AND NEW VALUES
Figure 1-2
New Competitors
• Global defines the competitive landscape.
• Aircraft and communication technologies are shrinking the
economic world.
• English has become the international language.
• There are very few countries that are not global players.
• Standardization of industrial and consumer products.
• Breakdown in industry boundaries is also resulting in new
domestic competitors.
• Technology versus physical competition via the Internet.
New Rules of Competition
• Speed has become a major success factor including time to
market, time to decisions and response time to customers.
• Distribution has become a key competitive strategy.
• Productivity defines competitive positioning.
• Assets can become a liability.
• Quality as a competitive factor is a given.
• All business functions must contribute value to customers.
• Need to focus on core processes and outsource the rest.
• Success is a combination of leadership and empowerment.
• When timely to do so, reinvent the business.
Industry Structure Changes
• The US has led the way, but the rest of the world is also
deregulating industries and/or privatizing government
owned businesses.
• Freedom from government imposed laws and/or controls
frequently leads to industry structure change.
• IT has prompted industry change because of the direct
access aspects of the Internet.
• Open competition over time results in industry change based
on changing rules of competition.
New Regulatory Environment
• One could conclude that there is a definite trend towards
deregulation of industries. In some cases this can be
misleading.
• Highly visible industries tend to be directly or indirectly
“regulated” in some form.
• As long as there are politicians there will be new laws and/or
regulations that can directly impact specific industries.
• Business managers prefer to compete openly despite a
perception of the benefits of having a protected market.
Increasing Customer Expectations
Is there such a thing as a customer that would be happier with
a more costly, lower quality product or service?
The better you do in servicing your customer, the more they
will want (and expect)!
Time constraints and pressures on customers also prompts an
increase in their expectations since they often do not have the
time or inclination to find alternative sources.
On the other hand, the global economy offers more options
and alternative sources.
New Employees and Values
Salary and benefit expectations are greatly influenced by
the financial status of people while they were growing to
adulthood.
Different attitudes towards authority and societal issues.
Surveys say that salary is not the highest priority for many
employees.
Meanwhile, an increasing number of people are pursuing the
startup route “to get rich.”
New Technologies
• IT and transportation technologies have changed the world
of competition and can greatly influence success or failure
of a company.
• The pace of technology change adds to the challenge.
• New technologies often complement each other.
• The impact of the Internet as a global network is huge.
• Integrating IT into a rapidly changing business can be a
major challenge.
New Political Agenda
• Importance of government role in positioning industries to
compete on a global basis.
• Tax policies are an important consideration.
• Regional partnerships are replacing individual country roles.
• Protectionism is an on-going threat.
• Monetary and fiscal policies add to challenges of competing
in global markets.
• Political instability has not disappeared from the global
economic world.
SIMULTANEOUS REVOLUTIONS
NEW
COMPETITORS
NEW RULES
OF
COMPETITION
INDUSTRY
STRUCTURE
CHANGES
NEW POLITICAL
AGENDAS
THE
BUSINESS
NEW REGULATORY
ENVIRONMENT
EVER INCREASING
CUSTOMER EXPECTATIONS
NEW
TECHNOLOGIES
NEW EMPLOYEES
AND NEW VALUES
Figure 1-2
Necessary to Go Global?
Being an international company - selling globally,
having global brands or operations in different
countries -- isn't enough.
Practically everyone is going global, but do they
really understand what this means.
Globalization
Is probably one of the most overused , even misused,
terms in business parlance.
Traditionally, global scope was likely to be a
multinational presence.
A truly global company is able to capitalize on
business opportunities wherever and whenever they
are found.
A Global Company
Its influence is felt in geographic locations where
it has neither physical presence or assets.
The principle constraint on the global success of an
organization is it’s management aim—the ability of
management to point the company in the right
direction.
World’s Most Valuable Brands
Who are the top ten companies with the world’s
most valuable brands?
9 of top 10 are US companies.
The list is not limited to consumer product
companies.
World’s Most Valuable Brands
1. Coca Cola
$68.9 Billion
2. Microsoft
$65.1
3. IBM
$52.8
4. GE
$42.4
5. Nokia
$35.0
6. Intel
$34.7
7. Disney
$32.6
8. Ford
$30.1
9. McDonald’s
$25.3
10. AT&T
$22.8
World’s Most Valuable Brands
11. Marboro
24. Compaq
12. Mercedes
25. Oracle
13. Citibank
32. Dell
14. Toyota
43. SAP
15. HP
49. Apple
16. Cisco Systems
53. Sun Microsystems
17. American Express
58. AOL
18. Gillette
76. Amazon.com
19. Merrill Lynch
100. Beneton
20. Sony
www.interbrand.com
Globalization
Globalization deals not with the mechanics of
making links with diverse locations but with
dedicating organizational resources to
continuously monitoring and taking advantage of
opportunities that emerge throughout the world.
Globalization Checklist
1. Make yourself at home in all three of the world’s most
important markets: North America, Europe and Asia and
keep your eye on Latin America.
2. Develop new products for the entire world.
3. Replace profit centers based on countries and regions with
ones based on product lines.
4. Make global decisions on strategic questions involving
products, capital and research but let local units decide
tactical questions like packaging, marketing and advertising.
Globalization Checklist
5. Overcome parochial attitudes and train people to think
and act internationally.
6. Open senior executive ranks to foreign employees.
7. Do whatever is best even if people at home lose jobs
or responsibilities.
8. In markets that you cannot effectively penetrate on your
own, find allies.
Daimler-Benz Globalization
Jürgen Schrempp, Chief Executive of Daimler-Benz:
• For Daimler-Benz globalization is not an optional
strategy. It is the only one.
• By the year 2010 we want to be number one or two in
each of our business areas.
• We are the world leader in commercial vehicles, number
one in rail systems through Adtranz and number two in
aircraft through Airbus.
• We want to double our revenue and be in the top quartile
of global companies in performance.
Globalization Plan
1. Be in the growth markets around the world with the
right products and the right services in the right places.
2. Be a leader in innovation. Only companies which
anticipate people's needs, translate great ideas into
products and services, and get them into the market
fast, will succeed.
3. Be exciting and rewarding for our people.
Globalization creates jobs both in other countries and
in the home market. For every three jobs created
abroad, one is created in Germany.
Globalization Plan
4. Have the right corporate culture. To be a successful global
company requires exceptional executives - people who have
industrial skills, but can also adapt to local communities and
respond to their needs.
5. Access to global capital. That means listing on the leading
stock markets. It also means presenting your financial
accounts to the standards of the transparency demanded by
investors.
But most of all, globalization is about creating value for
people. Producing products they want, creating interesting
jobs, and delivering excellent returns for shareholders.
Barriers to a Global Economy




Africa is a lost continent.
Latin America is sliding into terminal poverty.
Their people can only look forward to migrating from
place to place looking for hope.
They will redefine hope in fundamentally different ways--a
world war of terrorism that can rip the fabric of complex
systems.
Jacques Attali
Former head of European
Bank for Reconstruction
and Development
Business Drivers
Market
Technology
Employees/
Work
Regulation
Organization
Business Processes
Solutions to Business Requirements
Figure 1-3
Business Environment
It has become more difficult to describe a
business environment that applies to everyone.
Historically an environment that was conducive
to success within a specific industry was good
for every company in the industry.
Today, the companies within a specific industry
can have a wide range of different performances
and results.
For Instance
Contrast the success of Wal-Mart with
the following three retailers:
1. Kmart
2. Montgomery Ward
3. Sears, Roebuck
IT Relevance?
Industries with a high information content.
Industries with less information content.
A Logical Goal?
1. Competing with Information Technology.
2. Using Information Systems to Compete.
3. Creating the Necessary Environment to Use
Information Systems to Compete.
The Information Technology Environment
ERA I
Data
Processing
ERA II
End User
Computing
ERA III
Strategic
Systems
Administrative
Framework
Primary
Target
Justification/
Purpose
Regulated
Monopoly
Organizational
Productivity/
Efficiency
Free
Market
Individual
Effectiveness
Regulated
Free Market
Business
Processes
Competitive
Advantage
Source: Cash, McFarlan, McKenney and Appleton, Corporate Information Systems Management,
Richard D. Irwin,1992, 3/E, p. 11, adapted.
Figure 1-5
How Fragile is Business Success?
How much of the answer to this question is related to
business leadership and strategies?
How much of the answer to this question is related
to information technology leadership and strategies?
IT Significance
If your business lives by information technology
can it also die by information technology?
How much of an IT dependency does a company
have?
How much change must they deal with in defining
their business to be successful in the future?
Competitive Fitness Evaluation Criteria
Customer
Orientation
Mission
and Vision
Organization
and Systems
Planning and
Intelligence
Human
Resources
Technical
Resources
Marketing
Operations
Innovation
Market
Strategy
Corporate
Culture
Performance
International
Strategy
Source: Jean-Claude Larreche, INSEAD
A Quick IS Assessment
1. How is Business?
2. Is the Information Systems Manager a
Member of the Top Management Team?
3. What Percentage of the Operating Budget
of the Business is for Information Systems?
Examples of Successful Company
Use of I/S to Compete








Boeing Airplane Company
Wal-Mart Stores
Bissett Nursery Corp.
Federal Express
Charles Schwab
Your quota is 5
USAA
companies!
L.L. Bean
Progressive Corp.
Best ISTC Industries
Retail Industry:
• L. L. Bean
• Dillards Dept. Store
• The Gap
• Home Depot
• Kmart
• Men’s Wearhouse
• Mervyn’s
• J C Penney
• Toys R Us
• Wal-Mart Stores
Transportation Industry:
• American Airlines
• American President Co.
• British Airways
• CSX
• Delta Airlines
• FedEx
• Singapore Airlines
• Union Pacific
• United Airlines
• UPS
Worst ISTC Industries
Construction Industry
Petroleum Industry
Federal Government
Can the IS be right if:
1. The business climate is wrong.
2. The business strategy is wrong.
3. The business leadership is wrong.
Business Strategy and IS
 Concepts.
 Relative
To (Bigger Picture).
 Company
Examples.
Conclusions
To logically and effectively position information
systems within an organization one must begin
by understanding the environment and the
company itself.
Then and only then can you understand the
significance of the role of information systems.
ATP Roadmap
1.
2.
3.
4.
5.
6.
7.
Make sure that you understand the paper structure.
Read the information on the Callon web page regarding the
company assigned.
Go to Hoover’s Online and look at the information regarding
the company, its industry, its rivals and its customers.
I will provide recent copies of Value Line regarding the
industry and the company next Tuesday.
Go to the company web page and pay particular attention to
the company business and IT leaders. Look at any web links
to customers.
Look at the most recent annual report and read the cover
letter, review the financial performance over time and
understand the organization of the company from a product
and customer perspective.
Spend time looking at pertinent information via the Internet.

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