Effective use of IS/IT

Dr. V.T. RajaOregon State University

Chapter 13 - Outline

• Business value added when using IS/IT:– to automate existing business processes– for organizational learning and change in addition to

automation– BPR; Competitive Advantage; As a strategic enabler

• Effect of IS/IT on Competition– Porter’s competitive forces model

• Value Chain and IS/IT – Internal/External linkages facilitated by IS/IT

• Strategic Information Systems

Class Participation Exercise

• Examples– IBM Credit Corporation– Retail Store – Diaper Sales– Ford Motor Company– Flower Shop

Business Process Reengineering (BPR)

• BPR - Radical redesign of business process(es):– To achieve dramatic improvements in measures of

performance such as quality, cost, speed, and services– To gain competitive advantage or support/change

business strategy. • IT/IS facilitates BPR

– Examples• IBM Credit Corporation• Ford • Flower shop

BPR - Characteristics

• Advantages– Cycle time reduction– Effective communication– Restructuring organization

• Single point of contact for customer• Hierarchical – Flattened – Networked

organizations

BPR - Characteristics

• Disadvantages– Laying off employees

• Voluntary retirement– Retraining employees

• Retraining costs– Transfer of employees

Some Characteristics of a Virtual Organizations

• An organization composed of several business partners sharing costs and resources for the purpose of producing a product or service

• Each partner creates a portion of a product or service in an area in which they have special advantage such as expertise or low cost

• Example: Flower shop and its business partners

Example - Virtual Organization (VO)

Customer

VO - Flower Company

Flower Supplier

Amex/VISAMaster Card

FedEx

1. Places Order - Web

Sends monthly bill

2. E - validates payment3. Passes

e- order5. Accepts Order

4. E-acceptance Order

6. Sends pick up info electronically

7. Picks up order

8. Delivers flowers

Makes e-payment

Makes e-payment

Makes e-payment

Some Characteristics of a Virtual Organization

• Excellence - All star winning team• Resource Utilization - Competitive advantage• Opportunism – Making use of market opportunities• Lack of borders - Redefines traditional boundaries• Adaptability – to change• Trust - Essential between/among business partners• Technology - Basic ingredient

Resources of business partners remain in their original locations but are integrated via information systems.