What’s Happening?!What’s Happening?!

Consumer Electronics Show – Las Vegas

2,000 companies in a million square feet of space

An obvious reminder that there is a major merging of the computer industry and the consumer electronics industry.

Bill Gates gave the keynote speech.

Major product focus on mobility which means wireless and miniaturization.

FYIFYI

If you email me send it to my school address which is automatically forwarded to me at home.

Due TodayDue Today

1. Introduction Letters.

2. Requests for the company that you will base your analysis term paper in priority sequence.

Please also return the business awareness

questionnaires.

Given your understanding of Given your understanding of the content of this coursethe content of this course

Let’s begin.

Chapter 1 IntroductionChapter 1 Introduction

Business and Information

Systems Management Challenges

By Steven Parker

Objective of the ChapterObjective 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.

This is clearly a big picture chapter rather than one that fits within a broader perspective.

Major Chapter TopicsMajor Chapter Topics

1. The challenges of running a successful business in the current global environment.

2. Specific business success factors.

3. Three necessary perspectives.

4. Simultaneous revolutions in the current environment.

5. A business driver model.

6. A possible systematic approach to gain better results from the use of information systems.

7. The three possible roles of information systems.

Business Success FactorsBusiness Success Factors

A credible list of success factors would undoubtedly vary if cited by a specific successful executive or highlighted by one of multiple highly publicized studies.

The chapter cites eight such factors with an emphasis on business leadership, company culture and effective communication.

Three Necessary Perspectives Three Necessary Perspectives

Business Environment

– Specific industry

Enterprise Environment

– The company itself

Information Technology

– Used for a competitive advantage

Business Driver ModelBusiness Driver Model

1. Helps to understand the business environment2. The four components affect how an organization

addresses business processes:– Market– Technology– Regulation– Employees and Work

Systematic Approach to Systematic Approach to Information SystemsInformation Systems

The class roadmap chart

Emphasizes the important factors to manage the business and the relationship with and possible role of information systems.

Highlights the relationship between managing the business and managing information systems relative to business priorities and needs.

Identifies three possible roles of Identifies three possible roles of Information SystemsInformation Systems

» Efficiency

» Effectiveness

» Competitive Advantage

As a company’s Information Systems evolve,

it often uses IS in a more sophisticated and competitive manner.

Suggests A Quick Assessment of Suggests A Quick Assessment of the Significance of Information the Significance of Information

Systems in a CompanySystems in a Company Would increasing the involvement of IS

increase value to customers? Is the IS manager one of the top managers? Is the role of information systems a top

priority for multiple senior managers? How much of the revenue dollar is the

company spending on IS? Is IS an integral part of the daily business

operations?

Additional Points MadeAdditional Points Made

1. Introduces multiple company examples where key business strategies were successfully supported by the effective implementation and use of information systems.

2. Reminds us that some industries have far better track records through the use of information systems than others.

In ConclusionIn Conclusion

This chapter is obviously the start of a ten week journey.

Bon voyage!

Chapter 1Chapter 1

Business Business

andand

Information Systems Information Systems

ManagementManagement

Three Necessary PerspectivesThree Necessary Perspectives

• Business Environment

• Enterprise Environment

• I/T Environment

Business Success

Figure 1-1

Innovative Uses Innovative Uses

of Information Systems of Information Systems

Requires a Systematic ApproachRequires a Systematic Approach

A Fundamental PremiseA Fundamental Premise

VisionStrategyTactics

Business Plan

• Competitive Options• Roles, Roles and Relationships• Redefine and/or Define• Telecommunications

as the Delivery Vehicle• Success Factor Profile

A Systematic Approach

CompetingCompeting with with

Information TechnologyInformation Technology

through through People.People.

A Logical PremiseA Logical Premise

IS Roles (Objective)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.

Competitiveness is the pivotal issue in the 21st century.

Global competitiveness has frequently become the pivotal issue in the 21st century. (an offense/defense decision)

Key to Business SuccessKey to Business Success

How does a business compete?

What benefits does a business gain if it competes successfully to the point of being a market leader?

CompetitivenessCompetitiveness

Market Leader Benefits?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.

Happy, motivated employees and other stakeholders.

Customers less likely to substitute.

Lower probability of new entrants.

Purpose of a BusinessPurpose of a Business

The purpose of a business is to create a customer.

For this reason a business has only two basic functions:

1. Marketing.

2. Innovation.

This demands that a business define its goal as the satisfaction of customer needs.

Purpose of a BusinessPurpose of a Business

The customer defines the business.

The customer is primarily interested in its own wants, needs, values and reality.

Defining a business must start with understanding the customer’s realities, situation, behavior, expectations and values.

The business is defined by the want the customer satisfies when a purchase is made.

Who is the Customer?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?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 BusinessA 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. YansouniChairman and

CEO

Read-Rite Corp.

My Selection CriteriaMy Selection CriteriaStarted with list of companies in the In Search of Excellence book.

Quickly discovered that good companies could point me to other good companies.

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.

Wal-Mart, USAA, Federal Express, Schwab, L.L. Bean

Using IS to CompeteUsing IS to Compete

• American Airlines

• Boeing

• Federal Express

• Frito-Lay

• Frost Inc.

• IBM Canada

• Marion Laboratories

• McKesson Corp.

• L.L. Bean

• National Institutes of Health

• Progressive Corp.

• Charles Schwab

• Security Pacific Bank

• USAA

• University of South Carolina

• Wal-Mart Stores

Business Success FactorsBusiness Success Factors

1. Business Leadership.1. Business Leadership.

2. The Ability to Fit the Pieces into the Increasingly 2. The Ability to Fit the Pieces into the Increasingly Bigger Business Picture.Bigger Business Picture.

3. Organizational Responsiveness and Resilience.3. Organizational Responsiveness and Resilience.

4. Realizing That Most Major Customer Problems Are 4. Realizing That Most Major Customer Problems Are Solved Through a Combined Organizational Effort.Solved Through a Combined Organizational Effort.

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.

Business Success FactorsBusiness Success Factors

Successful BooksSuccessful Books

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, 2001 by Jim Collins, 2001 (11 companies)

Built to LastBuilt 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 CompaniesBuilt to Last Companies3M

American Express

Boeing

Citicorp

Ford

General Electric

Hewlett-Packard

IBM

Johnson & Johnson

Marriott

Merck

Motorola

Nordstrom

Phillip Morris

Procter & Gamble

Sony

Wal-Mart Stores

Walt Disney

Good to Great CompaniesGood to Great Companies

• Abbott

• Circuit City

• Fannie Mae

• Gillette

• Kimberly-Clark

• Kroger

• Nucor

• Philip Morris **

• Pitney Bowes

• Walgreens

• Wells Fargo

Selection CriteriaSelection 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 CriteriaSelection 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 ListDow Jones Industrial List•Alcoa

•Honeywell

•American Express

•AT&T

•Boeing

•Caterpillar

•Citigroup

•Coca-Cola

•DuPont

•Eastman Kodak

•Exxon Mobil

•General Electric

•General Motors

•Hewlett-Packard

•Home Depot

•Intel

•IBM

•International Paper

•JP Morgan

•Johnson & Johnson

•McDonald’s

•Merck

•Microsoft

•3M

•Philip Morris

•Procter & Gamble

•SBC Communication

•United Technology

•Wal-Mart Stores

•Walt Disney

Business ChallengesBusiness Challenges

1. Relative to all of this, what role should information

systems play?

2. How do you determine relevance regarding any of

these factors?

SIMULTANEOUS REVOLUTIONSSIMULTANEOUS REVOLUTIONS

NEW RULES OF COMPETITION

INDUSTRYSTRUCTURE CHANGES

THEBUSINESS

NEW COMPETITORS

NEW POLITICAL AGENDAS

NEW TECHNOLOGIES

NEW EMPLOYEESAND NEW VALUES

NEW REGULATORY ENVIRONMENT

EVER INCREASINGCUSTOMER EXPECTATIONS Figure 1-2

New CompetitorsNew 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 CompetitionNew 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 ChangesIndustry 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 EnvironmentNew 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 ExpectationsIncreasing 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 ValuesNew Employees and Values

Salary and benefit expectations are greatly influenced by the financial status of people while they were growing to adulthood.

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.”

Different attitudes towards authority and societal issues.

New TechnologiesNew 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 AgendaNew 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 REVOLUTIONSSIMULTANEOUS REVOLUTIONS

NEW RULES OF COMPETITION

INDUSTRYSTRUCTURE CHANGES

THEBUSINESS

NEW COMPETITORS

NEW POLITICAL AGENDAS

NEW TECHNOLOGIES

NEW EMPLOYEESAND NEW VALUES

NEW REGULATORY ENVIRONMENT

EVER INCREASINGCUSTOMER EXPECTATIONS Figure 1-2

The Right Way to Go GlobalThe Right Way to Go Global

Being an international company - selling globally, having global brands or operations in different countries -- isn't enough.

Everyone is going global, but do they really understand what this means.

World’s Most Valuable BrandsWorld’s Most Valuable Brands

9 of top 10 are US companies.

The list is not limited to consumer product companies.

Who are the top ten companies with the world’s most valuable brands?

World’s Most Valuable BrandsWorld’s Most Valuable Brands1. Coca Cola $68.9

Billion

2. Microsoft $65.1

3. IBM $52.8

4. GE $42.4

5. Kokia $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 BrandsWorld’s Most Valuable Brands11. Marboro

12. Mercedes

13. Citibank

14. Toyota

15. HP

16. Cisco Systems

17. American Express

18. Gillette

19. Merrill Lynch

20. Sony

24. Compaq

25. Oracle

32. Dell

43. SAP

49. Apple

53. Sun Microsystems

58. AOL

76. Amazon.com

100. Beneton

www.interbrand.com

GlobalizationGlobalization

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 CompanyA 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.

GlobalizationGlobalization

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 ChecklistGlobalization 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 ChecklistGlobalization 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 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 PlanGlobalization 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 PlanGlobalization 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.

Jack Welch Jack Welch Business PrinciplesBusiness Principles

1. Reality—seeing the world the way it is, not the way that you hope it will be or wish it to be.

• GE must be No. 1 or No. 2 in its global markets.

• Accepting the fact that E-Business is here.

• Means going on the offensive.

Welch Business PrinciplesWelch Business Principles

2. An organization’s ability to learn, to transfer its

learning across its components and to act on it quickly

as its ultimate, sustainable competitive advantage.

• Drove GE to create a boundary-less company.

• Selfishly sharing good ideas while endlessly searching for

better ideas became a natural act.

Welch Business PrinciplesWelch Business Principles3. An organization that is comfortable with change and even relishes it, has a distinct advantage in a world where the pace of change is always accelerating.

• Had the luxury of learning this when change was relatively slow and opportunities hung open for about a decade.

• Experience in partnering with European companies when opportunities lasted two or three years.

• Experience in partnering with Asian companies when opportunities were gone in a year.

• Today, in the midst of the Internet revolution, the opportunities presented by change open and close on a daily basis.

Welch Business PrinciplesWelch Business Principles

4. Measuring Progress—measuring new things and doing so on a daily basis. The measure focus is on:

Buy: Auctions on line, percentage of total buy on line and the dollars saved.

Make: How fast information gets from its origin to its users and how much unproductive gate gathering, expediting, tracking orders and the like can be eliminated.

Sell: Number of visitors, sales on line, percentage of sales on line, new customers, share, span and the like.

Strategic: Exposure to emerging companies.

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.

Barriers to a Global Economy

Jacques AttaliFormer head of EuropeanBank for Reconstruction and Development

The Best Structural Approach?The Best Structural Approach?

Government controlled and managed. A combination of government and business. Multinational companies operating

according to government guidelines. A totally open system with governments

dealing only with activities within their own country.

Regulation

Market Technology

Employees/Work

Organization

Business Processes

Solutions to Business RequirementsFigure 1-3

Business Drivers

Business EnvironmentBusiness 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 InstanceFor Instance

Contrast the success of Wal-Mart with the following three retailers:

Montgomery Ward

Kmart

Sears, Roebuck

Some Appropriate QuestionsSome Appropriate Questions

• How profound are the changes in the business

environment?

• How deeply rooted are any of the problems?

• Have solutions been successfully implemented to

address the problems?

• Can the success be emulated?

• Where does a company begin to solve its problems?

Business ChallengesBusiness Challenges

1. Relative to all of this, what role should

information systems play?

2. How do you determine relevance regarding any

of these factors?

IT RelevanceIT Relevance

Industries with a high information content.

Industries with less information content.

A Logical Goal?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 EnvironmentThe Information Technology Environment

ERA I Data Processing

ERA II End User Computing

ERA III Strategic Systems

AdministrativeFramework

RegulatedMonopoly

FreeMarket

RegulatedFree Market

Source: Cash, McFarlan, McKenney and Appleton, Corporate Information Systems Management, Richard D. Irwin,1992, 3/E, p. 11, adapted.

Organizational

Individual

BusinessProcesses

Productivity/Efficiency

Effectiveness

CompetitiveAdvantage

PrimaryTarget

Justification/Purpose

Figure 1-5

How Fragile is Business Success?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 SignificanceIT 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?

Mission and Vision Corporate

Culture

Planning and Intelligence

Technical Resources

Performance

Human Resources

Organization and Systems

Customer Orientation

Innovation

Market Strategy

Marketing Operations

International Strategy

Source: Jean-Claude Larreche, INSEAD

Competitive Fitness Evaluation CriteriaCompetitive Fitness Evaluation Criteria

A Quick IS AssessmentA Quick IS Assessment

1. How is Business?1. How is Business?

2. Is the Information Systems Manager a 2. Is the Information Systems Manager a Member of the Top Management Team?Member of the Top Management Team?

3. What Percentage of the Operating Budget 3. What Percentage of the Operating Budget of the Business is for Information Systems?of the Business is for Information Systems?

Examples of Successful Company Examples of Successful Company Use of I/S to CompeteUse of I/S to Compete

Boeing Airplane CompanyBoeing Airplane Company Wal-Mart StoresWal-Mart Stores Bissett Nursery Corp.Bissett Nursery Corp. Federal ExpressFederal Express Charles SchwabCharles Schwab USAAUSAA L.L. BeanL.L. Bean Progressive Corp.Progressive Corp.

Your quota is 5 companies!

Best ISTC IndustriesBest 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 Worst ISTC Industries

Construction IndustryConstruction Industry

Petroleum Industry

Federal Government

Can the IS be right if: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 ISBusiness Strategy and IS

Concepts.Concepts.

Relative To (Bigger Picture).Relative To (Bigger Picture).

Company Examples.Company Examples.

ConclusionsConclusions

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.