3 Strategy & Information Management II (IT-enabled Strategies)

Question 1

3. 1 IT-enabled Strategies
4. 1.1 Relation between corporate strategy and information systems (Bild)

Answer 1

Question 2

3.1.1.1 On-going Discussion – Does IT matter?

Answer 2

„It is not information technology itself that matters, but how you use it.“ (Hal Varian 2004)

Costs for IT are lower, ability to manage IT is widespread, IT is ubiquitous (allgegenwärtig). In

some areas, IT has indeed become a commodity (Rohstoff).

Question 3

3.1.1.2 Key questions to determine the impact of IT on Strategic Decision Making

Answer 3

• Can IT be used to reengineer core value activities and change the basis of competition?

→ American Hospital Supply Corporation (AHSC) & American Airlines (AA) are early examples of doing so

• Can IT change the nature of relationships and the balance of power between buyers and suppliers?

→ AHSC rose to power within the hospital supplies industry by streamlining channels, improving order accuracy, increasing speed of fulfillment and decreasing costs

Can IT build or reduce barriers to entry?

→ AA’s proprietary network increased barriers to entry (1970 –1980)

→ Today, the Internet reduces barriers to entry

Can IT increase or decrease switching costs?

→ Proprietary technologies increase switching costs (AHSC, AA)

→ Internet decreases switching cost (Amazon vs. Barnes and Noble)

Can IT add value to existing products and services or create new ones?

→ Digitization of print media, music and video

Question 4

3. 2 Components of IT-enabled strategies
4. 2.1 Strategic Information Systems (SIS)

Answer 4

Strategic information systems are IS that assure a competitive advantage for a company or avoid a drop of the company‘s competitiveness.

Question 5

3.2.1.1System Categories for SIS

Answer 5

• Inter-Organisational Systems
• Value-Added Services
• IT for new products and services
• Electronic Markets

Question 6

3.2.1.2 Successful SIS: Key Questions

Answer 6

• Do we need the SIS to compensate for a competitive disadvantage?
• Does the SIS add value for our customers?
• Is the SIS defendable?
• Does the SIS make use of the unique qualities of our company?
• Are there exit barriers?
• Does the SIS produce unrealistic expectations?
• Is the project the SIS is part of cost-effective?

Question 7

3. 2.2 Process Orientation
4. 2.2.1 IT-enabled Business Process Change

Answer 7

Business processes (in private and public organizations) present a collection of activities that takes one or more kinds of input and creates an output.

Business Process Change (BPC) presents a management concept that involves any type of process change (radical and continuous) for increasing efficiency and effectiveness in organizations.

While both approaches, radical (e.g., BPR, BPT) and continuous (e.g., TQM, CPI, six sigma), share the common goal of improving processes, they are also frequently used complementary

Question 8

3.2.2.2 Process Change Concepts / Methods

Answer 8

Question 9

3.2.2.2.1 Business Process Management (BPM)

Answer 9

Business Process Management is a holistic view of business processes and aims at a structured, analytical, cross-functional and continuous improvement of business processes (see also Lee/Dale 1998, p. 216).

Question 10

3.2.2.2.2 Business Process Reengineering (BPR)

Answer 10

Objective: achieve sustainable productivity improvements by changing processes substantially (erheblich).

This is typically achieved by applying ICT, often in a new and unprecedented way.

Question 11

3. 2.3 IT-enabled Business Models
4. 2.3.1E-Commerce Business Models

Answer 11

• The Storefront Model
• The Auction Model
• The Portal Model (Vertical vs. horizontal)
• The Name-Your-Price Model
• The Comparison Pricing Model
• The Demand Sensitive Pricing model
• The B2B Exchange Model

Question 12

3. 2.4 IT-enabled Organizational Models
4. 2.4.1 Closed Innovation (Bild)

Answer 12

Question 13

3.2.4.2 Open Innovation (Bild)

Answer 13

Question 14

3. 3 IT as disruptive (durchbrechend) Innovation
4. 3.1.1 Types of Innovation

Question 15

3.3.1.1 Sustaining Innovation

Answer 15

→ New technologies or business models which suit an existing market better (improvement)

evolutionary

revolutionary

Question 16

3.3.1.2 Disruptive Innovation

Answer 16

→ New technologies or business models that (at first) lead to worse products measured against common criteria; often cheaper / less complex;

Question 17

3.3.1.1.1 Disruptive Innovations (Bild)

Answer 17

Question 18

3.3.1.1.2 Christensen’s Criteria

It is not possible to forecast market disruption ex-ante → Criteria are a good first indicator

Answer 18

Historically most valued attributes

Innovation leads to products or services that underperform dominant ones along the dimensions historically most valued by customers in the market

Other qualities

Innovation leads to products or services superior in dimensions not valued as important before

Cost and margin

Innovation leads to products or services that are cheaper for customers and provide lower margins for vendors than dominant ones

Simplicity / convenience

Innovation leads to products or services simpler or more convenient to use

Interest of main customers

The most profitable customers of the current market’s leading firms have initially little interest in products / services based on the innovation

First customers

First customers are mainly situated in niche or emerging markets

First vendors

Among the companies that commercialize the innovation is a high rate of startups or companies new to the market

Value chain

The innovation leads to a different structure of the vendors’ value chain

Market disruption

Eventually, products or services based on the innovation will displace the dominant ones in the mainstream market

Question 19

3.3.1.2.1 Definition of Cloud Computing

Answer 19

Cloud Computing is an IT deployment model, based on virtualization, where resources in the form of infrastructure, applications and data are deployed via the internet as a distributed service through one or several service providers. These services are scalable on demand and can be priced on a pay-per-use basis.