lecture 1:Value creation

Question 1

Value creation purpose

Answer 1

To understand IT-based value creation in organizations and integrate concerns about the It-based value creation into the design and management of IS development and implementations projects.

Question 2

The major challenges

Answer 2

• High level of uncertainty and complexity
  
  • Design and co-specialization of IT and complementary investments
  • Changing the business process (or organization in general)
    ○ Want to give the business some benefit that the business couldnt achieve before.
  • Collecting the value from changes - reducing lag effect
    Protecting competitive advantages

Question 3

Value Creation - where and why do we use it?

Answer 3

Value creating are done up front in the project. This is something you have to think about before the project even starts.

Question 4

Information Systems

Answer 4

A system which assembles, stores, processes and delivers informations relevant to the organization, in such a way that the information is accessible ans useful to those who wish to use it.

Question 5

Why information systems?

Answer 5

competitive advantages, cutting cost etc.

organizations and societies have a hard time working without information systems.

Question 6

what is information systems?

Answer 6

example: decision-making (BI systems), marketing (social computing), shopping(e-commerce, web applications)

Question 7

IS investment

Answer 7

investments in Is, IT managers and IT specialist.

Question 8

Complementary investment

Answer 8

Investment in various froms of organizational change that complement the investment in IT.
Can be a key to value creation, an obstacle for value creation and/or a soruce for sustainable competitive advantages.

Question 9

IS business value

Answer 9

The impact of investments in particular IS assets on the perfromance an capabilities of a company.

Question 10

Contextual factors

Answer 10

factors related to the individual company, the industry or society that somehow impact the possibilities for creating value from IS and complementary investments

Question 11

Lag effects

Answer 11

Time lags between a investment is made to value is created

Question 12

sustainable competitive advantage

Answer 12

when the organizations competitive advantage resist erosion by competitor behavior. this requires the company to have some barrieres that makes imitation of their strategy difficult.
To keep value in terms of competitive advantage you need to build barriers to erosion (if not, the organization can experience not creating any value, because the other firms are copying the initiatives)

Question 13

Response lags

Answer 13

The time it takes competitors to respond aggressively enough ti erode the competitive advantage.

Question 14

Barrieres to erosion

Answer 14

impede or prevent complete dissipation of the advantage. the strength of barriers to erosion is directly related to their ability to generate response lag.

Question 15

response-lag drivers

Answer 15

characteristics of the firm, its competitors, the technology, and the value system in which the company raise and strengthen the barrieres to erosion.

Question 16

how is value created???

Answer 16

By combining investments in IS with complementary investments (non-IS investments)
- If good: the investments will lead to improved process performance
If REALLY good: the improved captured process performance are captured at the organizational level and the higher productivity can ex. Lead to company level savings.

BUT: new investment can lead to bad performance –> takes time to learn new processes(hint: lag effects) –> AND THEREFOR are value creation affected by contextual factor as low It skills, bad relations between IT and the business which can have a bad impact on value creation.

Question 17

what can value creation through information systems do?

Answer 17

It can have a major impact on productivity, accounting and performance –> IF managed properly.

Question 18

how to measure information system performance?

Answer 18

in theory many different ways to, in practice difficult to measure. don’t know if it is the IT investment or other factors that leads to higher performance.

BUT: what we do know is that alignment, relations and collaboration between IS departments and the business is crucial for the performance.

Question 19

The value creation process

Answer 19

IS development and implementation projects is to combine IS and investments in a way that changes business processes and creates value,
- Like buying a new IS systems and then changing the way decisions are made in the organization
- You are not gaining value just because you buy a new IT system, but it gives you the ability to enable complementary organizational investments.
Which can lead to productivity, reducing cost e.g. by changing the business processes.

Question 20

Co-specialization

Answer 20

a combination of IS and non-IS investments. Internal and maybe also external ressources are changed in a way that combines them into a new ressource that supports value creation.
AND diffrent depending on the scope of the project.

Question 21

IT changes: involves all

Answer 21

Making IT changes involves the whole organization and not just the technology part of the firm. Therefor it is necesaary to make sure every part of the organization are following. If not it can create significant productivity losses.
Structure –> technology –> people –> task !!

Question 22

Barriers to erosion: the barriers that actually can create sustainable competitive advantage

Answer 22

• IT resources barrier
- IT infrastructure, information repository, technical skills, IT management skills, relationship assets
• Complementary resources barrier
- The co-specialization process such as:
IT characteristics: Visiblity, Uniqueness, complexity, Implementation process: Implementation process complexity, Degree of process changes
• IT project barrier
- cost and scope
• Pretemption barrier
- Switching costs

Question 23

how to make it difficult for competitors?

Answer 23

hard-to-accelerate-processes

Question 24

how to use

Answer 24

Do not only focus on the software part, make use of the co-specialization process.
Use it to prepare, balance and evaluate the IT investments!!!!