Agenda:



Recap
Chapter 4 – Making Case for IT
Team Time
Disruptive Technology (Recap)


What is disruptive technology?
Why disruptive technology is essential for creating
and sustaining firm’s competitive advantage?
Provide example.
Disruptive Technology
Disruptive
technologies technologies that
improve a product
or service in ways
that the market
does not expect
and they are
particularly
threatening to the
leaders of an
existing market,
because they are
competition
coming from an
unexpected
direction.
Advantages and disadvantages of
Outsourcing (Recap)


What are the advantages and disadvantages of
outsourcing?
What kind of activities are normally outsourced?
Outsourcing
Marketing Channel Conflict

What is the likelihood that cannibalism would happen
in Li and Fund case when the company created
Li&Fund.com? Please explain.
Team Time (DIY)



Bloomberg Business Week Article: Wal-Mart’s Rocky Path
from Bricks to Clicks: After 15 years online, the retailer still trails
well behind Amazon.com and Ebay
Is there any channel conflict between local Walmart Stores and
walmart.com? Please explain.
If you are the CEO of Wal-Mart, how would you make your ecommence division more competitive?
Course Road Map
ISQS 5231
IT and
Business
Advantages
Business of IT
Making Case
for IT
Internetworking
Infrastructure
IT and Strategy
Diverse IT
Infrastructures
IT and
Organization
Reliable and
Secure IT
Services
Extending the
Enterprise
IT Leadership
Management
IT Functions
Managing IT
Projects
Management
IT Outsourcing
Chapter 4: Making the Case for IT
Do you agree with Carr’s assumptions? Why? Why not?
9
Chapter 4: Making the Case for IT
Carr’s Solutions
1.
Spend as little as possible on IT
2.
Concentrate IT investments on driving cost savings
3.
Follow rather than lead when adopting new IT, allowing others
to bear the risk and cost of testing new technologies
4.
Concentrate on managing risk, rather than searching for IT
opportunities
Do you agree with Carr’s solutions? Why? Why not?
10
Chapter 4: Making the Case for IT – Counterpoints
John Seely Brown and John Hagel stated:

Overestimate the strategic value of IT

Overspend on IT

Need to manage for reliability and security
However, they also argued:

IT remains a profound catalyst for the creation of strategic
differentiation.

IT maybe ubiquitous but the insight required to harness its
potential is not.
11
Chapter 4: Making the Case for IT – Counterpoints
Vijay Gurbaxani claimed:

The scare resource never was technology; it was the set of
managerial capabilities needed to create value with that
technology.
Paul Strassman asserted:

Carr’s logic is defective because his examples deal exclusively
with capital intensive goods.
12
Chapter 4: Making the Case for IT – Counterpoints
Applegate et al. stressed:

Carr’s arguments are based on the traditional mainframe-base
and client-server approach to building IT infrastructure, which
is very costly. (Legacy Mindset)

Today, open source and ubiquitous IT infrastructures are
designed to be shared and become more valuable when shared.
(Network Externality)

Cost and time are reduced to launch new IT-enabled strategic
initiatives. As such IT becomes more strategic and relevant.
What are your perspectives?
13
Chapter 4: Making the Case for IT
Legacy System and Centralized IT Architecture
14
Chapter 4: Making the Case for IT
Client and Server (Distributed) IT Architecture
Enterprise Application Integration (EAI)
Approach
Legacy
Application
Database
2
Middleware
ERP
Legacy
Application
SCM
Database
1
Using Business Models to Frame the Business
Case for IT – “IT Business Value” Mindset
Chapter 4: Making the Case for IT
IT Value Framework
18
Chapter 4: Making the Case for IT – Infrastructure
Leveraging Infrastructure

Infrastructure: IT operations and supporting enterprise
processes



Outsourcing to specialized shared services providers (e.g., IBM Global
Service and EDS)
Build best-in-class shared (with other divisions) service IT infrastructure:
off-shoring its shared services (data centers, call center and even ERP)
Options Value of Investments in IT Infrastructure
19
Chapter 4: Making the Case for IT
Cash Flows – MedCo A
20
Chapter 4: Making the Case for IT
MedCo A vs. MedCo B
21
Chapter 4: Making the Case for IT
MedCo B Leverages Infrastructure and Exercises Options
22
Chapter 4: Making the Case for IT
Value of Leveraging Infrastructure and Exercising Options
23
Chapter 4: Making the Case for IT – Profitability and
Proprietary
Driving Profitable Growth
1. Revenue-generating capabilities can be enhanced
2. IT-enabled product/service or business offerings can be
launched
Achieving Proprietary Advantage
1. Entry and Exit Markets
2. Strategic Positioning
3. PE Ratio
24
Team Time (DIY)


How well do you understand the linkages among the elements
of your organization’s business model – its strategy, the
capabilities and infrastructure built to execute the strategy, and
the value that can be created for all stakeholders (e.g.,
customers, suppliers, partners, employees, investors)?
Organization Choice
1.
2.
3.
4.
You team can pick your own organization.
Charles Schwab
Southwest Airline
Amazon.com