MEDIT 115
http://medit115.wikispaces.com
Competitive
Advantage
Robert J. Robbins
rrobbins@fhcrc.org
(206) 300 3443
Mini Lecture Series
The Goal: Competitive Advantage
Must align IT with business goals !
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
2
The Goal: Competitive Advantage
Must align IT with business goals !
Easier said than done…
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
3
The Goal: Competitive Advantage
Must align IT with business goals !
A google search on
align it business goals
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
4
The Goal: Competitive Advantage
Must align IT with business goals !
A google search on
align it business goals
produced 1.5 MILLION hits, most of them selling something and the rest talking
about how hard it is to achieve alignment.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
5
The Goal: Competitive Advantage
Must align IT with business goals !
A google search on
align it business goals
produced 1.5 MILLION hits, most of them selling something and the rest talking
about how hard it is to achieve alignment.
Why is it hard?
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
6
The Goal: Competitive Advantage
Must align IT with business goals !
A google search on
align it business goals
produced 1.5 MILLION hits, most of them selling something and the rest talking
about how hard it is to achieve alignment.
Why is it hard?
IT is so plastic that it can be aligned with ANY business goal, from achieving
savings through cost-cutting efficiency to achieving competitive advantage
through major investments.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
7
The Goal: Competitive Advantage
Must align IT with business goals !
A google search on
align it business goals
produced 1.5 MILLION hits, most of them selling something and the rest talking
about how hard it is to achieve alignment.
Why is it hard?
IT is so plastic that it can be aligned with ANY business goal, from achieving
savings through cost-cutting efficiency to achieving competitive advantage
through major investments.
Michael Porter’s analysis of competitive advantage offers a framework within
which to consider the alignment of IT with business goals.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
8
The Value Chain
Michael Porter’s works on competitive advantage contain a
compelling analysis of the various components of operational
activities in a competitive enterprise.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Michael Porter. 1985. Competitive Advantage.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
9
The Value Chain
According to Porter, the value-adding primary activities define
the enterprise. Primary activities must be managed to deliver
maximum strategic competitive effectiveness.
Primary
Activities
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
10
The Value Chain
According to Porter, the value-adding primary activities define
the enterprise. Primary activities must be managed to deliver
maximum strategic competitive effectiveness.
Primary
Activities
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Support
Activities
Human Resource Management
Firm Infrastructure
Conversely, support activities are necessary but not sufficient
for the success of the enterprise. Support activities must be
managed for maximum operational efficiency.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
11
The Value Chain
Inbound
Logistics
$o
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Cash outflow $o occurs during the value-adding and support
processes. Cash inflow $i occurs when the value-added products
are sold to customers.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
12
The Value Chain
$i
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Cash outflow $o occurs during the value-adding and support
processes. Cash inflow $i occurs when the value-added products
are sold to customers.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
13
The Value Chain
$i - $o
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Simplistically speaking, the difference between cash inflow and
outflow ($i - $o) provides the margin of profit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
14
The Value Chain
$i - $o
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Increased expenses (strategic investment) can lead to increased
profits, if the expenses generate more value than they cost.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
15
The Value Chain
$i - $o
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
ROI: Because $o usually occurs before $i, we can judge the
appropriateness of cost-incurring activities to the extent that we
can measure the effect of a particular $o upon overall $i.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
16
The Value Chain
As highly plastic tools, computers can play useful roles in both
the accomplishment and the management of tasks. Thus,
computers have potential roles in all phases of the value chain.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
17
The Value Chain
As highly plastic tools, computers can play useful roles in both
the accomplishment and the management of tasks. Thus,
computers have potential roles in all phases of the value chain.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Many of the most successful companies of the last fifteen years
have achieved that success through the skilled deployment of IT
to great competitive advantage.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
18
The Value Chain
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Computers can also play useful roles in many support activities.
Here, IT delivers infrastructure strength and may contribute to
competitive advantage through cost containment.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
19
The Value Chain
In the value-adding chain, IT is a strategic asset and must be
managed accordingly. Investment is made to maximize strategic
competitive effectiveness.
Inbound
Logistics
MEDIT 115
Operations
Outbound
Logistics
Marketing
&
Sales
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
Service
20
The Value Chain
Here, aggressive spending may be necessary to achieve the
business goal of improving the value-adding chain.
Inbound
Logistics
MEDIT 115
Operations
Outbound
Logistics
Marketing
&
Sales
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
Service
21
The Value Chain
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
In support activities, IT is a cost-center component and must be
managed accordingly. Costs must be contained and the entire
operation tuned to achieve maximum operational efficiency.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
22
The Value Chain
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Here, aggressive cost cutting may be necessary to achieve the
business goal of increasing operational efficiency.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
23
The Value Chain
Here, aggressive spending may be necessary to achieve the
business goal of improving the value-adding chain.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Here, aggressive cost cutting may be necessary to achieve the
business goal of increasing operational efficiency.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
24
The Value Chain
Here, aggressive spending may be necessary to achieve the
business goal of improving the value-adding chain.
Inbound
Logistics
Operations
?
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Here, aggressive cost cutting may be necessary to achieve the
business goal of increasing operational efficiency.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
25
The Value Chain
Here, aggressive spending may be necessary to achieve the
business goal of improving the value-adding chain.
Simultaneously implementing
aggressive spending and aggressive
cost-cutting is not easy.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
No wonder it can be hard to align IT
with business goals.
Human Resource Management
Firm Infrastructure
Here, aggressive cost cutting may be necessary to achieve the
business goal of increasing operational efficiency.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
26
Additional
Challenges
New Becomes Routine
The rapid rate of technological change adds another complexity.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
28
New Becomes Routine
The rapid rate of technological change adds another complexity.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Value-adding activities can become support activities overnight.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
29
New Becomes Routine
The rapid rate of technological change adds another complexity.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Value-adding activities can become support activities overnight.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
30
Issues in Healthcare
Although deploying IT to competitive advantage is a challenge
in any organization, the difficulties are especially acute in a
highly regulated environment, with third-party payers.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
31
Issues in Healthcare
Despite increased recognition of its importance, investment in
HIT to support strategic advantage has been limited.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
32
Issues in Healthcare
Despite increased recognition of its importance, investment in
HIT to support strategic advantage has been limited.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Instead, much of the historical focus in HIT has been on cost
containment in operational support.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
33
Issues in Healthcare
The environmental structure of US health care delivery has a
strong influence on this pattern.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
34
Issues in Healthcare
The environmental structure of US health care delivery has a
strong influence on this pattern.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Regulatory compliance drives up costs here…, while capped
fees hold down revenues here.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
35
Issues in Healthcare
The environmental structure of US health care delivery has a
strong influence on this pattern.
Inbound
Logistics
Operations
Outbound
Logistics
Marketing
&
Sales
Service
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Regulatory compliance drives up costs here, while capped fees
hold down revenues here.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
36
Added
Complexity
Multiple Value Chains
Grant
Inbound
Research
Outbound
Grant
Inbound
Research
Outbound Publication
Writing
Logistics
Operations
Logistics
Publication
Grant
Inbound Operations
Research Logistics
Outbound
Writing
Logistics
Marketing Publication
Inbound Logistics
Outbound Logistics
Writing
Operations Operations
&
Publication
Service
Logistics
Logistics
Sales
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
In most academic healthcare organizations, there are multiple
value-adding chains, one for each independently managed unit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
38
Multiple Value Chains
Academic healthcare provides a model for other organizations...
Grant
Inbound
Research
Outbound
Grant
Inbound
Research
Outbound Publication
Writing
Logistics
Operations
Logistics
Publication
Grant
Inbound Operations
Research Logistics
Outbound
Writing
Logistics
Marketing Publication
Inbound Logistics
Outbound Logistics
Writing
Operations Operations
&
Publication
Service
Logistics
Logistics
Sales
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
In most academic healthcare organizations, there are multiple
value-adding chains, one for each independently managed unit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
39
Multiple Value Chains
Academic healthcare provides a model for other organizations...
Aligning IT operations with multiple,
independently managed units (each
with its own dynamic goals, budgets,
staff, and timelines) is not easy.
Indeed, efforts to achieve specific
alignment with all of these activities
must fail.
Grant
Inbound
Research
Outbound
Grant
Inbound
Research
Outbound Publication
Writing
Logistics
Operations
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Publication
Writing
Logistics
Operations
Logistics
Procurement
Core Technology Facilities
Human Resource Management
Institute Infrastructure
In most academic healthcare organizations, there are multiple
value-adding chains, one for each independently managed unit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
40
Multiple Value Chains
Academic healthcare provides a model for other organizations...
The trick is UNDERSTANDING the
process, business drivers, and values
of healthcare.
Grant
Inbound
Research
Outbound
Grant
Inbound
Research
Outbound Publication
Writing
Logistics
Operations
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Publication
Writing
Logistics
Operations
Logistics
Procurement
Core Technology Facilities
With understanding, and acceptance,
real alignment may be possible…
Human Resource Management
Institute Infrastructure
In most academic healthcare organizations, there are multiple
value-adding chains, one for each independently managed unit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
41
Multiple Value Chains
Academic healthcare provides a model for other organizations...
The trick is UNDERSTANDING the
process,
business
drivers,leadership
and values
…provided
that business
of
healthcare.
(not
IT leadership) can identify the
business goals with which IT should
be
aligned.
With
understanding, and acceptance,
real alignment may be possible…
Grant
Inbound
Research
Outbound
Grant
Inbound
Research
Outbound Publication
Writing
Logistics
Operations
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Publication
Writing
Logistics
Operations
Logistics
Procurement
Core Technology Facilities
Human Resource Management
Institute Infrastructure
In most academic healthcare organizations, there are multiple
value-adding chains, one for each independently managed unit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
42
Multiple Value Chains
Academic healthcare provides a model for other organizations...
The trick is UNDERSTANDING the
PROBLEM:
process, business drivers, and values
of healthcare.
Most
business leaders find it much
easier to understand IT as a cost
center than to appreciate it as giving
With
understanding,
strategic
advantage. and acceptance,
real alignment may be possible…
Grant
Inbound
Research
Outbound
Grant
Inbound
Research
Outbound Publication
Writing
Logistics
Operations
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Grant
Inbound Operations
Research Logistics
Outbound Publication
Writing
Logistics
Publication
Writing
Logistics
Operations
Logistics
Procurement
Core Technology Facilities
Human Resource Management
Institute Infrastructure
In most academic healthcare organizations, there are multiple
value-adding chains, one for each independently managed unit.
MEDIT 115
Mini Lecture Series: Competitive Advantage
Copyright © 2010 by R. J. Robbins
43
MEDIT 115
http://medit115.wikispaces.com
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Mini Lecture Series