IT IMPACT ON BUSINESS MODEL
Session 02
Lecturer : JONATHAN SOFIAN LUSA
Reading materials : Applegate chapter 2
MASTER IN MANAGEMENT PROGRAM
PPM - School of Management
DEC 05 2009 - Week I
0CT 11 2008
Chapter Outline
Analyzing IT Impact
1
The Search for Opportunity
2
3
GPA Case Study
ANALYZING IT IMPACT
CASE STUDY : BORDERLESS MANUFACTURING AT LI & FUNG
Assembly
CHINA
Lining
TAIWAN
Shell
KOREA
by

Made in Hong Kong
Label, elastic,
studs, toggle
and string
HONG KONG
Filler
CHINA
Zipper
JAPAN
LI & FUNG’S BUSINESS PARADIGM
Raw Material
Sourcing
Factory
Sourcing
Product
Developm’t
Mfg
Control
Product
Design
Export Documentation
Consumer
Needs
Forwarder
Consolidation
Supply Chain
Management
Customs
Clearance
Local
Forwarding
Consolidation
Supply Chain Financing
Financing
Financing
Financing
Financing
Factories
Shipping
Airlines
Wholesale
Importer
Supply Chain
Raw Material
Mill
Retailer
Consumer
THE CHANGING ROLE OF
THE TRADING COMPANY
Supply Chain
Management
Virtual
Manufacturing
Borderless
Manufacturing
Sourcing
Buying
Agency
ANALYZING IT IMPACT
1. IT impact on strategy
•
Determining product, market, business network, and
boundary positioning
2. IT impact on capabilities.
•
Building processes, infrastructure, people, partner,
organization & culture, leadership, governance
ANALYZING IT IMPACT
IBM Path to Business transformation
ANALYZING IT IMPACT
IBM Path to Business transformation
• Goal: Use IT to improve end to end operating processes
• Goal: Transform organization n industry, differentiate strategy,
• Business Sponsor: Business Unit & Shared service Leaders
develop( proprietary asset.
suppliers, customer, partner)
• Business Sponsor: BOD, strong project leadership.
• Business Value: Reduce cost, decrease cycle time,• improve
Business Value: Enable sustained capital efficient profitable
org or extended enterprise operating performance, improve
growth, improve market share, deliver sustainable competitive
total cost of IT Ownership.
advantage.
• Risk & Uncertainty: moderate to high, business
& tech
• Risk
& Uncertainty: High, new business model needed, new tech
complexity and volatility, org change, required integration.
needed, organizational change, integration of new business.
• Investment: Corporate Budgeting, steering committee.
• Investment: Integrated with corporate strategy, Review by
committee, change control process n system
• Goal: Use IT to improve local operating
performance
• Business Sponsor: Local Manager, team,
individuals.
• Business Value: Reduce cost & Improve local
operating performance.
• Risk & Uncertainty: Low to moderate
• Investment: Local Budgeting
• Goal: Pursue opportunities that enable launch of new products /
business, entry into new market
• Business Sponsor: Executive Committee, business unit
leadership.
• Business Value: Grow Revenue, launch new product, enter high
growth industries and market
• Risk & Uncertainty: High, new business model needed
• Investment: Staged commitments and investments base on
milestones, base on business plan, new venture risk
management
BASIC QUESTIONS
Five key questions can be used to guide executives as they search
for value creating opportunities to use IT to support and drive the
business strategy
1. Can IT change the basis of competition?
2. Can IT change the nature of relationship and the balance of
power among buyers and suppliers
3. Can IT build or reduce barriers to entry?
4. Can IT increase or decrease switching costs?
5. Can IT add value to existing products and services or create
new ones?
GROUP PURCHASING ALLIANCE
New concept for health care industry
CASE STUDY
FACT
Radiology Film
2000000
1500000
1000000
500000
0
A
B
C
D
E
18x24
1086100
228800
325000
528000
240000
24x30
904800
371360
569900
880000
400000
30x40
1534500
590920
895500
1467400
655000
35x35
1603300
641980
951250
1548800
705000
FACT
Disp Syringe
4000
3000
2000
1000
0
A
B
C
D
E
1 ml
1746
3146
905
1270
2100
2ml
1202
2227
951
660
1200
5ml
1730
2794
1121
836
1550
10ml
2003
3591
1550
1452
2100
% COST DIFFERENCES
GLOVE
350%
18 X 24
24 X 30
30 X 40
35 X 35
474%
243%
259%
249%
I.V.SOLNS
D5W
D10W
SALINE
RINGERS
138%
164%
140%
164%
DISP
SYRINGES
1ml
2ml
5ml
10ml
347%
337%
334%
247%
FILM
SOLUTIONS ?
CONSEPT Infomediaries
GPA Components
Hospitals: Power Force of GPA
Bank: Financial support
GML: Representer of Hospital
Distributor/Manufacturer:
Product supplier
GPA Components
Transaction Scheme
GML
GML
BENEFIT
HOSPITAL
BANK
DISTRIBUTOR
GML
OUR LEARNING POINTS FOR TODAY …
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THANK
YOU