lOMoARcPSD|9607397 BU415 Textbook and Reading Notes Technology is everyone and necessary to survive. There isn’t a single modern managerial discipline that isn’t being deeply and profoundly impacted by technology. Tech skills are being “built into” jobs everywhere Chapter 1: Informa0on Systems and the Role of General and Func0onal Managers General and Func0onal Managers Manager: a knowledge worker of modern business and not-for-proBt organiza0on who is in charge of a team, a func0onal area, a business unit, or an en0re organiza0on Needs to have IT knowledge Objec0ve is business drivenused for growing or changing needs of the organiza0on General and Func0onal Managers versus End Users End Users: individuals who have direct contact with soLware applica0ons as they use them to carry out speciBc tasks (i.e a student using MicrosoL word) Most general and func0onal managers in modern organiza0ons are also end users Important to have knowledge of informa0on systems and the role that IT plays Informa0on Systems Professionals Need IT professionals to build infrastructure Need a partnership between them and the business people Common gap here which is why they teach MIS in schools Common Jobs in the Organiza0onal IT Func0on Chief Informa0on ORcer o Common for CIOs to become CEOs because: Increasing prevalence of IT and the consequent need for those who serve on the execu0ve teams and the board of directors to have some understanding of how to use the crucial resource They have a broad view of opera0ons Technical Staf o Architect: in charge of developing a framework for the development of a system, has a strong technical background. Big picture individuals o Developer: builds high-quality, innova0ve, and performing soLware that complies with coding standards, technical designs, and the framework provided by architects o Administrator: in charge of day-to-day maintenance of a system or collec0on of systems Analysts and Managerial Staf o Analysts: general term referring to an individual who performs analysis in a speciBc Beld or topic area Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Project Manager: responsible for the successful comple0on of a project o InformaLon Systems Manager: in charge of a team within the IT func0on of an organiza0on IT Consul0ng Data Science and Data Scien0sts o Data science: encompasses more than sta0s0cs, also includes the ability to iden0fy useful data sources, tap into data streams or generate new ones Must have a strong business acumen, coupled with the ability to communicate Bndings to both business and IT leaders Advanced Analy0cs Skills and Competencies o Following roles are cri0cal to the success of data science ini0a0ves Data ScienLsts: these individuals are in charge of analy0cs eforts and have an overview of end-to-end process Data Engineers: these individuals can be invaluable in reducing the 0me needed to access and prepare data for analysis Business Experts: these general and func0onal managers have a deep understanding of the business and func0onal domain of analysis Source System Experts: These individuals have a deep understanding of the technology underpinning the business domain of analysis. The understand what business processes created the data and how the data are stored SoOware Engineer: These individuals have tradi0onal soLware engineering knowledge that may be needed on special projects or when substan0al custom coding is required to extract, analyze or visualize the data Fundamental IT Trends: The Staying Power of Moore’s Law Informa0on systems: those original systems that enable the processing and management of an ins0tu0on’s informa0on Moore’s Law: the observa0on that the number of transistors in a dense integrated circuit doubles about every two years Processing Power and Memory Have Increased o Processing power of microprocessors have experienced exponen&al growth o Storage capacity of memory chips has also increased exponen0ally Cost of Compu0ng Power Have Declined o Costs of compu0ng power and storage has declined Computers have become easier to use o Have become more complex but are now easier to use Other IT Trends of Managerial Interest Declining Storage Costs o This trend has enables the emergence of a host of strategic ini0a0ves predicates on the collec0on and analysis of signiBcant amounts of data Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Ubiquitous Network Access o The internet: a global network of networks relying on distributed ownership and openly available standards and communica0on protocols o Increasing access + the costs of data transmission becoming negligible Ubiquitous Compu0ng and Digital Data Genesis o Global data networks have become widely available, more devices are now intelligent and connected o Rapid prolifera0on of easy-to-use compu0ng equipment has spurred more and more digitaliza0on How Do these Trends Afect Today’s Managers? Modern general and func0onal managers need to be able to devise strategies and implement process that enables your organiza0on to take advantage of these trends and be^er serve your increasingly IT-savvy customers Huge organiza0onal investment in IT equipment, soLware, and services DeBni0ons: Chief Informa0on oRcer (CIO): The individual in charge of the informa0on systems func0on Data scien0st: the individual in charge of the analy0cs eforts who has an overview of the end-to-end process Digi0za0on: the process by which content and processes become expressed and performed in digital form End users: those individuals who have a direct contact with soLware applica0ons as they use them to carry out speciBc tasks Informa0on system: formal, sociotechnical, organiza0onal system designed to collect, process, store, and distribute informa0on Informa0on technology (IT): Hardware, soLware, and telecommunica0on equipment IT professionals: those employees of the Brm who have signiBcant technical training and are primarily responsible for managing the Brm’s technology assets Manager: a knowledge worker of modern business and not for proBt organiza0on who is in charge of a team, a func0onal area, an en0re organiza0on, or a business unit Polymedia0on: the process of convergence of mul0ple digital devices into one. Chapter 2: Informa0on Systems DeBned Informa0on Systems: DeBni0on Informa0on Systems as Sociotechnical Systems o Formal, sociotechnical, organiza0onal systems designed to collect, process, store and distribute informa0on o Sociotechnical theory ques0ons overly op0mis0c predic0ons about the poten0al beneBts of new technology and suggested that the impact of new technologies Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 on work systems was not a direct one but depend on the interplay of technology with other aspects, or components Four Components of an Informa0on System o IT, people, processes, and structure o Grouped into 2 subsystems: Technical subsystem Comprises of IT and processes The por0on of the informa0on system that does not include human elements Social subsystem Comprises of people and structure People and people in rela0on to one another, represents the human element o InformaLon Technology Hardware, soLware and telecommunica0on equipment Cornerstone of any modern IS, enabling and constraining ac0on through the rules of opera0on that stem from its design o Process The speciBed series of steps necessary to complete a business ac0vity i.e job of a small family-owned grocery store manager and the process he engages in when restocking inventory check the inventory and iden0fy the needed items call individual suppliers for quotes and delivery dates compare the various quotes select one or more suppliers for each of the needed items based on the terms of agreement call these suppliers and place the orders receive the goods upon delivery, checking the accuracy and quality of the shipped items pay the suppliers same ac0vity may be performed using various processes gaps exist between oRcial business process that forms the basis of training programs and customer service protocols and the informal ways these are performed this discrepancy is because although training and such is codiBed, it is carried out by people, and people aren’t always the same o poten0al discrepancy between the business processes as designed by the organiza0on and the manner in which it is actually enacted is oLen the root cause of IS failure when designing new IS, must consider poten0al obstacles o People Individuals or groups directly involved in the IS End users, Managers, and their interpreta0ons Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Have their own set of skills, a`tudes, preconcep0ons, and personal agendas that determine what they are able to do and what they will elect to do as part of the IS o Structure Refers to the organiza0onal design, repor0ng, and rela0onships within the informa0on system Important to understand because of user resistance, incen0ve systems, and rela0onships are oLen enemies of IS o Systemic Efects Four components won’t work in isola0onthey interact with one another Success is based on the proper interac0on of IT with the other components This is known as systemic efects (a change in one component, afects all other components of a system) Need to focus on op0mizing en0re IS as a whole Need to understand the importance of systemic efects when designing a new system and troubleshoo0ng an exis0ng one that is underperforming Why Do OrganizaLons Build InformaLon Systems? 1. To fulBll its informa0on processing needs 2. Does so in an efort to improve its eRciency and efec0veness 3. To fulBll informa0on processing needs, an organiza0on has to get relevant data that are manipulated, or processed, to produce an output that will be useful IT can only be successfully leveraged as an integral part of an IS, but not in isola0on Successful Informa0on Systems o IS should be built according to an explicit goal designed to fulBll the special info processing needs of the implemen0ng org – do it for a reason o Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o InformaLon Systems Success: IS is a failure if it is abandoned or not used o Informa0on Systems Outcomes have other direct and indirect efects on people within and outside the Brm (i.e empowering employees, widening scope of their responsibility, deskilling, loss of responsibility, and crea0on of a monotonous working environment) IS may have efect on future opportuni0es available to the Brm Informa0on Systems in the Organiza0onal Context Every Organiza0on is Unique o Firm Strategy Represents the manner in which the organiza0on intends to achieve its objec0ves Understanding the strategy tells us what the Brm is trying to do and what course of ac0on it has chartered to get there o Firm Culture Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 DeBned as the collec0on of beliefs, expecta0ons, and values shared by the organiza0on’s members Broad representa0on of how the Brm does business Captures the oLen unspoken and informal way in which the organiza0on operates o Infrastructure Set of shared IT resources and services of the Brm, constraints and enables opportuni0es for future informa0on systems implementa0ons o The External Environment Encompasses regula0on, the compe00ve landscape, and general business and social trends Is fairly removed from day-to-day opera0ons but incuence the Brm and the type of IS the Brm will need to introduce Bringing It All Together o Immediate efect of IS is whether or not they are used o If used then outcomes (intended or not) occur (Bnancial results, efects on people, efects on the futre opportuni0es and constraints available to the Brm o Model shows that organiza0on doesn’t exist in isola0on o Also shows that IS are embedded in an org context, deBned by the Brm’s strategy, culture, and IT infrastructure o The loop nature is important to no0ce o Informa0on Systems and Organiza0onal Change First Order Change: Automate o Involves technology and processes but does not afect the sphere of the social subsystem Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Occurs when an IT innova0on is introduced that modiBes how an exis0ng process is performed o Managing First-Order change: limited scope makes it easy to envision, jus0fy, and manage. General and func0onal mangers understand how the new technology impacts the Brm’s opera0ons. Requires li^le execu0ve sponsorship and involvement Second-Order Change: Informate o Has some major implica0ons for the people component of the IS and the IT processes? o Manner in which the process is performed + the individuals that perform it are afected o The way people interact with the technology is changed o This level of change typically occurs when the info intensity of the process being performed changes substan0ally due to the intro of the new IT Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o o Managing Second-Order Change: challenging to managers, employees and customers may be afected. Must provide appropriate training and overcoming the human tendency to resist change are key challenges, harder to jus0fy Third-Order Change: Transform o Most pervasive and radical level of change o Encompasses Brst and second order change while also causing organiza0onal structure disrup0ons o The interac0on between structure and technology is substan0ated by a change in the way the organiza0on selects, uses, and manages technology o Fla^er/permeable org, structure usually emerges aLer the technology implementa0on Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o o Managing Third-Order Change: requires signiBcant managerial and execu0ve involvement, top management needs to be champions for the transi0on. Likely to face resistance. Implica0ons Don’t put the car before the horse? o Strategies are usually inspired by the func0onali0es of a powerful soLware product, and the selec0on of a speciBc IT product should not be the point of departure but rather the point of departure but rather the point of arrival of your informa0on system design efort Manage Systemic Efects o Must an0cipate the ripple efects that happen in the other parts of the IS from changing one part Informa0on Systems are in Flux o Business strategy and external environment evolve con0nuously, this means that there must be a constant revalua0on of IS goals and need informa0on processing func0onali0es o Design and use of an IS should be seen as an itera0ve process itera0ve process involving the cyclical evalua0on of individual IS components and the assessment of how diferent org systems work together to support the business Op0mize the Whole o Op0mize the informa0on system rather than any of its cons0tuent parts o Requires that one or more components be deop0mized? Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 DeBni0ons: Efec0veness: the ability to achieve stated goals or objec0ves. Typically, a more efec0ve Brm is one that makes be^er decisions and is able to carry them out successfully ERciency: the ability to limit waste and maximize the ra0o of the output produced to the inputs consumed. In other words, a Brm is more eRcient when it produced more with the same amount of resources, produces the same with fewer resources, or produces more with fewer resources External environment: the world outside the Brm that creates incuences, such as regula0on, the compe00ve landscape, and general business and social trends (e.g., outsourcing, customer self-service). Firm Culture: the collec0on of beliefs, expecta0ons, and values shared by the members of an organiza0on Firm Strategy: the manner in which the organiza0on intends to achieve its objec0ves Informa0on system: a formal, sociotechnical, organiza0onal system designed to collect, process, store, and distribute informa0on Informa0on technology (IT): hardware, soLware, and telecommunica0on equipment IT Infrastructure: the set of shared IT resources and services of the Brm, forming a Brm’s technological backbone, that constrains and enable opportuni0es for futures informa0on systems implementa0on Organiza0onal Structure: the organiza0onal design, repor0ng, and rela0onships within the informa0on system Process: the series of steps necessary to complete and organiza0onal ac0vity Systemic Efects: the no0on that the diferent components of a system are interdependent and that change in one component afects all other components of the system Chapter 3: Organiza0onal Informa0on Systems and Their Impact Categorizing Systems ClassiBca0on models are useful for two reasons o Provide you with a vocabulary to interact with your colleagues and with IS professionals o Provide the basis for you to develop your own thinking about the role that technology plays in your organiza0on and on how to best manage its impacts Hierarchical Perspec0ve o Recognizes that decision making and ac0vi0es in organiza0ons occur at diferent levels o Opera0onal Level Concerned with short-term ac0vi0es that deliver the Brm’s value proposi0on Highly structured decision makingdetailed procedures, li^le discre0on of front line employees Objec0ve is eRcient transac0on processing with limited uncertainty Transac0on Processing Systems (TPS): the informa0on systems that support this org. level Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Managerial Level Concerned with midterm decision making and a func0onal focus Ac0vi0es are semi-structured, have well known components and some degree of uncertainty Decision making is semi-structured but characterized by repeatable pa^erns and established methods Focused on tac0cal decision making characterized by some discre0on Objec0ve is to improve the efec0veness of the org, or one of its func0ons Decision Support Systems (DSSs): IS that typically support this org level o Provide the info needed by func0onal managers to engage in tac0cal decision making o Objec0ve is to produce recurring reports and excep0on reports o Typically focus on internal opera0ons and the data they use for analysis stem from the Brm’s TPS o Execu0ve Level Concerned with high-level, long-range decisions Execs are focused on strategic decision making and interpre0ng how the Brm should react to trends in the marketplace and the compe00ve environment Decision making at this level is highly unstructured, ad hoc, and reliant on internal and external data sources Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Objec0ve is to predict future developments by evalua0ng trends, using highly aggregated data and scenario analyses Li^le structure + few formal methodologies exists for ac0vi0es at this level Execu0ve Informa0on Systems (EISs): info system that supports this org level Ofered through execu0ve dashboards o Tools that enable rapid evalua0on of highly aggregated org and trend data o Evolu0on of the Hierarchical Perspec0ve Enables managers and IS professionals to easily iden0fy the main characteris0cs and purpose of IS and the IT products designed to support them Becoming less popular due to the org trend toward ca^er hierarchy + trend toward empowering opera0onal personnel DiRcult to separate informa0on systems into clear-cut categories FuncLonal perspecLve o Typically represented in the form of the organiza0onal chart o Designed to support the speciBc needs of individuals in the same func0onal area o Based on the principle of local op0miza0onsuggests that info processing needs are unique and homogeneous within a func0onal area o Tailored to speciBc needs of the professionals in the area Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o o Process Perspec0ve o Limita0on of func0onal and hierarchical perspec0ve is the lack of integra0on among separate systems and the intro of considerable redundancy Also creates ineRciency with duplica0on of similar eforts in separate business units, and substandard service Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Led to the development of siloed applica0ons, which serves each func0on well, but makes communica0on diRcult o Business Process Reengineering BPR emerged in the early 1990s to break down org silos, when it was realized that business processes are cross func0onal Business process: the series of steps that a Brm performs in order to complete an economic ac0vity BPR is a managerial approach that employs a process view of organiza0onal ac0vi0es Methodology for achieving internal business integra0on, uses top-down approach to business process redesign, seeks drama0c performance improvements Focuses on internal ac0vi0es Process focused: deBned as a way of organizing work that centres on the steps necessary to create value for customers, disregarding what each func0on would tradi0onally look out for o The Dark Side of Rengineering SigniBcant risks high risk of failure 1. Radical 3rd order change might bring out resistance due to change in their scope of work, responsibility and posi0on 2. Opera0ons are not glamourous or highly valued 3. BRP ini0a0ves are very expensive because they require the Brm to re0re its legacy systems and develop a costly integrated technology infrastructure 4. BRP methodology has a bad reputa0on because of its complexity and the fact that it led to downsizing and layofs o The Role of IT in Business Process Reengineering Eforts IT catalyst for BPR When technology changes, old processes may become obsolete Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Enterprise Systems Integra0on o Form, coordinate, or blend into a func0oning or undeBned whole (unite) o 2 dimensions of integra0on eforts Locus Internal or external Object of Integra0on What assets the Brm is looking to unify or combine Determine between business integra0on and systems integra0on Business Integra0on (link between business ac0vi0es) o UniBca0on or the crea0on of 0ght linkages among diverse but connected business ac0vi0es carried out by individuals, groups and departments within an organiza0on Systems Integra0on (link between systems and databases) o The uniBca0on or 0ght linkage of IT-enabled informa0on systems and databases o Primary focus of systems integra0on is the technological component of the IS o Outcome is the collec0on of compa0ble systems that regular exchange informa0on of or the development of integrated applica0ons that replace the old ones o Applica0on Integra0on: Seeks to enable communica0on among diferent soLware programs o Data integra0on: when the systems integra0on efort seeks to enable the merging of data repositories and databases o Internal integra0on: the uniBca0on or linkage of interorganiza0onal systems Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 External integra0on: pertains to interorganiza0onal ones Enterprise Resource Planning o o Started in the 1960’s, when it was realized that for inventory to be eRciently managed, it would have to be linked to produc0on schedules Material Requirement Planning (MRP) was bornsoLware designed to automa0cally translate master produc0on schedules into requirements for subassemblies, components and raw materials MRP-II expends MRP to encompass the en0re factory produc0on process now called ERP Pic 3.9 o Modularity Enables RP customers to exercise some cexibility with respect to the components of the applica0on they intend to purchase and those thay don’t want to pay for Applica0on and Data Integra0on o ERPs enable applica0on integra0on An even that occurs in one of the modules in one applica0on, automa0cally triggers an even in one or more of the other separate modules Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o ConBgurable Parameterizedintended to serve the needs of a wide range of diferent organiza0ons in the industry (can choose how they want it to work) Bolt-on modules: used to further tailor the ERP to the speciBc needs of the organiza0on The Advantages or ERP o ERciency: reduce costs, streamline business process and opera0ons o Responsiveness: allows company to respond faster to consumer demands o Knowledge Infusion: enable infusion of knowledge into the adop0ng Brmthe applica0on is thought to embed the state of the art industry prac0ce so that it can be used as a vehicle for upda0ng business processes and opera0ons within the Brm o Adaptability: adaptable to each unique organiza0onal context; oLen a degree of customizability using conBgura0on tables and bolt-on func0onality The Limita0ons of ERp o Standardiza0on and Flexibility Trade-of between the two The more areas of the Brm you reach, the less cexible itll be Once it is set, it is hard to change it (soLware concrete) o Is the best prac0ce embedded in the ES really best? Unclear how best prac0ce are iden0Bed Not enough to implement a soLware program to enact new prac0ce Unique approach your org has developed to carry out given ac0vity, may not be supported by the ERP (leads to strategic clash) o Strategic Clash Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 A previously established business process may not be supported by the ERP o High Costs and Risks Large scale implanta0ons, cost a lot Supply Chain Management o Set of coordinated en00es that contribute to moving a product form its produc0on to its consump0on o Upstream supply chain: concerned with gathering and providing the org with the resources it needs to perform its transforma0on process o Downstream supply chain: concerned with moving the outputs of the Brm’s produc0on process to its intended consumers o Supply chain management (SCM): set of logis0cal and Bnancial processes associated with the planning, execu0ng, and monitoring the supply chain opera0ons Interorganiza0onal systems increasingly supported by the use of the internet Customer Rela0onship Management o CRM strategic orienta0on that calls for itera0ve processes designed to turn customer data into customer rela0onships using the informa0on collected Is a strategic ini0a0ve, not a technology; IT is an enabler of it Relies on customer personal and transac0onal datadesigned to help the Brm learn about customers ULTIMATE OBJECTIVE: help the Brm use customer data to make inferences about customer behaviours, needs to increase proBtability o Opera0onal CRM: determines how the Brm interacts with customers to create and maintain the rela0onship o Analy0cal CRM: precise and granular interac0on analysis with costumers Knowledge Management o Refers to the set of ac0vi0es and processes used to create, codify, gather, and disseminate knowledge within the org Set of ac0vi0es and processes that an org does to make sure that its properly safeguarded o Crea0ng Knowledge First phase in knowledge management ini0a0ve Orgs employees generate new info, devise novel solu0ons, iden0fy new explana0ons for recurrent events o Capturing and Storing Knowledge Compile and use knowledge Knowledge repository: a central loca0on and search point for relevant knowledge o Dissemina0ng Knowledge Last phase in knowledge management ini0a0ve Here the investments made in knowledge crea0on and storage pay of Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Because knowledge is in readily available format, it makes search more eRcient Analy0cs and Big Data Business analy0cs: examina0on of business data in an efort to reveal useful insight that enables superior decision making Descrip0ve Analy0cs: the focus of descrip0ve analy0cs is to give an account of what has occurred; is substan0ated in reports and visualiza0on of data through execu0ve dashboards Predic0ve Analy0cs: focus of predic0ve analy0cs is to es0mate what will occur; substan0ated in sta0s0cal modeling and machine learning algorithms that extrapolate current trends Prespcrip0ve Analy0cs: focus is to state what should occur; substan0ated in op0miza0on algorithms that see to iden0fy targets to guide decisions to monitor current opera0ons The Batch Era o 1950’stransac0ons were batched and processed by a mainfraime at periodic intervals (one at a tame) o Computer cycles were scarce and expensive, jobs were qued o Jobs would take days to complete o S0ll used today by Nenlix The Transac0on Era o Online transac0ons were allowed by the introduc0on of computer terminals, personal computers, and networks o Online: in real 0me (the opposite of batch) o Transac0on: single logical opera0on on the data, can be completed or fail o Online transac0on processing (OLTP): systems designed to provide real-0me or near real-0me results Must respect the ACID proper0es Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Database Management Systems Database: a self-describing collec0on of related records Database Management System (DBMS): how organiza0ons manage their databases; equips a database administrator with the tools to maintain and administer the data and enables applica0on/data interdependence 3.18 o The Rela0onal Model Way diferent from the cat Ble system 3 layers The user interface layer: contains instruc0ons specifying how the user interface should look and operate The applica0on logic layer: contains instruc0ons specifying the func0onali0es of the soLware program The data management layer: contains instruc0ons specifying where and how to store the applica0on’s data as how to search, retrieve, and secure them Schema: the structure of the data and metadata in a rela0onal DBMSit is in tables Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Primary Key (of the table): can’t have duplicated records, so each row needs one or more a^ributes that iden0fy it; can’t have duplicate elements because it would generate ambiguous results Focus of RM is how to op0mally manage data Business Intelligence Era o Began when Brms focused their a^en0on on the use of transac0on data for decision support o Encompasses the set of techniques, processes, and technologies designed to gather and interpret data about the business in order to improve decision making and advance the organiza0ons interests o Shows how transac0onal data can create records of the past, becoming raw material for BI o Components of the Business Intelligence Infrastructure BI is not a technology To engage in BI, Brm must develop an IS focusing on each of the 4 elements, but need IT due to the high volume of data BI Infrastructure: the set of applica0ons and technologies designed to create, manage, and analyze large repositories of data in an efort to extract value from them Main components of a BI infrastructure: data warehouses, data marts, query and repor0ng tools, online analy0cal processing (OLAP) and data mining o Data Warehouse Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Data repository that collects and consolidates data from mul0ple source systems (internal and external) to enable analysis Has the following characteris0cs Large in size (terabytes) Large in scope Enabling data integra0on Designed for analy0cstradi0onal databases are op0mal for fast data retrieval o Data Mart Scaled-down version of a data warehouse that focuses on the needs of a speciBc audience Repository built to enable analysis; designed for the speciBc needs of a narrowly deBned community f knowledge workers Smaller in scope, easier to build, uses audience speciBc data (advantage over warehouse) Data redundancy and lack of data consolida0on (issues with this method; seen because dif departments in a Brm may have their own data mart) o Online Analy0cal Processing (OLAP) A class of soLware programs that enables a knowledge worker to easily and selec0vely extract and view data from analy0cal databases (historical data) User drivenanalyst has to issue a query o Data Mining The process of automa0cally discovering nonobvious rela0onships in large databases Used to analyze historical info SoLware iden0Bes signiBcant pa^erns, analyst doesn’t have to do it Pa^erns a data mining applica0on may Bnd: Associa0ons: occur when one event can be correlated to another event Sequences: occur when one event leads to another subsequent event Anomalies: occur when data deviate from an expected pa^ern ClassiBca0on: occurs when categories are generated from the data Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Forecas0ng: occurs when pa^erns in the data can be extrapolated to predict future events BI is about decision making and managing change Real-0me BI: business ac0vity monitoringBI approach focused on real 0me awareness by constantly monitoring KPIs Mobile BI: trying to bring decision analysis tools mobile Big Data Era o 3 part deBni0on in BI perspec0ve: Volume: the amount of digital data that orgs have to store and manage Velocity: the speed of crea0ng and use of new digital datathe need to gather, process and communicate info in real 0me Variety: the kind of digital data the organiza0ons have to store and manage o Big Data: Technology NoSQL databases ofer: Simple and cexible schema structure to accommodate heterogeneous data Horizontal scalability adapted to distributed environments composed of commodi0zed servers High availability NoSQL can be categorized into 4 categories Key-value stores o Associates a unique iden0Ber to relevant content o Document Stores o Each document can have a diferent structure o Structured on JavaScript Object Nota0on (JSON) o In a DBMS, for example, all records in the table share a common structure Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Column Family Stores o Similar in principle to the tables in the rela0onal model, but the columns can be diferent o Columns can be aggregated in column families, and a single row may contain more families o Graph Databases o Allow for eRcient storage of heavily linked data o Can show rela0onships between diferent objects o Horizontal scalability: the capacity of a distributed system to improve its performance by adding new nodes ver0cal scalability: the capacity of a distributed system to improve its performance by adding new nodes (single node is made more capable) choose horizontal scalability when handling massive amounts of data (however it is higher cost + not all tasks can be parallelized) Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 CAP theorem outlines the trade-of: o Consistency: assurance that all nodes see the same and current data o Availability: assurance that a request will result in a response whether the query failed or succeeded o Par00on: assurance that the system con0nues to operate even when some of the distributed database nodes are inaccessible Compu0ng Architectures and the Cloud Mainframes and Terminals o Mainframe: Support hundreds of simultaneous users and are used by large orgs that require high performance compu0ng o Terminal: and input/output device with no processing power used exclusively to access a mainframe Have no computa0onal ability Centralized architecture (one machine able to perform computa0onsthe mainframe, accessed by many input/output devices) Standalone Personal Compu0ng o Network enables sharing o Decentralized architecture The Client-Server Model o (Also called Shared Processing) based on the idea of le`ng to or more machines share the load of execu0ng the instruc0ons in a soLware applica0ondiferent computers execute the three elements layers) of the same soLware applica0on o Client: any soLware program that can make structured requests to a server o Server: the soLware program that makes resources available to clients Cloud Compu0ng o Info accessed by clients through the internet infrastructure o 3 main delievery modes: SoLware as a Service (SaaS): when an applica0on runs in the cloud Planorm as a service (PaaS): when what is being rented from the provider is not a full-cedged applica0on but rather a planorm on which the client builds its own applica0ons Infrastructure as a service (IaaS): level closest to hardware; the client purchases the use of hardware func0onality; you rent the virtualized hardware The all follow one of the following 2 approaches: Single-tenant: customers access their own dedicated soLware resources Mul0tenant: a single instance of the soLware serves all customers, and hardware resources are shared by all users Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 DeBni0ons: Business integra0on: the uniBca0on or crea0on of 0ght linkages among the diverse but connected business ac0vi0es carried out by individuals, groups, and departments within an organiza0on Business intelligence (BI): Thee ability to gather and make sense of informa0on about your business. It encompasses the set of techniques, processes, and technologies designed to enable managers to gain superior insight into and understanding of their business and make be^er decisions Business intelligence infrastructure: the set of applica0ons and technologies designed to create, manage, and analyze large repositories of data in an efort to extract value from them Business process: the series of steps a Brm performs in order to complete and economic ac0vity Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Chapter 4: The Changing Compe00ve Environment Network Economics Rela0onship between the scarcity and the value of a resource is the rule o This includes skilled labour, managerial talent, and physical resources Networks are Diferent: Value in Plen0tude Value in a network is propor0onal to the number of connected nodes Value is 0ed to how many other nodes are in the network (plen0tude) rather than how few (scarcity) Physical and Virtual Networks Physical networkswhere the nodes of the network are connected by physical links (railroad, telephone wires) Virtual networkconnec0ons between network nodes are not physical but intangible and invisible, nodes re typically people rather than devices Whether physical or virtual, the value of the network for its members is a func0on of its size Key Concepts and Vocabulary Posi0ve Feedback o Adop0on of a new technology product or service typically follows the pa^ern represented by the s-curve o DeBned as that self-reinforcing mechanism by which the strong gets stronger and the weak gets weaker Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o o Sets in mo0on a virtuous cycle, beneB0ng the larger Brm, and vicious, penalizing the smaller one Nega0ve feedback o The term used to refer to the opposite dynamic o Where the stronger gets weaker and the weaker gets stronger o Characterizes economies of scale and takes efect when the dominant Brm has reached a signiBcant size, in which further growth is hampered and costs increase Network Efects o Posi0ve and nega0ve feedback play a crucial role in physical and virtual networks because the value of a network to its members is a func0on of the number of nodes in the same network o Network efects occur when a new node creates value for all the other members of the network by making the network larger and thus more valuable o Evangelist efectwhere current members of the network are incen0vised to spread the word for others to join Tipping Point Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o The watershed of dominancethe 0pping point is the moment in the evolu0on of a market where one organiza0on or technology reaches cri0cal mass and goes on to dominate it, where winners and losers are deBned Tippy Market o One that is subject to strong posi0ve feedback, so that the market will 0p in favour of the Brm that is able to reach cri0cal mass and dominate it o How to recognize a 0ppy market Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o o The presence and strength of economies of scaleprovides an advantage to larger Brms o The variety of the customer needsniche markets the dominant player may be unable to fulBll o When economies of scale are limited and the market has a wide range of diferent needs, the poten0al for market 0ppiness is the weakest Two-Sided Network Networks that have two types of members, each crea0ng value for the other The value of the network to one type of member depends on the number of members form the other side who take part in the member Networks, Marketplaces, and Planorms Marketplacestwo-sided or mul0sided networks where demand and ofer meet; enables this encounter and oLen facilitates transac0ons between par0cipants Planormstwo-sided networks with speciBc members on the two sides: users and developers; soLware founda0on on which other soLware is built Implica0ons for General and Func0onal Managers Network Efect, not just networks The threshold of signiBcance Users select a network Controlling the network provides compe00ve advantage The importance of mutual exclusivity The Economics of Informa0on One of the most important results of managerial interest had been the unprecedented amounts of data and info that are being captured stored, processed and distributed by modern organiza0ons Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Data and informa0on DatadeBned as codiBed raw facts; things that have happened Informa0ondeBned as data in contact; data become informa0on when they are given meaning and can therefore be interpreted Classic Informa0on Goods Those products where informa0on is at the heart of the value proposi0on Those products that a customer purchases for the sole purpose of gaining access to the informa0on they contain If the product can be digi0zed it is an informa0on good The Economic Characteris0cs of Informa0on Informa0on has high produc0on costs Informa0on has negligible replica0on costs The informa0on is not the carrier Informa0on has negligible distribu0on costs Costs are sunk Informa0on has no natural capacity limits Informa0on is not consumed by use Informa0on goods are experience goods Implica0ons Informa0on is customizable Informa0on is reusable Informa0on is oLen 0me valued Informa0on goods can achieve signiBcant gross proBt margins Informa0on-Intensive Goods Most industries rely on informa0on to create and bring to market their product or service The Richness and Reach Trade-Of Richnessrepresents the amount of informa0on that can be transmi^ed, and degree to which the informa0on can be tailored to individual needs, and the level of interac0vity of the message Reachrepresents the number of possible recipients of the message Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Mew technology is making it increasingly possible to reach many people with more informa0on-intensive, interac0ve and personalized message Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Process Virtualiza0on Theory Provides a general framework for understanding the trade-of between richness and reach o The increasing number and variety of ac0vi0es performed in the digital space Virtual: something that does not physically exist but it is made to appear to exist through soLware Process virtualizabilitythe degree to which a goal-oriented series of ac0vi0es can be performed without the physical interac0on among par0cipants or among par0cipants and objects involved in the process Sensory Requirements o Represents the need for process par0cipants to be able to experience a range of sensory s0muli in order to engage in the process, including tas0ng, seeing, hearing, smelling, and touching the other process par0cipants and/or objects Rela0onship Requirements o Encompass the need for process par0cipants to interact in a social or professional context so as to acquire knowledge or develop trust and friendship Synchronism Requirements o Represent the degree to which the ac0vi0es that make up a process need to occur in real 0me or with minimal delay Iden0Bca0on and control requirements o Concern the degree to which the process requires the unique iden0Bca0on of all par0cipants and the ability to incuence or to exert control over their behavior Representa0on Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o The capability of IT to efec0vely simulate actors, objects, their proper0es and characteris0cs, and the manner in which users interact with them Reach o The capability of IT to overcome both 0me and space constraints Monitoring and iden0Bca0on o The capability of IT to authen0cate process par0cipants and objects and track their ac0vity Managerial Implica0ons Con0nued ques0oning of tradi0onal business models The importance of the customer interface The decreasing value of asymmetric informa0on Obstacles New technology must replace all characteris0cs of the old one Retalia0on from incumbents o Retalia0on can come in many forms Legal means Legisla0ve means Hybrid ofers Heightened comple0on Human resistance to change A^en0on challenges A Note About Disrup0ve Technology Managers must be aware of the poten0al disrup0ve impact of new technologies Must be able to iden0fy and manage the impacts Sustaining Technology Sustaining technologies maintain or rejuvenate the current rate of performance improvement of the products and services that use them S-curve suggest that as a product is Brst introduced, its performance is limited Enables a products performance to con0nue to grow Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Disrup0ve Technology DeBned by the following two characteris0cs o The technology ofers a diferent set of a^ributes than the technology the Brm currently uses in its products Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o The performance improvement rate of technology is higher than the rate of improvement demanded by the market Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Implica0ons for Managers Diferen0al rates of improvements o Rate of evolu0on on the currently established performance metrics Diferent sets of a^ributes become relevant o As disrup0ve technologies close the gap between the performance level they ofer and mainstream customer needs, the novel set of a^ributes they ofer may become increasingly a^rac0ve to poten0al customers Listening closely to customers might spell trouble o Listening a^en0vely to aggressive customers will create a bias toward prompt adop0on of sustaining technology and reluctance to buy into disrup0ve technology What to do? Monitor market developments for the emergence of new technologies and determine whether they are of the sustaining or disrup0ve kind When disrup0ve technologies emerge, envision the new market they would likely be best suited for Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Spin of a new division that focuses exclusively on the commercialisa0on of products based on the disrup0ve technology DeBni0ons: Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Chapter 5: Digital Business The Internet Interneta network of networks The internet is an infrastructure upon which services are delivered Internet Services Distributed Ownership o Internet is publicly accessible No single en0ty owns it, regulates its use or controls it Mul0plicity of Devices o Internet is a digital network consis0ng of millions of smaller digital networks o Nodes Open Standards o Internet relies on open technology standards and protocols o Protocolan agreed-upon set of rules or conven0ons governing communica0on among the elements of a network Web 2.0 The second wave of innova0on and evolu0on occurring on the internet aLer the shakeout following the original thrust of mainstream internet innova0on Two-way conversa0ons o Internet used to just allow people to publish things, now it allows for conversa0on Interac0ve user Experience User-Generated content Emergent Structure The Mobile Planorm Don’t have to be constrained to desktops anymore Ubiquity o Represents the idea that users of the device can access needed resources from anywhere o Mobile devices ofer the highest level of poten0al ubiquity among commercially available IT because they team portability with connec0vity Iden0Bability o Represents the idea that mobile devices uniquely iden0fy their user (SIM cards) Context o Enabled by the fact that mobile devices can be geolocatedmodern smartphones that incorporates a GPS receiver can communicate their posi0on to any soLware applica0on running on them Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Digital Business Innova0on Digital Business Modeling o Abstrac0on that captures the Brm’s concept and value proposi0on while also conveying what market opportunity the company is pursuing, what product or service it ofers, and what strategy it will follow to seek a dominant posi0on o Also iden0Bes what org capabili0es the Brm plans to leverage to turn the concept into reality The Elements of the Business Model Canvas o Customer segments All the people or organiza0ons for whom your Brm is crea0ng value o Value Proposi0on The speciBc set, or bundle, of products and services that create value for customers o Channels SpeciBc or physical or digital conduits, or touch points, the Brm u0lizes to deliver value to its customers o Customer Rela0onships Tangible and emo0onal connec0ons the Brm establishes with the customer o Key Resources Pertain to that sec0on of the business model that focuses on the tasks and assets that the Brm needs to bring to bear to create and deliver its value proposi0on to customers o Key Ac0vi0es The ac0ons that characterize the business modelthe ac0vi0es the Brm must be able to perform well in order to ofer its value proposi0on o Key Partnerships Complete that sec0on of the business model that focuses on how the value proposi0on is created and delivered o Cost Structure The equivalent of the revenue stream building block Aims to answer 4 ques0ons o 1. Who is the business designed to serve? o 2. What will the Brm do for those customers? o 3. How will the Brm create its value proposi0on? o 4. How will cash cow in and out of the business? Categorizing Digital Business Ini0a0ves Electronic commerce: an online exchange of value; the process of distribu0ng, buying, selling, marke0ng and servicing products and services over computer networks such as the internet Electronic Business: referred to the digital enablement of internal organiza0onal business processes, such as logis0cs and the use of intranets Categorizing Ventures by Transac0on Type Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Business-to-Consumer (B2C)transac0ons that involve a for-proBt organiza0on on one side and an end consumer on the other Business-to-business (B2B)transac0ons in which two or more business en00es take part Consumer-to-Consumer (C2C)transac0ons that enable individual consumers to interact and transact directly Consumer-to-business (C2B)transac0ons occur when individuals transact with business organiza0ons not as buyers of goods and services but as suppliers eGovernmentrefers to all transac0ons involving legisla0ve and administra0ve ins0tu0ons Categorizing Ventures by Company Structure Brick and Mortartradi0onal organiza0ons; Brms that have physical opera0ons and loca0ons and don’t provide their services exclusively through the internet Bricks and Clicksused to refer to organiza0ons that have hybrid opera0ons; typically bring-and-mortar that now incorporate digital business opera0ons Pure Playused to iden0fy those organiza0ons “born online”; Brms with no stores and provide their services en0rely through the internet Dominant Business Models for Digital Business Online retailingtake control of inventory that they then resell at a proBt Infomediariesorganiza0ons that use the internet to provide specialized informa0on on behalf of product or service providers Content Providersorganiza0ons that develop and publish content Social Networkingthe evolu0on of online communi0es; a group of people brought together through a network Crowdsourcingthe ability to connect people through social networking applica0ons consolidated, the opportunity to mone0ze the internet of people beyond adver0sement spurred a business model innova0on o An online ac0vity in which an individual or organiza0on proposes via an open call to a heterogeneous “crowd” of individuals the voluntary undertaking of a task o Can be categorized on the basis of the class of problems they address Knowledge discovery and management Distributed human intelligence tasking Broadcast search Peer-ve^ed crea0ve produc0on Marketplacesorganiza0ons that enable ofer and demand for some product or service to meet and transact; does not take control of inventory Cloud Compu0ng Dominant Revenue Models for Digital Business Pay for servicethe Brm ofers a product or a service for sale, and it is compensated much like a tradi0onal store or service provider Subscrip0oncustomers pay for the service they receive, which in this case is content, based on access rather than usage Adver0sement Supportrevenue model of the network economy is the adver0sementsupported model Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 ARliateseeks to generate revenue from a third party based on customer traRc to the Brm’s website FreemiumBrm gives away its product or service for free and a^empts to build a large customer base by reducing the obstacle created by the payment Issues to Consider Disintermedia0onrefers to the process by which Brm’s distribu0on chain is shortened through the elimina0on of one or more intermediaries o Has a direct impact on things like travel agents or car dealers Reintermedia0onwhere new intermediaries can exist alongside their brick-and-mortar counterparts Market ERciencyIT has contributed and reduced search costs and improved eRciency of markets Channel Concictemergence of the online channel created a conundrum of many organiza0ons that had an established distribu0on chain; should they disintermediate etc Customer and Employee Self-Service Long-Tail Strategiesa phenomenon by which the frequency of an event is related to some characteris0c of that same event o Online-to-ORcerefers to the use of digital technology to spur transac0ons in physical stores DeBni0ons: Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Chapter 8: Value Crea0on with Informa0on Systems Tradi0onal Models of Value Crea0on with IT Three analy0cal tools were introduced or adapted to the search for strategic informa0on systems opportuni0es at this 0me: o Industry Analysis Grounded in the basic no0on that diferent industries ofer diferent poten0al for proBtability Suggest that industry diferences can be analyzes a priori by managers using an analy0cal framework now known as the Bve forces framework Five Compe00ve Forces o o The threat of new entrants o The threat of subs0tute products or services o The bargaining power of buyers o The bargaining power of suppliers o The rivalry among exis0ng compe0tors Industry analysis and the role of informa0on systems o Ques0ons that are typically asked during 5 forces analysis Can the use of IT create or increase barriers to entry in the industry? Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Can the use of IT decrease suppliers’ bargaining power? Can the use of IT decrease buyers’ bargaining power? Can the use of IT change the basis of industry compe00on? o Value Chain analysis Transforma0on of input resources into Bnal products Value chain model maps the set of economic ac0vi0es that a Brm engages in and groups them into two sets: Primary and Support Ac0vi0es Primary ac0vi0esrepresent the Brm’s ac0ons that are directly related to value crea0on; ac0vi0es that deBne the Brm’s unique transforma0on process such that they are typically performed by all Brms engaged in the same or similar line of business o 5 primary ac0vi0esinbound logis0cs, opera0ons, outbound logis0cs, marke0ng and sales, and service Support Ac0vi0esthe Brm’s ac0ons that, while not directly related to the transforma0on process, are nevertheless necessary to enable it o 4 support ac0vi0esBrm infrastructure, HR management, technology development, and procurement Value Chain Analysis and the Role of Informa0on Systems Using the value chain to iden0fy opportuni0es to deploy ITdependent strategic ini0a0ves requires managers to iden0fy, understand, and analyze the ac0vi0es the Brm performs that that they can be enhanced or transformed using IS resources The value network o A Brm has rela0onships both upstream and downstreamBrms own value chain exists in a larger Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 value network that comprises the Brm’s suppliers upstream and the Brm’s customers downstream o o o Customer service life cycle analysis Primary objec0ve is to help management iden0fy stages where their organiza0on’s customers are frustrated or underserved and where the interac0on can be improved through the deployment of IT-dependent strategic ini0a0ves Breaks down the Brm-customer rela0onship into 13 stages, grouped into 4 primary stages Four Phases Suggests that managers step into their customers’ shoes and think about the needs and problems that customers experience at each of four major phases in their rela0onship and interac0on with the Brm Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 13 Stages Stage 1: Establish Requirements o Customer iden0Bes a need for the Brm’s product or service Step 2: SpeciBca0on o Must now specify the characteris0cs of that product or service in order to know which par0cular one to acquire Stage 3: Source Selec0on o Find where to buy product Step 4: Ordering o ALer selec0ng a source, customers must order it Stage 5: Authoriza0on and payment Stage 6: Acquisi0on o Customer takes possession of the product Stage 7: Tes0ng and Acceptance o Must make sure product works as expected Stage 8: Integra0on o Customer must add it into their exis0ng inventory of resources Stage 9: Using Monitoring o Must ensure that resources remain in an acceptable state of opera0on while they are in use or during the 0me they receive service Stage 10: Upgrading o May become necessary to modify or improve it Step 11: Maintain o Help the customer analyze, diagnose, and repair the product or service etc Stage 12: Transfer or Disposal Stage 13: Audi0ng and Accoun0ng Virtual Value Chain Maps out the set of sequen0al ac0vi0es that enable a Brm to transform data in input into some output informa0on that has a higher value than the original data Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Five ac0vi0es o Gathercollect info from transac0on processing systems and any other sources o OrganizeBrm stores the gathered data in a way that makes later retrieval and analysis simple and efec0ve o Selectusers iden0fy and extract the needed data from the data repository created in the previous step o SynthesizeBrm packages the selected informa0on so that it can be readily used by the intended consumer for the speciBc purpose to which it is directed o DistributeBrm transfers the packaged informa0on to its intended user or customer Three Classes of Strategic Ini0a0ves o Visibility Firm uses the sequen0al ac0vi0es in the virtual value chain to see through organiza0onal processes that it was previously trea0ng as a black box o Mirroring capabili0es Consists of shiLing some of the economic ac0vi0es previously completed in the physical value chain to the informa0on deBned world of the virtual value chain o New customer rela0onships (new digital value) Concerned with the organiza0on’s rela0onship with the customer and the Brm’s ability to increase customers’ willingness to pay using the informa0on generated through the virtual value chain Value Crea0on with Customer Data Analysis of the Value Proposi0on o Value propwhat the Brm specializes in o Constrained by the speciBc industry Repurchase and Customizability: The Dimensions of Decision Making o Theore0cal Repurchase Frequencyrepresents the regularity with which the average customer acquires goods and services ofered by the Brms in the industry or segment of interest Firm that has high theore0cal repurchase frequency is either doing a poor job or missing an opportunity o Degree of Customizabilityrepresents the extent to which the product or service your Brm ofers can be tailored to speciBc needs and requirements of individual customers or a segment of the customer base Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 General Customer Data Strategies o o Personaliza0on Strategytypical service personaliza0on or product customiza0on strategy is most appropriate for Brms compe0ng in industries characterized by both a high theore0cal repurchase frequency and a high degree of customizability o Rewards StrategyBrm’s product and service will be purchased frequently o Acquisi0on StrategyBrm in an industry with a high degree of customiza0on may beneBt from an acquisi0on strategy Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o No poten0alwhen a Brm is in an industry characterized by low theore0cal repurchase frequency and rela0vely low degree of customizability; li^le poten0al for craLing a strategy around customer data CraLing Data-Driven Strategic Ini0a0ves Methodology used to iden0fy opportuni0es to create value o Iden0fy relevant transac0on processing systems (TPS) o Inventory data currently available in these systems o Conceptualize ini0a0ves that use the available data o Priori0ze among the selected ini0a0ves Priori0za0on matrix Based on the evalua0on of two dimensions: Upside poten0al and data availability Upside Poten0alprovides an assessment of the Bnancial beneBts associated with the ini0a0ve in terms of revenue liL or cost reduc0on Time sensi0vitydegree to which the impact of the decisions that the analysis of the data allows depends on how closely to the 0me of data collec0on the analysis is made Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Impact immediacythe degree to which the informa0on is directly usable aLer it is generated, as opposed to needing aggrega0on or manipula0on Aggrega0on requirementsthe extent to which the beneBts of the analysis are dependent on substan0al aggrega0on of mul0ple data sources Trending requirementsthe extent to which the beneBts of the analysis are dependent on substan0al trending of data over 0me Data Availabilityprovides an assessment of the immediacy with which the ini0a0ve can be implemented and a measure of the costs associated with it Accuracyextent to which the available informa0on is reliable, without duplica0on, inaccuracies, or outdated elements Comprehensivenessextent to which the data needed to carry out he ini0a0ve are complete and free of missing elements and/or values o Quadrants Impera0ves Projects have signiBcant upside poten0al Rely on readily available informa0on Can be implemented quickly and with limited investment of resources beyond sunk costs Quick Wins Low upside poten0al High data availability Do not require signiBcant resources and a demanding approval cycle Can be used as proof of concept to gain momentum and establish a track record of successful implementa0on Trade-ofs High upside poten0al Low data availability Require substan0al cot beneBt analysis and a rigorous approval cycle before the alloca0on of the needed resources can be jus0Bed Losing Causes Li^le upside poten0al that rely on informa0on that is not readily available Should not be implemented DeBni0ons Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Chapter 9: Appropria0ng IT-Enabled Value over Time The Ned for A Priori Analysis Is there a way to reduce uncertainty about whether an IT-dependent strategic ini0a0ve can lead to a sustainable advantage? Appropria0ng Value over Time: Sustainability Framework Sustainable Compe00ve Advantage o The ability of a Brm to protect its compe00ve advantage, known as sustainability of the advantage o Compe0tors cant replicate it Resource-Based View Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o With this approach, a Brm is modeled as a bundle of resources o Firm’s compe00ve advantage depends on the characteris0cs of the resources at its disposal o 4 characteris0cs Valuableresource is valuable when it underpins a value-adding strategy; when it allows the Brm to ofer a value prop that is superior to compe0tors at a lower cost Rareresource is rare when it is idiosyncra0cally distributed; it is scarce and not readily available for acquisi0on by compe0tors Inimitablewhen compe0tors Bnd it impossible, or diRcult, to duplicate it Nonsubs0tutablewhen compe0tors are unable to replicate the Brm’s overall value proposi0on using surrogate resources for the ones that are rare, valuable and inimitable Response Lag o Think about sustainability in terms of how much 0me and money it would take compe0tors to erode the advantage that the leading Brm has o Barriers to erosion^ o Response lagthe 0me it takes compe0tors to respond aggressively enough to erode a Brm’s compe00ve advantage, is a measure of the delay in compe00ve response o Response lag driversthe characteris0cs of the technology, the Brm, its compe0tors, and the value system in which the Brm is embedded that combine to made replica0on of the IT-dependent strategic ini0a0ve diRcult and costly Four Barriers to Erosion Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Barrier 1: IT Resources IT Assets: Technology resources available to the organiza0on including hardware components and planorms, soLware applica0ons and environments and data repositories IT InfrastructureSet of IT components that are interconnected and managed by IT specialists with the objec0ve of providing a sat of standard services to the organiza0on Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o Takes years to develop, barrier to imita0on is likely to be substan0al Informa0on Repositorieslarge data stores containing extensive informa0on about customers, suppliers, products, or opera0ons, organized in a structured form that is accessible and useable for decision-making purposes o For compe0tors to replicate it, must duplicate the IT and accumulate a comparable informa0on resource IT Capabili0es: derived from the skills and abili0es of the Brm’s workforce; enable efec0ve and 0mely implementa0on, maintenance, and use of the technology IT Technical Skills and Business Understandingrelate to the ability to design and develop efec0ve computer applica0ons; include proBciency in systems analysis and design, soLware design, and programming IT-Management Skillsrefer to the Brm’s ability to provide leadership for the IS func0on, manage IT projects, integrate diferent technical skills, evaluate technology op0ons, select appropriate tech sources, and manage change ensuing from the introduc0on of IT Rela0onship Assetaccumulated over 0me and Bnds its roots in a mutual respect and trus0ng rapport between the IS func0on and business managers o Barrier 2: Complementary Resources Structural Resourcescomprise non-IT-related tangible and intangible internal assets used by the Brm in the enactment of its IT-dependent strategic ini0a0ves Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Tangible Assetscan underpin an IT-dependent strategic ini0a0ve; include compe00ve scope, physical assets, scale of opera0ons and market share, organiza0onal governance, and slack resources Intangible Assetscan support an IT-dependent strategic ini0a0ve Capabili0esdeBne how the Brm carries out its produc0ve ac0vi0es; specify what ac0vi0es are performed and what steps or business processes make up those ac0vi0es Ac0vity Systemrelies on a set of economic ac0vi0es that are both interlocking and mutually reinforcing, expressly showing internal consistency and appropriately conBgured, given the Brm’s external environment Business Processesseries of steps the Brm performs in order to complete an economic ac0vity; creates barrier when BP has characteris0cs of uniqueness and diferen0a0on External Resourcesassets that do not reside internally with the Brm but accumulate with other Brms and with consumers; usually developed over 0me o Barrier 3: IT Project IT Characteris0cstypes of informa0on technology difer with respect to their complexity, dis0nc0veness, and visibility to compe0tors IT Complexityraises the IT project barrier by increasing development lead 0mes for a compe00ve response IT Uniquenessmakes it more diRcult to imitate Visibilitythe extent to which compe0tors can observe the enabling technology; IT that is highly visible and readily available for inspec0on by compe0tors limits the strength of the IT project barrier Implementa0on Process Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Implementa0on-process complexitya func0on of the size and scope of the project, the number of func0onal units involved, the complexity of user requirements, and possible poli0cal issues, among other things Degree of process change o Barrier 4: Preemp0on Switching coststhe total costs borne by the par0es of an exchange where one of them leaves the exchange Co-specialized tangible investmentstotal capital outlay necessary to obtain these assets; more=stronger barrier Co-specialized intangible investments0me and money channel partners must invest to take part in IT-dependent strategic ini0a0ves; include set up costs, ongoing costs Value System StructureBrm is a link in a larger value chain or system that includes upstream and downstream members; can provide opportuni0es for preemp0ve strategies and for the exploita0on of the response-lag drivers discussed here Rela0onship Exclusivityexclusive rela0onship exists when par0cipants in the value system elect to do business with only one Brm that provides a par0cular set of products or services Concentrated Value System Linkthe degree of concentra0on at each link in the value system is inversely propor0onal to the number of suitable business en00es popula0ng that link The Dynamics of Sustainability o Managers proposing IT-dependent strategic ini0a0ves should have a plan for con0nuously remaining ahead of the compe00on Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 o o Capability Development Refers to the process by which an organiza0on improves its performance over 0me by developing its ability to use available resources for maximum efec0veness Consists of the ability to engage in learning by using (process by which a Brm becomes more efec0ve over 0me in u0lizing and managing an informa0on system and the technology at its core o Asset-Stock Accumula0on Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Usually the assets needed to implement an IT-dependent strategic innova0ve will need to be internally developed, meaning they are not readily available Represents the process by which a Brm accrues or builds up a resource over 0me Example: Google search engine data Applying the Framework Prerequisite Ques0ons o Is the proposed ini0a0ve aligned with the Brm’s strategy? o Is the proposed ini0a0ve focused on reducing the Brm’s cost or increasing customers’ willingness to pay? o What is the IS design underpinning the proposed ini0a0ve? Sustainability Ques0ons o What compe0tors are appropriately posi0oned to replicate the ini0a0ve? o Low long before compe0tors can ofer the same value proposi0on? o Will replica0on do compe0tors any good? o What evolu0onary paths does the innova0on create? Making Decisions 3 possible outcomes from the analysis o Develop the IT-dependent strategic ini0a0ve independently God when a leader can gain the return from the innova0on, and Brm sees value in the long run o Develop the IT-dependent strategic ini0a0ve as part of a consor0um If the ini0a0ve won’t be proBtable for the innovator, but will increase overall industry proBtability with replicators, innovator should look to start a joint venture o Shelve the IT-strategic ini0a0ve When the ini0a0ve wont ofer strong barriers to erosion, and retalia0on by compe0tors will degrade the average proBtability of the industry DeBni0ons: Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com) lOMoARcPSD|9607397 Downloaded by Jero Business (onlybusiness1492@gmail.com)