Strategic Uses of
Information Technology
Chapter 3
Information Systems Management
In Practice 6E
McNurlin & Sprague
Introduction
 Strategic uses of IT means “having a
significant, long-term impact on a
firm’s growth rate, industry, and
revenue.”
 Whither the Internet Revolution?
The hypothesis is that the Internet revolution
mirrors the British railway
Both revolutions deal with connection
technologies.
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Introduction
3
Introduction
 Episode Two: Profitability Strikes
Back
 The only way to sustain advantage through the
Internet is to create a distinct, unique value chain
(highly integrated and difficult to replicate)
 CASE EXAMPLE: Grainger
• Its Internet presence makes its physical sites more valuable.
• It cuts ordering costs and shipments to its stocking locations
(where customers pick up items).
• Online customers purchase more and its paper catalog actually
leads to more online orders.
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WORKING INWARD: Business to Employee
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WORKING INWARD: Business to Employee
 Managing an Intranet
Based on Internet standards, an employee intranet helps ease global
corporate operations.
An intranet needs to interface with legacy and ERP systems, and company
information must be safeguarded.
Many companies have thus created a corporate portal for employees to get
their information
 CASE EXAMPLE: BearingPoint
 To make its intranet interactive, the company added content from third
parties and a “where can I find this information?” advisor to the site, now
making items “actionable.”
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WORKING INWARD: Business to Employee

Fostering a Sense of Belonging
With employees becoming so dispersed, an intranet may be their main
connection to the company.
A major role providing the foundation for creating a sense of belonging among
employees.
 CASE EXAMPLE: Wire Nova Scotia
The program coordinator built an intranet to provide a sense of
belonging among students on a summer work program
establishing community Internet sites in rural towns in Nova
Scotia, Canada.
The summer program was also administered via this intranet, each
worker having a personal conference site.
Staff conferences were held weekly, and regional conferences were
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held to coordinate joint ventures.
WORKING OUTWARD: Business to Customer
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WORKING OUTWARD: Business to Customer
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WORKING OUTWARD: Business to Customer
 Being an Online Customer
 CASE EXAMPLE: A Day in the
Life of an E-lancer
One entrepreneur gains all his work and his working
partners via Elance, an online services marketplace.
This case tracks a typical day in his use of Elance’s site.
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WORKING OUTWARD: Business to Business
 Working with Co-suppliers
One arrangement is working with non-competitors who
supply the same customers.
CASE EXAMPLE: General Mills
and Land O’ Lakes
Both supply non-competing refrigerated goods to retailers
(yogurt and butter).
Hence, they have teamed up to coordinate their shipments
to stores.
They use the Internet to easily share information.
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WORKING OUTWARD: Business to Business
Establishing Close and Tight Relationships –
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WORKING OUTWARD: Business to Business
CASE EXAMPLE: Sara Lee Bakery
Group
•SLBG was one of the first to initiate scan-based trading with large
retailers that sell its baked goods.
• Using this technology, SLBG does not get paid until a loaf of
bread is sold and passes through the point of sale scanner.
• The technology requires drawing from a single database hosted
by a third party.
• Its use has improved the quality of delivery people, lowered
costs, and increased revenues.
• SLBG requires retailers to adhere to a number of prerequisites13–
to demonstrate that they are good trading partners.
WORKING OUTWARD: Business to Business
 Becoming a Customer-Centric Value
Chain
The demand-pull world, where products and services are built to order, is a
major trend these days. But getting there means becoming customer-centric
and having a tightly integrated supply chain.
CASE EXAMPLE: Dell Computer
Example of the demand-pull business model.
Customers configure their own PCs on Dell’s Web site, and once an order
is initiated, Dell’s suppliers can see the ordering information and
production schedule on Dell’s extranet.
Their production systems grab this information automatically; as a result,
Dell’s extranet has become a private exchange.
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Dell is even working to give suppliers two tiers down access to customer
order information, so they can react to changes even faster.
WORKING OUTWARD: Business to Business
 Pros and Cons of Demand-Pull
Value-chain transparency is much talked about because it can
• reduce duplicate orders,
• hasten response to changes, and
• allow all participants to become collaborators.
But the ecosystem participants depend on the provider’s infrastructure, so
seepage of confidential information could occur.
Getting the Back-End Systems in
Shape
To have a hope of making working-across viable, internal back-end
systems must be in shape. Companies are using ERP, extranets, and other
approaches to do this.
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