Management of Information
Systems: 45-870
Mini-3
Spring 2000
Thursday, February 17, 2000
1
Agenda





Schedule Reminders
Return of Mid-Term Exam
Discussion of IT Exercise III
Extending Intranets: Extranets
Using IT to create Strategic Advantage
Thursday, February 17, 2000
2
Schedule Reminders


Sonoco I/T Diagnosis
 Due no later than Tuesday, 22-Feb,
2000, by start of class
Ford I/T Strategy Analysis
 No assignment due


Thursday, February 17, 2000
Article and discussion questions will be
distributed on Tuesday, 22-Feb
We will discuss the article and discussion
questions informally in class on 29-Feb
3
Schedule Reminders

Guest Speakers

Feb 22, Mr. Alberto Espinosa, CEO of Mayor
Maynot Deliver, Inc. to discuss:



Feb 24, Mr. Rob Trollinger, Principal, AT
Kearney, to discuss:

Thursday, February 17, 2000
ASP and web databases
Technical aspects of IT Exercise III
Developing an I/T Strategy
4
Return of Mid-Term Exam



Grading/Curve
Answers to Questions
Re-grade request policy:
** Requests for re-grade of any item on the
exam are to be made in writing only.
Requestors should return the exam to Prof.
Slaughter with a brief explanation of why
they believe an item should be re-graded. **
Thursday, February 17, 2000
5
IT Exercise III: Web Business
Opportunity

Scenario:




Thursday, February 17, 2000
You (and your team) own a small, high
quality restaurant in the East End (of
Pittsburgh)
Current focus on individual on-site diners
Decline in on-site dining clientele
Offer limited delivery service
6
IT Exercise III: Web Business
Opportunity

The Opportunity:





Thursday, February 17, 2000
Proposal from Mr. Espinosa, CEO of Mayor Maynot
Deliver, Inc.
New Internet Start-up company
East End’s only Internet-enabled multi-restaurant
ordering and delivery service
Delivers high quality food (generally not fast food)
from best restaurants to homes, offices, and
hotels
Customer Profile: higher incomes, professionals,
business travelers, graduate students, etc. Also
larger groups or corporate customers.
7
IT Exercise III: Web Business
Opportunity

Mayor Maynot Deliver, Inc.:





Thursday, February 17, 2000
provides its own delivery service (customers
charged a flat 15% delivery fee)
Menu items at same prices as in the restaurants
Restaurants listed in company’s web directory
(where customers can order online on web pages
created by each restaurant)
Restaurants included in company’s delivery service
Restaurants must pay a monthly fee of about (35%) of total sales volume ordered over the web
each month
8
Mayor Maynot Deliver, Inc.
Website

Prototype web site for company at:
http://softrade-11.gsia.cmu.edu/data/restaurants.html


Each restaurant responsible for creating
and updating its menu order page and
information in the company’s database
Company responsible for creating and
maintaining other pages on the web
site
Thursday, February 17, 2000
9
Your Assignment


Evaluate this business opportunity and decide
whether to accept or reject it
Technical Portion:




Thursday, February 17, 2000
Register your restaurant name and type on the
company’s web site
Register up to 20 different menu items and prices
for your restaurant on the company web site
Create a web order page for your restaurant using
FrontPage (see and follow exactly the technical
instructions!)
Your web page should be attractive to customers
and should be functional in terms of taking orders
10
Your Assignment

Technical Portion (cont’d):

Address the following questions



Thursday, February 17, 2000
Strengths/weaknesses of the company’s design
for the web site
What functionality to add and why
What technical concerns do you have and how
should Mayor Maynot Deliver, Inc. address
them
11
Your Assignment

Strategic Portion

Address the following questions:





Thursday, February 17, 2000
How could this opportunity improve competitive
advantage for your restaurant
What strategic challenges/threats does this
opportunity represent
How would your business change if you
accepted this opportunity
Will you accept this opportunity
What would you want to modify or change in
the proposal
12
Web Fair



Assignment due at the beginning of class on
Thursday, March 2, 2000
Create a web page on your team web with
your answers to the technical and strategic
questions. This page should have a hyperlink
pointing to your restaurant order page
Your team will demonstrate your restaurant
order page at the “web fair” and will explain
to Prof. Slaughter whether you’ve decided to
accept Mayor Maynot Deliver’s proposal and
why
Thursday, February 17, 2000
13
Linking Intranets to Extranets, the Internet
Internet Web Sites
Internet Links
Engineering
Server
Extranet Links
Marketing
Server
CORPORATE
INTRANET
Extranet Links
Suppliers
Customers
H.R.
Server
Intranet Links
Legacy Data
Server
Other Company Locations
Thursday, February 17, 2000
14
Extranets

What is an Extranet?

Examples:
Thursday, February 17, 2000
15
Extranets

Thursday, February 17, 2000
Types of Extranets:

VANs:

EDIs:

VPNs:
16
Extranets

Thursday, February 17, 2000
How does an Extranet work?
17
Extranets

Tunneling:

Encryption:

Protocols used in Tunneling:
Thursday, February 17, 2000
18
Extranets

Firewalls:

How do Firewalls work:
Thursday, February 17, 2000
19
Extranets

Benefits of Extranets:

Key Issues of Extranets:
Thursday, February 17, 2000
20
IT for Strategic Advantage

How can IT be used to create
competitive advantage



Competitive Forces
The Value Chain
Using the Internet Strategically
Thursday, February 17, 2000
21
What is a Strategy?
A strategy is a definition of a business.
It specifies the product / service to be
provided and the segments of the market
to which that product / service is directed.
It defines the channels of distribution to
the market segments and the kind of
production processes that are required.
Finally, it defines how the necessary capital
will be provided and the kinds of people
and organizational structure needed.
Thursday, February 17, 2000
22
The Competitive Environment
Threat of
New Entrants
Bargaining Power
of Suppliers
Rivalry Among
Existing
Competitors
Bargaining Power
of Customers
Threat of
Substitutes
Thursday, February 17, 2000
23
Competitive Forces
Supplier
Customer Competitor
New
Entrant
Substitute
Competitive Strategies
Differentiation
Cost
Innovation
Growth
Alliance
Other
Strategies
Thursday, February 17, 2000
24
How does IT impact
Competitive Forces?
Time
Barriers
Geographic
Barriers
Breaking
Business
Barriers
with IT
Cost
Barriers
Thursday, February 17, 2000
Structural
Barriers
25
How IT can be used to
implement competitive strategies







Improve Business Processes
Promote Business Innovation
Lock in customers and suppliers
Create switching costs
Raise barriers to entry
Leverage a strategic IT platform
Develop a strategic information base
Thursday, February 17, 2000
26
Examples

IT for cost leadership:

IT to differentiate:

IT to innovate:

IT to expand:

IT to foster alliance:
Thursday, February 17, 2000
27
The Value Chain




Value Chain = system of interdependent,
linked activities
Competitive Advantage = f(how well value
chain activities are defined, integrated,
executed)
Primary Activities: inbound logistics,
operations, outbound logistics, marketing &
sales, service
Support Activities: firm infrastructure, human
resource management, technology
development, procurement
Thursday, February 17, 2000
28
SUPPORT ACTIVITIES
Generic Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND
LOGISTICS
OPERATIONS OUTBOUND
LOGISTICS
MARKETING
AND SALES
SERVICE
PRIMARY ACTIVITIES
Thursday, February 17, 2000
29
IT in the Value Chain
Information System Technology
Planning and Budgeting Technology
Office Technology
FIRM
INFRASTRUCTURE
HUMAN
RESOURCE
MANAGEMENT
Training Technology
Motivation Research
Product Technology
Computer-Aided Design
Pilot Plant Technology
TECHNOLOGY
DEVELOPMENT
Information Systems Technology
Communication Systems Technology
Transportation Systems Technology
PROCUREMENT
•Transportation
Technology
•Material Handling
Technology
•Storage and
Preservation
Technology
•Communication
System Technology
•Testing Technology
INBOUND
LOGISTICS
Thursday, February 17, 2000
Software Development Tools
Information Systems Technology
•Basic Process
Technology
•Materials
Technology
•Machine Tools
Technology
•Materials Handling
Technology
•Packaging
Technology
•Testing Technology
OPERATIONS
•Transportation
Technology
•Material Handling
Technology
•Packaging
Technology
•Communications
Technology
OUTBOUND
LOGISTICS
•Multi-Media
Technology
•Communication
Technology
•Diagnostic and
Testing Technology
•Communications
Technology
MARKETING
AND SALES
SERVICE
30
Levels of use of IT for
Competitive Advantage
Level 1: Strategic
Level 2: Offensive
Level 3: Defensive
Levels
Toward
Use of IT
To Create
Competitive
Advantage
Thursday, February 17, 2000
Level 4: Cost-Justified
Level 5: Controlled
31
Question

How would you classify these organizations in
terms of their level of investment in IT?








Thursday, February 17, 2000
FedEx
Ford
Amazon.com
Walmart
Federal Government
Pennsylvania State Government
PNC Bank
Wells Fargo Bank
32
Sonoco Case

For the Sonoco Case, in answering the
last set of questions:

How would you classify the role/level of IT
in Sonoco, using these levels of
competitive advantage?



Thursday, February 17, 2000
In 1980’s/1990’s?
With new business strategies?
With an e-commerce strategy?
33
Using the Internet
Strategically
HIGHER IMPACT
Global Market
Penetration
Cost and Efficiency
Improvements
LOWER IMPACT
Thursday, February 17, 2000
Product/Service
Transformation
Performance
Improvement
In Business Effectiveness
HIGHER IMPACT
34