What’s Happening?!
Consumer Electronics Show – Las Vegas
2,000 companies in a million square feet of space
An obvious reminder that there is a major merging of the
computer industry and the consumer electronics industry.
Bill Gates gave the keynote speech.
Major product focus on mobility which means wireless
and miniaturization.
FYI
If you email me send it to my school address
which is automatically forwarded to me at
home.
Due Today
1. Introduction Letters.
2. Requests for the company that you will base
your analysis term paper in priority sequence.
Please also return the business awareness
questionnaires.
Given your understanding of
the content of this course
Let’s begin.
Chapter 1 Introduction
Business and Information
Systems Management Challenges
By Steven Parker
Objective of the Chapter
To introduce the major business issues that must
be addressed to successfully manage a business
and factors that would influence the possible
role of information systems as an enabler of
business success.
This is clearly a big picture chapter rather than one
that fits within a broader perspective.
Major Chapter Topics
1. The challenges of running a successful business in the
current global environment.
2. Specific business success factors.
3. Three necessary perspectives.
4. Simultaneous revolutions in the current environment.
5. A business driver model.
6. A possible systematic approach to gain better results
from the use of information systems.
7. The three possible roles of information systems.
Business Success Factors

A credible list of success factors would
undoubtedly vary if cited by a specific successful
executive or highlighted by one of multiple highly
publicized studies.

The chapter cites eight such factors with an
emphasis on business leadership, company culture
and effective communication.
Three Necessary Perspectives

Business Environment
– Specific industry

Enterprise Environment
– The company itself

Information Technology
– Used for a competitive advantage
Business Driver Model
1. Helps to understand the business
environment
2. The four components affect how an organization
addresses business processes:
– Market
– Technology
– Regulation
– Employees and Work
Systematic Approach to
Information Systems

The class roadmap chart

Emphasizes the important factors to manage the
business and the relationship with and possible
role of information systems.

Highlights the relationship between managing the
business and managing information systems
relative to business priorities and needs.
Identifies three possible roles of
Information Systems
» Efficiency
» Effectiveness
» Competitive Advantage
As a company’s Information Systems evolve,
it often uses IS in a more sophisticated and
competitive manner.
Suggests A Quick Assessment of
the Significance of Information
Systems in a Company
Would increasing the involvement of IS
increase value to customers?
 Is the IS manager one of the top managers?
 Is the role of information systems a top priority
for multiple senior managers?
 How much of the revenue dollar is the
company spending on IS?
 Is IS an integral part of the daily business
operations?

Additional Points Made
1. Introduces multiple company examples where
key business strategies were successfully supported
by the effective implementation and use of
information systems.
2. Reminds us that some industries have far better
track records through the use of information
systems than others.
In Conclusion
This chapter is obviously the start of a ten
week journey.
Bon voyage!
Chapter 1
Business
and
Information Systems
Management
Three Necessary Perspectives
• Business Environment
• Enterprise Environment
Business
Success
• I/T Environment
Figure 1-1
A Fundamental Premise
Innovative Uses
of Information Systems
Requires a Systematic Approach
A Systematic Approach
Vision
Strategy
Tactics
Business Plan
• Competitive Options
• Roles, Roles and Relationships
• Redefine and/or Define
• Telecommunications
as the Delivery Vehicle
• Success Factor Profile
A Logical Premise
Competing with
Information Technology
through People.
IS Roles (Objective)
1. Efficiency--doing things better.
2. Effectiveness--broadening the scope of
individual tasks, jobs or processes.
3. Competitive Advantage--doing better or
new things for the customer.
Key to Business Success
Competitiveness is the pivotal issue in the
21st century.
Global competitiveness has frequently
become the pivotal issue in the 21st century.
(an offense/defense decision)
Competitiveness
How does a business compete?
What benefits does a business gain if it
competes successfully to the point of
being a market leader?
Market Leader Benefits?
Increased
volumes.
Lower unit
cost.
Higher profit
margins.
Ability to invest in product development and market
exploitation.
Increased brand strength.
Satisfied customers.
Customers less likely to substitute.
Lower probability of new entrants.
Happy, motivated employees and other stakeholders.
Purpose of a Business
The purpose of a business is to create a customer.
For this reason a business has only two basic
functions:
1. Marketing.
2. Innovation.
This demands that a business define its goal as the
satisfaction of customer needs.
Purpose of a Business
The customer defines the business.
The customer is primarily interested in its own wants,
needs, values and reality.
Defining a business must start with understanding the
customer’s realities, situation, behavior, expectations
and values.
The business is defined by the want the
customer satisfies when a purchase is made.
Who is the Customer?
Not a simple or intuitively obvious question.
There is never the customer but multiple customers
that are frequently different.
Each customer has possible different expectations
and values and may think that it is buying something
different or for a different reason.
Where is the Customer?
An increasingly important question.
Greatly influenced by increasing mobility on a
global basis.
What does the Internet do to questions regarding
where is the customer?
A Successful Business
The right business model now and for the future.
• Is responsive, flexible, adaptable, innovative,
resilient, talented and financially strong.
• Provides value to customers.
Is anything else necessary to achieve and sustain
business success?
Running a successful business is like
doing a jigsaw puzzle. The problem
is that the pieces and the picture are
both changing.
Cyril J. Yansouni
Chairman and CEO
Read-Rite Corp.
My Selection Criteria
Started with list of companies in the In Search of Excellence
book.
Frito-Lay, American Airlines, Boeing
Emphasized the role of senior management to focus the role
of information systems on key business strategies from the
very beginning. Also how IS was used to make significant
changes.
Quickly discovered that good companies could point me
to other good companies.
Wal-Mart, USAA, Federal Express, Schwab, L.L. Bean
Using IS to Compete
• American Airlines
• L.L. Bean
• Boeing
• National Institutes of Health
• Federal Express
• Progressive Corp.
• Frito-Lay
• Charles Schwab
• Frost Inc.
• Security Pacific Bank
• IBM Canada
• USAA
• Marion Laboratories
• University of South Carolina
• McKesson Corp.
• Wal-Mart Stores
Business Success Factors
1. Business Leadership.
2. The Ability to Fit the Pieces into the Increasingly
Bigger Business Picture.
3. Organizational Responsiveness and Resilience.
4. Realizing That Most Major Customer Problems
Are Solved Through a Combined Organizational
Effort.
Business Success Factors
5. A Strong Company Culture.
6. Ability and Willingness to Innovate, Change and
Take Risks.
7. Accomplishing All of These Factors While
Maintaining a Necessary Balance.
8. Effective and Timely Communication Across
the Entire Organization.
Successful Books
In Search of Excellence: Lessons from America's
Best-Run Companies by Tom Peters and Robert
Waterman, 1982 (43 companies)
Built to Last by Jim Collins and Jerry Porras, 1994
(20 companies)
Good to Great, 2001 by Jim Collins, 2001
(11 companies)
Built to Last
The objective in a six year study was to
systematically identify visionary companies, to
examine how they differed from comparison
companies to understand the underlying factors
that account for their extraordinary long term
position.
Visionary companies were identified based on
their having distinguished themselves as a very
special and elite breed of institutions.
Built to Last Companies
3M
Marriott
American Express
Merck
Boeing
Motorola
Citicorp
Nordstrom
Ford
Phillip Morris
General Electric
Procter & Gamble
Hewlett-Packard
Sony
IBM
Wal-Mart Stores
Johnson & Johnson
Walt Disney
Good to Great Companies
• Abbott
• Nucor
• Circuit City
• Philip Morris **
• Fannie Mae
• Pitney Bowes
• Gillette
• Walgreens
• Kimberly-Clark
• Wells Fargo
• Kroger
Selection Criteria
• Premier institution in its industry.
• Widely admired by knowledgeable businesspeople.
• Made an indelible imprint on the world in which we
live.
• Had multiple generations of chief executives.
• Been through multiple product (or service) cycles.
• Founded before 1950.
Selection Criteria
Started with Fortune 500 ranking of 1,435 largest publicly
traded US companies in 1965, 1975, 1985 and 1995.
Did a sophisticated analysis of compounded annual return
looking for companies that showed a pattern of above average
returns preceded by average or below average returns. This
reduced the list to 126 companies.
Analyzed the cumulative stock return relative to the general
market looking for good-to-great stock return patterns.
Reduced the list to 19 companies.
Dow Jones Industrial List
•Alcoa
•Exxon Mobil
•McDonald’s
•Honeywell
•General Electric
•Merck
•American Express
•General Motors
•Microsoft
•AT&T
•Hewlett-Packard
•3M
•Boeing
•Home Depot
•Philip Morris
•Caterpillar
•Intel
•Procter & Gamble
•Citigroup
•IBM
•Coca-Cola
•International Paper
•SBC
Communication
•DuPont
•JP Morgan
•Eastman Kodak
•Johnson & Johnson
•United Technology
•Wal-Mart Stores
•Walt Disney
Business Challenges
1. Relative to all of this, what role should information
systems play?
2. How do you determine relevance regarding any of
these factors?
SIMULTANEOUS REVOLUTIONS
NEW
COMPETITORS
NEW RULES
OF
COMPETITION
INDUSTRY
STRUCTURE
CHANGES
NEW POLITICAL
AGENDAS
THE
BUSINESS
NEW REGULATORY
ENVIRONMENT
EVER INCREASING
CUSTOMER EXPECTATIONS
NEW
TECHNOLOGIES
NEW EMPLOYEES
AND NEW VALUES
Figure 1-2
New Competitors
• Global defines the competitive landscape.
• Aircraft and communication technologies are shrinking the
economic world.
• English has become the international language.
• There are very few countries that are not global players.
• Standardization of industrial and consumer products.
• Breakdown in industry boundaries is also resulting in new
domestic competitors.
• Technology versus physical competition via the Internet.
New Rules of Competition
• Speed has become a major success factor including time to
market, time to decisions and response time to customers.
• Distribution has become a key competitive strategy.
• Productivity defines competitive positioning.
• Assets can become a liability.
• Quality as a competitive factor is a given.
• All business functions must contribute value to customers.
• Need to focus on core processes and outsource the rest.
• Success is a combination of leadership and empowerment.
• When timely to do so, reinvent the business.
Industry Structure Changes
• The US has led the way, but the rest of the world is also
deregulating industries and/or privatizing government
owned businesses.
• Freedom from government imposed laws and/or controls
frequently leads to industry structure change.
• IT has prompted industry change because of the direct
access aspects of the Internet.
• Open competition over time results in industry change based
on changing rules of competition.
New Regulatory Environment
• One could conclude that there is a definite trend towards
deregulation of industries. In some cases this can be
misleading.
• Highly visible industries tend to be directly or indirectly
“regulated” in some form.
• As long as there are politicians there will be new laws and/or
regulations that can directly impact specific industries.
• Business managers prefer to compete openly despite a
perception of the benefits of having a protected market.
Increasing Customer Expectations
Is there such a thing as a customer that would be happier with
a more costly, lower quality product or service?
The better you do in servicing your customer, the more they
will want (and expect)!
Time constraints and pressures on customers also prompts an
increase in their expectations since they often do not have the
time or inclination to find alternative sources.
On the other hand, the global economy offers more options
and alternative sources.
New Employees and Values
Salary and benefit expectations are greatly influenced by
the financial status of people while they were growing to
adulthood.
Different attitudes towards authority and societal issues.
Surveys say that salary is not the highest priority for many
employees.
Meanwhile, an increasing number of people are pursuing the
startup route “to get rich.”
New Technologies
• IT and transportation technologies have changed the world
of competition and can greatly influence success or failure
of a company.
• The pace of technology change adds to the challenge.
• New technologies often complement each other.
• The impact of the Internet as a global network is huge.
• Integrating IT into a rapidly changing business can be a
major challenge.
New Political Agenda
• Importance of government role in positioning industries to
compete on a global basis.
• Tax policies are an important consideration.
• Regional partnerships are replacing individual country roles.
• Protectionism is an on-going threat.
• Monetary and fiscal policies add to challenges of competing
in global markets.
• Political instability has not disappeared from the global
economic world.
SIMULTANEOUS REVOLUTIONS
NEW
COMPETITORS
NEW RULES
OF
COMPETITION
INDUSTRY
STRUCTURE
CHANGES
NEW POLITICAL
AGENDAS
THE
BUSINESS
NEW REGULATORY
ENVIRONMENT
EVER INCREASING
CUSTOMER EXPECTATIONS
NEW
TECHNOLOGIES
NEW EMPLOYEES
AND NEW VALUES
Figure 1-2
The Right Way to Go Global
Being an international company - selling globally,
having global brands or operations in different
countries -- isn't enough.
Everyone is going global, but do they really
understand what this means.
World’s Most Valuable Brands
Who are the top ten companies with the world’s
most valuable brands?
9 of top 10 are US companies.
The list is not limited to consumer product
companies.
World’s Most Valuable Brands
1. Coca Cola
$68.9 Billion
2. Microsoft
$65.1
3. IBM
$52.8
4. GE
$42.4
5. Kokia
$35.0
6. Intel
$34.7
7. Disney
$32.6
8. Ford
$30.1
9. McDonald’s
$25.3
10. AT&T
$22.8
World’s Most Valuable Brands
11. Marboro
24. Compaq
12. Mercedes
25. Oracle
13. Citibank
32. Dell
14. Toyota
43. SAP
15. HP
49. Apple
16. Cisco Systems
53. Sun Microsystems
17. American Express
58. AOL
18. Gillette
76. Amazon.com
19. Merrill Lynch
100. Beneton
20. Sony
www.interbrand.com
Globalization
Is probably one of the most overused , even misused,
terms in business parlance.
Traditionally, global scope was likely to be a
multinational presence.
A truly global company is able to capitalize on
business opportunities wherever and whenever they
are found.
A Global Company
Its influence is felt in geographic locations where
it has neither physical presence or assets.
The principle constraint on the global success of an
organization is it’s management aim—the ability of
management to point the company in the right
direction.
Globalization
Globalization deals not with the mechanics of
making links with diverse locations but with
dedicating organizational resources to
continuously monitoring and taking advantage of
opportunities that emerge throughout the world.
Globalization Checklist
1. Make yourself at home in all three of the world’s most
important markets: North America, Europe and Asia and
keep your eye on Latin America.
2. Develop new products for the entire world.
3. Replace profit centers based on countries and regions with
ones based on product lines.
4. Make global decisions on strategic questions involving
products, capital and research but let local units decide
tactical questions like packaging, marketing and advertising.
Globalization Checklist
5. Overcome parochial attitudes and train people to think
and act internationally.
6. Open senior executive ranks to foreign employees.
7. Do whatever is best even if people at home lose jobs
or responsibilities.
8. In markets that you cannot effectively penetrate on your
own, find allies.
Daimler-Benz Globalization
Jürgen Schrempp, Chief Executive of Daimler-Benz:
• For Daimler-Benz globalization is not an optional
strategy. It is the only one.
• By the year 2010 we want to be number one or two in
each of our business areas.
• We are the world leader in commercial vehicles, number
one in rail systems through Adtranz and number two in
aircraft through Airbus.
• We want to double our revenue and be in the top quartile
of global companies in performance.
Globalization Plan
1. Be in the growth markets around the world with the
right products and the right services in the right places.
2. Be a leader in innovation. Only companies which
anticipate people's needs, translate great ideas into
products and services, and get them into the market
fast, will succeed.
3. Be exciting and rewarding for our people.
Globalization creates jobs both in other countries and
in the home market. For every three jobs created
abroad, one is created in Germany.
Globalization Plan
4. Have the right corporate culture. To be a successful global
company requires exceptional executives - people who have
industrial skills, but can also adapt to local communities and
respond to their needs.
5. Access to global capital. That means listing on the leading
stock markets. It also means presenting your financial
accounts to the standards of the transparency demanded by
investors.
But most of all, globalization is about creating value for
people. Producing products they want, creating interesting
jobs, and delivering excellent returns for shareholders.
Jack Welch
Business Principles
1. Reality—seeing the world the way it is, not the way that
you hope it will be or wish it to be.
•
GE must be No. 1 or No. 2 in its global markets.
•
Accepting the fact that E-Business is here.
•
Means going on the offensive.
Welch Business Principles
2. An organization’s ability to learn, to transfer its
learning across its components and to act on it quickly
as its ultimate, sustainable competitive advantage.
• Drove GE to create a boundary-less company.
• Selfishly sharing good ideas while endlessly searching for
better ideas became a natural act.
Welch Business Principles
3. An organization that is comfortable with change and
even relishes it, has a distinct advantage in a world
where the pace of change is always accelerating.
• Had the luxury of learning this when change was relatively
slow and opportunities hung open for about a decade.
• Experience in partnering with European companies when
opportunities lasted two or three years.
• Experience in partnering with Asian companies when
opportunities were gone in a year.
• Today, in the midst of the Internet revolution, the
opportunities presented by change open and close on a daily
basis.
Welch Business Principles
4. Measuring Progress—measuring new things and doing so
on a daily basis. The measure focus is on:
Buy: Auctions on line, percentage of total buy on line and the
dollars saved.
Make: How fast information gets from its origin to its users and
how much unproductive gate gathering, expediting, tracking
orders and the like can be eliminated.
Sell: Number of visitors, sales on line, percentage of sales on
line, new customers, share, span and the like.
Strategic: Exposure to emerging companies.
Barriers to a Global Economy




Africa is a lost continent.
Latin America is sliding into terminal poverty.
Their people can only look forward to migrating from
place to place looking for hope.
They will redefine hope in fundamentally different ways--a
world war of terrorism that can rip the fabric of complex
systems.
Jacques Attali
Former head of European
Bank for Reconstruction
and Development
The Best Structural Approach?
Government controlled and managed.
 A combination of government and business.
 Multinational companies operating
according to government guidelines.
 A totally open system with governments
dealing only with activities within their own
country.

Business Drivers
Market
Technology
Employees/
Work
Regulation
Organization
Business Processes
Solutions to Business Requirements
Figure 1-3
Business Environment
It has become more difficult to describe a
business environment that applies to everyone.
Historically an environment that was conducive
to success within a specific industry was good
for every company in the industry.
Today, the companies within a specific industry
can have a wide range of different performances
and results.
For Instance
Contrast the success of Wal-Mart with
the following three retailers:
Montgomery Ward
Kmart
Sears, Roebuck
Some Appropriate Questions
• How profound are the changes in the business
environment?
• How deeply rooted are any of the problems?
• Have solutions been successfully implemented to
address the problems?
• Can the success be emulated?
• Where does a company begin to solve its problems?
Business Challenges
1. Relative to all of this, what role should
information systems play?
2. How do you determine relevance regarding any
of these factors?
IT Relevance
Industries with a high information content.
Industries with less information content.
A Logical Goal?
1. Competing with Information Technology.
2. Using Information Systems to Compete.
3. Creating the Necessary Environment to Use
Information Systems to Compete.
The Information Technology Environment
ERA I
Data
Processing
ERA II
End User
Computing
ERA III
Strategic
Systems
Administrative
Framework
Primary
Target
Justification/
Purpose
Regulated
Monopoly
Organizational
Productivity/
Efficiency
Free
Market
Individual
Effectiveness
Regulated
Free Market
Business
Processes
Competitive
Advantage
Source: Cash, McFarlan, McKenney and Appleton, Corporate Information Systems Management,
Richard D. Irwin,1992, 3/E, p. 11, adapted.
Figure 1-5
How Fragile is Business Success?
How much of the answer to this question is related to
business leadership and strategies?
How much of the answer to this question is related
to information technology leadership and strategies?
IT Significance
If your business lives by information technology
can it also die by information technology?
How much of an IT dependency does a company
have?
How much change must they deal with in defining
their business to be successful in the future?
Competitive Fitness Evaluation Criteria
Customer
Orientation
Mission
and Vision
Organization
and Systems
Planning and
Intelligence
Human
Resources
Technical
Resources
Marketing
Operations
Innovation
Market
Strategy
Corporate
Culture
Performance
International
Strategy
Source: Jean-Claude Larreche, INSEAD
A Quick IS Assessment
1. How is Business?
2. Is the Information Systems Manager a
Member of the Top Management Team?
3. What Percentage of the Operating Budget
of the Business is for Information Systems?
Examples of Successful Company
Use of I/S to Compete








Boeing Airplane Company
Wal-Mart Stores
Bissett Nursery Corp.
Federal Express
Charles Schwab
Your quota is 5
USAA
companies!
L.L. Bean
Progressive Corp.
Best ISTC Industries
Retail Industry:
• L. L. Bean
• Dillards Dept. Store
• The Gap
• Home Depot
• Kmart
• Men’s Wearhouse
• Mervyn’s
• J C Penney
• Toys R Us
• Wal-Mart Stores
Transportation Industry:
• American Airlines
• American President Co.
• British Airways
• CSX
• Delta Airlines
• FedEx
• Singapore Airlines
• Union Pacific
• United Airlines
• UPS
Worst ISTC Industries
Construction Industry
Petroleum Industry
Federal Government
Can the IS be right if:
1. The business climate is wrong.
2. The business strategy is wrong.
3. The business leadership is wrong.
Business Strategy and IS
 Concepts.
 Relative
To (Bigger Picture).
 Company
Examples.
Conclusions
To logically and effectively position information
systems within an organization one must begin
by understanding the environment and the
company itself.
Then and only then can you understand the
significance of the role of information systems.