What’s Happening?!
Quest is negotiating to buy MCI for about $6.2 billion.
Bush push to overhaul social security.
76,152 students applied to the UC system this year.
Tivo president resigned over vision conflict with founder
and CEO.
What’s Happening!
Midterm Exam
I will provide the exam answer paper.
Six essay questions:
1 is worth 25 points
1 of 2 is worth 20 points
1 is worth 15 points – must answer
4 are worth 10 points
Chapter 7 Summary
Implementing a Vision:
Strategy, Tactics and Business Plan
Important Chapter Topics
1.
How to transition a vision into reality through strategy,
tactics, and business plans.
2.
Fundamentals and guidelines that relate to business
strategies.
3.
How strategies dictate the role and significance of
information systems.
Defining the Process Elements




Vision: Identifies what the organization wants to
look like at some logical point in the future.
Strategy: How a company will achieve the longterm goal of the vision.
Tactics: More specific time-oriented, measurable
ways to make a vision a reality.
Business Plan: Allocation of funds and other
resources.
Business Strategy Focus

Competitive Environment: The primary market and
major competitors and whether current strategies are
producing the intended results.

Customer Targets: Are their primary needs being
satisfied?

Product portfolio: Is it on target or does it need to be
changed and/or broadened?

Financial Implications: Are current and projected results
up to expectations?

Resource Allocation: Do changes need to be made?
Porter Strategy Guidelines
Primary Strategies:
1. Differentiation
2. Least Cost
Supporting Strategies:
1. Innovation
2. Growth
3. Alliances
Business Strategy Model
Guidelines
1. What products and/or services do we intend to offer?
2. What price range of products do we intend to offer?
2. What customer targets do we intend to pursue?
3. What geographic markets do we intend to address?
4. How will we obtain products to sell to our customers?
5. How will we deal with sales to our customers?
6. What company structure do we intend to create?
7. What information systems approach will we take?
Strategic Management Process
Environmental Analysis
General Environment
External
Analysis
Operating Environment
Competitive Positioning
s
tie
i
n
tu ts
r
po rea
p
O Th
Directions for Development
Company
Vision
Company
Strategic
History
Current
Strategy
Stakeholder
Analysis
Vision &
Strategy
Chosen
Strategy
Realized
Strategy
Company Analysis
Structure
Internal
Analysis
Figure 7-2
Values/Culture
Skills
Resources
s
th
s
g
n
se
s
rt e
e
S
kn
a
e
W
Reprinted with permission from
The Strategic Management Blueprint
Cambridge, Ma: Blackwell, 1993.
Progressive Corporation
Important learning points:
1.
2.
3.
4.
Market factors triggered the need for a new vision and
supporting strategies.
The CEO had problems in getting his employees to
accept the fact that a major change was needed.
Changes involved refocusing product and service
strategies and related business processes and systems.
Information systems played a major role in support of
the new strategies.
Strategy Implementation
Senior Management
Vision
and Macro
Strategies
Business Uncertainties
Empowered Implementers
Company Culture
Risks to be Avoided
Critical Performance
Factors
Micro
Strategies
and
Tactics
Key Enterprise
Business Processes
Figure 7-3
IT Based Strategies
MARKET PLACE
OPERATIONS
SIGNIFICANT
STRUCTURAL
CHANGE
Federal Express
USA Today
Charles Schwab
Whirlpool
Xerox
TRADITIONAL
PRODUCTS
AND PROCESSES
USAA
L.L. Bean
McKesson
BancOne
Boeing
Frito-Lay
Wal-Mart
Figure 7-6
Possible Exam Questions
1.
Explain the relationship between the vision of a
company and the challenge of making things
happen.
2.
Explain the intent of Figure 7-3 and why it
could be difficult to implement such an
approach.
Chapter 8 Summary
Evaluating Business Strategies
and
The Use of Information Systems:
The Strategic Option Generator
Chapter Objectives

To identify strategic opportunities involving the use of
information system.

To relate the use of information system to gain a
competitive advantage.
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
STRATEGIC OPTION GENERATOR
TARGET
SUPPLIER
CUSTOMER
COMPETITOR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-1
Federal Express Analysis
Using the Strategic Option Generator
TARGET
SUPPLIER
CUSTOMER
COMPETITOR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-2
UPS Analysis
Using the Strategic Option Generator
TARGET
SUPPLIER
CUSTOMER
COMPETITOR
THRUST
DIFFERENTIATION
COST
INNOVATION
GROWTH
ALLIANCE
MODE
OFFENSIVE
DEFENSIVE
DIRECTION
USE
PROVIDE
EXECUTION
STRATEGIC
ADVANTAGE
Figure 8-3
Conclusions
It is necessary to understand and use the Strategic Option
Generator properly.
Some important guidelines:
» Target: be sure to identify the correct primary target
» Thrust: differentiation or cost must be selected, not
both.
» Supporting Strategies: any combination of the three
can be selected.
» Direction: it is confusing and the name of the
element is not self-explanatory. The intent is to
identify whether the users of the information
systems are company employees or external to the
company.
Possible Exam Questions
1.
Explain the elements of the Strategic Option
Generator.
2.
Explain how the Strategic Option Generator
should be used in Section III of the analysis term
paper.
Chapter 9 Summary
The Roles, Roles
and
Relationships Concept
Important Topics
1.
Roles, roles and relationships concept.
2.
Managing IS as a business.
3.
Technology transfer through organizational
learning.
4.
Outsourcing.
IS as a Competitive Resource?
• Business competitiveness is a top
priority.
• What about Information Systems?
Roles, Roles and Relationship Concept
***********
1. The role of information systems is focused on competitive
priorities.
2. Senior management plays a major role in positioning and
prioritizing the competitive role of information systems.
3. There is an on-going working relationship between senior
management and the information systems organization to
sustain the successful use of information systems to compete.
The Role of the Senior Executive
The Person that Runs the Business on a Day-To-Day Basis
• Provide a long term vision for the future of the
business.
• Recognize the value of information to the
organization.
• Sponsor and participate in determining the role of
information systems.
• Communicate the importance of the
information systems role.
• Provide funding, including R&D, to address
the major requirements.
• Focus on results and benefits.
• Motivate to make things happen!
Role of Other Senior Management

Understand the role of information systems within
the organization.

Identify and specify requirement for new
information systems.

Justify and fund existing and new systems.

Sponsor their information systems on an on-going
basis.
Role of IS Executive

Function as a member of the senior management
team.

Provide an understanding of the realm of the
possible, feasible, affordable and achievable with
information systems.

Posture information systems as a service and
support organization in both fact and perception.
Roles, Roles and Relationships
Leadership in two forms:
- Business Leadership
- IT Leadership
Managing IS as a Business
Important to recognize that the IS organization is
really in three different businesses:
1.
2.
3.
Designing information systems.
Building information systems.
Running and maintaining information systems.
Concurrent Learning Curves
Information Technology
Computer-based Applications
Organization
Outsourcing
Hiring someone whose expertise can perform a
business function or activity better, more cost
effectively and/or in a more timely manner than
can be achieved in-house.
Also enables the company to focus on its core
competencies and those factors that mean the
difference between success and failure.
Possible Exam Questions
1. Explain the importance of the roles, roles and
relationships concept if a company has decided
that it definitely wants to use information systems
to gain a competitive advantage.
2. Can a company successfully use information
systems as a competitive resource by outsourcing
the management of this resource to an outside
company?
Chapter 10 Introduction
The Redefine and/or Define Concept
and
Change Management
Agenda
Learning Objectives
 Redefine and/or Define Concept
 The Product and Service Delivery Process
 The Challenge of Change Management
 Conclusions

Learning Objectives
1.
2.
3.
To understand the second of the two core
concepts of the structured analysis
approach.
To appreciate the importance and
significance of change management within
an organization.
To remember that information systems is
viewed as a major cause of change within
a company.
Redefine and/or Define Concept
Redefine = Change
Define = Clarify
How an organization can change and
clarify the role of IS to achieve and
sustain competitive advantage?
Redefine and/or Define What?
Options:
 The business
 Products and/or services
 Business processes
Why bother?
 Value to customer
Product and Service Delivery
Process
Is the delivery process of the product more important
than the product itself?
Product/Service
Value-Add Process
Delivery Process
Product/Service
What the Customer
Buys
Value to Customer
Figure 10-1
Change Management
Four Challenging Factors:
 The pace and time pressures of change.
 Financial controls may not allow increase in
the number of employees despite growth.
 Shifting of productivity and other
operational objectives to IT.
 Dramatic improvements in IT price,
performance, and function.
Conclusions
Change is the norm in most businesses.
 Information technology can be a catalyst or
vehicle for change.
 Organizational change must be carefully
managed.
 Employees and management must
understand and accept the need for change.

Chapter 10
The Redefine and/or Define
Concept
and Change Management
We live in a word of change,
yet we act on the basis of
continuity.
The Challenge of Change
Millions of ordinary, psychologically
normal people will face an abrupt
collision with the future. Many of
them will find it increasingly painful
to keep up with the incessant demand
for change that characterizes our time.
Alvin Tofler
Futurist
Definition of Change
Making an essential difference often
amounting to a loss of original identity
or a substitution of one thing for another.
Equipping a company with the latest
technology doesn't mean a thing if you
don't alter how your employees think
and how management leads them.
Chad Frost
President
Frost Inc.
As we change what computers can
do, we must change what we can do
with computers.
Max Hopper
Former CIO
Information Systems
AMR and American Airlines
Redefine
Change
Define
Clarify
Companies that achieve a sustainable
strategic advantage with information
technology generally redefine the
factors of competition rather than using
technology in a traditional way.
Competitive Advantage
Through Use of IS?
*********
Redefine and/or Define:
1. The Business
2. Products and/or Services
3. Business Processes
To Provide Value to Customer
McDonald’s as Concept Source
Peter Drucker’s Assessment:
• Defined its products.
• Redefined processes to make the product.
• Defined customer service as quality, product
predictability, fast service, cleanliness and
friendliness.
• Set standards for these and trained its employees
accordingly.
• Redefined the “hamburger business.”
Redefine and/or Define
The Business

USA Today

American Airlines

American President Companies

Amazon.com

eBay
Redefine and/or Define
Products or Services
Charles Schwab
 Banc One
 Any company that has introduced an
E-commerce approach in addition to an
existing brick and mortar operation.

Redefine and/or Define
Business Processes

Boeing

LL Bean

All of your ATP companies—intranets,
extranets, E-Business processes
When making a purchase decision
does the delivery process become
more important than the product or
service?
Product/Service
Value Add Process
Delivery Process
Product/Service
What the Customer
Buys
Value to Customer
Figure 10-1
Value to Customer Analysis
Charles Schwab & Co.
Brokerage Service
• Computer Based Trades
• Client Broker Service
Street Smart
Telebroker
Equalizer
• OneSource
• Electronic Transfers
• Trade Risk Analysis
Delivery Process
Product/Service
Value-add Process
• Stock, Bond and Mutual Fund
•
•
•
•
•
Trades
Financial Product Options
Competitive Fees
Timely Execution of Trades and
Money Transfer
Personal Service
Confidence in Financial
Custodial Responsibility
What the Customer Buys
Value to Customer
Figure 10-2
Value to Customer Analysis:
Mervyn’s
Product/Service
• Point-of-Sale (POS) System
Ticketed Merchandise
UPC Scanning
Price Look-up
Credit Card Approval
• Wireless Portable POS
• Warehouse System
• EDI Systems with Vendors
• Infobot Voice Response
Delivery Process
Product/Service
Value Add Process
• Quality Apparel/Home
Fashions
• Competitive Prices
• High Merchandise
Availability
• Personal Service
• Fast, Accurate Check-out
• Fast Credit Approval
• Access to Credit Information
What the Customer
Buys
Value to Customer
Figure 10-3
Value to Customer Analysis
Boeing Commercial Airplane Group
Commercial Aircraft
• CAD design system and
review process
• Customer input through network
• Co-design process with customer
• Quality control system
• Vendor EDI system
Delivery Process
Product/Service
Value-add Process
•
An aircraft designed for
passenger comfort, operational
efficiency and safety.
• Flexible design configuration
• Competitive price
• Logistical support
What the Customer Buys
Value to Customer
Figure 10-4
Product/Service
Delivery Process
Product/Service
Value-Add Process
What the Customer Buys
Value to Customer
Reengineering
Hammer Definition: Reengineering is the
fundamental rethinking and radical redesign of
business processes to achieve dramatic
improvements in critical, contemporary
measures of performance, such as cost, quality,
service and speed.
Key words are fundamental, radical, dramatic and
processes.
Michael Hammer Videotape
The father of reengineering.
At least the term.
Reengineering Business
Processes
Difference between business functions and business
processes?
Definition of a business process: A sequence of predefined
activities executed to achieve a type or range of desired
outcomes.
Definition of process engineering: An approach to achieve
radical improvements in value to customer and/or business
efficiency.
Business Processes
• New product development.
• Customer order fulfillment.
• Customer service.
• Supply chain management.
• Budgeting.
• New employee recruitment and hiring.
Reengineering Motivation
• Improve value to customer.
• Strengthen alignment of core processes to business strategies.
• Pursuit of new opportunities.
• Optimize cross-functional performance.
• Broaden scope of activities and individual jobs to improve
responsiveness or flexibility.
• Reduce operating costs.
Reengineering Guidelines
1. Senior management commitment to adopting a new process.
2. Team empowerment and decision-making.
3. Be careful about how you draw conclusions and create
perception.
4. Move toward inquiry, not conclusions.
5. Make the space and time available for the official beginning
with a team kickoff.
6. Reward system must be correctly focused.
Reengineering Methodology
Process
Prototyping
and
Implementation
Phase 6
Institute
Continuous
Improvements
Phase 5
Implement
Business
Processes
Phase 4
Phase 1
•Critical Success Factors
•Activity Value Analysis
•Benchmarks and Surveys
•Processing Modeling
•Investment Analysis
Design
Business
Processes
Phase 3
Identify
Process
Breakthroughs
Phase 2
Analyze
Leverage
Points
Performance
Reporting
Source: ISS Corporation
Reengineering Success Factors
• Business Imperative.
• Strong Sponsorship.
• Right Team.
• Clear Objectives with a Well Defined
Foundation.
Hewlett-Packard
Reengineering Lessons Learned:
1. Goals and accountability must be clear.
2. Process ownership is crucial.
3. Links among business owners, process
owners and IS organization are critical.
Avon Reengineering Approach
Process
Culture
1. Stay Focused
1. Analyze (Opposition)
2. Be Specific
2. Educate (Concerns)
3. Deliver Results
3. Motivate (Buy-in to
process)
American Express Methodology
• Ownership
• Teams
• Goals
• Tracking
Change Management
Resistance to Change?
You often don’t have a choice.
There are those that content that an
organization has two choices: change
or die.
Graying of Auto Industry
Within the next year, as many as forty to fifty percent of the
auto industry workforce will be eligible to retire.
Auto companies must decide if they will replace these
people with similarly skilled workers or redesign their jobs
and recruit more technologically advanced workers.
The shortage of skilled workers is partially a result of changes
in work requirements as the industry moves from an auto parts
or components mentality to a systems mentality. e.g. not an
odometer but an entire dashboard.
Impact of Change
Change is intensely personal.
For change to occur in any organization, each individual
must think, feel or do something differently.
Even in large organizations, which depend on thousands
of employees understanding company strategies well
enough to translate them into appropriate action, leaders
must win their followers one by one.
Let’s Not Forget
• Xerox: Invented plain paper copiers but almost needed to
file bankruptcy after hemorrhaging financially while trying to
become the document company.
• Eastman Kodak: Basically popularized film photography
but struggled to decide if it was in the imaging business.
• Digital Equipment: Created the minicomputer
segment of the computer industry but has disappeared as a
company.
IT Related Change
If IT related change could be limited to only affecting
the technology, implementation would be relatively
simple.
Adding human factors increases the complexity of the
change process significantly.
Successful implementation of change requires an
understanding of the human as well as the technical
aspects involved in the situation.
IT projects and people translate to “here comes the next
wave of change.”
Old Paradigms Die Hard!
They have built in resistance to their own
corresponding attitudes, institutions and
cultures.
The Law of Change
Achieving change, of any significance within an
organization, is in inverse proportion to the
success that it has had up to the time that
management feels a change is needed.
The greater the success of the company, the less
likely it is to change.
Selecting a Change Strategy
Which strategy to use in approaching a change problem is a
decision affected by a number of possible factors.
1.Degree of Resistance.
2.Target Population Size.
3. High, Medium or Low Business Stakes.
4. The Time Window.
5. Expertise Availability.
6. Organization and People Dependency.
Necessary Questions
1. Is the purpose of the new technology clear to its users?
2. Do the users accept the need for the technology change?
3. Were the users involved in planning the new system?
4. Has there been good communication regarding the change?
5. Is there acceptance of the increased cost compared to the
benefits of the new system?
6. Is there a perception of organizational support for the new
system?
7. Is there compatibility of the new technology with the old
way of doing things?
8. Have the social aspects of the new system been assessed?
9. Do the users feel that the new system reflects negatively on
their past performance?
11. Have the habit patterns of the users influenced the design of
the new system?
12. Is there a lack of respect and trust in the change agents?
13. Has excessive pressure been involved relative to the
project?
14. Is the pace of change perceived to be too fast or too slow?
15. Is there a significant amount of user fear of failure?
16. Can the status quo be reestablished if the new technology
proves unsuccessful?
Change Management Skills
• People Skills
• Business Skills
• System Skills
• Political Skills
• Analytical Skills
Middle Management is Key



Organizational cultures are easy to establish when
a company is young.
Middle managers must be enlisted as agents of
change for an entire organization to change the
way that it operates.
This will happen only if top management
communicates directly and in depth as to the logic
and importance of the proposed change.
Transition Versus Change
1. It goes on inside a person, not outside.
2. It takes much longer.
3. It starts with an ending.
4. It finishes with a new beginning.
5. In between is a neutral zone.
This applies to organizations as well as individuals.
Burning Platform Decision
A burning platform type of decision is at hand when
the organization is facing a major, disruptive change
in which the cost for the status quo is prohibitively
high and there is a significant risk that
implementation failure could occur.
Celebrate Your Victories
1. Companies often don’t celebrate enough when their
people win.
2. They get so caught up in the daily grind of work that they
don’t stop to enjoy what they have achieved.
3. Do things that build people’s self confidence. It’s all
about praising others and getting excited about their
victories.
4. Celebrating success will help to convince people that
they are important, doing well and can respond to the
next challenge even if it involves significant change.
Change Management
Guidelines
1. Plan change management like you would change new
products.
2. A new process needs to reflect the appropriate culture.
3. A focus on tools can be counter-productive.
4. Expect people unhappiness in a change process.
5. Gear the entire effort to the goals of a new program or
process.
6. Structure where possible to have fun.
Conclusions
Change has become the norm in most businesses
Information systems are often the cause of or the
vehicle for change.
Change within an organization has to be managed
appropriately.