Strategic use of Information System

8/12/2019 Strategic use of Information System

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Strategic Uses ofInformation Systems


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Strategy and Strategic Moves

Strategy

A plan designed to help an organization outperform

its competitors

Strategic Information Systems

Information systems that help seize opportunities

Can be developed from scratch, or they can evolve

from existing ISs


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Strategy and Strategic Moves (Cont.)

Strategic advantage:

Using a strategy to maximize strength

Competitive advantage:

The result of the use of a strategic advantage


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Achieving a Competitive Advantage

Increase profits through increased market share

Innovation results in advantageStrategies that no one has tried before

Example: Dell using the Web to take customer

orders


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(Cont.)


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(Cont.)


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Lower costs results in lower price

Bigger Market Share

Implement automation to become more productive

The Web has made this possible for many

Initiative #1: Reduce Costs


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Patenting

High expense of entering industry

State Street, Inc. (Pension fund management

business)

Initiative #2: Raise Barriers to

Market Entrants


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Lasts only until competition offers an identical orsimilar product or service for a comparable orlower price

First Mover: Creates assets

Brand Name

Better Technology

Delivery Methods

Critical Mass: body of clients that attracts otherclients

Initiative #4: Create New Products

or Services


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Product differentiation

Brand recognition Examples of brand name success

Levis jeans

Chanel perfumes

Gap clothes

Initiative #5: Differentiate Products

or Services


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Combined service may attract customers

Lower cost

Convenience

Examples

Travel industry

HP and FedEx

Initiative #7: Establish Alliances


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Establishing Alliances (Cont.)


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Bargaining Power

Purchase volume

Strengthen perception as a leader

Create a standard

Initiative #8: Lock in Suppliers or

Buyers


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Strategic Information Systems

(SIS) An IS that helps achieve long-term competitive

advantage

SIS embodies two types of ideas:Potentially-winning business move

How to harness IT to implement that move

Two conditions for SIS:

Serve an organizational goal

Work with the managers of the other functional

units


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Creating an SIS

Top management involvement

From initial consideration through development

and implementation

Must be a part of the overall organizational

strategic plan


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Steps for Considering a new SIS


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Steps to Take in an SIS Idea-

Generated Meeting


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To implement an SIS and achieve a competitive

advantage, organization must rethink entireoperation

Goal of re-engineering

Achieve efficiency leaps of 100% or higher

Re-engineering and

Organizational Change


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SISs developed as strategic advantages quickly

become standard business

Banking industry (ATMs and banking by phone)

Continuous search for new ways of utilizing

information technology to their advantage SABRE, American Airlines reservation system

Competitive Advantage as

Moving Target


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JetBlue: A Success Story

Gained competitive advantage where others failed

Proper technology and management methods

Reducing costs resulting in reduced pricing

Improving service


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Massive Automation

Automation of services with software

Combination reservation system and accounting

system

Supports customer services and sales tracking

JetBlue: A Success Story (Cont.)


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Massive Automation, continued

Electronic tickets

No paper handling or expense

Encourages online ticket purchases

Avoids travel agents

Significant savings in cost



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Maintenance information system

Logs all airplane parts and time cycles

Reduces manual tracking costs

Flight planning software

Maximize seats occupied on a flight

Reduced planning costs



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Wireless devices for employees

Report and respond to irregular events Quick response

Events recorded for future analysis

Training records stored electronically Easy to update

Efficient retrieval



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Away from Tradition

Decision to not use the hub and spoke routing

method

Paperless Cockpits

Laptops for Pilots

Harnessing IT to maintain a strategic gap



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Enhanced Service

Available on all flights and all class tickets

Live TV through contract with DirecTV Leather Seating

Excellent on-schedule arrivals and departures

Fewest mishandled bags Rapid check-in time

Security upgrades



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Impressive Performance

Maintains excellent statistics

7 cent cost per available seat-mile (CASM)

78% of seats are filled

Late Mover Advantage

New Technology vs. legacy systems



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The Ideas

Wingcast telematics

Technology in vehicles to enable Web access

Business to Business: Covisint

Joint venture with General Motors and

DaimelerChrysler

Electronic market for parts suppliers

Vendor bidding for proposals from automakers

Ford on the Web: A Failure Story


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The Ideas (cont.)

Business to Consumer: FordDirect.com

Sell vehicles direct to consumers via the Web

Bypass dealerships

Provide service while saving dealer fees

ConsumerConnect

Special unit to build Web site and handle direct sales


(Cont.)


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Hitting the Wall

Wingcast: Failed

Buyers not interested

Product eliminated in June 2001

Covisint: Successful

Now includes more automakers


(Cont.)


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Hitting the Wall

FordDirect.com: Failed

Not a result of faulty technology

Ford failed to consider state laws and dealership

relationships

Dealership relationship was still needed for

purchases not on the Web


(Cont.)


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The Retreat

ConsumerConnect disbanded

FordDirect.com used by dealerships now

Sells used cars

Price tag for failure: $1 billion

FordDirect.com today results in 10,000 sales

transactions a month


(Cont.)


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Success and Failure on the Web

Being first is not enough for success

Business ideas must be sound

An organization must carefully define what buyers

want

Establishing a recognizable brand name isimportant but does not guarantee success;

satisfying needs is more important


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The Bleeding Edge

Business owners must develop new features to

keep the system on the leading edge

Adopting a new technology involves great risk

No experience from which to learn

No guarantee new technology will work orcustomers and employees will welcome it


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The Bleeding Edge (Cont.)

The bleeding edge: failure in an organizations

effort to be on the technological leading edge

Allow competitors to assume the risk

Risk losing initial rewards

Can quickly adopt and even improve pioneerorganizations successful technology


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Summary

Business strategy and strategic moves can give an

organization an advantage

Basic initiatives for gaining a competitiveadvantage

Strategic information systems require fundamental

elements

Circumstances and initiatives that make one SIS

succeed and another fail

Strategic use of Information System

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