Chapter 1

Business

and Information Systems

Management

Competitiveness is the pivotal issue in the 21st century.

How does a company compete?

What benefits does a company gain if it competes successfully to the point of being a market leader.

Competitiveness

Business and Information SystemsManagement Challenges

• Business Success Factors

• The Role of Information Systems

Running a successful business is like

doing a jigsaw puzzle. The problem

is that the pieces and the picture are

both changing.

Cyril J. YansouniChairman and

CEO

Read-Rite Corp.

Business Challenges

• Business Vision and Supporting Strategies• Globalization• Time to market, customer and decisions• Concurrent Engineering• Business Process Reengineering• Total Quality Management• Employee Empowerment• Health Care and Other Employee Benefits• Right Sizing, Alliances, Outsourcing• Change Management

Jack Callon’s Key Business Issues

• Direct Business Model

• Extended Enterprise

• Supply Chain Management

• Outsourcing

• Reengineering Business Processes

• Managing Change

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.

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

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?

Three Necessary Perspectives

• Business Environment

• Enterprise Environment

• I/T Environment

Business Success

Figure 1-1

SIMULTANEOUS REVOLUTIONS

NEW RULES OF COMPETITION

INDUSTRYSTRUCTURE CHANGES

THEBUSINESS

NEW COMPETITORS

NEW POLITICAL AGENDAS

NEW TECHNOLOGIES

NEW EMPLOYEESAND NEW VALUES

NEW REGULATORY ENVIRONMENT

EVER INCREASINGCUSTOMER EXPECTATIONS

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.

• Logical 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.

• 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 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.

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.”

Different attitudes towards authority and societal issues.

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.

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

Wal-Mart

Kmart

Sears

Montgomery Ward

Regulation

Market Technology

Employees/Work

Organization

Business Processes

Solutions to Business RequirementsFigure 1-3

Business Drivers

Some Appropriate Questions

• How profound are the changes being experienced?

• 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.

IS 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.

Innovative Uses

of Information Systems

Requires a Systematic Approach

A fundamental premise

VisionStrategyTactics

Business Plan

• Competitive Options• Roles, Roles and Relationships• Redefine and/or Define• Telecommunications

as the Delivery Vehicle• Success Factor Profile

A Systematic Approach

Competing with

Information Technology

through People.

A Logical Premise

A Logical Goal?

• Competing with Information Technology.

• Using Information Systems to Compete.

• Creating the Necessary Environment to Use

Information Systems to Compete.

Business Strategy and IS

• Concepts.

• Relative To (Bigger Picture).

• Company Examples.

The Information Technology Environment

ERA I Data Processing

ERA II End User Computing

ERA III Strategic Systems

AdministrativeFramework

RegulatedMonopoly

FreeMarket

RegulatedFree Market

Source: Cash, McFarlan, McKenney and Appleton, Corporate Information Systems Management, Richard D. Irwin,1992, 3/E, p. 11, adapted.

Organizational

Individual

BusinessProcesses

Productivity/Efficiency

Effectiveness

CompetitiveAdvantage

PrimaryTarget

Justification/Purpose

Figure 1-5

Examples of Successful Company Use of I/S to Compete

• Boeing Airplane Company• Wal-Mart Stores• Bissett Nursery Corp.• Federal Express• Charles Schwab• USAA• L.L. Bean• Progressive Corp.

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 you 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?

PROFILE ORGANIZATIONS• AMERICAN AIRLINES *

• BANC ONE CORP. *

• L.L. BEAN

• BOEING

• CISCO SYSTEMS

• DELL COMPUTER

• FEDERAL EXPRESS *

• FRITO-LAY

• GM SATURN

• HARLEY-DAVIDSON

• MEN’S WEARHOUSE

• THE PROGRESSIVE CORP.

• SAN JOSE MERCURY NEWS

• CHARLES SCHWAB

• USAA *

• UPS

• USA TODAY

• WAL-MART STORES

• WHIRLPOOL • XEROX

Analysis Term Paper Companies

Will the Internet fundamentally change discount retailing and negatively impact Wal-Mart?

Has Intel exceeded the processing speed needs of PC users and minimized its future markets?

Will smart cards eliminate 80% of Visa’s online credit authorizations?

Does the San Jose Mercury News face an inevitable decline in readership and business volumes?

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?

Best ISTC IndustriesRetail Industry:• L. L. Bean• Dillards• 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

An IT Perspective

• There has never been a time in history when there was better Information Technology price/performance and so many choices of hardware, software and services.

• There has never been a time when it was less clear as to the way to best utilize Information Technology.

The Promise of IT

Better technology, better systems, better processes and better employees.

The ideal situation within a company is IT that helps employees make decisions in organizations that encourage them to do so.

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 and Information Systems Management Challenges

Chapter 1 Summary

Two Themes To Keep In Mind

• Business success factors

• The role of information systems

A Systematic Approach• Vision• Strategy • Tactics• Business Plan• Competitive Options• Roles, Roles and Relationships• Redefine/Define• Telecommunications as a Delivery Vehicle• Success Factor Profile

Ultimate Goals

• Efficiency

• Effectiveness

• Competitive Advantage

Possible Exam Questions

1. Identify the three possible roles (objectives) for

information systems and provide company examples

for each of them.

2. Explain the logic of the “systematic approach” (class

roadmap) with a particular focus on the relationship

between the top box and the bottom box.

3. Why are three different perspectives necessary to

understand the significance of information systems

within a specific company?