Download Information Technology and Strategic Competition, Cash Flow | ISM 50 and more Assignments Accounting in PDF only on Docsity!
ISM 50 - Business Information Systems
Lecture 3
Course Instructors: Mary Doyle,
Geoff Ryder
April 6, 2009
Outline For Today
Class Announcements
Student Presentations
Information Technology and Strategic
Competition
Cash Flow
Business Process Reengineering intro…
Class announcements
Due Wednesday
Assignment 1: Resume and Cover letter
For Next time Read:
Chapter 2 - Section II of O’Brien
STUDENT PRESENTATIONS
Elliott Ten
Josef Rokicki
News Folio Presentation
ISM 50
Elliott Ten
April 6, 2009
Authors and Articles
Michael S. Malone “Newspapers, Hail and Farewell”
Michael S. Malone “How Newspapers Must Change to
Survive”
CNN Video “Newspaper Jobs Dying”
Brendan Gupta “The Dying Newspaper”
Lee Bains “Are These Newspapers Going Out of
Business?”
WBZ-TV “Are Newspapers A Dying Breed?”
Wikipedia “Seattle Post-Intelligencer”
Gary Kamiya “Death of the News”
Main Ideas
Newspapers are failing
Technology changed how we view news
What do major newspapers need to do to
survive
Newspapers are failing
From 2006 – 2008 American newspapers
lost 42% of their market value.
Newspapers are loosing a lot of advertising,
their main source of income.
Craigslist has dominated classified
advertising
The San Francisco Chronicle is soon looking
for a buyer
Seattle Post Intelligencer went web only on
March 17, 2009
Technology changed how we view
news
Ways to get news using technology
Internet source
Computer
Blackberry/Smartphone
Advantages of news online
Greener
Quicker updates
Free (mostly)
What do major newspapers need
to do to survive
Recognize how everything has changed
Use technology to deliver news
Strive to market to eBooks and smart
phones
Convert to web only
See where they need to be in 10 years, and
get there in 5 years.
Summary of How Article Relates to
ISM 50 Concepts
Old fashion paper newspapers need to get with
the times and go electronic to survive. A new
method of getting news to people using
technology has begun to change and shape a
new era of reporting.
News Folio Presentation
ISM 50
Josef Rokicki
April 6th, 2009
Review of Lecture 2
History of IT 1960 - …….(Nolan article)
Eras
Stages within eras
Emergence of IT as a business function
The value of networks (Metcalfe’s Law)
Messerschmitt definitions
Business Functions and Processes (Obrien,
Ch. 1)
Definitions
Case studies
Information Technology and
Strategic Competition
Competitive Forces (Porter 5 forces)
Competitive Strategies
Strategic Use of Information Technology
Internet and the Value Chain
Competitive Forces
Bargaining power of customers
Bargaining power of competitors
Rivalry of competitors
Threat of new entrants
Threat of substitutes
Porter Competitive ModelPorter Competitive Model
(Identify the Industry and the Specific Market(Identify the Industry and the Specific Market
Being Evaluated)Being Evaluated)
Intra-Industry Rivalry
Strategic Business Unit
Bargaining Power of Buyers
Bargaining Power of Suppliers
Substitute Products and Services
Potential New Entrants
Intra-Industry Rivalry SBU: UCSC Rivals: UC campuses, CSU, Private universities, Community Colleges
Bargaining Power of Buyers
Bargaining Power of Suppliers
Substitute Products and Services
Potential New Entrants
- Faculty
- Staff
- Equipment and Service Suppliers
- Alumni
- Foundations
- Governments
- IT Vendors
- Internet Distance Learning
- Books and Videotapes
- Computer-Based Training
- Company Education Programs
- Students
- Parents
- Businesses
- Employers
- Legislators
- Foreign Universities
- Shift in Strategy by Universities or Companies
Porter Competitive Model
Education Industry – Universities
Bargaining power of customers
and competitors
Strength in numbers?
Well-informed about the industry/brands?
Loyalty/incentives?
What are some examples of the bargaining
power of customers, competitors?
Rivalry of competitors
Number of firms in industry
Rate of market growth
Level of differentiation in market
Diversity of rivals
Probability of industry shakeout
Threat of new entrants
Government-created barriers
Proprietary knowledge to enter
Little brand differentiation
Low cost to enter
Threat of substitutes
Switching costs
Buyer inclination to substitute
Price/performance trade-offs (paying
more doesn’t get you more)
What are some examples of threat of
substitutes?
Competitive Strategies
Cost leadership
Differentiation
Innovation
Growth
Alliance
What is the purpose of competitive strategies?
Cost leadership
Low cost production – how?
Inventory
Staffing
Customer cost
Competitor cost
Production processes
What about the role of IT in cost leadership?
Differentiation
Positive difference between your
products/services and the competition
How can this help reduce the competitor’s
advantage?
Establish a niche market
Value Chain Purpose
A way of classifying a companies activities
and how they help deliver value to
customer.
A framework for evaluating decisions like
outsourcing, or deployment of IT.
The Value Chain
Support Processes
Primary Business Processes
Source: Adapted from Michael Porter, “Competitive Advantage,” 1985
Examples of IT Supporting Value
Chain
Examples of IT Strategies as
Applied to Support Processes
Administrative coordination and support
Collaborative workflow/tools
Portals
Others?
Human Resources Management
Career development intranet
Applicant tracking system
Others?
Examples continued……
Technology Development
CAD extranet
Trouble ticket system
Others?
Procurement
E-commerce exchanges for suppliers
Purchasing cards
Others?
IT Strategies as Applied to
Primary Business Processes Inbound logistics
JIT warehousing
Operations
Computer aided flexible manufacturing
Outbound logistics
Online POS and order processing
Marketing and sales
Interactive targeted marketing
Customer Service
CRM
WHAT EXAMPLES CAN YOU SUGGEST?
Information System Roles
Competitive
Advantage
Effectiveness
Efficiency
A few Information System
Categories…
Definitions: Net Present Value
Finding the value of an IT Project http://www.soe.ucsc.edu/classes/ism050/Spring09/Cash_Flow.pdf
Insight: $1 tomorrow is worth less than $1 today!
Say the interest rate i = 10% per year
The discount factor d = 1 / (1+i) = 1/1.1 = 0.
Now suppose we have a stream of payments
X 0 , X 1 , X 2 , X 3 , ….
Then the net present value NPV of this stream of
payments is computed as
NPV = X 0 + dX 1 + (d^2)X 2 + (d^3)*X 3 + …
Net Present Value Example
Finding the value of an IT Project
Example from the help file, page 2
http://www.soe.ucsc.edu/classes/ism050/Spring09/Cash_Flow.pdf
Our NPV model only requires two data: an
interest rate, and a stream of payments.
Positive numbers are positive revenue.
Interest rate i = 0.1 (purple) or i = 0 (blue)
Estimate that our payments each year are
-3M, 1M, 1M, 2M, and zero after that
Net Present Value Example 1
Blue: i = 0
Purple: i = 0.
Green: annual payments
Red: NPV
Years
$M
ROI = 0.24/3 = 0.
NPV of an IT Project: How Large Are Gains After 5 Years?
An example: Process Control Systems
Monitor and control physical processes
Example:
An example decision support systems
What is Business Process Reengineering?
A fundamental rethinking and redesign of
business processes
Minor improvement to a business process is
often called streamlining the business
process
Business Process Example
Customer
Sales
Finance
Inventory Control
Warehousing
Order
Take Order
Credit Check
Enter Order
Check Stock Print Packing list
Find Goods
Print Invoice
Ship
Tell Mfg. to make order
Business Functions
A Streamlined Business Process
Customer
Sales
Finance
Inventory Control
Warehousing
Order
Take Order
Credit Check
Enter Order
Check Stock Print Packing list
Find Goods
Print Invoice
Ship
Tell Mfg. to make order
Business Functions
Automatic Credit Check
A Reengineered Business Process
Customer
Sales
Finance
Inventory Control
Warehousing
Order On web
Print Packing list And invoice
Find Goods
Ship
Inform Mfg. to replenish stock
Business Functions
Automatic Credit Check Automatic Checking of Stock
Role of Information Systems in
Business Process Reengineering?
IS often enables complicated business
processes be made more simple.
IS doesn’t always drive business process
reengineering though…
Results: Business Information
Systems Drive Improvement
GE Case Study, page 85 in the Reader
Six Sigma Quality: “define, measure,
analyze, improve, control”---and IT enables
many of those activities
Implemented by a famous CEO…
The GE Saga:
Jack Welch, Jeff Immelt
Jeff Immelt: take risks or else http://www.businessweek.com/magazine/content/05_ /b3926088_mz056.htm
Jack Welch is wrong for the times (2006) http://money.cnn.com/2006/07/10/magazines/fortune/ rules.fortune/index.htm
Jack Welch is the #1 CEO in America
(1998) http://www.businessweek.com/1998/23/b3581001.htm
TO DO:
Today (April 6th): Business Paper Preferences (Group members, Companies) Turn in as a group By paper, or email to Peter
By Wednesday (April 8th): Finish Reading all O’Brien Sections Homework 1 Due: Resume & Cover Letter Turn in as an individual, one paper copy
By Monday (April 15th^ ):
Read “Frito-Lay Case” (93-103 + figs) in Course Reader
