8/9/13 IT and Strategy

Mod 2 Project Retrospective:

 Teams will analyze a completed IT project or major milestone/phase, and
evaluate it based on the Project Management principles we’ll discuss in Mod
2.
 Preferably from one of our organizations
 Objective: apply module concepts/ideas/techniques while critiquing the
project management process and outcome, as well as to make
recommendations for improvement.
 Deliverables: Retrospective (will have a template) and a presentation to
faculty
 Need to choose and confirm project by 10/13. Brief should have short
description and summary

Key Dimensions: Market focus, differentiation, relative cost position.

 Market focus: geography, product/service, customer segmentation
 Differentiation: design, quality, service, price, increasing willingness to pay,
what customers experience
 Relative Cost Position: Adds value through managing costs, back end

IT leaders are in a unique position to see across a company.

Porter, “What is strategy?”

 Five forces model for analyzing an industry
 Strategic Positioning requires the creation of valuable position, making
trade-offs, and creating fit between company activities.
 Operational effectiveness is necessary but not sufficient to sustain
competitive advantage.
 Productivity frontier
 Fit means alignment between strategy and activities

Resources and Capabilities:

 Physical and intangible resources (facilities, IT, people, financials)
o Culture, brands, trust, intellectual property
 What you can do with those resources
 IT can be both a resource (accounting, HR management) as well as a
capability (proprietary analytical software, logistics apps, etc.)
 Should be consistent with strategy and provide value to end user
 Deeply embedded capabilities are harder to imitate
 Should enable firms to adapt
 BE CAREFUL: can become core rigidities.

Walmart
Get info from slides
Obstacles in China
E-commerce stumbles

Value Chain Framework

 Michael Porter, Competitive Advantage, 1995
 Adding value to a product or service at each stage of its
production/development
 Series of interdependent activities that bring the product or service to the
customer

Value – willingness to pay (customer). Derived from demand and price.

Dell’s value chain: received an order, pluck parts, assemble, test (x2), ship

Business model: provide customizable options the way individual consumers want
them. Deliver faster. Quick production turnaround with focus on performance
metrics and minimal inventory. Cost position was a bit higher but they offered
specialized models based on segments.

Resources & Capabilities: Phone/Online ordering system, large assembly plants, fast
inventory, leadership (at first)

Management concerns (rigidities) –

 Became very myopic on production process, not what consumers would be
willing to pay for (what they want)
 Shrinking margins
 Lack of physical locations
 Commoditization of their main product

E-books:
 Long value chain from author > publisher > wholesaler > purchasing >
warehousing > storefront > customer
 Amazon direct publishing – disruptor technology?
o Shorter value chain means less value overall?
o Amazon taking on low risk and takes 30% of sales
o No marketing costs
 Barnes & Noble