Chapter 2

Information Systems for

Competitive Advantage

Information Systems Today

Leonard Jessup and Joseph Valacich
 Chapter 2 Objectives
Understand the IS in automation, organizational
learning, and strategic support
Understand IS for strategic organizational success
Understand the need for making an IS business case
Understand technological innovations to improve
competitive advantage
 Why Use Information
Systems?

Automating: doing things faster

Organizational learning: doing things better
Supporting Strategy: doing things smarter
 Automating:
Doing Things Faster
Technology is used to automate a manual
process
Doing things faster, better, cheaper
Greater accuracy and consistency
Loan application example
Manual processing
Technology-supported process
Completely automated
 Organizational Learning:
Doing Things Better
Going beyond automation
Involves learning to improve the day-to-day activities
within the process
Looking at patterns and trends
Organizational Learning
Using acquired knowledge and insights to improve
organizational behavior
Total Quality Management (TQM)
Monitoring an organization to improve quality of
operations, products, and services
 Supporting Strategy:
Doing Things Smarter
Strategic Planning
1. Create a vision: setting the direction
2. Create a standard: performance targets
3. Create a strategy: reaching the goal
Types of Competitive Advantage
Low-Cost Leadership
Best prices on goods/services
Examples: Dell, Target
Differentiation
Best products or services
Examples: Porsche, Nordstrom, IBM
Best-Cost Provider (middle-of-the-road)
Reasonable quality, competitive prices
Example: Wal-Mart
 Information Systems for
Competitive Advantage
A clear strategy is essential
Sources of competitive advantage:
Best-made product
Superior customer service
Lower costs
Superior manufacturing technology
Shorter lead times
Well-known brand name
High value per cost
 Information Systems for
Competitive Advantage
IS and Value Chain Analysis
VC Analysis: adding value within an organization
Organizations as big input/output processes
IS can automate many value chain activities:
Purchased supplies inbound logistics
Operations
Outbound logistics
Sales and marketing
Service
Organizational Value Chain
 Information Systems for
Competitive Advantage
The Role of IS in Value Chain Analysis
IS competitive advantage in VCA:
Internet link with suppliers, dealers
Extranets: using the Internet for B2B interactions
Computer-aided manufacturing systems
Web site with online product ordering
Customer service response system
Computer-aided design
 Information Systems for
Competitive Advantage
The Technology/Strategy Fit
An IS implementation should create a significant
organizational change consistent with the
business strategy
Business Process Reengineering (BPR)
 Making the Business Case for a
System
The Productivity Paradox (how to quantify gains?)
Measurement problems
End-user development
Decision support systems (DSS)
Strategic systems
Time lags
Redistribution
Mismanagement
 Making the Business Case for a
System
Making a Successful Business Case
Arguments Based on Faith
Arguments Based on Fear
Industry factors
Stage of maturity
Regulation
Nature of competition or rivalry
Arguments Based on Facts
Cost-benefit analysis for a web-based system
Recurring/nonrecurring costs
Tangible/intangible costs
Tangible/intangible benefits
 Presenting the Business Case
Know the Audience
The IS Manager
Company Executives (VPs and higher)
Steering Committee
Convert Benefits to Monetary Terms
 Presenting the Business Case
Devise Proxy Variables
Measure changes in terms of perceived value
Develop a Work Profile Matrix
Time spent on each job, each type of work
Measure What Is Important to Management
Conoco: Making a Business Case
Changing Mindsets About Information
Systems
 Competitive Advantage
in Being at the Cutting Edge
Deploying new technologies faster, better,
and cheaper than competitors
Using new technology in innovative ways
 Competitive Advantage
in Being at the Cutting Edge
The Need for Constant IS Innovation
On the lookout for new technologies that
impact business
 Competitive Advantage
in Being at the Cutting Edge
E-Business Innovation Cycle
Choosing enabling/emerging technologies
Matching with economic opportunities
Executing business innovation for growth
Assessing client value
 Competitive Advantage
in Being at the Cutting Edge
Implications of E-Business Innovation Cycle
Begin with technology when considering
successful business strategies
Marketing is secondary to IT
Emerging technology cycle is ongoing
 Competitive Advantage
in Being at the Cutting Edge
Terms and Concepts
E-commerce (Internet-related)
E-business (any IT that supports business)
Enabling technologies
Economic opportunities
 Competitive Advantage
in Being at the Cutting Edge
The Cutting Edge vs. The Bleeding Edge
Information systems are often bought from, or
built by, someone else
An organization typically cannot patent an IS
Rivals can copy emerging information systems
Therefore, ones IS competitive advantage can be
short-lived
 Competitive Advantage
in Being at the Cutting Edge

Requirements for Being at the Cutting Edge

Consider Porters competitive forces
To deploy emerging systems well:
Organization must adapt well to change
Human capital available for deployment (knowledge,
time, skills)
Tolerance of risk and uncertainty