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MODULE 1 : IT and Business Advantage

MODULE 1 : IT and Business Advantage. Corporate Information Strategy and Management. OVERVIEW. Understanding Business Models [Chapter 1] Business model components Analyzing business model components Evolution of business models IT Impact on Business Models [Chapter 2]

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MODULE 1 : IT and Business Advantage

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  1. MODULE 1 : IT and Business Advantage Corporate Information Strategy and Management

  2. OVERVIEW • Understanding Business Models [Chapter 1] • Business model components • Analyzing business model components • Evolution of business models • IT Impact on Business Models [Chapter 2] • Analyzing IT impact on business models • Analyzing competitive forces [CF] and value chains [VC] • Searching for opportunities using CF and VC • IT Impact on Organizations [Chapter 3] • New organization design • IT impact on capabilities

  3. CHAPTER 1 Understanding Business Models

  4. Discussion Questions • What are the key components of a business model? • How will you analyze an organization’s strategy, capabilities, and value added? • What is a strategy audit? How can it assist organizations in positioning themselves to achieve a distinctive and sustainable competitive advantage? • How do business models evolve?

  5. Business Model: Definition • Organization interacts with environment to: • define strategy • attract resources and build capabilities to execute strategy, and • create value for stakeholders

  6. Analyzing Strategy • Conduct a strategy audit • Four areas to consider • Market positioning • Customers, needs, channels • Product positioning • Product/service offerings, features, price • Business network positioning • Activities in extended value chain • Boundary positioning • Markets, products, businesses not to pursue

  7. Analyzing Capabilities • Conduct a capabilities audit • Four areas to consider • Processes and infrastructure • Analyses of internal and external processes • People and partners • Ability to attract, motivate, and retain expertise • Analyses of performance metrics • Organization and culture • Appropriate structural design for accountability, decision making, and coordinating mechanism • Leadership and governance • Clear vision, strategic controls, operating controls, effective risk management

  8. Analyzing Value • Conduct a value audit • Three areas to consider • Internal and external stakeholders • Assess interest and expectations • Business model drivers and alignment • Conduct a SWOT analysis • Identify drivers of revenue, cost, and asset efficiency • Develop the financial model • ROE = profit margin * asset efficiency * leverage • ROE = (NI/revenue) * (revenue/assets) * (assets/SE)

  9. Evolving Business Models • Four key approaches • Enhance • Incremental improvements to strategy and capabilities • Expand • New products/services, markets, capabilities • Explore • New businesses and capabilities • Exit • Exit product, market, outsource capability

  10. CHAPTER 2 IT Impact on Business Models

  11. Discussion Questions • How will you analyze the impact of IT on the business model? • What are the implications for design, implementation, and management of IT initiatives in different quadrants of the IT impact map? • How can IT be leveraged to identify opportunities for business model strategy?

  12. Analyzing IT Impact High CORE CAPABILITIES Low Low High STRATEGY

  13. Industry and Competitive Analysis[Porter’s Five Forces]

  14. Porter’s Value Chain Model

  15. Searching for Opportunities • Value Chain Framework and Five Forces Model • Can IT streamline processes? • Can IT change the basis of competition? [AHSC & AA] • Can IT change the nature of relationships and balance of power in buyers-sellers relationships? [GHX] • Can IT build barriers to entry? [Amazon] • Can IT raise switching costs? [Wal-Mart, Intuit] • Can IT add value to existing products/svcs? [Boeing] • Can IT create new products/services? [GM]

  16. CHAPTER 3 IT Impact on Organizations

  17. Discussion Questions • Why is there a need for an organization to be both “big” and “small”? • How will you analyze IT impact on an organization's capabilities? • What challenges do executives face in designing modern information age organizations? How can these challenges be addressed successfully?

  18. Need for New Designs [Capabilities] • Organization environment interaction • Environments are dynamic and uncertain • Large firms must respond quickly to local needs • Intelligence cannot be centralized • Organizations need to have a global focus • Small firms must act big to survive in global economy • New business design • Extended enterprise & on demand

  19. IT Impact on Design [Capabilities] • Can IT enable agility and control? • Time synchronizing operating and management processes [eg. Making changes to portions of operations without considering impacts on partners, suppliers] • Can IT enable accountability and collaboration? • Access to information in hierarchical versus on demand enterprise • Flatter information curve and redesign of collaborative structure, culture, incentives, authority etc.

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