CLASS 2 SUPPLEMENTAL INTRODUCTORY MATERIALS

1. CLASS 2SUPPLEMENTALINTRODUCTORYMATERIALS CSE 7360

2. Five Forces To Determine Industry Profitability New Entrants Threat ofNew Entrants Industry Competitors Bargaining Powerof Suppliers Bargaining Powerof Buyers Suppliers Buyers Rivalry AmongExisting Firms Threat of SubstituteProducts or Services Substitutes Source: Porter, M., Competitive Advantage, NY: The Free Press, 1985

3. Impact on Competitive Forces Source: Cash, J. I., McFarlan, F. W., McKenney, J. L., Applegate, L. M., Corporate Information Systems Management: Text and Cases, Homewood, IL, 1992.

4. Impact on Competitive Forces Source: Cash, J. I., McFarlan, F. W., McKenney, J. L., Applegate, L. M., Corporate Information Systems Management: Text and Cases, Homewood, IL, 1992.

5. The Value Chain Firm Infrastructure M A R G I N Human Resources Management Technology Development Procurement N I G R AM InboundLogistics Operations OutboundLogistics Marketing& Sales Service Source: Porter, M., Competitive Advantage, NY: The Free Press, 1985

6. How long before a response? • Who can respond? • Will copying help? OTHERWISE Be prepared to be a fast/cheap follower

7. The Evolution of Customer Order Entry ONE-WAY COMMUNICATION 1957 Customer orders taken manually. Order entry and billing procedures automated 1960’s: Tel-American IBM 1001 Dataphone and 026 card punch sped the order process and increased accuracy 1970’s: ASAP Utilization of card reader developed by Tek-Pro with mainframe computer support widely implemented 1980: ASAP 3 Enabled customers to use their internal stock numbers to order and build standing orders. Also produced inventory lists, P.O.’s and requisition forms to customer specifications TWO-WAY COMMUNICATION 1977: ASAP 2 Addition of Bell 43 terminal to allow customer response to orders; also allowed intra-company/ customer messaging capability 1983: ASAP 3 Plus Enabled customers to manage inventory through the incorporation of bar code scanning MULTI-WAY COMMUNICATION 1985: ASAP 5 Extended capabilities of ASAP 3 by using IBM PC with tutorial software and menu-driven functions. Also provided capability to edit order off-line, thus saving telephone expenses 1986: ASAP Express Capabilities expanded to include other vendors by using electronic clearing house to enter orders. Potential for total automation of hospital logistics 1983: ASAP 4 Computer-to-computer order entry system that merely required customer approval for processing

8. Porter Industry and Competitive Analysis FrameworkPrior to Introduction of ASAP Express Information Technology Specialists EDS Perot Systems IBM GE New Entrants High Positioning ofIntraindustryRivals Bargaining PowerofSuppliers Bargaining Powerof Buyers High High High Competing Systems as Good or Betterthan ASAP Hospital Creation of Buyer GroupsImproved Access SupplierInformation Direct Linkage With Hospitals Substitute Productsor Services Medium Consolidated Ordering SystemIntegrated Ordering and Material Management Systems

9. Porter Industry and Competitive Analysis FrameworkAfter Introduction of ASAP Express New Entrants ASAP Express Establishes Barrier to Entry for IT Specialist Medium Positioning ofIntraindustryRivals Bargaining PowerofSuppliers Bargaining Powerof Buyers Medium Low High High No ASAP Express Intraindustry Rivals Hospital Creation of Buyer GroupsImproved Access SupplierInformation Consolidated System ForcesSupplier to Interface with ASAPExpress Rather than Direct Linkwith Hospitals Substitute Productsor Services Low Consolidated Ordering SystemIntegrated Ordering and Material Management Systems

10. Phases of IT Assimilation PHASE 1Decision to investandproject initiation Failure Success PHASE 2Technology learning andadaptation StagnationBlock A Narrowlyfocused andnot marketed Success PHASE 3Rationalizationand management control StagnationBlock B Too efficiencydominated Success PHASE 4Widespreadtechnologytransfer StagnationBlock C Source: Cash, J. I., McFarlan, F. W., McKenney, J. L., and Applegate, L. M., Corporate Information Systems Management: Text and Cases, Homewood, IL, 1992.

11. Architecture:A Plan for the Structure of IT Capabilities Why Do We Need an IT Architecture? • Facilitate decision making on specific technology acquisitions • Ensure compatibility of IT and business strategy • Improve likelihood of IT integration and interconnectivity • Define a framework for control • Influence user decision making concerning IT

12. Components of an IT Architecture Source: Davenport, T., Budd Services, Unpublished Teaching Note, 1987.

13. Levels of an IT Architecture Source: Davenport, T., Budd Services, Unpublished Teaching Note, 1987.

14. Balancing Hardware/Data Distribution/Software Source: Cash, J. I., McFarlan, F. W., McKenney, J. L., and Applegate, L. M., CorporateInformation Systems Management: Text and Cases, Homewood, IL, 1992.

15. Sample IT Architecture Applications TOOLS InformationPackaging andDelivery (e.g., Commander EIS) InformationAnalysis (e.g., Lotus 123G) Knowledge-BasedSystems (e.g., Expert System) ApplicationDevelopment (e.g., CASE) Communications (e.g., E-Mail, Conferencing) Communications Wide area networkLocal area network FOUNDATION Information ManagementClient server architectureDB2 relational databaseData feeds from internal and external sources Manu-facturing IndustryNews/IRI Dow Jones Accounting Sales Purchasing Logistics External Systems Internal Business Operations and Transaction Systems Source: Applegate, L., Frito-Lay, Inc.: A Strategic Transition (C), Harvard Business School Case #9-190-071, 1990