What’s Happening?! Bill Gates wants to entertain you with digital devices and services – keynote speaker at the Consumer Electronics Show. Tsunami business and political implications? Bush attempt to limit liability law suit awards. The governator’s latest plans and strategies.
ISM Thought for the Day This IT stuff is hard. What a company really wants is somebody that can help implement it. Lou Gerstner, retired CEO IBM Corp.
Presentation Assignments • Introduce Chapter 1 – James Hendrix • Summarize Chapter 1 – Rebecca Sherrill • Introduce Chapter 2 – Mitchell Paulsen • Summarize Chapter 2 – Jonathan Gregorio • Introduce Chapter 3 – James Schultz • Summarize Chapter 3 – Kim Nguyen • Introduce Chapter 4 – Michael Arias • Summarize Chapter 4 – Jason Demant
Oral Presentations 9. Introduce Chapter 5 – Cyrus Semnani 10. Summarize Chapter 5 – Tan Nguyen 11. Introduce Chapter 6 – Jackey Liu 12. Summarize Chapter 6 – Adam Thompson 13. Introduce Chapter 7 – Chris Johnson 14. Summarize Chapter 7 – Vladimir Gorenshteyn 15. Introduce Chapter 8 – Rashi Sinha 16. Summarize Chapter 8 – Li Zhu 17. Introduce Chapter 9 – Daniel Lifschitz 18. Summarize Chapter 9 – Kevin Wang
FYI If you email me send it to my school address which is automatically forwarded to me at home. Only two people indicated an interest in Toastmasters.
Due Today • Introduction Letters and personal resumes. • Requests for the company that you will base your analysis term paper on in priority sequence.
Chapter 1 Introduction Business and Information Systems Management Challenges By James Hendrix
Objective of the Chapter To introduce the major business issues that must be addressed to successfully manage a business and factors that would influence the possible role of information systems as an enabler of business success. Important to remember that this chapter is an overview of the entire class.
Major Chapter Topics • Business Success Factors. • Three Necessary Perspectives. • The Many Simultaneous Revolutions in the Business Environment • A Business Driver Model. • A Systematic Approach for the Use of Information Systems. • Three Roles of Information Systems.
Business Success Factors • The chapter cites eight such factors with an emphasis on business leadership, company culture and effective communication. • The list would undoubtedly vary in order of importance from one executive to another, one company to another and between different industries.
Three Necessary Perspectives • Business Environment • Specific Industry • Enterprise Environment • The Company Itself • IT Environment • Used for a competitive advantage Business Success
Simultaneous Revolutions New Competitors New Rules of Competition New Political Agendas The Business Industry Structure Changes New Technologies New Employees and New Values New Regulatory Environment Increasing Customer Expectation
Business Drivers Market Technology Employees/ Work Regulation Organization Business Processes Solutions to Business Requirements Figure 1-3
Three Roles of Information Systems • Efficiency: Doing things better. • Effectiveness: Doing better things within the organization. • Competitive Advantage: Doing better and new things for customers.
Systematic Approach to IS Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles, and Relationships • Redefine/Define • Telecommunications as the Delivery Vehicle • Success Factor Profile
In Conclusion The journey of a thousand miles begins with a single step. -- Chinese Proverb
Vision Strategy Tactics Business Plan Here is our roadmap, let the journey begin. • Competitive Options • Roles, Roles, and Relationships • Redefine/Define • Telecommunications as the Delivery Vehicle • Success Factor Profile
Chapter 1 Business and Information Systems Management
Three Necessary Perspectives Business Success • Business Environment • Enterprise Environment • IT Environment Figure 1-1 Why 3 perspectives?
Business Today Moves in a Nonlinear Way • There is no continuity in the flow of competition. • It is very difficult to predict which products will succeed. • It is very difficult to predict which companies will succeed. • Competitive advantage is often fleeting. • Technology and markets change so frequently and radically that yesterday’s assets can become today’s dead weight.
Are Managers Obsolete? Complexity theorists argue that management counts for little in a world of radical discontinuity. In such an environment things happen so quickly that employees must be empowered to make decisions and to act upon circumstances as they occur. So why do the best-led companies so often prevail?
A Fundamental Premise Innovative Uses of Information Systems Requires a Systematic Approach
A Systematic Approach Vision Strategy Tactics Business Plan • Competitive Options • Roles, Roles and Relationships • Redefine and/or Define • Telecommunications • as the Delivery Vehicle • Success Factor Profile Figure 1-4
Competing with Information Technology through People. A Logical Premise
IS Roles (Objective) 1. Efficiency--doing things better. 2. Effectiveness--broadening the scope of individual tasks, jobs or processes. 3. Competitive Advantage--doing better or new things for the customer. Are each of these roles measurable?
Key to Business Success Competitiveness is often the pivotal issue in the current business environment. Global competitiveness has often become an integral part of this issue. (an offense/defense decision)
Competitiveness How does a business compete? What benefits does a business gain if it competes successfully to the point of being a market leader?
Market Leader Benefits? Increased volumes. Lower unit cost. Higher profit margins. Ability to invest in product development and market exploitation. Increased brand strength. Satisfied customers. Customers less likely to substitute. Lower probability of new entrants. Happy, motivated employees and other stakeholders.
Purpose of a Business The purpose of a business is to create a customer. For this reason a business has a basic function and a need to emphasize: 1. Marketing. 2. Innovation. This demands that a business define its goal as the satisfaction of customer needs.
Who is the Customer? Not a simple or intuitively obvious question. There is never thecustomer but multiple customers that are frequently different. Each customer has possible different expectations and values and may think that it is buying something different or for a different reason.
Where is the Customer? An increasingly important question. Greatly influenced by increasing mobility on a global basis. What does the Internet do to questions regarding where is the customer?
A Successful Business The right business model now and for the future. • Is responsive, flexible, adaptable, innovative, • resilient, talented and financially strong. • Provides value to customers. Is anything else necessary to achieve and sustain business success?
Running a successful business is like doing a jigsaw puzzle. The problem is that the pieces and the picture are both changing. Cyril J. Yansouni Chairman and CEO Read-Rite Corp.
Using IS to Compete 1. Not a new topic. 2. Was relatively new in 1984. 3. The American Hospital Supply story goes back to the 1960’s.
My Selection Criteria Started with the list of companies in the In Search of Excellence book. Frito-Lay, American Airlines, Boeing Emphasized the role of senior management to focus the role of information systems on key business strategies from the very beginning. Also how IS was used to make significant changes. Quickly discovered that good companies could point me to other good companies. Wal-Mart, USAA, Federal Express, Schwab, L.L. Bean
Using IS to Compete • American Airlines • Boeing • Federal Express • Frito-Lay • Frost Inc. • IBM Canada • Marion Laboratories • McKesson Corp. • L.L. Bean • National Institutes of Health • Progressive Corp. • Charles Schwab • Security Pacific Bank • USAA • University of South Carolina • Wal-Mart Stores
Business Success Factors 1. Business Leadership. 2. The Ability to Fit the Pieces into the Increasingly Bigger Business Picture. 3. Organizational Responsiveness and Resilience. 4. Realizing That Most Major Customer Problems Are Solved Through a Combined Organizational Effort.
Business Success Factors 5. A Strong Company Culture. 6. Ability and Willingness to Innovate, Change and Take Risks. 7. Accomplishing All of These Factors While Maintaining a Necessary Balance. 8. Effective and Timely Communication Across the Entire Organization.
Books on Business Success In Search of Excellence: Lessons from America's Best-Run Companies by Tom Peters and Robert Waterman, 1982 (43 companies) Built to Last by Jim Collins and Jerry Porras, 1994 (20 companies) Good to Great by Jim Collins, 2001 (11 companies)
Built to Last The objective in a six year study was to systematically identify visionary companies, to examine how they differed from comparison companies to understand the underlying factors that account for their extraordinary long term position. Visionary companies were identified based on their having distinguished themselves as a very special and elite breed of institutions.
Built to Last Companies Marriott Merck Motorola Nordstrom Phillip Morris Procter & Gamble Sony Wal-Mart Stores Walt Disney 3M American Express Boeing Citicorp Ford General Electric Hewlett-Packard IBM Johnson & Johnson
Good to Great Companies • Abbott • Circuit City • Fannie Mae • Gillette • Kimberly-Clark • Kroger • Nucor • Philip Morris ** • Pitney Bowes • Walgreens • Wells Fargo
Selection Criteria • Premier institution in its industry. • Widely admired by knowledgeable businesspeople. • Made an indelible imprint on the world in which we • live. • Had multiple generations of chief executives. • Been through multiple product (or service) cycles. • Founded before 1950.
Selection Criteria Started with Fortune 500 ranking of 1,435 largest publicly traded US companies in 1965, 1975, 1985 and 1995. Did a sophisticated analysis of compounded annual return looking for companies that showed a pattern of above average returns preceded by average or below average returns. This reduced the list to 126 companies. Analyzed the cumulative stock return relative to the general market looking for good-to-great stock return patterns. Reduced the list to 19 companies.
Dow Jones Industrial List • McDonald’s • Merck • Microsoft • 3M • Philip Morris • Procter & Gamble • SBC Communication • United Technology • Wal-Mart Stores • Walt Disney • Exxon Mobil • General Electric • General Motors • Hewlett-Packard • Home Depot • Intel • IBM • International Paper • JP Morgan • Johnson & Johnson • Alcoa • Honeywell • American Express • AT&T • Boeing • Caterpillar • Citigroup • Coca-Cola • DuPont • Eastman Kodak
Business Challenges • Regardless of whose list of successful companies one • relates to, what role should (better yet, did) • information systems play? 2. How do you determine relevance regarding any of these factors?
SIMULTANEOUS REVOLUTIONS NEW COMPETITORS NEW RULES OF COMPETITION NEW POLITICAL AGENDAS INDUSTRY STRUCTURE CHANGES THE BUSINESS NEW TECHNOLOGIES NEW REGULATORY ENVIRONMENT NEW EMPLOYEES AND NEW VALUES EVER INCREASING CUSTOMER EXPECTATIONS Figure 1-2
New Competitors • Global defines the competitive landscape. • Aircraft and communication technologies are shrinking the • economic world. • English has become the international language. • There are very few countries that are not global players. • Standardization of industrial and consumer products. • Breakdown in industry boundaries is also resulting in new • domestic competitors. • Technology versus physical competition via the Internet.
New Rules of Competition • Speed has become a major success factor including time to • market, time to decisions and response time to customers. • Distribution has become a key competitive strategy. • Productivity defines competitive positioning. • Assets can become a liability. • Quality as a competitive factor is a given. • All business functions must contribute value to customers. • Need to focus on core processes and outsource the rest. • Success is a combination of leadership and empowerment. • When timely to do so, reinvent the business.