IT Resource Management

1. IT Resource Management Impact to the corporate world

2. Resource based-theory • Firms can be attributed to the variance in the firms‘ resources and capabilities. • The essence of the resource-based theory of the firm lies in its emphasis on the internal resources available to the firm, rather than on the external opportunities and threats dictated by industry conditions. • In order to generate sustainable competitive advantage, a resource must provide economic value and must be presently scarce, difficult to imitate, non-substitutable, and not readily obtainable in factor markets • Resources are the determinants of firm performance. • Resources must be rare (R), valuable (V), difficult to imitate (or inimitable—I) and non-substitutable (N) by other rare resources—the so-called VRIN principle

3. Resource-based Perspective • IS resources that are inimitable and valuable can be rent yielding. • Technology assets are unlikely to be rent yielding, since they can be easily procured. • Combining software & hardware to create sophisticated IT infrastructure can be non-imitable. • It requires careful melding of different technology components, and requires skilled human resource. • Conceptualize IT capability as comprising three dimensions: • IT infrastructure capability (the technology foundation): The firm's ability to deploy shareable platforms. • IT business spanning capability (business-IT strategic thinking and partnership): Firm's management ability to envision and exploit IT resources to support and enhance business objectives; • IT proactive stance (opportunity orientation): Firm's ability to proactively search for ways to embrace IT innovations or exploit existing IT resources to create business opportunities. • IT capability enhances both the firm's market capitalizing agility and operational adjustment agility

4. Value that IT provides to organization • We must first understand the way a particular organization conducts business and how information systems affect the performance of various component activities within the organization • The Firm as: • Value Chain • Value Shop • Value Network

5. The Firm as Value Chain • Created through efficient production of goods and services based on a variety of resources. • Perceived as a series or chain of activities • Primary activities: inbound logistics, production, outbound logistics, marketing and sales, and service • Support activities: infrastructure, human resources, technology development, and procurement • These activities needs to be performed efficiently and effectively • IS/IT are assigned to primary and support activities.

6. IS/IT in the Value Chain

7. Firm as a Value Shop • Activities are scheduled and resources are applied in a fashion that is dimensioned and appropriate to the needs of the client's problem. • Creates value by solving unique problems for customers and clients. • Knowledge is the most important resource, and reputation is critical to firm success • not only sell a problem-solving service, but equally a problem-finding, problem-defining, solution-execution, and monitoring service

8. IS/IT in Value Shop

9. The Firm as Value Network • Creates value by connecting clients and customers that are, or want to be, dependent on each other. • These companies distribute information, money, products, and services. • Activities in value networks occur in parallel. • Number and combination of customers and access points in the network are important value drivers • More customers and more connections create higher value to customers. • Activities performed: • Development of customer network through marketing and recruiting of new customers, to enable increased value for both existing customers and new customers. • Development of new services and improvement in existing services. • Development of infrastructure so that customer services can be provided more efficiently and effectively.

10. IS/IT in the Value Network

11. Characteristics of value configurations

12. Business Model of the Firm • The method by which a firm builds and uses its resources to offer its customers better value than its competitors and to take money doing so. • It details how a firm makes money now and how it plans to do so in the long run. • It enables a firm to have a sustainable competitive advantage, to perform better than its rivals in the long term. • Can be conceptualized as a system that is made up of components, linkages between the components, and dynamics • "management's plan to make money in a particular business,“ • business model is not strategy because business model does not address competition which is core to strategy

13. Components of Business Model • Customers • Competitors • Value proposition - “Offering” to the customer • Internal activities and organization to create the value • Resources (tangible/intangible) • Product inputs – “Raw Materials”

14. Building blocks of business model Product Customer Interface Value proposition – products or services Target customer – customer targeted to offer value Distribution channel – various means used to reach its customers Relationship – relationships with its different customer segments Value configuration – arrangement of activities and resources Core competency - competencies required to execute the firm's business model Partner Network – network of cooperatives with other companies to efficiently offer and commercialize value. Cost structure – cost in deploying the model Revenue model – revenue stream to sustain the firm’s profitability Infrastructure Management Financial Aspects

15. E-Business Models • Enabled by Internet IT strategy, which implements e-strategy • Deeds, efforts, or performances whose delivery is mediated by information technology

16. Factors to address in order to profit in e-business model • Customer value • Scope • Price of the offering • Sources of revenue • System of interconnected and interdependent activities, which create customer value • Implementation • Capabilities • Sustainability

17. 3 components of e-business model • Content: The exchanged goods and information and the resources required to facilitate the exchange. • Structure: The linkage between transaction stakeholders • Governance of transactions: The control of the flows of goods, information, and resources, and the form of legal association

18. Types of e-business model • Direct to customer - Buyer and seller communicate directly, rather than through an intermediary • Full-service provider - Provides total coverage of customer needs in a particular domain, consolidated via a single point of contact • Whole of enterprise - The essence of the whole-of-enterprise atomic business model • Intermediary - Sites that stand between the buyer and the seller • Shared infrastructure – Suppliers and customers share, but does not own, the same infrastructure • Virtual community – Creates a community which enables communication between users • Value net integrator - Attempt to control the virtual value chain in their industries by gathering, synthesizing, and distributing information • Content provider - creates and provides content in digital form.

19. Determining an appropriate e-business model • Involved parties, such as business-to-business, business-to-consumer, and/or consumer-to-consumer. • Revenue sources, such as transaction fee, product price, and/or exposure fee. • Value configuration, such as value chain, value shop, and/or value network. • Integration with customers and/or partners. • Relationships, such as one-to-many, many-to-many, and/or many-to-one. • Knowledge, such as know-how, know-what, and know-why.

20. Characteristics to assess in excluding incompatible models • Economic control - the degree to which a market is hierarchical or self-organizing. • Supply chain integration - the degree to which the business functions and processes of an organization are integrated with those of their supply chain partners. • Functional integration - the degree to which multiple functions are integrated in a business model. • Innovation - the extent to which processes can be performed via the Internet that were not previously possible. • Input sourcing - inputs are sourced by the organization, either systematically from a long-term supplier or through spot markets.

21. Sources • http://youtube.com/watch?v=K7niFZmGawM • Knowledge Driven Service Innovation and Management: IT Strategies for Business Alignment and Value Creation (by Eng K. Chew and Petter Gottschalk (eds) IGI Global. (c) 2013)