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The Role of Information Technology in Business Success

Information technology (IT) is a vital component in modern business, acting as an enabler of success and innovation. Organizations operate through various functional areas that are interdependent, highlighting the need for effective communication between business and IT personnel. Key performance indicators (KPIs) and metrics are essential for measuring the efficiency and effectiveness of IT systems. Understanding competitive advantages through tools like Porter’s Five Forces Model enhances strategic decision-making, ensuring businesses thrive in a competitive landscape.

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The Role of Information Technology in Business Success

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  1. Business Driven Information Systems

  2. SECTION 1.1 INFORMATION SYSTEMS IN BUSINESS 1-3

  3. INFORMATION TECHNOLOGY’S ROLE IN BUSINESS • Information technology is everywhere in business 1-6

  4. INFORMATION TECHNOLOGY’S ROLE IN BUSINESS 1-7

  5. INFORMATION TECHNOLOGY’S ROLE IN BUSINESS 1-8

  6. INFORMATION TECHNOLOGY’S ROLE IN BUSINESS 1-9

  7. INFORMATION TECHNOLOGY’S ROLE IN BUSINESS • Organizations typically operate by functional areas or functional silos • Functional areas are interdependent 1-10

  8. INFORMATIONTECHNOLOGY BASICS • Information technology (IT) • Information technology is an important enabler of business success and innovation 1-11

  9. INFORMATIONTECHNOLOGY BASICS • Management information systems (MIS) • MIS is a business function, similar to Accounting, Finance, Operations, and Human Resources 1-12

  10. INFORMATION • Data • Information • Business intelligence 1-14

  11. IT RESOURCES • People use • Information technology to work with • Information 1-18

  12. IT CULTURES • Organizational information cultures include: • Information-functional culture • Information-sharing culture • Information-inquiring culture • Information-discovery culture 1-19

  13. THE GAP BETWEEN BUSINESS PERSONNEL AND IT PERSONNEL • Business personnel possess expertise in functional areas such as marketing, accounting, and sales • IT personnel have the technological expertise • This typically causes a communications gap between the business personnel and IT personnel 1-26

  14. MEASURING IT’S SUCCESS • Questions executives should ask regarding IT systems • Is the internal IT operation performing satisfactorily? • Should I outsource some or all of the IT operations? • How is my outsourcer performing? • What are the risk factors to consider in an IT project? 1-28

  15. MEASURING IT’S SUCCESS • Key performance indicator(KPI) • Metrics are detailed measures that feed KPIs • Performance metrics fall into the nebulous area of business intelligence that is neither technology, nor business centered, but requires input from both IT and business professionals 1-29

  16. EFFICIENCY AND EFFECTIVENESS METRICS • Efficiency IT metric • Effectiveness IT metric 1-30

  17. BENCHMARKING – BASELINING METRICS • Benchmarks • Benchmarking 1-31

  18. THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS • Efficiency IT metrics focus on technology and include: • Throughput • Transaction speed • System availability • Information accuracy • Web traffic • Response time 1-33

  19. THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS • Effectiveness IT metrics focus on an organization’s goals, strategies, and objectives and include: • Usability • Customer satisfaction • Conversion rates • Financial 1-34

  20. THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS • Security is an issue for any organization offering products or services over the Internet • It is inefficient for an organization to implement Internet security, since it slows down processing, however, to be effective it must implement Internet security 1-35

  21. THE INTERRELATIONSHIPS OF EFFICIENCY AND EFFECTIVENESS IT METRICS 1-36

  22. SECTION 1.2 BUSINESS STRATEGY 1-37

  23. IDENTIFYING COMPETITIVE ADVANTAGES • To survive and thrive an organization must create a competitive advantage • Competitive advantage • First-mover advantage 1-39

  24. IDENTIFYING COMPETITIVE ADVANTAGES • Organizations watch their competition through environmental scanning • Environmental scanning • Three common tools used in industry to analyze and develop competitive advantages include: • Porter’s Five Forces Model • Porter’s three generic strategies • Value chains 1-40

  25. THE FIVE FORCES MODEL – EVALUATING BUSINESS SEGMENTS • Porter’s Five Forces Model 1-41

  26. BUYER POWER • Loyalty program 1-42

  27. SUPPLIER POWER • Supply chain 1-43

  28. SUPPLIER POWER • Business-to-Business (B2B) marketplace • Private exchange • Reverse auction 1-44

  29. THREAT OF SUBSTITUTE PRODUCTS OR SERVICES • Switching cost 1-46

  30. THREAT OF NEW ENTRANTS • Entry barrier 1-47

  31. RIVALRY AMONG EXISTING COMPETITORS • Although competition is always more intense in some industries than in others, the overall trend is toward increased competition in just about every industry 1-48

  32. THE THREE GENERIC STRATEGIES 1-49

  33. VALUE CREATION • Business process • Value chain 1-51

  34. VALUE CREATION Value Chain 1-52

  35. VALUE CREATION • Value chains with Porter’s Five Forces 1-53

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