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Information Technology, Integration and Organizational changeRobert I. Benjamin Michael S. Scott Morton
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INFORMATION TECHNOLOGY, INTEGRATION AND ORGANIZATIONAL CHANGE
WRITTEN BY,ROBERT I. BENJAMINMICHAEL S. SCOTT
MORTON
Presented By,
B. Sundaravadivelu
ESIGELEC, Rouen, France
Email: buvanesh.s@gmail.com
POINTS TO DISCUSS What is IT ?
Effect of IT
After effect of IT
Case Study – Batterymarch
Research – Apply IT
Assessing The Integration Chain
WHAT IS IT? A power that has changed traditional labor
into capital relationship.
It has also opened up new opportunities for strategic use of technology.
Improved interconnection and larger accessible databases adds strategic advantage.
Search strategy available in organizations provide help to find potentially strategic application
EFFECT OF IT
Information technology drives new and powerful forms of integration in companies.
Integration of: Multiple classes of transaction data Multiple forms of data representation Knowledge Group communications
The above are mainly possible due to Improved Interconnection Improved Accessibility to shared data.
EFFECTS OF IT Historically, the labor and capital goods prices
have tend to move in a similar fashion over different product groups.
But capital goods have gained an upper hand over last three decades.
Cost of Technology Capital Equivalency ratio = --------------------------
Cost of Labor
Improved 1.4 times compared to improvement of 1.7 times for one product in a period of 10 years.
COST IMPROVEMENT
Significant difference between the rate of change of the capital equivalence index for IT as contrasted with other technologies.
The difference in the curves suggests the enormous potential available to those organizations willing to seize the opportunity.
Example: Swiss makers not taking into consideration which the Japanese manufacturers of Electronic watches. Increased revenue by 10 times in 4 years.
AFTER EFFECT The benefits are delivered to end users in two
ways: Reduction in cost of the product (Instruction per
second) Increase in functionality of the product (Workstations)
Investment in IT has three effects New cost effective applications
Accounting era Operations era Information era Knowledge era
Consistent progress in Technology areas New applications that generate strategic advantage.
CASE STUDY - BATTERYMARCH
Financial investment management firm with 12 Billion dollars in managed assets.
“Finding stocks that are out of favor or neglected by other portfolio managers”
Investments firms of the future will be a few senior people with one big machine – Dean LeBaron
CASE STUDY - BATTERYMARCH Batterymarch accomplished the goal with
lesser work strength and used IT to support value-added chain.
Ways of implementation Investment process
Developing research themes Data was available Browse database to find stocks before placing order
Portfolio Construction Assigning stocks to each portfolio Executing Transactions
Record Keeping and Client Support One Staff can manage average of 15 clients.
RESEARCH – APPLY IT Two complementary
Models Market Positioning Model
Understanding where the firm stands
Low-cost producer, Product differentiation or Niche positioning
Value-added Chain Break organization into
Operational and Support activities
Separate entities can be analyzed and concentrated
Rockart and Scott Morton model (1984) showing Strategy and Information Technology being the change stimuli
ASSESSING THE INTEGRATION CHAIN
Search strategy based on finding new forms of integration
Tier1 – Conceptual side of the model where possibilities opened by IT. E.g. Batterymarch
Tier2 – Implementation elements of the model with the logical flow between IT, Integration, Strategic Advantage & Org forms.
ASSESSING THE INTEGRATION CHAIN Integration has been enabled by
improvements in interconnectivity and data accessibility.
Concerns combining and eliminating tasks associated with a process carried on by several people or groups
Measured through Cost of Transmission Purity of the Data Speed of Access Type of Data Availability of Data
INTEGRATION – RESTRUCTURE
Leads to structural change in: Processes Functions Organizations
With these Integration an organization can fall in two classes: More productive organization Better positioned w.r.t its market place.
INTEGRATION RESTRUCTURE - EXAMPLES
Batterymarch Database of Information
Travel Industry Reservation Systems
Engineering and Manufacturing Design drawing, CAD
Financial Services Merrill Lynch – Cash Management Account
CONCLUSION
- Improved Interconnectio
n- Shared
Access data
Transactional Processes
Multiple forms of data
representation
Groups through Communication
GRACIAS
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