Issues in the Application of Information Technology for Strategic

MBA Essentials Information Technology for

Strategic, Competitive Advantage

Virginia Franke Kleist, Ph.D.

Assistant Professor

Division of MIS/Management

MBA Essentials Session X

Information Resources Management

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Welcome to the Technology Part of the Program

• How are you using information technology (IT) today in your firms and businesses?

• How successful has this been for your firm?• Do you have problems that are still

unresolved with Information Technology?• Can IT give competitive advantage, anyway?• How can one identify which technologies will

best give strategic advantage?



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Contact Information

• Virginia Franke Kleist, Ph.D.• [email protected]• www.be.wvu.edu/divmim/mgmt/kleist• 304-293-7939• I welcome your comments and contacts!• Several drawings are adapted from Laudon and Laudon,

(2005), Management Information Systems: Managing the Digital Firm, New Jersey: Prentice Hall (8th ed.).

• Some material adapted from Burgelman, Christensen and Wheelwright, (2004), Strategic Management of Technology and Innovation, Boston: McGraw-Hill Irwin (4th ed.).

http://www.be.wvu.edu/divmim/mgmt/kleist



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What will we learn?

• Strategic advantage from information technology

• Latest information technologies• How do you successfully select,

implement and manage a new IT?• How can your firm benefit from IT?



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Strategic Information Systems



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Strategic Information System

• Technology used to gain an edge over an organization’s competition

• Can be used at all levels of an organization or just a few

• Makes a difference• Profoundly alters the way an organization

does business• Sustained strategic, competitive

advantage



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Examples of Strategic Information Systems

• American Airlines• Fed Ex• Citibank• Wal-Mart• Abitibi Consolidated• Simonton Windows

(SBR)

• USA Today• Benetton• Sheetz• PNC Corporation• PriceWaterhouse

Coopers• Baxter Healthcare



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Four types of Information Systems

• Operational

• Decision Support

• Managerial

• Executive

• Decision-making becomes more complex the more executive the level

• Operational systems have been around a long time and tend to have good ROI’s



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Current Technologies for Strategic Information

Systems



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What are the latest technologies of interest?

• CPU’s and software, open source code

• Client server computing

• Interactive multimedia

• Developments in Electronic Commerce

• TCP/IP and the Internet

• Databases and Datamining

• Handhelds, M-commerce

• Knowledge Management tools and Artificial Intelligence



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Technologies: CPU’s and Software

• Hardware components of a computer system• Buses, CPUs, MHz, RAM, Gigs and cache• Bits and Bytes, storage• Moore’s Law and price points per MIPs• Mainframes, RISC computers, Parallel

processing• Open source movement in operating systems• Enterprise Resource Planning software• Object oriented programming



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Technologies: Client Server Computing

• Distributed processing vs. centralized processing

• Network computing

• Servers

• Bridges and routers, gateways

• Network management

• Ethernet and Token Ring



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Technologies: Interactive Multimedia

• Groupware

• Voice over IP

• Streaming technology

• Flash

• MP3

• Seeing corporate uses in training applications



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History of Technology• 1960s: Mainframe computers, MIS not

superb at meeting budgets or deadlines• 1980s: First PCs emerge, beginning of

schism between departments and centralized MIS

• 1990s: MIS and departments work together well, networks key techno

• 2000: Enterprise networks• Next: Vice Presidents of Electricity?



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Technologies: Electronic Commerce

• The client/server/database three tier model

• HTML, JavaScript

• XML vs. EDI, ASP and ActiveX, PHP, CGI

• Web Services

• Interdev and development tools

• Security and encryption issues

• Intranets and Extranets



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Technologies: TCP/IP and the Internet

• Codes, bits and bytes

• Analog vs. Digital transmission

• Packet switching and circuit switching

• The IP address, TCP/IP layers

• The world is becoming digital

• VoIP



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Technologies: Databases, Datamining

• Data is the company’s strategic asset • Data warehouses, multidimensional

databases and data marts• Informix, Oracle and Red Brick• The database management system• Data mining is a type of software

application that finds patterns in data that can guide decision-making

• Data mining allows focused differentiation and the ability to narrow target markets



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Technologies: Handhelds and M- Commerce

• Cellular technology

• WAP technology

• Handheld market and applications

• The Win CE platform

• Linux in the small devices

• What is M-commerce and what does it mean to me?



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Technologies: Knowledge Management Tools and Artificial

Intelligence

• Examples of Knowledge Management systems

• Expert systems: the earthenware dam

• Neural Networks

• Fuzzy logic

• Intelligent agents



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Technologies: Wireless

• 802.11b, a and g

• Weaknesses in security in wireless

• Access points

• Use firewalls behind access point

• Netstumbler and war driving

Managing for Information Systems Strategic Advantage



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Management: Information Systems Planning

• IS plan maps to the corporate strategic plan

• Variety of IS planning styles: CSF, Enterprise Planning

• Components of Information Systems Strategic Plan

• Organizational change from systems: TQM, BPR, paradigm shifts or simple automation



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Management: the Systems Development Life Cycle

• Systems analysis

• Systems design

• Programming

• Testing

• Conversion

• Production mode and ongoing maintenance



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Management: IS Strategic Plan

• Purpose linked to strategy

• Current situation

• Systems: What do you have, what will you need to meet future

• New developments in corporation

• Management strategies with techno: Bleeding edge, leading edge, lagging edge, single vendor strategy, outsource



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Management: Implementation

• The RFP document• Financial issues for IS planning• The payback concerns• Programming: the mythical man/month• Construction issues• Testing and maintenance• End users • Prototypes and pilots• Outsourcing



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Management: Security Issues

• System quality, reliability, accuracy

• Threats: hackers, viruses, Trojan horses, denial of service attacks, identity theft

• Controls

• The firewall and internet issues Encryption, DES, SSL, SET

• Biometrics



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Management: Legal Issues with Information

• HIPAA. Health Insurance Portability and Accountability Act, 1996

• Gramm-Leach-Bliley Act, 1999

• Sarbanes-Oxley Act of 2002



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Strategic Advantage: IT at work

• IT and changes in the organization of business: flatter, leaner, teams, JIT, global

• Datamining and Walmart

• E-commerce and the supply chain at Dell

• M-commerce and Progressive Auto

• Internet and Egghead

• American Airlines, Baxter, Citibank



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Strategic Advantage: How does one come up with this idea,

anyway?(Laudon and Laudon, 2000)

• Porter’s Value Chain: primary and support activities

• The competitive forces model: Threats from new market entrants, suppliers, substitute products and customers

• Core competencies

• Network economics



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Some Problems from IT for Competitive Advantage

• The productivity paradox• Tangible vs. intangible benefits from IT• Future cash flows analysis• Unique vs. staying even with competition• Value from simple automation projects• Value from highly risky, but strategic IT

projects• Risk vs. return issues



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Technology Life Cycle (Little, 1981)

• Emerging techno- Not demonstrated potential

• Packing techno- Has demonstrated potential

• Key techno- Embedded, major impact, proprietary

• Base techno- Minor impact• Can a technology cause innovation?

Leadership?



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How can your firm benefit from IT?

• In supply chain management through inventory management

• In the customer interface via ecommerce

• In logistics through GPS/GIS

• In client management through groupware

• In marketing through datamining

• In internal management through Intranets



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Class Discussion: The Dell Case

• How did Dell achieve success?• What IT technologies did Dell use?• How does Dell use ecommerce successfully?• What are the ways that Dell uses IT for strategic,

competitive advantage?• What is Dell’s business model?• Will Dell be able to keep this success going,

given the recent troubles?



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What have we learned?

• Strategic advantage from information technology

• Latest information technologies• How do you successfully select,

implement and manage a new IT?• How can your firm benefit from IT?

Business

Issues in the Application of Information Technology for Strategic