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Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 2
Introduction
• World med MBA …
– To make informed decisions in a responsiblemanner, encompassing ethical, social,environmental dimensions.
• This course …
– To give you an understanding of therelationship between information systems /information technology strategy and businessstrategy that you can apply to any situation.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 3
Introduction
• The course involves:
– Developing concepts and thinkingconceptually.
– Developing frameworks and models to makesense of examples from the real world.
– Applying your knowledge to specific instancesof real world and drawing inferences andconclusions from them.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 4
Introduction
• Concepts provide an internally coherentset of assumptions about the world. Theyare templates that you use make sense ofyour environment.
– Concepts are built on past experience; theyare used to classify objects and to allow youto interpret them and take appropriate action.
– Normally concepts are built up intuitively andover time.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 5
Introduction
• This course will provide a framework foryou to model the relationship betweenIS/IT and strategy.
– Framework = a conceptual structure that isdeveloped in order to be able to buildcoherent models of the real world.
– Model = a representation of the real world thatis created by only focusing on those aspectsof it that are considered to be important
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 6
Overview
• Basic terminology
– Organizations and Work
– Data, Information and Knowledge
– Technology, Information Technology and InformationSystems
– Strategy, Corporate Strategy and Business Strategy
• The alignment of IS and business strategies
– Types of IS
– Convergence
– Business Models
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 7
Organizations and Work
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 8
Organizations and Work
• We have all said "I work for ..." but whatdo we mean by this?
• How do we describe what work is and theorganizations we work in?
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 9
Organizations
• Some definitions– Organizations are closed social arrangements
for the controlled execution of collective goals.
– Organization: a group of people broughttogether for the purpose of coordinating theiractivities to achieve a shared objective.
– The basic unit of an organization is the rolerather than the person; an organization canremain in place despite changes in itsmembership.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 10
The meaning of organization
• A typical definition of an organizationmight say it has:
– a boundary, so that some are consideredinside while others are considered outside
– a goal, purpose or objective which is, to someextent, shared by its members
– a structure which is, to some extent,independent of its members
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 11
Work
Work involves individuals:– Collaborating with each other to ensure that
their activities are coordinated
– Expending their time and their physical,intellectual and emotional energy
• Work also involves groups that:– Define identities, provide principles and give
meaning to actions
– Are political and the source of disputes andconflicts
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 12
Organizations and Work
• Organizations and work are not asstraightforward as they might seem– constructed by people but existing
independently of any one individual
– consisting of individuals but acting as acollective
– existing to achieve shared objectives but alsothe source of conflict
– existing within boundaries but influencing lifeoutside those boundaries
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 13
Data, Information and Knowledge
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 14
Data, Information and Knowledge
• Data are a set "facts" without context:meaningless characters
• 'A series of observations, measurements,or facts'
– Collins concise dictionary
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 15
Data, Information and Knowledge
• Information is data which has beenprocessed to turn it into a usefulstatement: something that informs
• 'The meaning given to data by the way it isinterpreted'
– Collins concise dictionary
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 16
Data, information and knowledge
– Explicit Knowledge
• "… formal and systematic … easily communicatedand shared in a product … or a computerprogram."
» Ikujiro Nonaka, The knowledge Creating Company.HBR, Dec 1991, pp. 96 - 104
– Tacit Knowledge
• "… highly personal … hard to formalize andtherefore difficult to communicate."
» Ikujiro Nonaka, The knowledge Creating Company.HBR, Dec 1991, pp. 96 - 104
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 17
Data, Information and Knowledge:View 1
Information
Knowledge
Data
Filters Data
Builds Knowledge
Manager
Action
Objective World
Subective World
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 18
Data, Information and Knowledge:View 2
Information
Knowledge
Data
Filters Data
Extends Knowledge
ManagerAction
Objective WorldSubective World
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 19
Data, Information and Knowledge:View 3
Data
IndividualKnowledge
Information
SocialKnowledge
Learning
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 20
Data, Information and Knowledge:View 4
Data
TacitKnowledge
Information
ExplicitKnowledge
Action
Event
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 21
Technology, Information Technology
and Information Systems
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 22
Tools and Techniques
• Probably the broadest definition of technology is"the way things are done"
– "The sum of knowledge, received information, whichallows things to be done" (technology beyond machines, Macdonald
1985)
• Thus, technological developments become theaddition of new knowledge to old: a process:
– " of which the encapsulation of information inmachinery can be only a part" (technology beyond machines,
Macdonald 1985)
• Technology is a blend of tools and techniques
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 23
Information Technology
What is information Technology?
• "Any means by which information iscreated, manipulated and distributed to arecipient."
Collect Process Distribute
Store
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 24
Information Systems
What is an Information system?
• "An Information System is any related setof elements that collect data, process,store it and disseminate it"
Input Process Output
Store
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 25
Technology, Information Technologyand Information Systems
abstract concrete
concrete
Machines / Tools
People /Techniques
Information systems
Information technology
Technology
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 26
Strategy, Corporate Strategy andBusiness Strategy
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 27
The vision thing
• George H Bush admitted in1987 that he lacked "thevision thing" – meaning thathe found it hard to see pastthe immediate tactics of thecampaign to the longerterm objectives.
• One way to think ofstrategy is that it is a "visionthing" knowing where youwant to be and planninghow to get there.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 28
28
"I think there's a worldmarket for maybe five
computers."Thomas Watson,
Chairman of IBM, 1943
"There is no reasonanyone would want a
computer in their home."Ken Olson, President,
Chairman and Founder ofDigital EquipmentCorporation, 1977
"Heavier-than-air flying machinesare impossible."
Lord Kelvin, President of TheRoyal Society, 1895
The vision thing ...
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 29
... and events
The Right HonourableHarold Macmillan,The Earl of Stockton(1894 – 1986)
Harold Macmillan was the PrimeMinister of the UK from 1957 until1963 during a period that sawseveral political scandals andpolicy debacles.
When he resigned he was askedby a reporter what the greatestchallenge was that he had facedas the leader of the country, hewas alleged to have said:
"Events dear boy,events"
Strategy is more than just vision
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 30
What is strategy?
• Strategy
– The determination of long term objectives,actions, alternatives and resources
– A set of actions to accomplish a particularhigh level objective
– A programme that sets out objectives, policiesand resource allocations
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 31
Corporate and Business Strategy
• Corporate strategy
– which industries and markets to compete in,growth, diversification or retrenchment,acquisitions, new ventures, divestments ...
• Business strategy
– how firm competes within a particular industryor market and how to achieve a competitiveadvantage over rivals, cost leadership,differentiation, added value ...
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 32
32
Corporate and Business Strategy
RATE OF RETURNABOVE COST OF
CAPITAL
How do wemake
money?
INDUSTRYATTRACIVENESS
Whichindustries?
COMPETITIVEADVANTAGE
How tocompete?
CORPORATESTRATEGY
BUSINESSSTRATEGY
Grant 2008
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 33
Corporate and Business Strategy
• We will focus on Business Strategy and inparticular the links between informationtechnology and information systems andthe setting and achieving of a businessesstrategic objectives.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 34
Types of Information Systems
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 35
The organization as a pyramid
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 36
Systems and levels
StrategicLevel
OperationalLevel
Office WorkLevel
ManagementLevel
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 37
The 'classic' information systems
Operational level (Data)
• Transaction Processing System
– Process large amounts of data for routinebusiness transactions
– Boundary-spanning
– Support the day-to-day operations of thecompany
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 38
The 'classic' information systems
Office level (Information)
– Office Automation System (OAS)
• Supports workers who share information, but donot usually create new knowledge
– Knowledge Work System (KWS)
• Supports professional workers who need tomanage complex and interrelated information suchas scientists, engineers or doctors
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 39
The 'classic' information systems
Management level (Information / knowledge)
• Management Information System (MIS)
– Support a broad spectrum of organizationaltasks including decision analysis and decisionmaking
• Decision Support System (DSS)
– Aids decision makers in creating scenariosand making of decisions
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 40
The 'classic' information systems
Strategic level (Knowledge)
• Executive Information System (EIS)
– Provides up to date overview of firm's positionwith the ability to 'drill down'
– Used for non-routine decisions requiringjudgment, evaluation and insight
– Helps executives to make strategic decisionsin a structured and informed way
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 41
The 'classic' IS
The 'classic' IS just as much an invention as the classic malts, butlike the classic malts it does help to highlight the key features ofhow IS are used in organizations.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 43
Early computers (Manchester mark 1, 1948)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 44
Early computers (Ferranti Mark 1, 1951)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 45
Changing Technology– Computers
• 1st generation (1950's) - Large (30 tonnes), unreliable (meantime between failures < 15 min), expensive ($400,000 at1946 prices)
• 2nd generation (1960's) - Smaller, faster and more reliablebut still expensive. Services often rented, use restricted tolarge businesses
• 3rd generation (1970's) - Smaller, faster and more reliable.Low cost mini-computer stimulates many new businessapplications
• 4th Generation (1980's) - Development of personalcomputing erodes mainframe market. Low cost, "userfriendly" computing for all
• ...
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 46
Generations in a family tree
Information
First Generation
Second Generation
Third Generation
Fourth Generation
Fifth generation
Information Systems
Knowledge Systems
Mini Computers
Personal Computers
Laptop Computers
Data
?
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 47
Convergence
• A term used to describe the comingtogether of IT, telecoms, content, andother related industries because ofcommon technology developments andmarket aspirations.
– IMO secretariat, European Commission.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 48
Convergence
• IT and telecommunications
– Client level convergence: Handhelds / Cellphones
– Server / network level convergence: Skype,Internet telephony
– Cloud Computing: Network become thesource of computing power
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 51
Change and Complexity
• The rate of technological change iscontinuing and accelerating
• There is also an unprecedented growth intechnological complexity in terms of
– Range and diversity of applications
– Interdependence of applications
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 52
How to deal with complexity?
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 53
Business Models
• A 'narrative with numbers' which originatedin the dot-com era and was used to:
– "... to glorify all manner of half-baked plans. Acompany did not need a strategy or a specialcompetence, or even any customers, all itneeded was a web-based business modelthat promised wild profits in some distant, illdefined future" (Magretta, 2002)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 54
Models
• A model is a substitute for a real systemthat is easier to work with than the actualsystem.
• They are simplified and abstractconstructs created to help us understandreal world systems by only representingcertain aspects of the actual system thatare deemed to be important.
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 55
Business Models
• Business models are an effective way forpeople to plan and to communicate goals,ideas and objectives
• Business models also capture the'business logic' of a company in a way thatmakes it easier to translate into IS models
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 56
A Simple Modelof a Business Model
Value Proposition
Customer
Product / service
Partners
Value Architecture
Resources
Internal value chain
External value chain
Revenue Generation
Capturing Value
Reducing costs
Profitability
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 57
An example of a Business Model
Value Proposition
A 'one stop shop' forwedding planning
Value Architecture
Role as an intermediarybrings substantial
discounts
Revenue Generation
Commission from storesand loyalty card
(See 1001 Listes)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 58
Types of Business Model
• Just like Information systems, there havebeen many attempts to classify businessmodels into different types of model thatcan be adapted for and used in differentsituations
• These are often expressed as a hierarchywhere one type of model is broken downinto subcategories
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 59
Types of Business ModelBusiness
model
Brokerage AdvertisingInfomediar
y
DemandCollection
Auction
Englishauction
Dutchauction
Sealed-bidauction
...
... ... ... ... ... ......
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 60
Brokerage
• Marketplace Exchange
• Buy/Sell Fulfilment
• Demand Collection System
• Auction Broker
• Transaction Broker
• Distributor
• Search Agent
• Virtual Marketplace
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 61
Brokerage
• Auction Broker
– English auction
– Dutch auction
– Sealed-bid auction
– Combinatorial auction
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 62
Business Models
• The use of business models within IT:
– "A business model is a conceptual toolcontaining a set of objects, concepts and theirrelationships with the objective to express thebusiness logic of a specific firm." (Osterwalderet al. 2005)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 63
Another view of a Business Model
(Gordijn, Akkermans et al. 2001)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 64
Another view of a Business Model
Valueactivity
Valueconfiguration
Actorby
DescriptionReasoningCategory {Value chain, Value shop, Value network …}
needs (in)implements
Resource Value proposition
refined byis a
Category {principal, support …}
creates (out)
(Osterwalder and Pigneur, 2006)
Chris Kimble World Med MBA 2009 / 2010IS and Business Strategy
Session 1, slide 65
Next session
• Evaluation of the different types andcategories of information system available
• Review of the different approaches andtechniques for the acquisition ofinformation systems
• An analysis of the choices (strategic /tactical / social / ethical) faced wheninvesting in IS / IT