Relevance of IT in Business

MBA I, Semester I, SIBM

Kaushik Gala
(kaushikgala@gmail.com)
Session Plan
Session no Date Topic to be covered
1 June 20 Introduction, Scope, Trends of IT
2 June 27 IT & Innovation
3 July 4 IT & Globalization
4 July 11 IT & Business Strategy
5 July 18 IT & Economics
July 25 No class
6 August 1 IT Case Study (20 marks)
7 August 8 IT & Intellectual Property
August 15 No class
8 August 22 IT in Financial Institutions
9 August 29 IT in Academic Institutions
10 September 5 IT in Media
September 12 No class
September 19 No class
11 September 26 IT in MSMEs
12 October 3 IT Startups – Business models & Funding
October 10 Internal Exam (30 marks)
Subject to change.
Case Study (20 marks)

Sent to CRs via email by July 18th

Case analysis to be submitted via email to
kaushikgala@gmail.com by July 25th

Groups of 4, within a division

Choose your own group

Send 1 case analysis per group

All group members & their email addresses to be listed

Cite your references

Everyone in a group gets the same marks

If late, 5 marks deducted per day

On August 1st

Each group to present their analysis in 5 minutes (max)

No slides!
What is Business Strategy?

“A firm’s theory about how to compete successfully.”

http://www.nottingham.ac.uk/sedu/leadership/documents/Whatisstrategy.ppt
Sources of Competitive Advantage

Operational Excellence
Best total cost

Product Leadership Customer Intimacy

Best product Best total solution

http://www.nottingham.ac.uk/sedu/leadership/documents/Whatisstrategy.ppt
Sources of Competitive Advantage

Operational Excellence
Dell, Reliance

Product Leadership Customer Intimacy

Apple, 3M Zappos, Toyota

http://www.nottingham.ac.uk/sedu/leadership/documents/Whatisstrategy.ppt
Michael Porter’s 5 Forces Framework

http://www.eett.gr/conference2009/pdf/tzortzakakis.pdf
5 Forces – Industry Analysis & Strategy

http://www.filebuzz.com/fileinfo/53648/Porters_Five_5_Forces_Advanced_Software.html
Levels of Strategy

http://www.nottingham.ac.uk/sedu/leadership/documents/Whatisstrategy.ppt
More Perspectives on Strategy

Gary Hamel, C. K. Prahalad

Core competency

Strategic intent

Robert Kaplan, David Norton

Balanced scorecard

Strategy maps

SWOT Analysis

Strengths-Weaknesses-Opportunities-Threats

Consulting bliss ($$$)

Strategic Information Systems

Information technology that alters basic competitive
structure of industry or provides competitive advantage
to a company

How?

Cost leadership

Product differentiation/innovation

Growth

Alliances

http://www.wiley.com/college/turban2e/ppt-97/chapter3.ppt
Strategic Use of IT

Cost leadership

Dell: Build to order PCs

Priceline: Online bidding of airline tickets

Ebay: Auctions on everything

Product differentiation/innovation

Charles Schwab: Online discount brokerage

FedEx: Package tracking

Amazon: Customer service

Growth

Citicorp: Global intranet
global service

Microsoft: Customer lock in, switching costs

Alliances

Cisco: Virtual manufacturing alliances

Procter & Gamble: Integrated supply chains
http://online.sfsu.edu/~rnick/bus782/siis.pdf
Agile Company, Virtual Company
Agile Company

Make a profit in markets with broad product ranges and short
model lifetimes

Offer individualized products while maintaining high volume of
production

Google: 20% time to work on whatever; Scrum teams

Virtual Company

An organization that uses IT to link people, assets, and ideas

Adaptable, opportunist, borderless, brand/trust-base

MoveOn.org: Runs political campaigns with 5M members

Nike: Design + branding

http://csob.berry.edu/faculty/lleblanc/Strategic%20Advantage.ppt
 Internal Information Systems/Technologies
Differentiating Technologies
Need to reflect needs of individual business units/functions
Opportunity for competitive advantage
Value more important than cost

Commodity Table Stakes

Technologies Technologies
Differentiating Technology that allows to
Little opportunity for compete
competitive advantage or Technologies
leverage Value and leverage
comes from efficient
Focus on cost, efficiency Commodity Table Stakes application of technology
& productivity
Technologies Technologies

Foundation Technologies

Foundation Technologies
Basic desktop services, networks, etc. that provide basis for
other technologies
Focus on:
improving interoperability/ portability etc.
optimizing enterprise-wide costs

http://posc.org/notes/oct98/oct98_k.ppt
External Information Systems/Technologies

http://www.mis.boun.edu.tr/badur/MIS125/ch02.ppt
Walmart - “Continuous replenishment”

1980s – Point of Sale

Item ID, price, sales receipt

Sales database

1990s - $600M telecom link

Stores to Centre

Centre to Suppliers

2000s – Bar code, RFID

Quick search & info

Track physical movement

UCCnet

Supplier 
Marketer network

Standardized product data entry

http://www.scribd.com/doc/11796980/Information-Systems-at-Walmart-Inc
Delta Airlines (1997
$1B+
2000 )

http://download.microsoft.com/download/4/f/3/4f33cdbb-f8c9-4edf-9bd7-6675d67d9eea/IT_StrategicAgility.pdf
Siemens ShareNet

Global knowledge sharing / content management
system

A community of 18,000+ sales, marketing, biz-dev and
R&D employees across 80 countries

Several hundred million in additional sales

http://www.khunpai.com/km/06%20Case%20Study%20-%20Siemens%20Sharenet.pdf
Rapid Prototyping (CAD)

“Automatic construction of physical objects using
additive manufacturing technology”

Virtual design from CAD software
Thin, virtual cross
sections
Layered manufacturing

3D printing

Powder as ink

http://www.atilim.edu.tr/~mkoyuncu/ISE102/chap3-week5.ppt, http://en.wikipedia.org/wiki/Rapid_prototyping
 Smart Power Grids

http://www-03.ibm.com/industries/global/files/smart_grids_innovating_utility_business_models.pdf
 Mechanical Turk

HITs - Human Intelligence Tasks

Crowdsourcing

Micropayments

http://en.wikipedia.org/wiki/Amazon_Mechanical_Turk
SABRE

A computer reservations system/global distribution
system (GDS) used by airlines, railways, hotels, travel
agents and other travel companies

Originated at American Airlines in 1960s

IBM re-used idea from an US-AF project

“Semi-Automated Business Research Environment”

Expanded to travel agents, then spun off as company

Current status

SABRE connects 30,000 travel agents and 3M consumers
with 400 airlines, 50 car-rental companies, 35,000 hotels, etc.

Travelocity

Also: Orbitz (a partnership of major airlines)

http://www.dcs.ed.ac.uk/home/adamd/essays/confirm.html
AMRIS

Strategic Alliance, driven by IT

American Airlines

Marriot

Budget Rent-A-Car

Hilton Hotel Group

USP: Integrated booking of air, hotel & cars

Outcome: $125M loss (1990s)

Post-mortem:

Bad system design

Unrealistic financial models

Unethical practices

http://www.dcs.ed.ac.uk/home/adamd/essays/confirm.html
 Zappos

#1 Online Shoe Retailer

Founded 1999, 2008 Revenue > $1B

Customer Service (an investment!)

Free shipping, both ways

365 day return policy

Friendly (24x7) call center

Will pay freshers $1000 to quit

A service company that happens to sell…Whatever

http://www.socialtext.net/data/workspaces/mi021jg/attachments/zappos:20080428001636-0-4389/original/Zappos%2520PPT.ppt
 Zappos’ CEO

Tony Hsieh

Serial entrepreneur, investor, advisor

http://www.socialtext.net/data/workspaces/mi021jg/attachments/zappos:20080428001636-0-4389/original/Zappos%2520PPT.ppt
 Zappos’ IT Strategy

Integration

Website and Warehouse tightly coupled

Website

Simple

Everything revolves around “customer experience”

Word of mouth

Works well on the web

Warehouse

Efficiency

Ship fast

Robots!

Kiva Systems

http://www.socialtext.net/data/workspaces/mi021jg/attachments/zappos:20080428001636-0-4389/original/Zappos%2520PPT.ppt
DeLaval VMS

http://www.delaval.com/Corporate/sys_ProductsSystems/sys_VMS/
DeLaval Voluntary Milking System
We’re done! See you on July 18th

Questions? Comments?
kaushikgala@gmail.com