1. IT & Strategy

2. 2 things

3. IT-strategy alignment

4. modularization & IT
architecture

5. how do I align my
technology to my firm’s
strategy?

6. TODAY:
conventional views

7. 1.0

8. what does a firm do?

9. materials market
firm product needs
money

10. what is a product?

11. customer’s needs

12. a product is a solution
package

13. mobilize commodities
to deliver the product

15. 2.0

16. what dose IS do?
Accounting Finance Sales Human Production
Resources
MIS is the “glue” that ties
businesses together…
…and uses the technology that
makes business work.

17. IT reduces
communication &
coordination cost

18. IT architecture

19. shows how hardware,
software, database and
network will be
coordinated

20. to achieve strategic
goal of the firm

21. a master plan that
provides a technology
vision for the company

22. more than IT architecture
“A digital nervous system requires a combination of
hardware and software; it's distinguished from a mere
network of computers by the accuracy, immediacy, and
richness of the information it brings to knowledge
workers and the insight and collaboration made possible
by the information.”
Bill Gates, Business @ The Speed of Thoughts
© copyright 2007, youngjin yoo

23. Scott McNealy on Gates
“He is right - I would be very nervous if my systems
were based on their (Microsoft’s) platforms
and products!”
© copyright 2007, youngjin yoo

24. also includes

25. organizational control

26. funding model

27. standardization

28. 3.0

29. strategy question
how do you build sustainable competitive advantage?

30. 3.1

31. Michael Porter
it’s all about positioning
five forces
three generic strategies

32. Threat of
new entrants
Bargaining power Rivalry among Bargaining power
of suppliers existing competitors of buyers
Threat of substitute
products or services

33. three generic strategies

34. cost leadership

35. differentiation

36. focus

37. 3.2

38. CK Prahalad
it is about unique
resources
capabilities
core competencies

39. 3.3

40. Kathleen
Eisenhardt
it is about ability to
innovate
dynamic capability
hyper competition

41. 4.0

42. how can you exploit IT
to build sustainable
competitive advantage?

43. it depends!

44. 4.1

45. positioning

46. Wal-Mart and EDI

47. 4.2

48. create unique
resources

49. 4.2.1

50. unique IT

51. Mrs. Fields Cookie
American Airline
City Bank
IBM-Mayo Clinic
HyperActive Bob

52. 4.2.2

53. technology is a
commodity utility

54. others

55. they will copy it

56. if not the same system

57. similar enough is
enough

58. IT value will evaporate

59. first mover makes all
the mistakes

60. second mover will learn

61. price will go down

62. consumer will benefit

63. ATM
Airline reservation systems
ERP

64. 4.2.3

65. Managerial
Technology Sustainable
Capabilities
(Efficiency) competitive
(Uniqueness) Advantage
© copyright 2007, youngjin yoo

66. IT + culture
IT + ownership structure
IT + access to capital
IT + operation excellence
IT + brand
IT + HR

67. Some statistics
© copyright 2007, youngjin yoo

68. 4.3

69. first mover

70. Amazon
vs
Barns & Noble

71. Me First
vs.
Me Too

72. Amazon
Introducing new feature

73. Barns & Noble
integration with inimitable resources (physical stores)

74. Sustainable
Competitive
IT-enabled
Advantage
innovation
Time &
History

75. it’s like a garden

76. time matters!

77. 5.0

78. Modularization & IT
architecture

79. 5.1

80. mass production

81. physical machines

82. maximizing the
throughputs

83. economy of scale

84. upstream & downstream
integration

85. economy of scope

86. diversification

87. vertical integration

88. m-form organization

89. internalization of value activities

90. traditional view
Back-end Systems Executives &
Managers
A firm’s value chain
Suppliers
Transaction Systems
(ERP, MRP, TPS)
Customers
Enterprise
DB
© copyright 2005, youngjin yoo

91. control

92. everyone thinks
“I am unique!”

93. centralized

94. decentralized

95. hybrid

96. 5.2

97. modularization of
products

98. system view of a
product

99. subsystems and
components

100. design hierarchy
and
design rules

101. components
interfaces

102. stereo
system
amplifier speakers CD players radio tuner

103. so, what’s the big deal?

104. containing
complexity

105. innovation through
mix & match

106. agility

107. what does IT have to
do with this?

108. reduction of
communication and
coordination cost

109. making externalization
of activities cheaper

110. facilitating
modularization

111. disintegration of
vertically integrated
firms

112. network-centric view
(service oriented architecture) for
modular organizations
CRM
support
Service
Center
Sales
force
Call
ERP
Manufacturing
CRM infrastructure services
Distribution
Sales and
Financials
Resource
Human
RDBMS Middleware
EAI
Commerce Server
ERP infrastructure services
Shopping
Payment
Catalog
Cart
Application Server RDBMS
RDBMS
© copyright 2007, youngjin yoo

113. service oriented
architecture

115. modular
interoperable
reusable
flexible
scalable

116. standards
common infrastructure

117. SOA

120. 6.0

121. IT infrastructure is a
strategic asset

122. more than a tool

123. not utility

124. no overhead

125. “let’s just have ERP”
wouldn’t work

126. it is a strategic decision

127. must be a part of
strategic decision-
making process

128. aligning business
goals to IT

129. how do I really know if
IT is a strategic
resource in my firm?

130. where is your CIO in
your organization?

131. how is IT being funded?

132. is IS a part of corporate
G&A?

133. where is IS plan in your
strategic planning?

134. who makes the
decision?

135. so, why should I care?

136. accelerating technology
innovations

137. challenging long-held
assumptions

138. new ways of organizing
relationship inside

139. new ways of organizing
relationship outside

140. agility and innovations

141. it is as strategic as it
gets when it comes to
information systems