MASTER OF MANAGEMENT PROGRAMMM46

PPM GRADUATE SCHOOL OF MANAGEMENTJanuary 09, 2010

LECTURER : HENRY CHRISTIANTO., ST., MTI

DOES IT MATTER ?

INDICATOR OF SUCCESS

IT BUSINESS VALUE

IT IMPACT ON COMPETITION

CASE STUDY ON IT EVALUATION

NICHOLAS CARR: IT DOESN’T MATTER (Spring, 2003)

1st PREMISE

IN THE PAST -> IT WERE DEVELOPED IN-HOUSE

- COST EXPENSIVE

- LONG TIME DEVELOPMENT

NOW -> IT APPLICATION DEVELOPED IN MANY WAYS:- BUILD

- BUY

IT BECOME PROPRIETARY ADVANTAGE

- RENTCOMMON TECHNOLOGY

IT BECOME COMMODITYIT BECOME COMMODITYIT BECOME COMMODITYIT BECOME COMMODITY

2nd PREMISE

INVESTMENT NOTDELIVERS THE EXPECTED

RETURN

IT BECOME COMMODITY

EXECUTIVE MAY SINK MONEY INTO EXECUTIVE MAY SINK MONEY INTO RISKY INVESTMENT IN INFRASTRUCTURERISKY INVESTMENT IN INFRASTRUCTURE

EXECUTIVE MAY SINK MONEY INTO EXECUTIVE MAY SINK MONEY INTO RISKY INVESTMENT IN INFRASTRUCTURERISKY INVESTMENT IN INFRASTRUCTURE

3rd PREMISE

WIDESPREAD ADOPTIONOF INTERNET-BASED

TECHNOLOGY STANDARD

DRAMATIC INCREASEIN NETWORK SPEED

AND CAPACITY

TENDENCY TO DEVELOPAPPLICATION THAT CROSS

FIRM BOUNDARIES

NEW VALUE –CREATING IT APPLICATIONS ARE QUICKLY COMMODITIZED

DECREASE ENTRY BARRIERS

LOWER SWITCHING COST

THE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESTHE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITEDBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITED

THE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESTHE OPPORTUNITY FOR CREATING VALUE-ADD FROM IT OFTEN CLOSESBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITEDBEFORE PROPRIETARY ADVANTAGES CAN BE FULLY EXPLOITED

SO, CARR CONCLUDE:

1. SPEND AS A LITTLE AS POSSIBLE ON IT2. CONCENTRATE IT INVESTMENT ON DRIVING COST SAVINGS3. BE A FAST FOLLOWER4. FOCUS ON MANAGING RISK RATHER THAN SEARCHING FOR IT OPPORTUNITIES

1. SPEND AS A LITTLE AS POSSIBLE ON IT2. CONCENTRATE IT INVESTMENT ON DRIVING COST SAVINGS3. BE A FAST FOLLOWER4. FOCUS ON MANAGING RISK RATHER THAN SEARCHING FOR IT OPPORTUNITIES

WHAT DO YOU THINK ?

lliminate

implify

ntegrated

utomated

CREATECREATENEW NEW

OPPORTUNITYOPPORTUNITYCREATE NEWCREATE NEWBUSINESS BUSINESS

MODELMODEL

EFFICIENCYEFFICIENCYANDAND

EFFECTIVENESSEFFECTIVENESS

BUSINESS STRATEGY

IS/IT STRATEGY

ALI

GN

MEN

T

RESPONSIBILITIES ?

INFLUENCE

CAN IT DRIVE COST SAVING ?

Streamline and Integrated nonrevenue-generating process (e.g., payroll, HR, ERP, accounting and finance).

EXAMPLES

Improve productivity, cycle time and effectiveness of nonrevenue-generating process

SAMPLE METRICS

Improve performance of nonrevenue-generating process

Decrease cost of current business operations

CAN IT DRIVE REVENUE GROWTH ?

Improve new product development process to increase speed to market and efectiveness of new product launches.

EXAMPLES

Improve productivity, cycle time and effectiveness of revenue-generating process

SAMPLE METRICS

Improve performance of revenue-generating employees

Quantity value of improved decision making

Improve revenue-generating process to increase customer satisfaction, loyalty, lifetime value, and demand

Provide relevant, actionable information and analytical tools to business decision makers

Improve market segmentation and personalization to expand market penetration Enter new markets or increase market spending from existing customer Launch new information-based products, services, and solutions

etc

CAN IT DRIVE ASSET EFFICIENCY

Create shared services, self-service portals, and center of excellence.

EXAMPLES

Decrease total cost of ownership of current infrastructure and operations

SAMPLE METRICS

Improve asset efficiency (dollars of sales generated by each dollar of IT asset)

Decrease IT infrastructure and operations cost as a percentage of revenues

Outsource and offshore to take advantage of low-cost labor markets and scarce expertise

Build a modular, flexible, open source IT Architecture

Attract, develop, and retain top IT Talent Create IT development, deployment, and operating process that

decrease the cost, time and effort needed to launch new value-creating IT application Develop best-in-class security and risk management system

Decrease IT Headcount cost as percentage of sales

CAN IT CREATE SUSTAINABLE ADVANTAGE

Differentiate product (e.g., Information Value-Added, improve ability to compete on price

EXAMPLES

Increase market share

SAMPLE METRICS

Increase brand reputation and awareness

Increase market value

Launc new IT-enabled products or businessess in high-growth markets and industries

Increase barriers to entry or switching costs

Decrease the time, cost, and success of pursuing incremental and radical innovations

Increase success of innovation process

IT DRIVE COST SAVINGS

IT DRIVE REVENUE GROWTH

IT DRIVE ASSET EFFICIENCY

CAPITAL EFFICIENT

PROFITABLE GROWTH

CREATE SUSTAINABLE ADVANTAGE

Threats ofNew Entrants

Rivalry among

Exsisting competito

rs

Threats ofSubtitute Products

Or Services

BargainingPower ofsuppliers

BargainingPower ofbuyers

SEE APPENDIX 4A ON PAGE 120

“The scarce resource never was technology, it always the set of managerial capabilities needed

to create value with that technology” (Prof. Vijay Gurbaxani)