MI 720 Session #5: IT for Competitive Advantage• Agenda

– Business Analytics Intro– Harrah’s Entertainment Inc. – Readings revisited: IT strategy, Building Analytic Capabilities

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Analytics at PhoneCo

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Business Analytics• Business Analytics:

– Using detailed transaction level data on some entity (customers, suppliers, products, processes) to build sophisticated mathematical models that categorize and/or predict things about that entity

• Why is analytics becoming so hot? What are the drivers and enablers?

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Harrah’s

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Building Analytic Capabilities

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Data and Technology

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What else do we need to build analytic capabilities?

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1. New Business Upside

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3. Retention Program

Sustainable Competitive Advantage?

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IT & Sustainable Competitive Advantage(Gallaugher, Chp 2 Strategy & Techology)

• What is sustainable competitive advantage?• Determinants of sustainability: V.R.I.N.

– “Resources” that are valuable, rare, inimitable, non-substitutable• How can IT provide competitive advantage? Use IT:

… to help build an imitation resistant value chain

… to build/reinforce a brand

… to create/reinforce scale economies

… to impose switching costs on buyer/suppliers

… to differentiate your product

… to create positive network externalities (network effects)

…to create new distribution channels

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From Data to Knowledge to Results – Building an Analytic Capability [Davenport et al 2003]

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Context StrategySkills &

ExperienceOrganization

& CultureTechnology

& Data

Transformation

Outcome

Analysis

DecisionMaking

Financial- - - - - - - - Process & Program

- - - - - - - - - - - - - Behavioral