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COMM 190
Tracy Jenkin

MIS FINAL EXAM REVIEW Part A – Strategy Generic Strategies 1. Lowest cost in the industry 2. Lowest cost in the industry segment 3. Better (differentiated) product/service in the industry 4. Better (differentiated) product/service in the industry segment  IT can improve cost, timing and quality of information flows Target Market Competitive Advantage Scope Low Cost Product/Service Uniqueness Broad Low Cost Product/Service (industry wide) Differentiation Differentiation Narrow Niche/Focus Strategy Niche/Focus Strategy (market segment) (low cost differentiation) (product differentiation) Strategic Alignment between Business and IT  A company’s IS should support, or be aligned with, the overall company strategy  Organizational strategy begins with the assessment of fundamental characteristics & structure of the industry Porter’s 5 Forces – to assess industry structure 1. Bargaining Power of Customers 2. Bargaining Power of Suppliers 3. Threat of Substitutes 4. Threat of New Entrants 5. Rivalry Among Existing Firms  Determine how they intend to respond to 5 forces o Generic Strategies  To be effective, an organization’s goals, objectives, culture, and activities must be consistent with their strategy 3 Perspectives on Strategy 1. Position  Porter’s 5 Forces (IT Impact) o Bargaining Power of Customers  Companies can establish direct connections with their customers  Increased transparency  Affects switching costs o Bargaining Power of Suppliers  Direct connections with suppliers  Suppliers develop a preference for distributors with efficient and integrated systems  Retailer may have power to oblige suppliers to integrate with their systems  Suppliers have the ability to take out the middleperson o Threat of Substitutes/ New Entrants  Businesses can compete on a global scale  Non-traditional competitors may have lower barriers to entry  New intermediaries can enter the market o Rivalry Among Existing Firms  Competitors can discount prices  Shortening of product development cycles  Increased transparency and ease of imitation  Streamline procurement and distribution channels (efficient and it cuts cost)  Generic Strategies  Value Chain – network of activities that improve effectiveness (or value) of a good/service o More value = higher price to charge customers o Primary Activities – activities in which value is added directly to the product o Support Activities – support primary activities (add value indirectly) o IS increase productivity by offering new and improved services, and primary activities that would not be available without IT o IS enable the development of more efficient and effective supporting activities o Each business process/step in the chain adds value 2. Leverage  Resource-based view o Firm level focus – heterogeneous resources (assets and capabilities) o Focus on resources that serve as internal drivers of profit 3. Opportunity  Creative Destruction o Constantly innovate, destroying old markets and creating new ones (firm/industry level)  Blue Ocean Strategy o Don’t compete in existing markets (RED) o Create new markets (BLUE)  3 S Model o Substitution Effect  Online channels are parallel to other channels  Objectives are to substitute (complement, support, and/or extend) existing channels o Scale Effect  Online channels enables businesses to connect with many consumers, that were previously unreachable (across time, geography, etc.)  Mediators consolidate buyers and sellers (or products and services) in a market that is fragmented  Transaction volume increases significantly as more and more buyers and sellers use this efficient and value-added service o Structural Effect  A synthesis of substitution and scale models and other strategies to disrupt the value chain  Most difficult to predict  Look at disruptive technologies and monitor trends to help gauge potential impact Strategic Grid – Also “E – Operations”  Defensive strategy (tool) vs. Offensive strategy (weapon) o Defensive – support & factory o Offensive – strategic & turnaround Lo Operational + Lo Strategic (Support)  IT plays supportive role to other critical functions  IT does not require senior management attention o Unless IT budget is significant o Ex: Farmer’s Market Hi Operational + Lo Strategic (Factory)  Firms are dependent on IT for smooth operations  Senior management ensures IT is reliable o Ongoing investments are made in IT Lo Operational + Hi Strategic (Turnaround)  IT investments are crucial to firms future survival  Senior management leads the IT projects o Substantial investments are made, requires appropriate IT planning and budget  Catch-up cell Hi Operational + Hi Strategic (Strategic)  IT is the backbone of the firm  Senior management is responsible for IT strategy and implementation o IT strategy is linked to business strategy o Becomes critical to take advantage of emerging technologies Weaknesses  Should be continuum  Black and white – no gray Part B – Structure Process vs. Functional Orientation Governance - Also “D. Process” Governance – The development of consistent, cohesive management policies and verifiable internal processes for information technology and related services  Goal of IS governance is to improve the benefits of an organization’s IT investment over time through o Reporting structures o Reviewing processes o Improving quality o Reducing service costs and delivery time o Reducing IT risks Sarbanes-Oxley Act (SOX) & Bill 198  Laws forcing companies with governance standards for collecting, reporting, and disclosing information  SOX was enacted prevent corporate frauds (WorldCom, Enron) o Lack of accounting oversight and IS governance o Senior management used a lack of internal controls and weak IS governance to manipulate information to shareholders, accountants, regulators and others o “Fraud parties”; meetings where plans were hatched to create fake information about the finances of ENRON  Bill 198 – Budget Measures Act o Increase the level of responsibility and accountability of executive management of publicly held Canadian companies traded on the TSX in a fashion similar to that described in SOX  Both pieces of legislation require management to create internal controls sufficient to produce reliable financial statements and to protect the organization’s assets  The organization’s external auditor must also issue an opinion on the quality of the internal controls and the credibility of management’s statement  Expose both management and the external auditor to financial and potential criminal liability if subsequent events show that internal controls were defective Information Systems Audit – Analogous to a financial audit (an examination and verification of a company’s financial and accounting records and supporting documents by an accredited professional), however, instead of financial and accounting records, the focus is placed on information resources that are used to collect, store, process, and retrieve information  Information Systems Audit and Control Association (ISACA) o Formed in 1969 and has become a leader in developing knowledge and standards relating to IT audit and IT governance  Certified Information Systems Auditor (CISA) o Members have job titles such as information systems auditor, consultation, information systems security professional, regulator, chief information officer, and internal auditor Control Objectives for Information and Related Technology (COBIT)  Framework for best practices – provides board members, managers, auditors, and IT users with a set of generally accepted measures, indicators, processes, and best practices to assist them in getting the best from their organizational IT investments  Key aspect of the COBIT governance framework is to define decision rights and accountabilities  Provides a process through which alignment between IT and business objectives is developed RACI Decision Making Framework  Recommends – responsible to recommend a decision to the problem  Approves – authorized to approve and be accountable for the decision  Consulted – those who opinions are sought, and with whom there is two-way communication  Informed – those who are informed after the decision is made, and with whom there is one-way communication  This cross-functional approach ensures that both business and IS managers are involved in IT-related decisions within the context of the whole organization CIO reports to CEO (Innovation Centre) or CFO (Cost Centre)  CIO reports to CFO if the primary information systems support accounting and finance activities Federalized Model  Hybrid of Centralized and Decentralized Models  Steering Committee, Shared Services, Project Management Office Outsourcing  Outsourcing – The process of hiring another organization to perform a service  When a vendor is overseas, outsourcing is referred to as offshoring o Shown that establishing clear requirements is the key to providing success in an offshoring agreement  Can be an easy way to gain expertise  Cost reductions o Can obtain part-time services  Reduce development risk o Can cap financial risk by setting specific prices on components of the system o Can reduce risk by ensuring a certain level of quality or avoiding the risk of having substandard quality  Reduce implementation risk o Reduce the risk of picking the wrong hardware or wrong software, using the wrong network protocol, or implementing incorrectly Risks  Application Service Providers (APS) o Organization contracts with a vendor to “rent” applications from the vendor company on a fee-for-service basis o In ASP, the vendor maintains the system at its own Web location, and the client organization accesses the application on the vendor’s website o Vendor can offer standardized software to many companies while maintaining only a single site o Reduces the costs of supporting the application and theoretically reduces the costs associated with outsourcing – payments made monthly or yearly and are often based on the number of employees or on the number of “users” of the software o Risks  Loss of physical control over some corporate data  Any failure of the Internet means that the client company cannot operate, even internally  Potential for “lock in” of the ASP Part C – Leadership Role of CIO  Responsible for developing the IT plan, implementing IT systems and for addressing IT needs of the firm  Formulate IT strategy  Deploy Technology  Address Business Needs What Business Needs From IT Where Do CIOs Come From? Background  Technical (IT) o Develop strong technical skills through education and work experience o Technical depth  Functional (Business) o Develops strong knowledge of the business through education and work experience o No/limited technical knowledge Tenure  Long Tenure o Stays with the same company, moving up the ranks o Knowledge of particular business and industry (deep knowledge) o Leverages relationships within firm  Short Tenure o Moves from company to company, to bigger challenges, better positions o Variety of business and industries (broad knowledge) o Leverages strong track record o Focuses on the “profession” and their ability to fix problems IT Leadership Types IT Leadership Matrix Business Needs from IT and IT Leadership Types Part D – Process (Business & IS) ITBV BPA  Business Process analysis and redesign 1.Creation of an “As-Is” Process Map 2.Identification of Problems and Problem Sources  Prioritize problems based on the organization’s objectives 3.Design the “To-Be” Sub-Process(es)  Elimination and/or minimization of non-essential sub-processes  Simplification, transformation and/or automation of essential sub-processes 4.Describe the Value of the Redesign Opportunity (“why”)  Some dimensions of value to consider o Increase the quality of the process/product o Reduce cost to provide the process/product o Increase the speed of meeting customer or supplier needs o Innovate in terms of the product/service provided o Improve relationships with customers (internal or external), etc. 5.Enabling the Process with an Information System (“how”)  Hardware, software, data, procedures, people 6.Implementing the Redesign  Consider the feasibility in terms of: o Costs o Timeline o Risks o Other foreseeable challenges – potential areas of resistance is something you will need to consider. Assess who will resist and why, as well as the level of their resistance. Provide a mitigation strategy. o Governance – Also “B. Structure”  RACI Approaches to Allocating Funds 1. Individual Business Case a. Captures and documents the reasoning and justification for a new IS project b. Helps to determine whether or not a project justifies an organization’s investment into a project c. Defines the problem and its impact and performs a cost-benefit analysis for the proposed solution d. Looks at possible alternative solutions e. Checks to see that the project aligns with the organization’s strategic plans 2. Project Prioritization a. Process used for selecting projects that best support the company’s objectives and provide the greatest value to the company b. Project Identification i. List of IT projects (likely from business units) c. Project Prioritization i. A rank-ordered list of projects d. Resource Allocation i. Implementation schedule for IT projects 3. Portfolio Management a. Must be balanced to include several types or “classes” of application and infrastructure technologies to achieve short and long-term business objectives b. Value Maximization i. Financial returns such as profitability, payback, NPV, IRR c. Balance i. Project mix including long- and short-term, functional, customers, suppliers, partners, industry, markets ii. Infrastructure, databases, applications, emerging IT d. Strategic Direction i. Aligned with corporate strategy such as market positioning, product/service offering, customer relationships, etc. IT Spending by Class Project Roll- Out Approaches (System Conversion) Pilot  Organization implements the entire system in a limited portion of the business  Advantage is that if the system fails, the failure is contained within a limited boundary  Reduces the business’s exposure and also protects the new system from developing a negative reputation throughout the organization  If deemed successful by the users, new system is rolled out to everyone else using big bang or phased approach Phased  New system installed in phases across the organization  Once a given piece works, the organization then installs and tests another piece of the system, until the entire system has been installed  After each phase, users start to use that portion of the newly implemented system and discontinue using the equivalent part of the old system  Some systems cannot be installed through phased installation due their high level of integration Parallel  New system runs in parallel with the old one until the new system is tested and fully operational  Expensive because the organization incurs the cost of running both systems  Users must work double time to run both systems  Considerable work is needed to determine whether the results of the new system are consistent with those of the old system Plunge/Big Bang  Organization shuts the old system down and starts the new system  If the new system fails, the organization is in trouble: nothing can be done until either the new system is fixed or the old system is reinstalled  Big risk – organizations should avoid this conversion style  Exception – when the new system is providing a service that is not vital to the day-to- day operation of the organization Systems Development Methodologies – Also “G. Managing and Deploying IS” Generic SDLC  Systems Development Life Cycle – the classic process used to acquire information systems 1. System definition  Define the goal and scope of the new IS  Development team defines the goals and purpose of the new system in terms of these purposes  Assess Feasibility o Sometimes referred to as creating the business case for the project o Cost feasibility o Schedule feasibility o Technical feasibility  Whether existing information technology is likely to be able to meet the needs of the new system o Organizational feasibility  Concerns whether the new system fits within the organization’s customs, culture, charter, or legal requirements 2. Requirement Analysis  Form the project team and develop the requirements  Team normally consists of both IT personnel and user representatives  Project manager and IT personnel can be internal personnel or outside contractors  Typical personnel on a development team are a manager(s), systems analysts, programmers, software testers, and users  The work of analysis and design is often completed by business analysts and systems analysts o Business analysts – focus on the analysis of the current system and procedures, and interact with the stakeholders of the system o Systems analysts – technically focused IT professionals, who understand both business and technology o Active throughout the systems development process and play a key role in moving the project through the process  During requirements definition, the team will mainly consist of business analysts and systems analysts  During design and implementation, the emphasis will shift to programmers, testers, and database designers  The important point is for users to have active involvement and to take ownership of the project through the entire development process  Once the requirements have been specified, the users must review and approve them before the project continues  Easiest and cheapest time to alter the IS 3. Component Design  Each of the five component of an IS must be designed  The team designed each component by developing alternatives, evaluating each of those alternatives against the requirements, and then selecting among those alternatives  Hardware – team needs to specify the computers, operating systems, networks, and network connections that will pro
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