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FEATURES (TECHNICAL VIEW) FEATURES (BEHAVIORAL)

1 2

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FEATURES .. cont.’
ORGANIZATIONAL STRUCTURE

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TECHNOLOGICAL ENVIRONMENT DISRUPTIVE TECHNOLOGIES

Disruptive technologies
• Technology that brings about sweeping change
to businesses, industries, markets.
• Substitute for and significantly reduce the
market share of existing products, services, and
business models.
• First movers and fast followers
• First movers—inventors of disruptive
technologies
• Fast followers—firms with the size and resources
to capitalize on that technology
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IMPACTS OF IS IMPACTS OF IS .. cont.’

• IT lowers market transaction costs for
organizations, making it worthwhile for • Examples of strategies: vertical integration (e.g.
1 organizations to transact with other Facebook buying Whatsapp, outsourcing
organizations rather than grow the number of (Apple outsources to Foxconn), buying
employees. suppliers and distributors (e.g. Ford and
• This follows the transaction cost theory. This General Motors to achieve economies of scale),
and strategic investments/possible future
theory states organizations seek to economize
acquisition? (e.g. Microsoft’s investments in
(minimize) transaction costs (the costs of
Chatgpt)
participating in markets/doing business).

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IMPACTS OF IS .. cont.’ IMPACTS OF IS .. cont.’

Another example of Transaction Cost • IT can reduce internal management costs
theory application (agency costs)
2 • How does IT relate to agency theory?
• Agency theory states that organizations employ
people who need supervision. Otherwise, they
will pursue self-interest. This requires higher
cost (to pay higher overheads).
• IT can reduce agency costs, through reducing
the need to use people for acquiring &
9
analyzing information. 10

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IMPACTS OF IS .. cont.’ IMPACTS OF IS .. cont.’

• Organizational and behavioral impacts
Example of Agency Theory application
o IT flattens organizations
o Decision making is pushed to lower levels.
o Fewer managers are needed (IT enables
faster decision making and increases span of
control).
• Postindustrial organizations
o Organizations flatten because in
postindustrial societies, authority increasingly
relies on knowledge and competence rather
11 than formal positions. 12

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IMPACTS OF IS ARE FACTORS OF

WHEN PLANNING FOR A NEW IS:
RESISTANCE
Implementing information • The environment in which the organization must
systems has consequences for function
task arrangements, structures,
3 and people. According to this • The structure of the organization: hierarchy,
model, to implement change, all
four components must be specialization, routines, and business processes
changed simultaneously.
• The organization’s culture and politics
• The type of organization and its style of leadership
• The principal interest groups affected by the system
and the attitudes of workers who will be using the
How do you apply this system
model/framework in a real • The kinds of tasks, decisions, and business processes
case study? that the information system is designed to assist
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IS AND COMPETITIVE ADVANTAGE..

IS AND COMPETITIVE ADVANTAGE cont.’
• Traditional competitors (existing)
o All firms share market space with
Porter’s Five
Competitive Forces competitors who are continuously devising
4 new products, services, efficiencies, and
switching costs.
• New market entrants
o Some industries have high barriers to entry, for
example, computer chip business.
In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition
with its traditional direct competitors but also by four other forces in the industry’s environment: new market entrants, substitute
products, customers, and suppliers. o New companies have new equipment, younger
How do you apply this model/framework? workers, but little brand recognition
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IS AND COMPETITIVE ADVANTAGE .. IS AND COMPETITIVE ADVANTAGE ..

cont.’ cont.’
• Substitute products and services • Suppliers
o Customers might use substitutes when o Market power of suppliers when firm cannot
prices become too high, e.g. iTunes raise prices as fast as suppliers
substitutes for CDs
• Customers
o Can customers easily switch to competitor's
products? From iPhone i7 to Samsung Galaxy
Edge 7 Smartphone? What about switching
cost? Can they force businesses to compete
on price alone in transparent marketplace?
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EXAMPLES OF USING AI IN IS AND COMPETITIVE ADVANTAGE ..

PORTER’S cont.’
• Porter’s four generic strategies for dealing with
competitive forces, enabled by using IS/IT:
o Low-cost leadership e.g. Walmart
5 o Product differentiation e.g. Google & Google
Maps
o Focus on market niche e.g. Hilton
o Strengthen customer and supplier intimacy
e.g. [Link]. Strong linkages with
customers/suppliers increase switching cost
(cost to switch from one product to another)
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VALUE CHAIN MODEL VALUE CHAIN MODEL .. cont.’

• Firm as series of activities that add value to
Examples of products or services
systems for both
primary and • Highlights activities where competitive
support activities strategies can best be applied
of a firm and of its
value partners • Primary activities vs. support activities
that can add a
margin of value to • At each stage/activity, information systems
a firm's products can be used to improve operational efficiency
or services.
and improve customer and supplier intimacy
6 • This model can be used for benchmarking
industry best practices
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EXAMPLES OF USING AI IN VCM GREEN IT AND BUSINESS STRATEGY

Green IT, or green computing, involves design,
manufacturing, using and disposing of computing
equipment (PCs, servers, peripherals such as
monitors, printers, storage devices, networking and
communications equipment) in such a way that there
is minimal impact on the environment and other
hardware) in environmentally friendly ways. Green IT
practices revolve around reducing energy
consumption (cost) and disposing of equipment
responsibly (corporate social responsibility).

[Link]
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GREEN IT AND BUSINESS STRATEGY GREEN IT AND BUSINESS STRATEGY

.. cont.’ .. cont.’
• Green design: Designing energy-efficient 3. Design with the use of less physical space e.g.
computers, servers, handheld devices, printers, data centers (buildings that house computer
and other digital devices . systems, components, storage systems and
1. Design products that last longer and are telecommunications) that push cold air under
modular in design so certain parts can be the data centers to cool equipment, using
upgraded without replacing the entire system. software to efficiently control cooling fans,
(hardware-focused) building facilities with more insulation, and
2. Design search engines and other computing even collecting rain water from roofs to cool
routines (codes) that are faster and consume equipment. (facilities)
less energy. (software components)
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GREEN IT AND BUSINESS STRATEGY GREEN IT AND BUSINESS STRATEGY

.. cont.’ .. cont.’
• Green manufacturing (hardware): Minimizing • Green disposal: Remaking an existing digital
waste during the manufacturing of computers device or properly disposing of, or
and other digital devices to reduce the remanufacture unwanted digital devices
environmental impact of these activities (dispose hardware).
• Green use: Minimizing the electricity
consumption of computers and other digital
devices and using them in an eco-friendly
manner

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GREEN IT AND BUSINESS STRATEGY GREEN IT AND BUSINESS STRATEGY

.. cont.’ .. cont.’
• Design & use: Replace several underutilized • Strategy – use an alternative that consume less
smaller servers with one large server using a energy (i) allow certain employees to work from their
virtualization technique. In this case, multiple homes (e.g. less energy bills), (ii) replace actual face-
to-face meetings with meetings over computer
operating systems are hosted on a single networks (e.g. make use of video conferencing), (iii)
hardware platform and can share this hardware use cloud computing instead of owning and managing
platform. IBM’s Project Big Green is an example servers.
of virtualization, with energy savings of • Use power management software to manage devices
approximately 42 percent for an average data across network.
• Change printer configurations to use less paper and
center. ink, use draft mode.

29 Strategies and implementation for reducing costs 30

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OTHER STRATEGIES FOR SOME STRATEGIES FOR

IMPLEMENTATION .. cont.’ IMPLEMENTATION .. cont.’
• Special handling is required to dispose of • Computers and monitors contain toxic substances
computers and other hardware (e.g. mobile like dioxins, polychlorinated biphenyls (PCBs),
phones). cadmium, chromium, radioactive isotopes,
Example: Sell to remanufacturing of computers mercury and lead that contaminate soil and water
and mobile phones company (earnings from sale). if dumped in landfills or pollute the air if
• Remanufacturing is an industrial process whereby incinerated.
used/broken-down products (or components) – • Aluminum, tin, silicon, iron, copper, gold, and
referred to as ‘‘cores’’ – are restored or upgraded plastics must be extracted from computers for
to like-new condition (Lund, 1998; Östlin, 2009). reuse.
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BUSINESS IMPACTS OF
REMANUFACTURING
• Remanufacturing of digital devices and
peripherals has economic and environmental
benefits
• However, its business model presents
threats such as lower prices of newer
technology, competition, rapid advances in
new technology, difficulty to get parts from
original equipment manufacturer (OEM),
and disposal of waste (applying the Porter’s
competitive forces principle)
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