Chapter 3 Effects of IT on Strategy and Competition

Chapter 1 The Importance of MIS - Case & Exercise Jason C. H. Chen, Ph.D. Professor of MIS School of Business Gonzaga University Spokane, WA 99258 USA [email protected] Dr. Chen, Management Information Systems 1 Part I

Dr. Chen, Management Information Systems 2 In Class Exercise USING YOUR KNOWLEDGE UYK#1(2)-p.31 Dr. Chen, Management Information Systems 3 a. Many experts believe that, over the lifetime of a system, the

single most expensive component is people. Does this belief seem logical to you? Explain why you agree or disagree. (Answer) It is likely that this belief is true. An information system is only as good as the people who have developed it and who make use of it to perform their business functions more effectively and efficiently. It is very costly to hire and retain qualified, creative, and motivated people. Without those people, however, even the most technically sophisticated system will be of little value to the organization. - Creating/improving competitive advantage since people are difficult to be replaced/replicated. Dr. Chen, Management Information Systems

4 b. Consider a poorly developed system that does not meet its defined requirements. The needs of the business do not go away, but they do not conform themselves to the characteristics of the poorly built system. Therefore, something must give. Which component picks up the slack when the hardware and software programs do not work correctly? What does this say about the cost of a poorly designed system? Consider both direct money costs as well as intangible personnel costs. If a system does not meet its requirements, the people and procedures will have to adjust and pick up the slack. People will have to change their behaviors to work with the system.

This may result in reduced productivity at a minimum. In addition, annoyance and frustration may build to the point where people actually avoid the system in some fashionthey may find a way not to use the system at all (thus defeating its purpose); they may avoid using it by increasing absenteeism; or they may find another job. Dr. Chen, Management Information Systems 5 c. What implications do you, as a future business manager, take from questions (a) and (b)? What does this say about the need for your involvement in requirements and other aspects of

systems development? Who eventually will pay the costs of a poorly developed system? Against which budget will those costs accrue? It is hoped that you (students) will appreciate how important it is that the business professionals play an active role in systems development. Requirements not only must be delineated for the system, but business managers (who are paying the bills) must ensure that the requirements are being fulfilled in the new system. If they are not fulfilled, the business unit not only will have wasted the development costs; it will experience ongoing costs of decreased productivity and possibly higher staff turnover user involvement. (we will learn more in chapter 11) Dr. Chen, Management Information Systems

6 Part II CASE STUDY-1 What company (organization) is described in the case? Dr. Chen, Management Information Systems 7 Case Study 1: zulily (pp. 33-35)

Dr. Chen, Management Information Systems 8 What is Business Model? A business model is a set of planned activities (sometimes referred to as business processes) designed to result in a profit in a marketplace. The business model is at the center of the business plan. Why New Models?

Profitability (making money) N Dr. Chen, Management Information Systems 99 Case Study 1: zulily What is their business model? Sells to mothers: primarily childrens clothes and toys, womens clothes, accessories, and dcor items. Use information technology to provide entertaining shopping experience to mothers, name brand goods, unique and difficult-to-find

off-brands, at substantial discounts. 45% of sales occur over mobile devices. Curated sales. Dr. Chen, Management Information Systems 10 Case Study 1: zulily (cont'd.) Dr. Chen, Management Information Systems 11 How They Do It

Buyers identify goods to be sold, negotiate with vendors. Photographs sample items in-house, write ad copy. Group items for three-day sales events. After event closes, zulily orders items from vendor, receives, packages, and ships to customers. (maintains no inventory). Vulnerable to vendors errors and mistakes. Dr. Chen, Management Information Systems 12 Use of Technology

Internet, mobile technology compatibility. Developed a proprietary technology platform to handle. enormous spikes in web processing demand. Extensive data collection and analytics capabilities. Dr. Chen, Management Information Systems 13 Growth-Management Problems To support continued growth, we must

effectively integrate, develop and motivate a large number of new employees, while maintaining our corporate culture. In particular, we intend to continue to make substantial investments to expand our merchandising and technology personnel. http:// www.sec.gov/Archives/edgar/data/1478484/000144530514000741/zu-12292013 x10k.htm Dr. Chen, Management Information Systems

14 14 Learning from zulily Founders developed innovative application of information systems technology. Applied it to a business opportunity. Managerial skill to develop that idea. Dr. Chen, Management Information Systems

15 1-9. Go to zulily.com and register. Identify features of the site that make shopping entertaining to mothers and explain why those features entertain. Explain why this is important to the zulily business model. Some of the features of the site that are fun and entertaining are wide array of items that are available for girls, boys, women, and the home; the way that items are organized by theme (an entire section on princesses, for example); the many colorful pictures; the list of new events and ongoing events at the top of the page; the sense of a limited time to purchase items; the ability to look forward to things that will be available tomorrow; the section containing items on their

last day of sale; the automatic daily email announcing specials. Dr. Chen, Management Information Systems 16 1-11. If you were buyer for zulily, what data would you like to have about customer purchase habits? Data of interest to buyers would include: what items sold out and how long did it take to sell out; what colors and sizes sold out most quickly; what items took the longest to sell out; what colors and sizes took the longest to sell out;

do customers tend to buy frequently in small quantities in an order or infrequently with larger quantities in an order How? IS/IT? B.I. (Business Intelligence/ Data Mining) Dr. Chen, Management Information Systems 17 1-12 If you were a buyer for zulily, what data would you like to have about past vendor performance? Data of interest about vendors would primarily focus on the

vendors order fulfillment performance - is the vendor providing the right items of acceptable quality in a timely way. How to achieve the objective? Dr. Chen, Management Information Systems 18 1-13 In the general course of life, 2-year-old boys become 3-year-old boys, 4-year old-girls become 5-yearold girls, etc. How can zulily use this not-soremarkable phenomenon to customize a customers shopping experience? What data would you need to do this? By keeping track of the typical items purchased by a

customer, say, good for an infant boy, zulily could offer that customer special promotions geared toward that child as he grows, such as clothing, toys, school items, etc. The order data (e.g, datawarehouse) from that customer would be the source of this information Dr. Chen, Management Information Systems 19 1-14 As a business professional, it is likely information systems professionals will ask you data questions like those in questions 1-11 to 1-13 above. What is the best way for you to respond? Verbally in a meeting? With a

written document? With a sketch or diagram? How will you know if you have been understood? The most effective way to communicate these data needs is to show a sketch or diagram of a sample report (e.g., those generated by MS/Excel or Access) and be able to discuss in a meeting with the IS staff how you would use the report contents for decision making. Dr. Chen, Management Information Systems 20 1-14 (cont.) The IS staff would have a tangible example of your

information needs and will then be able to focus on the task of finding and organizing the data needed to produce your report. You will know if youve been understood if you receive some prototype reports that include the information you want, so you know the IS staff is on the right track (e.g., displayed via Web browserHTML) Dr. Chen, Management Information Systems 21