1

KEY THEMES

CHALLENGES OF
MANAGING IN A
NETWORK ECONOMY

IMAD-UD-DIN
NUML LAHORE
 Evolution of Computing Performance
2
 Themes presented in this book
3

Market structure and industry dynamics

Evolving business models
IT impact
Prioritizing IT investment
Assimilation and organizational learning
Buy versus make
Partnership among key constituencies as IT evolves
Protecting IT assets and managing risks
Pervasive computing
 Theme 1: Market Structure and
Industry Dynamics
4

Value Chain
Integrated Operations => Rise to vertical Integration

Data Information Knowledge

R&D Procurement Production Marketing After Sales

and sales

Facilities and Technology People

Equipment
 Theme 1: Market Structure and
Industry Dynamics
5

New choices for designing and building industries,

markets, and organizations.
IT expands processing capacity enabling
convergence of voice, video, and data.
Real-time transactions, interactivity and
connectivity

Value
Chain
Model
 Theme 2: Evolving Business Models
6

Technology has redefined

opportunities
What business are you in?
What is your business model?
Business Models that dominated
the Industrial Economy are
evolving to take advantage of the
capabilities of the new
technologies and business practices
of the Network economy, giving
rise to new sources of power and
differentiation
 Theme 3: IT Impact
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Important dimensions are:

The impact of IT on core operations and
The impact of IT on core strategy.

High
Factory Strategic
Impact on Core

Goal: Improve performance of core processes Goal: Transform Organization Industry

Operations

Leadership: Business Unit executive Leadership: Senior Exec & Board

Project Management: Process Re-engineering
Support
Goal: Improve Local performance
Leadership: Local
PM: Grass root experimentation
PM: Change Management
Turnaround
Goal: Launch new ventures
Leadership: Venture Unit
PM: New venture development

Low Impact on Core Strategy High

 Theme 4: Prioritizing IT Investments
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IT investments must not be treated as budgeted

expense justified on a project to project basis. Why?
Answer: IT investments in general have a long
payback. Similar to investments in process
improvement
Shift in IT investment priorities and decisions from a
cost-avoidance, project centered approach to an
asset-based, strategic option approach
 The IT Business Value Scorecard
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Goals and Measures
Categories of
Benefits
Table 4-2: The IT Business Value Scorecard
Internal
Type I: Benefits from Investments in a Networked IT Infrastructure
Functionality and Improve infrastructure
Flexibility performance; increase the
functionality and range of strategic
options that can be pursued
Sample Measures: Decrease the
cost and/or improve the
performance of internal IT
operations; enable new IT
applications to be created at lower
cost, in less time, and with less
risk; expand the range of internal
IT initiatives
External
Create an efficient, flexible
online/offline platform for doing
business with customers, suppliers,
and partners
Sample Measures: Decrease the cost
and/or improve the performance of
doing business online; decrease the
time, cost and risk of launching new
online business initiatives; expand
the reach of existing IT enabled
businesses and the range of business
opportunities that can be pursued.
 The IT Business Value Scorecard
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Categories of Goals and Measures

Benefits Internal External
Type II: Benefits from Doing Business on a Networked IT Infrastructure
Commerce Improve internal operating Streamline and integrate channels to
efficiency and quality market, create new channels, and
Sample Measures: Internal integrate multiple online/offline
process performance and channels
work flow Sample Measures: Supply chain or
improvements; cost distribution channel performance
savings or cost improvements; cost savings or cost
avoidance; increased avoidance for the organization and its
quality; decreased cycle customers, suppliers, or partners;
time decrease time to market or just-in-time
order replenishment; enable new
channels to market and/or extend the
reach and range of existing channels
 The IT Business Value Scorecard
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Categories of Goals and Measures

Benefits Internal External
Type II: Benefits from Doing Business on a Networked IT Infrastructure
Content / Improve the performance of Improve the performance of knowledge
Knowledge knowledge workers and workers in customer, supplier, and
enhance organizational partner organizations; add information
learning value to existing products and services;
Sample Measures: Enable create new information-based products
individuals to achieve and and services
exceed personal Sample Measures: Provide information to
performance goals; increase customers, suppliers, and partners that
the speed and effectiveness enables better decision-making; charge
of decision making; a price premium for products and
increase the ability of the services based on information value-
organization to respond added; launch new information-based
quickly and effectively to products and services; increase revenue
threats and opportunities per users and add new revenue streams
 The IT Business Value Scorecard
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Categories Goals and Measures

of Benefits Internal
Type II: Benefits from Doing Business on a Networked IT Infrastructure
Community Attract and retain top talent;
increase satisfaction, engagement,
and loyalty; create a culture of
involvement, motivation, trust, and
shared purpose
Sample Measures: Length of time
to fill key positions; attrition rate,
trends in hiring and retaining top
talent (over time, by industry, by
region)
External
Attract and retain high quality
customers, suppliers, partners, and
investors; increase external
stakeholders satisfaction,
engagement, and loyalty
Sample Measures: Customer,
supplier, partner satisfaction and
lifetime value; average revenues
per customer and trend over time;
level of personalization available
and % that use it; churn rate
 Theme 5: Assimilation and
organizational Learning
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Phase 1:
Opportunity Success
identification
and Investment
Phase 2:
Organizational Success
Lack of attention and Learning and
commitment
adaptation
Phase 3:
Rationalization Success
Stagnation Block A Narrowly focused
and not marketed and Continuous
Improvement

Stagnation Block B Widespread

Too efficiency
dominated Technology
Transfer

Stagnation Block C
 Theme 6: Make VS Buy
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External industry, internal organizational, and

technological changes are increasing the pressure on
organizations to buy rather than make IT
applications and services.
Preference shifting from Make to Buy, rent
The result is :
Outsourcing => SLA, SLM

Vendor/supplier relationship
 Factors to considered in Make VS Buy
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Decision Pressure to Make / Own Pressure to Buy/ Rent/

Criteria Subscribe
Business IT application or infrastructure IT application or
Strategy provides proprietary infrastructure supports
competitive advantage strategy of operation s but is
not considered strategic in its
own right
Core Business or IT knowledge / Business or IT knowledge
competencies expertise required to develop expertise required to build or
or maintain an application is maintain an IT application or
considered a core competency infrastructure is not critical to
of the firm the firms success
Information / The information or processes Failure of routine security and
process contained within IT system or confidentiality measures
security and databases are considered while problematic, would not
confidentiality highly confidential cause serious problems
 Factors to considered in Make VS Buy
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Decision Pressure to Make / Own Pressure to Buy/

Criteria Rent/Subscribe
Availability There are no reliable competent and Reliable, competent and
of suitable / or motivated partners that could appropriately motivated
partners assume responsibility for the IT vendor (or other partner)
application or infrastructure are available
Availability The IT application or infrastructure Packaged software or
of packaged required by the firm is unique solution are available that
software or would meet the majority of
solution business requirements
Cost benefit The cost of purchasing the product The cost of purchasing and
analysis or service and / or coordinating and managing the service is
controlling inter-organizational significantly lower than
relationships and operations is the cost of performing the
greater than the cost of performing service in house
the service in house
 Factors to considered in Make VS Buy
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Decision Pressure to Make / Own
Time frame for There is sufficient time
implementation available to develop internal
resources and skills,
implement the IT application
and / of develop the IT
infrastructure
Evolution and The firm is able to attract,
complexity of retain & develop the range of
the technology IT experts needed to
implement IT applications
and infrastructures at a
reasonable cost
Ease of Software development tools
implementation that provide rapid IT
application development are
available
Pressure to Buy/Rent/Subscribe
The time required to develop
internal resources and expertise and
/ or to implement the IT application
or infrastructure project exceeds the
organizations demand for the
produce or service
The Firm is unable to keep pace
with the rapidly changing and
increasingly complete technologies
required
Tool to support rapid application
development are not available or
are viewed as insufficient or
ineffective
 Theme 7: Partnership among key
constituencies as IT evolves
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High levels of engagement and cooperation among

four key constituencies / stakeholder groups
1. Business executives
2. IT executives
3. Users
4. IT vendors / partners
 Three Eras of IT Evolution
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 Theme 8 Protecting IT Assets and
managing risks
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The ability to ensure high levels of security, privacy,

reliability, and availability is a core capability that
determines an organizations ultimate success and
survival.
In 2000, e-Bays system failed => Stocks affected
Challenges in Pakistan
Business Continuity and disaster recovery
 Theme 9 Pervasive Computing
opportunities and risks
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Shift in IT that has dramatically changed the way

people access and use technology, the way
organizations exploit it, and the way it is developed
and managed
Opportunities
Risks
 Summary
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Market Protecting
Assimilation Partnership
structure Evolving Prioritizing Buy IT assets
IT and among key Pervasive
Chapter and business IT versus and
impact organizational constituencies computing
industry models investment make managing
learning as IT evolves
dynamics risks
Creating Business Advantage
Crafting Business Models
Building Networked
Businesses
Making the Case for Digital
Business / IT
Understanding Internet-
working Infrastructure
Assuring Reliable and
Secure IT Services
Managing Diverse IT
Infrastructures
Managing and Leading the
IT Organization
Managing IT Outsourcing
A Portfolio Approach to IT
Projects