DATA MANAGMENT AND IT LIKEY QUESTIONS AND ANSWERS

Q1: Difference between Porters 5 forces theory and D'aveni's Theory. Q2: Value Chain Concept: How can we use it? Telecommuting: Factors, Concerns of Telecommuting? Q3: Outsourcing: Reasons 4 Outsourcing (Inshore, Off-Shore); what should you do as a Gov. to outsource more? Q4: CIO: Duties, 8 Core Activities and Responsibilities Q5: 3 theories of Ethics; what does PAPA policy mean? If ethics are overlooked, then what will happen to the company? Q6: 3 Methods of Funding, Positive and Negative Impact, In what circumstances is funding important? Q7: Application of Knowledge management.

QUESTION 1: (CHAPTER 2) MICHAEL PORTERS 5 FORCES:

General Managers can use the five competitive forces model to: Identify the key forces currently affect competition Recognize uses of IR to influences forces Consider likely changes in these forces overtime

This model provides a way to think about how IR can create competitive advantage for a business unit and for the firm, even can reshape a whole industry. Threats of New entrants from the possibility of new firm coming into company market: IR can be used to build barriers that discourage competitors from entering the industry. E.g.: Zaras IT supports its tightly knit group of designers, market specialist, production managers, and production planners. New entrants are unlikely to provide IT to support relationships that have been built over time. Furthermore, it has a rich information repository about customers that would be hard to replicate. Bargaining Power of Buyers: Switching costs can be any aspect of a buyer purchasing position that decreases the likelihood of switching his or her purchase to a competitor. IR can be used to build switching costs that make it less attractive for customers to purchase from competitors. E.g.: Amazon.com One click encourages return purchases by making buying easier. Similarly, Apples ITunes simple to use interface and proprietary software on the iPod make it difficult for customers to use other formats and technologies than the iPod. Bargaining Power of Suppliers are the ability of buyers to use their market power to decrease a firms competitive position. The company can use IR to reduce the dependence to the supplier.

E.g.: - Steel firms lost some of their power over the automobile industry because car manufactures developed technologically advanced quality control systems. Manufactures can now reject steel from suppliers when it does not meet the required quality levels. - Through the Internet, firms continue to provide information for free as the attempt to increase their share of visitors to their Web sites. This decision reduces the power of information suppliers and necessitates finding new ways for content providers to develop and distribution information. Threats of substitute Products Manager must watch for potential substitutes from many different sources to fully manage this threat. E.g.: Consider how digital cameras have made film (and the cameras that use them) obsolete. CDs and more recently digitally based MP3 files have made vinyl records (and the record players that use them). IR can create advantages by reducing the threat of substitution. E.g.: eBay brought out Pro-Stores, a service to help all sellers build their own Website. eBay managers noticed that many sellers did not have any Web presence other than eBay, and the move was another way to lock in these customers to the eBay environment. The more those sellers are locked into an eBay environment, the less likely they will work with rivals. For competitors to be successful, they needed to offer not just a substitute, but also a better service to these sellers. So far none has. INDUSTRY COMPETITORS One way competitors differentiate themselves with an otherwise undifferentiated product is through creative use of IS. Information provides advantages in such competition when added to an existing product. E.g.: FedEx was able to take an early lead in the industry by adding information such as deliver time, the place for receipts etc. to its delivery service. Information helped its differentiate its offerings from competitors. The firms must focus on the competitive actions of a rival to protect market share. Intense rivalry in an industry ensures that competitors respond quickly to any strategic actions. The banking industry illustrates this point. Several smaller competitors joined forces and shared information sources to

create a competing network as the large Philadelphia based bank developed ATM network. This made the large bank unable to create a significant advantage from its system and had to carry the full cost of developing networks itself. As a result, IR was committed quickly to achieve neutralizing results due to the high level of rivalry that existed between the local bank competitors in Philadelphia. As firms within an industry begin to implement standard business processes and technologies often using enterprise wide system such as those of SAP and Oracle the industry becomes more attractive to consolidation through acquisition. Standardizing IS lowers the coordination costs of merging two enterprises and can result in a less competitive environment in the industry.

HYPERCOMPETITION FRAMEWORK (DAVENIS THEORY)

Those models focus on creating and sustaining competitive advantage, whereas hyper competition model suggest that speed and aggressiveness of the moves and countermoves in any given market create an environment in which advantages are rapidly created and eroded. It suggests seven approaches and organization can take in its business strategy: superior stakeholder satisfaction, strategic soothsaying, positioning for speed, position for surprise, shifting the rules of competition, signaling strategic intent, simultaneous and sequential strategic thrusts.

THE DIFFERENCES BETWEEN PORTERS THEORY AND D AVENIS 7 S MODEL:

FRAMEWORK

KEY IDEAL

APPLICATION INFORMATION SYSTEM

TO

Porters framework

Genetic

Strategic Firms

achieve

competitive Understanding which strategy is cost chosen by a firm is critical to

advantage

through

leadership, differentiation, or choosing IS to complement the focus strategy

DAvenis Hyper competition Speed and aggressive moves The 7Ss give the manager Model and countermoves by a firm suggestions on what moves and create competitive advantage countermoves to make. IS are critical to achieving the speed needed for moves and

countermoves. IS are in a constant state of flux or

development.

1)

Competitive advantages contributed to sustainability (The role of IS in building and

sustaining competitive advantages) Porter competitive forces framework argues that competitive advantages can be created by manipulating the industrys forces. The resource-based view maintains that competitive advantages come from the information and other resources of the firm. Additionally, while value chain model focuses on a firms activities that can add value the firm in order to create competitive advantages, this view focuses on the resources including information resources that it can manage and create the competitive advantages of the firm. Information resources include data, technology, people, and processes within an organization. Information resources can be either assets or capabilities. They not only enable a firm to attain competitive advantage but also enable the firm to sustain the advantage over the long term. The only way to be sustainable for a firm is to continue to innovate or to protect against resource imitation, substitution, or transfer. E.g.: Wal-marts complex logistics management is deeply embedded in both its own and its suppliers operations that imitation by other firm is unlikely. UPS was able to build a competing information system to the one FedEx uses, but by the time it was up and running, FedEx has innovated far beyond and continued to enjoy advantages.

From IS perspective, some types of resources such as relationship skills are better than other for creating attributes that enable a firm to attain and sustain competitive value (i.e., value, rarity, low substitutability, low mobility, low imitability). Some IT management skills are general enough in nature to make them easier to transfer and imitate relationship skills. They require not only the management of internally oriented resources such as IS infrastructure, systems development, and running cost effective IS operation; but also the understanding of critical processes, social complex working relationships as well as changes of business environments. Moreover, some technical skills, such as knowledge of a firms use of technology to support business processes and technology integration skills are not easily moved to another firm. Another information resource is information repository. It requires to be filled with internally oriented information designed to improve the firms efficiency as well as the external environment and contain significant knowledge about the industry, competitors and customers

QUESTION 2
VALUE CHAIN: The value chain highlights how information system add value to the
primary and support activities of a firms internal operations, as well as to customers activities, and other components of its supply chain.

The Value Chain model suggests that competition can come from two sources:
-

Lowering the cost to perform an activity => Lowering activity cost only achieve an advantage if the firm possesses information about its competitors cost structures (even

though reducing isolated costs can improve profits temporarily, it does not provide a clear competitive advantage unless a firm can lower its costs below a competitors).
-

Adding value to a product or service so buyers will be willing to pay more. => adding value is a strategic advantage if a firm possesses accurate information regarding its customer such as: which products are valued? Where can improvements be made?

Much of the advantage of supply chain management comes from understanding how information is used within each value chain of the system. Opportunities also exist in the transfer of information across value chains. E.g.: Amazon.com created a new paradigm for its competitors about how their value chain works with the value offered to their customers through their traditional business. It began selling books directly to customers over the Internet and bypassing the traditional industry channels. Customers who valued time saved by shopping from home rather than driving to physical retail outlets flocked to Amazon.coms website to buy books. Linking many value chains into a value system can extend the value chain model. This value system is a collection of value chains connected through a business relationship and through technology.

TELECOMMUTING

(WHICH

IS

COMBINED

FROM

TELECOMMUNICATION AND COMMUTING)

DRIVING FACTORS
Drivers The work shift to Effects knowledge-based Eliminates requirement that

certain work can be performed in a specific place Equipped assimilate with the can and right IT,

Employees

create, distribute

knowledge as effectively at

home (or any place) as they can at office. Changing demographics and life- Provide workers style preferences geographic flexibility. New technologies with the Makes remotely performance and with the

time-shifting

bandwidth Reliance on Web

work practical and cost effective Provides workers with ability to stay connected to coworkers and customers, even on a 24/7 basis

Energy concerns

Reduces the cost of commuting for the commuters and reduces energy cost associated with real estate for companies.

a. CONCERNS
o Management concerns: managers may feel that they may lose control of their employees and be challenged in addressing the performance evaluation and compensation. o Remote workers need to be self-disciplined to get works done, get out of high-level of distractions such as personal issues, personal calls, visitors, familys o It is difficult for employees to separate works from their familys issues. Consequences are they will experience more stress or need more time to fulfill the jobs.

o Working remotely can disconnect an employee from his or her companys culture and make them feel isolated. Consequently, employee needs to take a special effort to stay connected. o Offshoring problems: Authorities may find hard to manage work that have done by workers from outside of country.

b.

SUMMARY OF TELECOMMUTINGS ADVANTAGES AND DISADVANTAGES .

QUESTION 3: (CHAPTER 7) 1) OUTSOURCING

DEFINITION: The purchase of a good or service that was previously provided internally, or that could be provided internally. Drivers (reasons) include (see the following table):

a. Cost reduction achieved through economies of scale (outsourcer may be able to negotiate lower prices on hardware and software) b. Help a company transition to new technologies through access to larger IT talent pools. c. Bringing in outside expertise can help management focus more attention on core activities rather than on IT issues. d. Outsourcing companies know how to hire, manage, and retain IT staff. e. Greater capacity on demand. f. Overcome inertia to consolidate data centers

2) INSOURCING
Definition: The situation in which a firm provides IS services or develops IS in its own inhouse IS organization. This is the make decision. Drivers that favor this decision:

a. Keep core competencies in-house.

b. IS service or product that requires considerable security or confidentiality?

c. Time available in-house to complete IS projects. d. In-house IT personnel. Challenges to insourcing: e. Getting needed IT resources from management. f. Finding a reliable competent outsource provider.

HOW DOES A GOVERNMENT ENCOURAGE FOREIGN COMPANIES TO DO OUTSOURCING IN ITS COUNTRY?

Invest in a substantial infrastructure: human capital, telecommunications and technology parts. Most important, a groundwork must be laid in science and technology education, especially IT education. Give marketing assistance to offshore vendors: assist firms in attaining recognized standards of quality in the global marketplace. Promote collaborate efforts between government, software companies, financial institutions and university. Offer specific incentives to companies that are considering their country as an offshoring destination. They can, for example reduce/eliminate various taxes or ease bureaucratic process required for the company. Ensure political stability for their country.

QUESTION 4 RESPONSIBILITIES OF CIO:

The following responsibilities often define the role of the CIO: 1. Championing the organization: Promoting IT within the enterprise as a strategic tool for growth and innovation. 2. Architecture management: Setting organizational direction and priorities. 3. Business strategy consultant: Participating in executive-level decision making. 4. Business technology planning: Bridging business and technology groups for purposes of collaborating in planning and execution. 5. Application development: Overseeing legacy and emerging enterprise initiatives, as well as broader strategic business unit (SBU) and divisional initiatives. 6. IT infrastructure management (e.g., computers, printers, and networks.): Maintaining current technologies and investing in future technologies. 7. Sourcing: Developing and implementing a strategy for outsourcing (versus retaining inhouse) IT services and/or people. 8. Partnership developer: Negotiating relationships with key suppliers of IT expertise and services and making sure everyone is working toward mutual goals.

9. Technology transfer agent: Providing technologies that enable the enterprise to work better with suppliers and customers both internal and external and consequently, increase shareholder value. 10. Customer satisfaction management: Understanding and communicating with both internal and external customers to ensure that customer satisfaction goals are met. 11. Training: Providing training to IT users, as well as senior executives who must understand how IT fits with enterprise strategy. 12) Business discontinuity/disaster recovery planning: Planning and implementing strategies to limit the impact of natural and human-made disasters on information technology and, consequently, the conduct of business.

MANAGERS EXPECTATION FROM THE IS ORGANIZATION

Managers can expect 8 core activities from the IS organization so they can plan and implement business strategy accordingly 1. Anticipating new technologies. IT must keep an eye on emerging technologies. Work closely with management on decisions. Weigh risks and benefits of new technologies.

2. Participating in setting strategic direction. IS can act as consultants to management. Educate managers about current technologies/trends.

3. Innovating current processes. Review business processes to innovate.

Survey best practices.

4. Developing and maintaining systems. Build or buy software.

5. Supplier management. Carefully manage outsourced IT.

6. Architecture and standards. Be aware of incompatibilities. Inconsistent data undermines integrity.

7. Enterprise Security Important to all general managers. Much more than a technical problem.

8. Business continuity planning Disaster recovery. What if scenarios.

QUESTION 5 3 THEORIES OF ETHICS

STOCKHOLDER THEORY
Stockholders advance capital to corporate managers who act as agents in advancing their ends. Managers are bound to the interests of the shareholders (maximize shareholder value). Managers duties: Bound to employ legal, non-fraudulent means. Must take long view of shareholder interest.

STAKEHOLDER THEORY

Managers are entrusted with a responsibility (fiduciary or other) to all those who hold a stake in or a claim on the firm.

Stakeholders are Any group that vitally affects the corp. survival and success. Any group whose interests the corp. vitally affects.

Management must enact and follow policies that balance the rights of all stakeholders without impinging upon the rights of any one particular stakeholder.

SOCIAL CONTRACT THEORY

Consider the needs of a society with no corporations or other complex business arrangements. What conditions would have to be met for the members of a society to agree to allow a corporation to be formed? Corporations are expected to create more value to society that it consumes. Social contract: o 1. Social welfare corporations must produce greater benefits than their associated costs. o 2. Justice corporations must pursue profits legally, without fraud or deception, o and avoid actions that harm society.

TO SUMMARIZE

PAPA PRINCIPLES
PRIVACY
Those who possess the best information and know how to use it, win. However, keeping this information safe and secure is a high priority (see Figure 9.2). Privacy the right to be left alone. Managers must be aware of regulations that are in place regarding the authorized collection, disclosure and use of personal information.

ACCURACY
Managers must establish controls to insure that information is accurate.

Data entry errors must be controlled and managed carefully. Data must also be kept up to date. Keeping data as long as it is necessary or legally mandated is a challenge.

PROPERTY
Mass quantities of data are now stored on clients. Who owns this data and has rights to it is are questions that a manager must answer. Who owns the images that are posted in cyberspace? Managers must understand the legal rights and duties accorded to proper ownership.

ACCESSIBILITY
Access to information systems and the data that they hold is paramount. Users must be able to access this data from any location (if it can be properly secured and does not violate any laws or regulations). Major issue facing managers is how to create and maintain access to information for society at large. o This access needs to be controlled to those who have a right to see and use it (identity theft). o Also, adequate security measures must be in place on their partners end.

PAPA AND MANAGERS

Managers must work hard to implement controls over information highlighted by PAPA. Limit access to data avoid identify theft, and respect customers privacy. FTC requires more disclosure of how companies use customer data. o Gramm-Leach-Bliley Act (1999) Information privacy guidelines must come from above: CEO, CFO, etc.

a. Supporting you do things in your company without any concern about ethics.

QUESTION 6

Funding IT
a. 3 METHODS OF FUNDING o Chargeback method
IT costs are recovered by charging individuals, departments, or business units Rates for usage are calculated based on the actual cost to the IT group to run the system and billed out on a regular basis

They are popular because they are viewed as the most equitable way to recover IT costs However, creating and managing a chargeback system is a costly endeavor

Charge methods are appreciate when there is a wide variation in usage among users or when actual costs need to be accounted for by the business units.

o Allocation
Recovers costs based on something other than usage, such as revenues, log-in accounts, or number of employees Its primary advantage is that it is simpler to implement and apply There are two major problems: The 'free rider' problem Deciding the basis for charging out the costs

True-up process is needed where total IT expenses are compared to total IT funds recovered from the business units.

o Corporate Budget
-

Here the costs fall to the corporate bottom line, rather than levying charges on specific users or business units

In this case there is no requirement to calculate prices of the IT systems and hence no financial concern raised monthly by the business managers

b. POSITIVE AND NEGATIVE OF EACH METHOD

QUESTION 7 Knowledge Management Process: A.1. Knowledge Generation Concerns the intentional activities of an organization to acquire/create new knowledge.

Two primary ways are knowledge creation and knowledge sharing. Methods include: Research and Development Adaptation Buy or Rent Shared Problem Solving Communities of Practice

A.2. Knowledge Capture Knowledge capture takes into account the media to be used in the codification process. The 3 main knowledge capture activities are: Scanning (gather raw information) can be electronic or human. Organizing (move it into an acceptable form) must be easy for all types of users to access. Designing knowledge maps (providing a guide for navigating the knowledge base). A.3. Knowledge Codification Knowledge must be used or shared to be of value. Codification puts the knowledge into a form that makes it easy to find and use. It is difficult to measure knowledge in discreet units (since it changes over time). Knowledge has a shelf life. Four basic principles of Knowledge Codification are:

1. Decide what business goals the codified knowledge will serve (define strategic intent).

2. Identify existing knowledge necessary to achieve strategic intent. 3. Evaluate existing knowledge for usefulness and the ability to be codified. 4. Determine the appropriate medium for codification and distribution. A.4. Knowledge Transfer Involves transmitting knowledge from one person or group to another and the absorption of that knowledge. Four different modes of knowledge transfer are:

1. Socialization: from tacit knowledge to tacit knowledge 2. Externalization: from tacit knowledge to explicit knowledge 3. Combination: from explicit knowledge to explicit knowledge 4. Internalization: from explicit knowledge to tacit knowledge

TO

Tacit Knowledge Socialization Transferring

FRO M

Explicit knowledge Externalization

tacit

knowledge Articulating experiences, capturing mentoring through

and tacit

thereby knowledge metaphors,

Tacit Knowledge

through

shared

apprenticeships,

use

of

relationships, on-the-job training, analogies, and models. and talking at the water cooler. Combination Internalization existing explicit

Converting explicit knowledge Combining Explicit knowledge

into tacit knowledge; learning by knowledge through exchange doing; captured studying explicit previously and synthesis into new explicit knowledge knowledge.

(manuals, documentation) to gain technical know-how.