Introduction

Strategic and Transformational IT

Information Technology
The Iceberg Model: 10% above the surface, 90% below

Why Strategic and Transformational IT?

Technology is transforming organizations, markets, industries and our lives Managers have to spot coming transformations and take steps to see that they become competence enhancing rather than competence destroying As a result, technology has to be a part of any corporate strategy in the 21st Century To execute your strategy, you must be able to make good decisions about and manage IT

The technology is all around us creating the opportunity for major transformations:
Digital goods: music, video, newspapers Manufacturing, especially supply chains and global sourcing E-Government Social networking Even intelligence Service industries Education: slowly Health care: transformation badly needed The way we work: no more offices? The way we play: no more network TV?

More specifically what is happening?

Ads are flocking to the Internet Readers get their news on Internet news sites
What is happening to newspapers as a result?
130,000,000 125,000,000

120,000,000

115,000,000 Circulation 110,000,000

105,000,000

100,000,000

95,000,000
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

U.S. Newspaper Circulation Source: Newspaper Association of America

The impact?
Newspapers

Losing advertising revenue to Google Losing classified ads to everyone on the Web, especially sites like Monster.com, Craigslist, eBay Motors Losing revenue as circulation drops
Will all news be online? The new Wall Street Journal: news on its web site, the paper for analysis Will it be video clips delivered to your iPad from CNN? How about digital paper? Will our news be constant and ongoing 24 hours a day? Will our information be superficial-the longest story a paragraph or two? The death of analysis? A more poorly informed electorate?

Will print newspapers survive?

What will the impact be on us, society and government?

Creating exciting competition for infrastructure and content

The line to your house Cable DSL Fiber WiMax Satellites What devices will connect to the Internet? PCs Cell phones Smart phones PDAs Appliances Content providers Video rental stores (rapidly disappearing) Cable Netflix Direct view satellites Telephone companies Hollywood directly to theaters and your house

It goes by different names

Disruptive technologies Frame-breaking change Punctuated equilibrium They all can be a catastrophe for the manager and the organization that fail to recognize that massive changes are coming

IT-enabled transformations are changing everything

What is being transformed:

Firms Markets Industries Economies Our lives

What every MBA needs to learn: how to:

Recognize a new, potentially disruptive technology. Develop a strategy to take advantage of that change and make it competence enhancing for the organization. Manage the transformation and change process required to successfully implement a new strategy.

What it helps to know:

The basics of information technology How to scan for new technologies and forecast their impact Business models Business processes Organization structure and different structural options How to work in virtual groups and organizations Leadership Change theories The ability to execute

Transformer or transformee?
You want to be leading the IT-enabled transformation of just about everything

You dont want someone else to be transforming what you do Example: what has digital photography done to Kodak? How would you have responded as Kodaks CEO?

How do you manage disruptive technology?

A Survivor Model
Morph business model to accommodate competition and new opportunities

Information Technology

Abandon existing business model and adopt a new one Innovator Products Services Business models The incumbents dilemma

Denial History Resistance to change Mind set Brand Sunk costs Profitability Lack of imagination

Failure: merger, buyout, liquidate

How are we doing?

A summer internship Having taken only the core IS course a Smith student secured a summer internship at Software AG, the largest middleware company in Europe.

Worked in Reston to support US marketing director

Preparing CEO presentations for a new product: XML integration software Used to connect legacy systems to new front ends

Contd
One week later the marketing director left; our student holds down her job

She prepared sales brochures based on Spanish and Dutch office presentations Later in the summer she critiqued a report on RFID by a Georgetown MBA based on her core course team project And casually explained that all Smith MBAs are conversant with IT Offered a full-time position on graduation

Software AG headquarters is Darmstadt Germany with offices in 59 countries and 2500 employees

An email message entitled: Smith 1, Wharton 0

Professor Lucas Hope you had a wonderful summer. Just wanted to share an incident that took place during my internship. I was an intern at the Hershey Company, so my question (when we interns met the CIO) was obviously regarding the rough ERP implementation. Before the gentleman could finish his first sentence in response, the intern from Wharton asked him what an ERP system was. Needless to say, I felt totally uplifted when this happened. Thank you for pushing all that information through our thick skulls this Spring, it definitely helped me make a good impression. Warm Regards.

Is IT Innovation the Key to Competitiveness?

New business models, e.g. Amazon.com, Google, Zynga, Facebook New manufacturing models: Dell, Cisco New kinds of services: on-line shopping, e-travel, customer service, product reviews New marketing channels: search engines, facebook New intermediaries: Auto-by-tel, Edmunds, comparison sites Wireless communications: blackberry, iPhone, Android, wifi Digital, Virtual, Mobile, Personal Carlys mantra

Some data suggest IT is associated with greater productivity

See data on the next slide. What is interesting about the data? What is the challenge for you and your organization?

Information Technology (IT) and Productivity: The Data Speak

Computers are associated with greater productivity...
1.5 1.0 0.5

Productivity M

0.0 (relative to FP industry average) -0.5 -1.0 -1.5 -4 -2 0 2 4

IT Stock (relative to industry average) IT3

Eric Brynjolfsson, M..I.T.

Some Evidence

Internet Adoption
Has continued to grow in spite of the dot.com meltdown Has been more rapid than any prior technology including phone, radio and television Provides clear evidence that successful organizations will continue to adopt IT in order to flourish in the new economy

What about the financial crisis?

Is it the technologys fault? Has anyone blamed the financial meltdown on computers yet?

Our Belief
Information Technology is a fundamental driver of business in the 21st Century

IT Transformation & Strategy

Information Technology

Value of IT IT Investments

Strategic & Transformational IT IT applied to The course plan: functional areas Transformation is a unifying theme: Strategy leads to applications Applications transform the organization Managers assess the value of IT to help in making Organizational IT investment decisions transformation Information technology is the underlying artifact

In Summary..
Managers who understand and take advantage of information technology will be the most successful (and will have the most fun)

Your assignment is to think deeply about transformation, strategy, management and technology as you analyze cases, study the readings, join in class discussion and complete the course projects