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The responsibilities of the head of the IS function now go far beyond operating highly efficient “production programming shops.” These executives must understand the goals of the enterprise and work in partnership with line executives to deploy IT to attain the organization’s goals. We shall discuss in next lectures the top IS executive’s job, looking first at the top job itself by summarizing six major responsibilities, and then exploring several ways the information systems function is evolving in organizations.
The Top IS Job Lecture 2-1 Summary of Previous Lecture 2-2 Summary The Top is Job The responsibilities of the head of the IS function now go far beyond operating highly efficient “production programming shops.” These executives must understand the goals of the enterprise and work in partnership with line executives to deploy IT to attain the organization’s goals 2-3 Summary The Top is Job We shall discuss in next lectures the top IS executive’s job, looking first at the top job itself by summarizing six major responsibilities, and then exploring several ways the information systems function is evolving in organizations 2-4 Summary … The Top is Job The SABRE system, Lifescan, BP, Aetna Life and Casualty, Duke Energy International, Wal-Mart Vs Kmart, AXA Financial, and Rexam provide examples of how the role of information systems management is changing 2-5 Today’s Lecture Introduction Where is the IS Organization headed? The Escalating Benefits of Information Technology Case Studies SABRE International, BERGEN BRUNSWIG Wal Mart 2-6 Introduction Management of IT has changed drastically in the past 50 years Early days = manage the technology: Get it to work Keep it running Reduce cost of doing business Then = manage the information resources Support (management) decision making Delivering information when and where it was needed Now = IT is pervasive and is a mandatory link between enterprises 2-7 Introduction cont • Responsibilities of the head of IS now go far beyond operating highly efficient ‘production programming shops’ • These executives are now part of top management and help form the goals of the enterprise in partnership with the CEO, CFO and other members of top management 2-8 Where Is The IS Organization Headed? • • The Escalating Benefits of Information Technology – Kenneth Primozic, Edward Primozic, and Joe Leben introduce the notion of “Waves of Innovation” which they define as how IT is used by industries and enterprises There are five Waves of Innovation (Figure 2-1): Reaching the consumer Enhancing executive decision making Enhancing products and services …………………………………………………………………………………… Leveraging investments Reducing cost 2-9 Where Is the IS Organization Headed? Escalating Benefits of IT 2-10 Background Information Financials Customers/Suppliers/Competitors IT Organization and Architecture IT Strategic Advantage EDI Background Founded by Sam Walton in 1962 Company founded with first store in Rogers, AR Headquarters: Bentonville, AR 38 stores in 1970 4732 stores today http://www.walmartstores.com/wmstore/wmstores/Mainabout.jsp Financials $191 Billion in Sales in 2001 $8 billion in capital spending in 2001 Five Times that of AOL Time Warner Market Expansion Cash flow of $9.8 billion Up 17 % from 2000 (5) Competitors/Suppliers Competitors Kmart Sears Target Suppliers P &G Thousands of others (4) Distribution Structure Vendor Vendor Vendor Vendor Vendor Distribution Center Store Store Distribution Center Store Store Distribution Center Store Store Distribution Center Store Store IT Organization Most powerful computer system in the corporate world Second largest data warehouse Logistics Technology Retail LinkTM Enormous Network Infrastructure CIO: Kevin Turner $500 million IT budget 26 % of Annual Sales Revenue (6) Distribution Structure • Supply Chain Management Create superior efficiencies through SCM Decentralize distribution through multiple distribution centers Centralize management and control Excellent coordination with multiple suppliers (4)(3)(2) IT Critical Differentiator: EDI Transmission of data to and from various companies Examples: Purchase Orders Payment information Inventory information Invoices WHY EDI? Realized the complexity of their supply chain Thousands of Stores, Suppliers and Products Inventory management removed from store level Also: Transaction Costs Paperless Environment Inventory Management Efficiencies JIT of Retail “Everyday low price strategy” through up-to-date sales information (1)(4) EDI • • How does it work? Through telephone line: Item is purchased Computer Adjusts Inventory Need To Order Level reached Purchase Order sent to vendor Vendor replenishes and sends invoice Wal-Mart sends electronic funds transfer (2)(4) Retail LinkTm Software that enhances EDI functionality Provided to vendor in 1991 Allows for much better forecasting and reporting abilities Faster replenishment Better communication between Wal-Mart and Vendors (1)(3)(5) EDI and Retail LinkTM Today No longer through telephone lines Cisco Networking Web Enabled Most vendors now utilize Retail LinkTm Required enrollment: EDI (1)(2) EDI Critical Differentiator?YES Has allowed for a 2-3 percent reduction in costs Allowed for increased vendor responsiveness Resulted in Wal-Mart out pricing it’s competitors Superior Customer Satification Sales Revenues tell the story (3)(4)(5) Sales Revenue 200 180 160 140 120 100 80 60 40 20 Sales(Billions) 1991 1995 1998 2001 Annual Report, WalMart Inc 2001 Summary of Todays Where is the IS Organization headed? The Escalating Benefits of Information Technology Case Studies SABRE International, BERGEN BRUNSWIG Wal Mart 68 ... understand the goals of the enterprise and work in partnership with line executives to deploy IT to attain the organization’s goals 2-3 Summary The Top is Job We shall discuss in next lectures the top. .. of Previous Lecture 2-2 Summary The Top is Job The responsibilities of the head of the IS function now go far beyond operating highly efficient “production programming shops.” These executives... examples of how the role of information systems management is changing 2-5 Today’s Lecture Introduction Where is the IS Organization headed? The Escalating Benefits of Information Technology