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  1. Chapter10Introduction The Redefine and/or Define Concept and Change Management

  2. Agenda • Learning Objectives • Redefine/Define Concept • The Product and Service Delivery Process • The Challenge of Change Management • Conclusion

  3. Learning Objectives • To understand the second of the two core concepts of the structured analysis approach. • To appreciate the importance and significance of change management within an organization. • To remember that information systems is viewed as a major cause of change within a company.

  4. Redefine/Define Concept Redefine = Change Define = Clarify How an organization can change and clarify the role of IS to achieve and sustain competitive advantage?

  5. Redefine/DefineWhat? Options: • The business • Products and/or services • Business processes Why bother? • Value to customer

  6. Product/Service Value-Add Process What the Customer Buys Product and Service Delivery Process Is the delivery process of the product more important than the product itself? Delivery Process Product/Service Value to Customer Figure 10-1

  7. Change Management Four Challenging Factors: • The pace and time pressures of change. • Financial controls may not allow increase in the number of employees despite growth. • Shifting of productivity and other operational objectives to IT. • Dramatic improvements in IT price, performance, and function.

  8. Conclusions • Change is the norm in most businesses. • Information technology can be a catalyst or vehicle for change. • Organizational change must be carefully managed. • Employees and management must understand and accept the need for change.

  9. Chapter 10 The Redefine and/or Define Concept and Change Management

  10. We live in a word of change, yet we act on the basis of continuity.

  11. The Challenge of Change Millions of ordinary, psychologically normal people will face an abrupt collision with the future. Many of them will find it increasingly painful to keep up with the incessant demand for change that characterizes our time. Alvin Tofler Futurist

  12. Definition of Change Making an essential difference often amounting to a loss of original identity or a substitution of one thing for another.

  13. Equipping a company with the latest technology doesn't mean a thing if you don't alter how your employees think and how management leads them. Chad Frost President Frost Inc.

  14. As we change what computers can do, we must change what we can do with computers. Max Hopper Former CIO Information Systems AMR and American Airlines

  15. Redefine Change Define Clarify

  16. Companies that achieve a sustainable strategic advantage with information technology generally redefine the factors of competition rather than using technology in a traditional way.

  17. Competitive Advantage Through Use of IS? ********* Redefine and/or Define: 1. The Business 2. Products and/or Services 3. Business Processes To Provide Value to Customer

  18. McDonald’s as Concept Source Peter Drucker’s Assessment: • Defined its products. • Redefined processes to make the product. • Defined customer service as quality, product predictability, fast service, cleanliness and friendliness. • Set standards for these and trained its employees accordingly. • Redefined the “hamburger business.”

  19. Redefine and/or Define The Business • USA Today • American Airlines • American President Companies • • eBay

  20. Redefine and/or Define Products or Services • Charles Schwab • Banc One • Any company that has introduced an E-commerce approach in addition to an existing brick and mortar operation.

  21. Redefine and/or Define Business Processes • Boeing • LL Bean • All of your ATP companies—intranets, extranets, E-Business processes

  22. When making a purchase decision does the delivery process become more important than the product or service?

  23. Product/Service Product/Service Delivery Process What the Customer Buys Value Add Process Value to Customer Figure 10-1

  24. Value to Customer Analysis Charles Schwab & Co. Product/Service • Stock, Bond and Mutual Fund • Trades • Financial Product Options • Competitive Fees • Timely Execution of Trades and • Money Transfer • Personal Service • Confidence in Financial • Custodial Responsibility • Computer Based Trades • Client Broker Service • Street Smart • Telebroker • Equalizer • OneSource • Electronic Transfers • Trade Risk Analysis Brokerage Service Delivery Process Value-add Process What the Customer Buys Value to Customer Figure 10-2

  25. Value to Customer Analysis: Mervyn’s Product/Service • Point-of-Sale (POS) System • Ticketed Merchandise • UPC Scanning • Price Look-up • Credit Card Approval • Wireless Portable POS • Warehouse System • EDI Systems with Vendors • Infobot Voice Response • Quality Apparel/Home • Fashions • Competitive Prices • High Merchandise • Availability • Personal Service • Fast, Accurate Check-out • Fast Credit Approval • Access to Credit Information Product/Service Delivery Process Value Add Process What the Customer Buys Value to Customer Figure 10-3

  26. Value to Customer AnalysisBoeing Commercial Airplane Group Product/Service • An aircraft designed for • passenger comfort, operational • efficiency and safety. • Flexible design configuration • Competitive price • Logistical support CommercialAircraft • CAD design system and • review process • Customer input through network • Co-design process with customer • Quality control system • Vendor EDI system Delivery Process Value-add Process What the Customer Buys Value to Customer Figure 10-4

  27. Product/Service Product/Service Delivery Process Value-Add Process What the Customer Buys Value to Customer

  28. Hammer Definition: Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. Reengineering Key words are fundamental, radical, dramatic and processes.

  29. Michael Hammer Videotape The father of reengineering. At least the term.

  30. Reengineering Business Processes Difference between business functions and business processes? Definition of a business process: A sequence of predefined activities executed to achieve a type or range of desired outcomes. Definition of process engineering: An approach to achieve radical improvements in value to customer and/or business efficiency.

  31. Business Processes • New product development. • Customer order fulfillment. • Customer service. • Supply chain management. • Budgeting. • New employee recruitment and hiring.

  32. Reengineering Motivation • Improve value to customer. • Strengthen alignment of core processes to business strategies. • Pursuit of new opportunities. • Optimize cross-functional performance. • Broaden scope of activities and individual jobs to improve • responsiveness or flexibility. • Reduce operating costs.

  33. Reengineering Guidelines 1. Senior management commitment to adopting a new process. 2. Team empowerment and decision-making. 3. Be careful about how you draw conclusions and create perception. 4. Move toward inquiry, not conclusions. 5. Make the space and time available for the official beginning with a team kickoff. 6. Reward system must be correctly focused.

  34. Reengineering Methodology Institute Continuous Improvements Analyze Leverage Points Identify Process Breakthroughs Design Business Processes Implement Business Processes Phase 6 Phase 5 Phase 2 Phase 3 Phase 4 Phase 1 Process Prototyping and Implementation Performance Reporting • Critical Success Factors • Activity Value Analysis • Benchmarks and Surveys • Processing Modeling • Investment Analysis Source: ISS Corporation

  35. Reengineering Success Factors • Business Imperative. • Strong Sponsorship. • Right Team. • Clear Objectives with a Well Defined Foundation.

  36. Hewlett-Packard Reengineering Lessons Learned: 1. Goals and accountability must be clear. 2. Process ownership is crucial. 3. Links among business owners, process owners and IS organization are critical.

  37. Avon Reengineering Approach Process Culture 1. Stay Focused 1. Analyze (Opposition) 2. Be Specific 2. Educate (Concerns) 3. Deliver Results 3. Motivate (Buy-in to process)

  38. American Express Methodology • Ownership • Teams • Goals • Tracking

  39. Change Management

  40. Resistance to Change? You often don’t have a choice. There are those that content that an organization has two choices: change or die.

  41. Graying of Auto Industry Within the next two years, as many as forty to fifty percent of the auto industry workforce will be eligible to retire. Auto companies must decide if they will replace these people with similarly skilled workers or redesign their jobs and recruit more technologically advanced workers. The shortage of skilled workers is partially a result of changes in work requirements as the industry moves from an auto parts or components mentality to a systems mentality. e.g. not an odometer but an entire dashboard.

  42. Impact of Change Change is intensely personal. For change to occur in any organization, each individual must think, feel or do something differently. Even in large organizations, which depend on thousands of employees understanding company strategies well enough to translate them into appropriate action, leaders must win their followers one by one.

  43. Let’s Not Forget • Xerox: Invented plain paper copiers but almost needed to • file bankruptcy after hemorrhaging financially while trying to • become the document company. • Eastman Kodak: Basically popularized film photography • but struggled to decide if it was in the imaging business. • Digital Equipment: Created the minicomputer • segment of the computer industry but has disappeared as a • company.

  44. IT Related Change If IT related change could be limited to only affecting the technology, implementation would be relatively simple. Adding human factors increases the complexity of the change process significantly. Successful implementation of change requires an understanding of the human as well as the technical aspects involved in the situation. IT projects and people translate to “here comes the next wave of change.”

  45. Old Paradigms Die Hard! They have built in resistance to their own corresponding attitudes, institutions and cultures.

  46. The Law of Change Achieving change, of any significance within an organization, is in inverse proportion to the success that it has had up to the time that management feels a change is needed. The greater the success of the company, the less likely it is to change.

  47. Selecting a Change Strategy Which strategy to use in approaching a change problem is a decision affected by a number of possible factors. 1.Degree of Resistance. 2.Target Population Size. 3. High, Medium or Low Business Stakes. 4. The Time Window. 5. Expertise Availability. 6. Organization and People Dependency.

  48. Necessary Questions • Is the purpose of the new technology clear to its users? • Do the users accept the need for the technology change? • Were the users involved in planning the new system? • Has there been good communication regarding the change? • Is there acceptance of the increased cost compared to the benefits of the new system? • Is there a perception of organizational support for the new system? • Is there compatibility of the new technology with the old way of doing things? • Have the social aspects of the new system been assessed?

  49. Do the users feel that the new system reflects negatively on • their past performance? • Have the habit patterns of the users influenced the design of the new system? • Is there a lack of respect and trust in the change agents? • Has excessive pressure been involved relative to the project? • Is the pace of change perceived to be too fast or too slow? • 15. Is there a significant amount of user fear of failure? • 16. Can the status quo be reestablished if the new technology • proves unsuccessful?

  50. Change Management Skills • People Skills • Business Skills • System Skills • Political Skills • Analytical Skills