Information Management
Prof. Dr. Elgar Fleisch, Ass. Prof. Dr. Felix Wortmann ETH Zurich & University of St. Gallen (HSG)
Discovering Management – Information Management Thursday, April 23, 2015, 8-10am
The Management Model
Marketing Cor por at e Cu ltu re / H um an R es ou rc e M an ag em ent Supply Chain und Operations
Vision Values
Technology- und Innovation- management HR Management Financial Management Information Management Risk Management Quality Management Employee Satisfaction Customer Satisfaction Partner + Supplier Satisfaction Social + ecological Responsibility Bu si ne ss R es ul t Cor por at e St ra te gy
The 2 different views on Information Management
Leveraging IT
Managing IT
CEO
CIO
Business value of IT
IT-based business model innovation Process & product innovation
Stragegic information systems
IT-System types and trends, and its business impact
Basic topics such as integration, transaction costs, network economy, disruptive innovation
Organizational
representative
Overall goal
Subject topics
IT GovernanceIT Project Portfolio Management IT-Business Alignement
Infrastructure IS-Selection
IT & Business Architecture Cost & budget management Software development
Leveraging IT
Business Model Innovation and its Predecessors
Time
Product
Process
Business Model
R
at
e
of
ma
jo
r
in
no
va
tio
n
Business Model Articles in the Business &
Management Field
A BM describes how a company creates, captures,
and delivers value.
§ Articulates the value proposition (i.e., the value created for users by an offering
based on technology);
§ Identifies a market segment and specify the revenue generation mechanism (i.e.,
users to whom technology is useful and for what purpose);
§ Details the revenue mechanism(s) by which the firm will be paid for the offering; § Defines the structure of the value chain required to create and distribute the
offering and complementary assets needed to support position in the chain;
§ Estimates the cost structure and profit potential (given value proposition and
value chain structure);
§ Describes the position of the firm within the value network linking suppliers and
customers (incl. identifying potential complementors and competitors); and
§ Formulates the competitive strategy by which the innovating firm will gain and
hold advantage over rivals.
Source: H. Chesbrough, Business Model Innovation: Opportunities and Barriers, Long Range Planning
W h at? To W h o m ? How?
Example Dacuda – Which one is the right business
model?
Example Dacuda – Which one is the right business
model?
§ What? – Sell Mouse? – Sell Scanner? – Sell License?– Sell B2B projects (passport scanner at checkout etc.)? – Sell consumer apps?
– Do scientific publications? – Go open source? § To whom? – Retailer? – ODM? – Brand?
– Go for Laptops, Tablets, and mobile phones?
§ How - supply chain?
– …key partners in the value chain – … of mice, scanners, or what?
§ How - revenue model?
– $ per Hardware – $ per License?
Business Model Definition – The Magic Triangle
How is revenue
created? How is the value proposition created? What do you offer to
the customer? Value Proposition Revenue Model Value Chain What? How? How? Who?
Who is your target customer (segment)?
Industry game changer
Premiere (1990) Salesforce (1999) SAP Business ByDesign (2007)
The customer pays a regular fee, e.g., most commonly on a monthly or an annual basis, to have access to the product/service.
Jamba (2004)
blacksocks (1999)
Detailing the BM pattern
Subscription
© Prof. Oliver Gassmann, Dr. Karolin Frankenberger, ITEM-HSG
Dollar Shave Club (2012)
Create Transfer Combine Leverage Apple iPod/iTunes (2003) (R) Apple iPhone/ AppStore (2007) (R) Apple iPad/iBook- Store (2010) (R) Nestlé Nespresso (1986) Nestlé SpecialT (2011) Nestlé BabyNes (2012) Gillette (1904) hp (1984)
Razor and Blade (R): Reverse
Multi-sided platform Long Tail
4 Strategies of how business model innovating
firms use patterns - Example
Leveraging IT
IT empowers BMP: Example Hidden Revenue
§
Definition
– The logic that the user is responsible for the income of the business is
abandoned. Instead, the main source of revenue comes from a third party,
which cross-finances whatever free or low-priced offering attracts the users. A
very common case of this model is financing through advertisement, where
attracted customers are of value to the advertisers who fund the offering. This concept facilitates the idea of 'separation between revenue and customer'.
§
Case Examples
– JCDecaux (1964), Sat.1 (1984), Metro Newspaper (1995), Google (1998),
Facebook (2004), Spotify (2006), Zattoo (2007)
IT empowers BMP: BMP Two-Sided Market
§
Definition
– A two-sided market facilitates interactions between multiple interdependent
groups of customers. The value of the platform increases as more groups or as more individual members of each group are using it. The two sides usually come from disparate groups, e.g., businesses and private interest groups.
§
Case Examples
– Diners Club (1950), JCDecaux (1964), Sat.1 (1984), Amazon Store (1995),
eBay (1995), Metro Newspaper (1995), Priceline (1997), Google (1998), Facebook (2004), MyHammer(2005), Elance (2006), Zattoo (2007), Groupon (2008)
IT as a prerequesite: BMP E-Commerce
§
Definition
– Traditional products or services are delivered through online channels only,
thus removing costs associated with running a physical branch infrastructure. Customers benefit from higher availability and convenience, while the
company is able to integrate its sales and distribution with other internal
processes.
§
Case Examples
– Dell (1984), Asos (2000), Zappos (1999), Amazon Store (1995), Flyeralarm
(2002), Blacksocks (1999), Dollar Shave Club (2012), Winebid (1996), Zopa (2005)
IT as a prerequesite: BMP Long Tail
§
Definition
– Instead of concentrating on blockbusters, the main bulk of revenues is
generated through a 'long tail' of niche products. Individually, these neither demand high volumes, nor allow for a high margin. If a vast variety of these products are offered in sufficient amounts, the profits from resultant small
sales can add up to a significant amount.
§
Case Examples
– Amazon Store (1995), eBay (1995), Netflix (1999), Apple iPod/iTunes (2003),
YouTube (2005)
IT as a prerequesite: BMP Affiliation
§
Definition
– The focus lies in supporting others to successfully sell products and directly benefit from successful transactions. Affiliates usually profit from some kind of
pay-per-sale or pay-per-display compensation. The company, on the other hand, is able to gain access to a more diverse potential customer base without additional active sales or marketing efforts.
§
Case Examples
– Amazon Store (1995), Cybererotica (1994), CDnow (1994), Pinterest (2010)
IT as a prerequesite: BMP Freemium
§
Definition
– The basic version of an offering is given away for free in the hope of
eventually persuading the customers to pay for the premium version. The free offering is able to attract the highest volume of customers possible for the company. The generally smaller volume of paying ‘premium customers’
generate the revenue, which also cross-finances the free offering.
§
Case Examples
– Hotmail (1996), Survey-Monkey (1998), LinkedIn (2003), Skype (2003),
Spotify (2006), Dropbox (2007)
IT as a prerequesite: BMP Freemium (cont.)
General IT-Triggered Trends Across IT-enabled BMP
Which features did IT enable in many of the BMP?
1. Integration of users / customers
– IT enables companies, to outsource tasks to customers
– BMP examples are 05 User Designed, 06 Crowdsourcing, 07 Crowdfunding, 39
E-Commerce, 04 Open Source (Content), 09 Peer-2-Peer, 01 Mass customization
2. Run time services / digital contact to customer after sales
– IT enables companies to maintain the relationship after sales via IT-based services
– Examples are 17 Rent Instead of Buy, 12 Subscription, 11 Freemium, 03 Razor &
Blade, 48 Add on, 38 Leverage Customer Data, 15 Performance-based Contracting
3. Analytics of user and other data evolves to a core competency
– The target-oriented collection and analysis of transaction and usage data becomes
a core competency in digital industries for product and pricing decisions.
– Examples are 12 Subscription, 13 Flat Rate, 11 Freemium, 14 Pay per Use, 48
Which Technology-Waves did enable new
Business Model Patterns?
39 E-Commerce 08 Multi-sided Plattform 10 Hidden Revenue 54 Affiliation 02 Long Tail 09 Peer-2-Peer 11 Freemium
38 Leverage Customer Data 04 Open Source (Software) 40 Digitalisierung
05 User Designed 06 Crowdsourcing 07 Crowdfunding
12 Subscription (SaaS, Media as a Service)
04 Open Source (Content)
Web 1.0
Web als Business Infrastructure Web 2.0 Web als Social Media
„When users add value“
Web 3.0
Internet der Dinge
„When things add value“
?
Understanding the Web 3.0 Value Stack
Digital World Physical World DigitalServic Layer 5 Analytics Layer 4 Connectivity Layer 3Sensor and Actuator
Layer 2 Physical Thing Layer 1 Digital, Global Physical, Local Customer Value
Web 3.0: Towards Hybrid Value Propositions
THING
+
DATA
=
Thing-based
Function
Data-driven
Service
+
Bulb Bin Tractor Security Stock Diagnostics Presence Automatic Replenishment Predictive Maintenance, Optimization Towing vehicle Storage capacity LightManaging IT
Definition of Information Management
The focus of information management is shifting
Definition from the 1980’s:
„Information Management is the cognition and conversion of the potentials of
ICT.“
Definition since the mid-1990’s:
„ Information Management is the cognition, conversion
and operation
of the
potentials of ICT.“
Source: Österle, H. (1987) Erfolgsfaktor Informatik–Umsetzung der Informationstechnik in der Unternehmensführung, Information Management (2:3), pp 24-31.
The role of IT in the company
Perception of IT by the business units of a company
„necessary evil“
Avoid IT, because it cannot be controlled
„support, no partner“
The corporate management should provide IT
with the direction
„IT is everything!“
IT-Specialists should supervise the alignment
of IT
„business units are better
in IT“
Each business unit should control its own IT
„equal partners“
Control over IT should be divided between
business units and IT-Specialists
The basic problem: The machinist in the basement
Challenge 1: Legacy Systems
They must be compatible with modern systems
Legacy systems are historically grown information systems that do not conform with the
technological state-of-the-art and are operated beyond the end of their originally
intended life span.
1001010100111010101110
Source: Hansen, H.R., and Neumann, G. (2001) Wirtschaftsinformatik Lucius & Lucius Verlagsgesellschaft, Tübingen.
Challenge 2: Interfaces (with legacy systems)
The number of interfaces can be a challenge
The number of interfaces between systems is
calculated by
n
(
n
−
1)/2 ~ n
2 Systems Interfaces 1 -‐ 2 1 10 45 20 190 30 435 40 780 50 1'225 60 1'770 70 2'415 80 3'160 90 4'005 100 4'950 1'000 499'500Challenge 3: The Dominance of Operations
Prof. Dr. E. Fleisch Slide 35
Challenge 4: ICT Breakdown
Costs for broken down ICT can be enormous
Reasons for breakdowns:
§
Force majeure, organizational flaws,
human failure, technical fault, willful
intent
Costs during breakdowns:
§
Lost employee productivity = cost per
hour x duration
§
Lost IT productivity = cost per hour x
duration
§
Lost revenue = revenue per hour x
duration
Costs after breakdowns:
§
Image loss and overtime
§
Missed appointments, contractual
penalties
Challenge 5: Cost cutting vs. Innovation
Cost cutting
Efficiency
Innovation
Effectiveness
Managing IT
Business-IT-Stack
Strategy
Business Process
Information System
Enterprise Architecture is about aligning strategy,
processes and IT
Strategy
Project Portfolio
Management
Project
Management
+
Strategic planning, controlling-
-
Implementation+
Enterprise Architecture
Management
Business transformation as an engineering
discipline
Transformation framework at Swiss Re
Transformation artefacts at Swiss Re
Prof. Dr. E. Fleisch Slide 43
Run the IT – IT Infrastructure Library (ITIL) Version 2
Summary
Leveraging IT
Managing IT
Information Management
Prof. Dr. Elgar Fleisch, Ass. Prof. Dr. Felix Wortmann ETH Zurich & University of St. Gallen (HSG)
Discovering Management – Information Management Thursday, April 23, 2015, 8-10am
