ISDS 3100 Exam 3 (FInal)

Let's now assume that you were not the only one who had been given the secret recipe in your grandma's will. Much to your surprise, your estranged cousin Bettie also received the secret recipe, and you just found out that she is entering the cake-baking business in your area! Now, your added value is now $__

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One of Five Competitive Forces: Ability of customers to influence the pricing and terms of purchase in their dealings with sellers.

Bargaining Power of Buyers

One of Five Competitive Forces: Ability of providers of goods or services to influence the terms and conditions under which their goods or services are sold. Example: High-tech microprocessor is only produced by a few suppliers globally, so they have upper hand in negotiations

Bargaining Power of Suppliers

Things done in ___ phase of SDLC: System Design Programming Testing

Build

There are three general approaches to the acquisition of information processing functionalities and the introduction of information systems

Build Buy End-user development

The ___ suggests that there is a lot of opportunity to create value using IT and it identifies 4 major phases and 13 steps to map firm/customer relationship where each step has opportunities for value creation

CSLC

Software development practice where code changes are automatically prepared for a release to production. -It expands upon Continuous Integration by deploying all code changes to a testing environment and/or a production environment after the build stage. -This allows teams to ensure that software can be released at any time

Continuous Delivery (CD)

development practice where developers frequently merge their code changes into a shared repository, often multiple times a day. The goal is to prevent integration problems

Continuous Integration (CI)

CAC stands for

Customer Acquisition Cost

CSLC stands for

Customer Service Life Cycle

Maximum amount of money the firm's customers are ready to spend in order to obtain the firm's product.

Customer Willingness to Pay (CWP)

Unless some customer is willing to part ways with his money in order to acquire what the inventor has created and this amount is larger than the SOC, no value has been generated. This describes:

Customer Willingness to Pay (CWP)

Two ways to create new value: 1) Increase ___ 2) Decrease ___

Customer Willingness to Pay (CWP) Supplier Opportunity Cost (SOC)

leveraging digital data and analytics as the means of digital value creation.

Data monetization

Things done in ___ phase of SDLC: Investigation Feasibility Analysis System Analysis

Definition

3 phases of SDLC process

Definition Build Implementation

blends software development (Dev) and IT operations (Ops) practices to shorten the system development life cycle -Delivering features, fixes, and updates frequently in close alignment with business objectives. -It emphasizes collaboration, automation, continuous integration, and continuous delivery, with a focus on improving and optimizing both the development and the deployment of software. -DevOps also focuses on creating a culture of shared responsibility, seamless communication, and streamlined processes.

DevOps

Non-IT professionals within the firm create the software. -Facilitated by advanced tools and cloud services, increases development speed and satisfaction but risks in quality and continuity. -Example: Marketing manager uses Excel to create a custom dashboard implementing formulas, tables without need from the IT department

End-user development

With this approach, the organization uses a software application created ad hoc by its end users rather than the firm's IS professionals. This is increasingly popular with tech-savvy employees who have access to ever more powerful digital technologies.

End-user development

A common approach is to use the system requirements document to identify the features that appropriate applications should have and group them into three categories: • ___ features. Those capabilities that the system must have. Systems that miss any one of these features are automatically discarded. • ___ features. Those capabilities that, while not essential, offer significant advantages for which the firm would be willing to pay a premium. • ___features. Those capabilities that are "nice to have" but produce small tangible advantages for which the firm is not willing to pay a premium.

Essential Value-adding Nonessential

Phase 1 of 4 Customer Interaction: Requirements has (2) steps: establish need for product/service and determining the product or specific attributes

Establishing Requirements Specification

Actual amount of money the firm disbursed to acquire the resources needed to create its product or service.

Firm Cost (FC)

The VVC identifies five sequential activities that must be completed in order to harness its power: These can be used to transform raw data input into information outputs that have more value than the inputs.

Gather Organize Select Synthesize Distribute

Custom-designed software programs are increasingly developed by software houses that "fill in" for the firm's ___ professionals. These arrangements, typically called software development outsourcing, vary greatly, with some firms only outsourcing the programming and testing stages, while others resort to an external provider to see them through the entire systems development life cycle (SDLC).

IS

___-___ strategic initiaties are foals that rely heavily on IT to be successful. Example: Amazon

IT-dependent

A resource is ___ when competitors find it impossible, or difficult, to duplicate

Imitable

Things done in ___ phase of SDLC: Installation Operations Maintenance

Implementation

Example ___ class of data monetization (1 of 3) Hospital using data to improve care protocols

Improving

The data monetization model identifies three general classes of data monetization strategic initiative:

Improving Wrapping Selling

Anything that is used to generate the product or service and then market it, sell it, and support it is to be considered an input resource i.e. raw materials, labor, transportation, storage

Input resources

Phase 3 of 4 Customer Interaction: Ownership has (4) Steps Add/integrate into existing inventory and business processes Control access and use of product/service Upgrade product/service if conditions change Analyze, diagnose, and repair the product or service as necessary

Integration Usage Monitoring Upgrading Maintain

___ class of strategic initiatives (2 of 3) Adopting new technologies that competitors use, implementing industry best practices, or internal benchmarking to ensure every unit performs at par with the best within the company.

Mirroring Capabilities

describes how products in a network increase in value to users as the number of users increases

Network Effect

___ class of strategic initiatives (3 of 3) Personalized marketing, new customer engagement programs, partnerships with other companies to expand customer bases, or exploring untapped geographic markets.

New Customer Relationships

Software whose source code is freely available for anyone to view, modify, and distribute. -No longer common

Open Source

___ class of data monetization (2 of 3): Spotify using listening habits to create personalized playlists. (enhance existing products or services)

Wrapping

Early efforts modeled firms as value chains that transform inputs into outputs through a sequential set of value-adding ___

activities

A firm is able to appropriate that portion of the TVC that would be lost if the firm did not partake in the exchange—a figure we termed ___ ___

added value

The ___ model of SDLC divides projects into small, manageable cycles or "sprints," allowing for iterative development and frequent assessment. -Flexible -Best for rapidly changing requirements documentation

agile

Company building up its resources, such as physical assets, technology, or intellectual property, over time.

asset-stock accumulation

Example of ___: tech startup invests heavily in research and development over several years to create a portfolio of patents, which then serve as critical resources for developing innovative products and defending against competition.

asset-stock accumulation

Response lag drivers create ___ Example: Firm develops special algorithms. It is hard for competitors to copy, so this acts as a barrier that protects the company's app from being copied

barriers to erosion

The higher the "time and money" it would take competitors to erode a firm's advantage created by its IT-dependent strategic intitiative

barriers to erosion

Example of ___: A manufacturing company continuously trains its workforce in the latest robotic and automation technologies to increase production efficiency and product quality.

capability development

Process by which a company improves and refines its abilities and skills over time, enabling it to operate more efficiently and effectively.

capability development

There are two main dynamics for rejuvenating and strengthening barriers to erosion over time:

capability development asset-stock accumulation

A firm has a ___ when it is able to outperform competitors thanks to some unique characteristic of its operations or its offerings. In other words,

competitive advantage

Project Barrier: Scale and scope of a project that makes it difficult for other companies to undertake similar projects due to high ___ or ___. Example: A tech giant builds a vast, global data center network. The sheer scale and integration of these data centers provide faster data processing services that smaller companies cannot afford to match.

costs, complexity

Complementary Resource Barrier: Assets or capabilities that complement the main technology or product, enhancing its effectiveness and creating a competitive edge that is hard to mimic. Example: A software company not only develops an innovative software but also provides exceptional ___ and ___ programs that are tailored to the specific needs of their clients.

customer service, training

collecting data quietly and efficiently in the background, without users noticing any disruption or change in the functionality of their devices or applications.

degree of unobtrusive data transfer

An IT-dependent strategic initiative is defendable when the magnitude, in terms of time and money, of one or more of the barriers to erosion is such to ___ imitation or to render it impossible or impractical.

discourage

___ ___ is created when some input resources that have a value of $x in their next best utilization are transformed into outputs for which customers are willing to pay $x + $v

economic value

Enabled by the cloud, digital platform revenues consist of customers' fees and subscriptions. While received over the customer lifetime, the CACs are ___, making the ability of a platform to retain existing customers fundamental.

front-loaded

The value ___" The firm's own value chain exists in a larger value network that comprises the firm's suppliers upstream and the firm's customers downstream

network

In digital platforms, effectively managing the ___ ___ requires firms to devise appropriate strategies. The examples of the past showed the importance of creating one side of the network, subsidizing it, or attracting members with a core feature and then leveraging the ecosystem value to lock them in.

network effect

Firm's added value: that ___ of the TVC that would be lost if the firm did not take part in the exchange.

portion

For aggregators, because of the prominence of network effects in their strategies, the ___ barrier is the most relevant.

preemption

Appropriating value: When a firm appropriates value, it does so in the form of higher ___. When customers appropriate value, they do so in the form of ___ (i.e., paying less than what they would have been willing to pay)

profits, savings

The useful life of an IT-dependent strategic initiative can be extended by ___ the barriers to erosion. Two processes, capability development and asset-stock accumulation, enable the firm to maintain its leadership position.

rejuventating

Four phases of customer interaction (which are 13 sub-steps)

requirements, acquisition, ownership, and retirement

Digital platforms that create value by creating and exposing resources for digital innovators can focus on ___ ___ as their IT-dependent strategic initiative.

resource creation

Creating value as a digital platform hinges on the firm's ability to create and market ___ that other firms are willing to pay for.

resources

Factors that create obstacles to prevent others from easily copying the strategy.

response lag drivers

Example of SIS: FedEx package tracking system enhances customer ___ and ___ from competitors.

satisfaction differentiates

A resource is valuable when firm is enabled to offer a value proposition that is either ___ or ___ ___ than competitors

superior, lower cost

Example of ___ IS: Retail store using POS system so managers can study sales and optimize stock levels for short-term operational and financial goals

tactical

Strategic information systems are those that are designed and developed to create and appropriate value. They differ from ___ information systems, which do not enable the creation of distinctive value

tactical

Four barriers to erosion: 1) ___ resource barrier 2) ___ resources barrier 3) ___ barrier 4) ___ barrier

technology complementary project barrier preemption

When building a platform or working as an aggregator, the goals and methods differ. As an aggregator, you have a lot of control, from how you interact with customers to managing the digital resources and marketplace. Being able to see all the ___ gives you a special chance to create value. Also, controlling the search and recommendation systems on the platform lets you develop strategies to increase sales and make more money from transactions. Example: Nintendo

transactions

Economic value is created through a ___ process when some input resources that have a value of $x in their next best utilization are transformed into outputs for which customers are willing to pay $x + $v.

transformation

The ___ model of SDLC is linear and sequential, where each phase (requirements, design, implementation, verification, maintenance) must be completed before the next begins. -Rigid, changes difficult and costly once a phase has been completed

waterfall

One of Five Competitive Forces: Extent to which the industry is open to entry by new competitors

Threat of New Entrants

Five Competitive Forces

Threat of New Entrants Threat of Substitute Products/Services Bargaining Power of Buyers Bargaining Power of Suppliers Rivalry among Existing Competitors

One of Five Competitive Forces: Extent product/services can be substitutes

Threat of Substitute Products/Services

difference between CWP and SOC (___ = CWP − SOC).

Total Value Created (TVC)

Phase 4 of 4 User Interaction: Retirement has (2) Steps Transfer, resell, return, or dispose of product or service Monitor evaluations and expenses related to the product/service

Transfer or disposal Auditing and accounting

Resource-based (3) Views of Competitive Advantage

Valuable, Rare, Imitable

___ ___ Analysis is about how information systems and technology can be used to introduce new activities and/or change the way the firm's activities are currently performed.

Value Chain

The economic value created is partitioned among those entities involved in its creation—a firm, its suppliers, and its customers

Value appropriation

series of steps where businesses collect, synthesize, and distribute information derived from their operations, market interactions, or customer data to create new products, improve services, enhance customer experiences, or streamline processes

Virtual Value Chain

___ class of strategic initiatives (1 of 3) Implementing advanced data analytics to monitor performance, increasing marketing efforts to boost brand recognition, or using public relations to enhance the company's public image.

Visibility

Name the 3 classes of Strategic Initiatives

Visibility Mirroring Capabilities New Customer Relationships

Two commonly used methods to implement the SDLC (Systems Development Life Cycle):

Waterfall Agile

The ___ of the transformation process is the product and/or service that the firm engaging in the transformation process is seeking to sell and that a customer is interested in acquiring

Output

___ migration approach: Well suited for multiunit operations (e.g., hotels, chain retailers), this approach allows the firm to run the new system in one business unit or in one of the firm's departments before rolling it out completely.

Pilot

___ are providers and orchestrators of resources that can be assets (i.e., tangible or intangible things the firm controls) or capabilities (i.e., competencies the firm had developed)

Platforms

___ Barrier: Company captures and controls critical resources or market territories before its competitors have the chance, effectively blocking others from entering the market. Example: A renewable energy company acquires the rights to all significant wind farm locations in a region, preventing other companies from developing competing wind farms in that area.

Preemption

Technology Resource barrier: ___ technology that a company develops, which is difficult for others to replicate or replace. Example: A pharmaceutical company holds a patent for a new drug formulation

Proprietary

Formal document issued by an organization to solicit vendor proposals for a specific product, service, or solution.

Request for Proposal (RFP)

Measure of the delay in competitive response. The longer the time and the higher the cost of replication, the more resilient the firm's advantage.

Response lag

One of Five Competitive Forces: Extent to which fierce battling for position and aggressive competition occur in the industry.

Rivalry among Existing Competitors

When you join a platform or an aggregator, you need to follow their rules and adjust to how they work. Since these platforms make money from transaction fees or subscriptions, sellers must focus on being easy to find. This often involves using strategies similar to ___ to help turn visitors into customers. Being visible on an aggregator is very important for sellers—they should really understand the algorithms that increase their exposure and use resources that might not be provided by the platform to help boost their visibility.

SEO

For an example of ___, think back to the latest job offer that you received and accepted. During the interview, you, the supplier of labor to the hiring firm, formulated some idea regarding your willingness to work for the company and how much you'd want to get paid. When the offer came through, it most likely exceeded this minimum requirement you had established, and you took the job . . . without returning the "excess salary" you received.

SOC

___: rational supplier will only provide the firm with its services (e.g., labor, managerial talent, raw materials) if it receives at least the same sum of money it would have received from any other buyer; r will accept any offer exceeding opportunity cost

SOC (Supplier Opportunity Cost)

Most used among agile frameworks due to its ability to deal with rapidly changing user requirements. Its strength lies in the simplicity of the approach and the rapid feedback cycles it enforces. Scrum software development progresses via a series of iterations called sprints, usually lasting two to four weeks. Sprints begin with a brief planning phase and end with a review and retrospective.

Scrum

___ class of data monetization (3 of 3): Telecom companies have access to vast amounts of location data through mobile devices. They can sell this data to advertisers

Selling

Phase 2 of 4 Customer Interaction: Acquisition has (5) Steps Determine where to obtain product/service Ordering Transfer funds or extend credit Take possession of product or receive service Ensure product/service meets specifications

Source Selection Ordering Authorization and Payment Acquisition Testing and acceptance

___ IS: Designed to support or shape competitive strategy of firm.

Strategic

Minimum amount of money suppliers are willing to accept to provide the firm with the needed resources.

Supplier Opportunity Cost (SOC)

___ IS are designed to assist firm in making decisions on the managerial level for more control, planning, and operational decision-making

Tactical