Recapitulation and Exam Preparation MIS Lecture 12 - Information ...

Recapitulation and Exam Preparation
MIS Lecture 12
Prof. Dr. Elgar Fleisch
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Exam information
• Date: 06.01.2009, 8.15 AM – 9.45 AM
• Room: ETH HG F1 (differs from normal lecture room)
• Language: English
• Mode: Closed book (exception: language g dictionary)
• Some tips
• Read all questions first before starting to write
• Consider the point/time ratio
• Mark important words of the questions
• Sketches and curves: focus on correct
labels/flows/slops/intersections
• Explicitly name effects
• Provide consistent and convincing reasoning
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Sample exam question
Imagine you are Chief Operating Officer (COO) of a hardware manufacturer. You are responsible for the
procurement and production of various products. The R&D department came up with a new product idea
and your task is now to establish the production process. The product consists of several individual
components which are assembled at your factory. To procure these components it is important to select
the appropriate coordination mechanism. Basically, you have the two coordination options for each
component: 1) you produce the component on your own (i.e. hierarchy) or 2) you buy the component from
the market. Of course, the choice of an appropriate coordination mechanism will depend on transaction
costs and the specificity of the component.
Questions
1. Outline the development of transaction costs for the coordination mechanisms market and hierarchy
in relation to specificity! (4 Points)
2. Name and describe two effects on transaction costs that are caused due to the introduction of
information and communication technology (ICT)! (6 Points)
3. Sketch the effect of the introduction of information and communication technology in relation to the
development of transaction costs for the coordination mechanisms market and hierarchy! (4 Points)
4. Explain how the introduction of new information and communication technology could affect your
choices for - 1) You produce a product on your own (hierarchy/company) and 2) You buy a product
from the market (6 Points)
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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3. Hybrid Coordination
• What is it? Why is it?
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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A SURVEY
IN THREE FRAMEWORKS
lstyne, THE STATE OF NETWORK ORGANIZATION:
Source: Al
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Network types
Attribute Internal Network Stable Network Dynamic Network
Purpose Introduction of market Flexibility through
Agility through
principles in the
partial outsourcing of massive outsourcing of
company
processes
processes
Vertical integration High - Ownership of
production factors held
centrally
Transactions Long time frame
High probability of
repetition
Medium - few
participants dedicate
their resources for a
decentralized creation
of value
Long time frame
High probability of
repetition
Low – resources of
many partner are
allocated projectoriented
by a broker
Medium time frame
Medium probability of
repetition
sustained, directly, m:n On request, with
Communication sustained, via (vertical) sustained directly m:n On request with
communication
limited life time,
channels, 1:n / n:1
directly, m:n
Organizational principles Shared Service, Profit
Centers, fractal
organization
Outsourcing, Supply
Chain Management,
Strategic alliances,
Keiretsu
Example Zara Riverwood (SCM-
Center)
Virtual companies
Vollbad
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Impact of IT on optimal coordination form
Transaction
Cost
Market
coordination
Hierarchical
coordination
1. Effect fixed TC - IT
2. Effect variable TC - IT
3. Effect Specificity - IT
Specificity
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Impact of IT on Division of labor on a task level
Cost
Total cost
2.
Transaction cost
Total cost - IT
Transaction- IT
1.
Opt* - IT
Opt*
Production cost
Production cost - IT
Level of division of work
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Path dependence
n n
A n B
Monopoly position of
technology A
Preferences of R-
Agents compensated
Adoption
Preferences of S-
Agents
compensated
n A
n B
Monopoly position of
technology B
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Increasing returns
Output
Returns
• Winner takes it all
• Mechanisms of positive feedback
• Knowledge intensive products
• Unpredictability
• Lock-in
• „Bad solutions“
Cost
Input (# adopters)
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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The shift from a seller’s to a buyer’s market reduces
the margins of products
Margin
Combined
Service
Commodity
Time
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Horizontal and vertical integration
ti
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Optimal level of integration
Cost / Benefit
Benefit of integration (speed,
rationalization,...)
Cost of integration (cost and
complexity of change, employee
requirements,...)
Opt*
Level of integration
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Positive Emotion
The ROI …
Convenience
Self service
Additional Features
Turnover
TTM of new Products
TTM of Changes
Market research
Sales Controlling
ROI
Cost-efficient Management Tool for B- and C-CustomersCustomers
Management of Complexity
Project cost (HW, SW, Change)
1. Catalogue
Cost
Licenses & Maintenance
2…nn Catalogue
Changes
Process cost & Error cost
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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How to deal with hidden costs?
Cost
high
„Hidden costs“
included
low
„Hidden costs“
not included
low
high
Level of automation
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Sample process for creation and publication of content
Terminology
Management
Specialists
Department
Content-Management
Content-
Management
Terminologist
Author
Content-Manager
Quality-Manager
Content-Manager
Taxonomy
Care
Receive Revision
Request of Taxonomy
Creation of Information Object
Create
Information Object
Revision of
Inform. object
Receive Revision
Demand
Store & Allocate
Metadata
Formally approve
Information Object
Specialists
Department
Approve the
content of the
Information Object
Formulate
Revision
Demand
Formulate
Revision
Request of Taxonomy
Content-
Management
Knowledge Worker
Webmaster
Use
Publication
Read & use
Information Object
Integrate
Information Object
= „or“
Source: Courtesy of Prof. Gerold Riempp , European Business School, EBS
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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3. Media breaks
• Media break = when one piece of information is transferred
from one media to another
• Media breaks often involve manual work
• Automate by avoiding media breaks
• Speed
• Errors
• Cost
Letter PC Printer/Fax ERP List PPS
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Business process model
Process
Development
Measure
Measure
Project based
process design
Process Control
Process
cycle
Output
Chain
of Tasks
Task
Task
Task
Information
System
Application
Database
Application
Database
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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Web 2.0
• Services, not packaged software, with cost-effective
scalability
• Control over unique, hard-to-recreate t data sources that t get
richer as more people use them
• Trusting users as co-developers
• Harnessing collective intelligence
• Leveraging the long tail through customer self-service
service
• Software above the level of a single device
• Lightweight g user interfaces, development models, AND
business models
• Analytic data management
• Network economics
12/15/2008 Prof. Dr. Elgar Fleisch – D-MTEC, © Copyright ETH Zürich 2008
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