Information Systems

MSI 101

Manu K. Gupta
Department of Management Studies,

IIT Roorkee.

Session 2
Welcome to this Module!

• Session 1 - Introduction to Information Systems and IT Value

• Session 2 - Aligning IT with Business Strategy and Operating
Models
• Session 3 - IT-based Business Models
• Session 4 - IT-Based Decision Making and Data-Driven Organization
• Session 5 - IT Governance, IT Investment, and Healthcare IT

1
Last Lecture

• Data vs Information
• Information systems – three fundamental types
• Information technology vs information systems
• Importance of IS and its key role in business
• IT value in Modern businesses

2
Session 2
IT Value in Modern Business

Definition: IT value refers to the benefits that IT brings to an

organization, such as increased efficiency, enhanced innovation, cost
savings, and improved customer experiences.

• Efficiency gains (automated processes)

• Better decision-making (data analytics)
• Competitive advantage (e.g., Amazon’s use of AI/ML for
recommendations)
• Innovation and new business models (Airbnb, Uber)

3
Michael Porter’s Competitive Force Model

• The most widely used model for understanding competitive

advantage.
• A general view of the firm, its competitors, and the firm’s
environment.

4
Michael Porter’s Competitive Force Model

• The most widely used model for understanding competitive

advantage.
• A general view of the firm, its competitors, and the firm’s
environment.

4
How IT Drives Competitive Advantage?

Michael Porter’s Competitive Forces:

• IT as a driver for reducing costs

• Enhancing product differentiation
• Focus on market niche
• Strengthening customer and supplier relationships

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Strategy Description Example
Low-cost Use information systems to produce prod- Walmart
leadership ucts and services at a lower price than
competitors while enhancing quality and
level of service
Product dif- Use information systems to differentiate Google
ferentiation products, and enable new services and
products
Focus on Use information systems to enable a fo- Hilton Hotels
market niche cused strategy on a single market niche;
specialize
Customer Use information systems to develop Amazon
and supplier strong ties and loyalty with customers and
intimacy suppliers

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Case Study: Amazon’s Use of IT for Value Creation

Company: Amazon
IT Investments: E-commerce platform, cloud computing (AWS), AI for
recommendations, logistics automation
Business Impact: Faster deliveries, personalized recommendations, cost
efficiencies through automation

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Discussion: How IT is Affecting Your World?

Think about the businesses you interact with regularly (e.g., banks, social
media, e-commerce).
How are these businesses using IT to create value or gain a competitive
edge?

Group Activity: Discuss in pairs and share your thoughts with the class.

9
Challenges in Leveraging IT for Value

Challenges:

• High initial costs of IT infrastructure

• Rapid technological changes (need for constant updates)
• Cybersecurity risks
• Skill gaps

10
Importance of Aligning IT with Business Strategy

• Definition: Alignment ensures IT investments support business

goals.
• Benefits:
• Increases operational efficiency.
• Drives innovation and growth.
• Enhances customer engagement.
• Provides a competitive edge.
• Key Goal: IT should be integrated into the overall business strategy.

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Wireless telecommunication subscribers in India

Source: TRAI (Telecom Regulatory Authority of India)

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Can you think of an example in India?

Reliance Jio:

• Business Strategy: Disrupt the Indian telecommunications market

with affordable data services and a digital ecosystem.
• IT Alignment: Developed a nationwide 4G network and created a
digital ecosystem, including JioMart, JioTV, and JioMoney.
• Outcome: Within just 3 years of its launch in 2016, Jio captured a
35% market share in the telecom sector, contributing to a 94%
increase in India’s data consumption, largely driven by its digital
strategy.

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Adjusted profit after tax (APAT) for Reliance Jio Platforms

Source: HDFC Securities; RIL (Jio)

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Company Business Objective Key IT Initiatives Notable Achieve-
ments
Reliance Disrupt Indian tele- Nationwide 4G Over 450 million
Jio com market with af- network, digital subscribers, lead-
fordable data plans ecosystem (JioMart, ing online grocery
and digital services JioTV, JioMoney) platform
Robust mobile app, Over 330 million
Paytm Become India’s lead- integration with pay- users, billions of
ing digital payments ment gateways, IT transactions daily,
platform security expanded services
Infosys Investment in AI, Over 270,000 em-
Global leader in con- machine learning, ployees, recognized
sulting, technology, automation for innovative use of
and outsourcing technology
Flipkart Scalable IT infras- Millions of cus-
India’s largest e- tructure, advanced tomers, wide range
commerce company analytics of products, signifi-
cant growth 15
IT-based Business Operating Models

• Four key IT-based business operating models:

1. Unification Model
2. Diversification Model
3. Replication Model
4. Coordination Model
• Each model aligns IT strategy differently to fit business needs.

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Standardization and Integration

• An operating model has two dimensions.

• Standardization: Defining exactly how a process will be executed
regardless of who is performing the process or where it is completed.
• Integration: It links the efforts of organizational units through
shared data.

Standardization Integration Operating Model

High High Unification
High Low Replication
Low High Coordination
Low Low Diversification

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• Diversification: Independence with Shared Services
• Coordination: Seamless Access to Shared Data
• Replication: Highly Standardized
• Unification: Standardized, Integrated Processes

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Examples

Reliance Industries – Conglomerate (Energy, Telecom, Retail,

Petrochemicals)
Maruti Suzuki
Cafe Coffee Day (CCD): Retail (Coffee Chain)
Fabindia
Tata Group – Conglomerate (Automotive, IT, Hospitality, Steel, etc.)
Mahindra group (automotive and tech Mahindra)
ICICI Bank group
Tata Steel - Steel Manufacturing

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Examples

• Reliance Industries – Conglomerate (Energy, Telecom, Retail,

Petrochemicals)
• Coordination models
• Other Indian companies – ICICI Bank group
• Tata Group – Conglomerate (Automotive, IT, Hospitality, Steel,
etc.)
• Diversification model
• Other Indian companies – Mahindra group (automotive and tech
Mahindra)
• Cafe Coffee Day (CCD): Retail (Coffee Chain)
• Replication Model
• Other Indian companies – Fab India
• Tata Steel – Steel Manufacturing
• Unification Model
• Other Indian Company – Maruti Suzuki

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Summary

• Porter’s competitive force model

• IT for competitive advantage
• IT for value creation
• Challenges in leveraging IT for value
• Standardization and Integration
• IT-based business operating models

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