INSS737 - Management of Information Systems - Fall 2000

The IT Business

Lecture notes

IT is a business within a business. The firm IT belongs to used to be referred as the "host" organization, to highlight this notion of a business (IT) within a business (the firm). This is good and bad for IT. Good because mobility between firms is easy, given similar characteristics of IT in all firms. This is also bad, because IT is many times seen as not belonging to, part of, an organization, what makes internal career paths difficult and the CIO job perceived as technical, not part of the top management team.

Before we discuss the issues of IT in organizations, lets take a glance at the computer industry as a whole. We can roughly divide the computer industry into six segments:

Industry Sales (million of dollars) 1996 rank
computers, office equipment 261,585 1
computer and data services 80,571 4
network communications 61,886 6
semiconductors and CPU 50,451 2
computer software 40,693 3
computer peripherals 29,788 5

No single organization is a leader in all segments. In most cases, however, one or two firms dominate each segment. See the enclosed list of the 1999 Top 20 firms in IT. As you can see the top three firms (IBM, HP and COMPAQ) are primarily computer systems manufacturers, followed by Lucent -- the top network communications firm, the next two (Motorola and Intel) are semiconductor and CPU manufacturers. The sales of the top software company (Microsoft) amounted to about 22.5% of the sales of the top computer system manufacturer (IBM).

Finally, computer and data services and network communications became a bigger business than software and semiconductors and CPUs, just in three years. I suggest that you also take a look at the links to each industry segment, above, to understand the relative importance in each segment of firms familiar to you.

The IT (internal) business is analyzed in the textbook in terms of products, consumer, costs, channels of distribution, competition, promotion and price (pages 589-602). The emphasis is on the change from an internal, sole, producer to a mixed environment of outsourcing, software packages, and external competition - as we discussed in prior classes.

Case instructions

We will use the same simple framework to analyze Singapore Unlimited case: (a) what is the problem, (b) what are the alternatives, and (c) what are the recommendations, like we have done before.

1. What is the problem?

Why is it a problem? Is there a decision involved? If it is a problem, what are the pros and cons that makes it a problem?

2. What are the alternatives?

What can be done? There is always the do nothing alternative. If everything went well (rosy scenario) what we would like to do? If everything went wrong (doomsday scenario) what should we do? What can we do in between the rosy and the doomsday scenarios? What are pros and cons of each alternative? Be sure to list not only alternatives, but pros and cons.

3. What is you recommendation?

What criteria should we use to select the most suitable alternative in the case? Why you are recommending one alternative versus the others? How this alternative satisfies your criteria? How to implement the alternative you selected?