Porter's Value Chain Model

According to Michael Porter (1985), there are two kinds of activities can be conducted from any organization. They are primary activities and support activities.

The five primary activities deals with material are purchased, processed into products and delivered to customer. These activities form in the chain from manufacturing to servicing afterwards. The work progresses according to the sequence, value is added to product at each activity.

1.      Inbound logistics: the value chain starts from this point with adding value by processed for incoming materials (receiving, storage...).

2.      Operations: the materials are used, which adds important values to process by  bring raw materials to products or services.

3.      Outbound logistics: the delivery (packaging, storing, shipping) for products adds more value to the process.

4.      Marketing and Sales: this step tries to sell products to customer and adds value to process by increasing demand of market to products.

5.      Service: such as warranty service or upgrade notification is performed for customer to adding after-sale values to process.

These primary activities are supported by the following support activities:

1.      Organizational infrastructure

2.      HR management

3.      Technology development

4.      Procurement

            Each support activities can support to any or all primary activities, they also can support to each other.

The value chain model can be used in difference ways. The first one, company analysis can apply it, by systematically evaluating the company's key process and core competencies. A second one, an industry analysis can identify various activities then search for specific information system to handle these activities. Finally, the value chain can be used either individual company or industry by overlapping different types of information system to support activities.

Improving the legacy systems by Re-engineer

Re-engineering in IT means extracting the business logic and data from current systems then moving to new system. The term “re-engineering” have different meaning with the term “business process re-engineering” or “BPR”. The “system re-engineering” refers to software only while BPR refers to redesigning the business processes.

People thinks existing systems as a debt that have to be maintained, and avoid developing the new, exciting systems. That thinking way is the main problem in IT management. Instead, management team needs to understand the existing systems as asset. When developer can reverse engineer a system, to extract the underlying business logic, they can forward engineer that logic to new system.

Charles Bachman proposed a new system development life cycle, which can include all four basic activities: maintenance, enhancement, new development and migration. This life cycle presents on circular.

As in case study of GTE Directories, a company in advertising industry with Yellow Page product, they have four legacy systems/databases. These databases were designed application-by-application at original, so they didn't have any business relationship to each other. The management team decided using reverse engineering tools to help them improve databases. A designer modelled existing database to graphical then made changes by manipulating icons. The reverse engineering tool helped to draw complete and consistent relationship diagrams. Once new databases design had been created, the designer forward engineered the database design to generate database statements.

Security’s Five Pillars

There are five pillars of security techniques nowadays. They are:

1. Authentication: means verify authenticity of users. It depends on three basic factors: knowledge factor, ownership factor, and inherence factor. “Knowledge factor” or “something they know” means things only they know, e.g. password or first pet’s name. “Ownership factor” or “something they have” means things belong to them, e.g. the token or digital certificate. “Inherence factor” or “something they are or do” means a physical characteristic, e.g. fingerprint or retinal eye.
2. Identification: means issuing and verifying access privileges. In principle, identification is certified able to do certain things. Identification has moved to application level, where people have an authentication at every application. Because identification at application is inconvenient for user, so companies are moving to single-sign-on technique.
3. Privacy and Integrity: means keeping information from being seen (privacy) and changed (integrity). The most common method of protecting data is encryption. Two common types of encryption are public key and secret key. DES is an example of secret key, while RSA is an example of public key.
4. Nonrepudiation: it can prove that communication between sender and receiver is secure and there is trusted third parties can monitor their transferring data. This technique prevents man-in-middle attack or phishing.

Managing Outsourcing: Organizational Structure

There are lot of factors affect to handle a successful working relationship in managing outsourcing. These are four popular factors below:

1. Organizational Structure
2. Governance
3. Day-to-day working
4. Supplier development

We will discuss about organizational structure in this journal. The vendor of outsourcing tries to earn more while the client tries to cutting cost. From that difficulty, the vendor and client do not have the same goals when they put efforts to their joint. Therefore, they have to discuss about how they are going to joint manage the contract they sign. In case of Eastman Kodak Company, they has an incremental agreement with IBM in outsource the managing of data centre at U.S. then expand to six international sites.

A typical solution for parties is layered joint teams. A top-level team has final word for conflict resolutions. An operational team monitors everyday functioning. A special-purpose team deal with pressing issues. Come back with Kodak, their management structure has some elements: a management board, an advisory council, a supplier and alliance management group, etc.

Even though, the joining is a common management structure but a single executive still needs in charge at each side of their relationship. At client side, this position is the relationship manager. A relationship manager should good at negotiating, sweet talk, and effective communication between end users and service providers.

Working Outward: Business-to-Customer

In most industries, companies must utilize computer systems to advance in their competition. Industry leaders advance their systems to state-of-the-art to address four aspect of competitiveness: quality, service, innovation, and speed.

More experience leads the firm to a set of connected curves, rather than one continuous learning curve. A company properly identified a new market and the technology to exploit it can shift to new experience curve. An electronic tender is an electronic communication capability on a product or service. An electronic tender allows another computer cared for, attended to or kept track of it. Becoming customer driven is the current focus of companies.

By involving of Internet, Business-to-Customer (B2C) has both new advantages and problems.

Advantages of B2C E-Business

• Internet helps business overcome the geographic limitation.
• Reduce order-processing.
• Available online to serve customer at anytime (24/7).
• Quickly address concerns and customize responses.
• Pay more attentions to customer services and personalized.
• Provide relate products and services with things are customer looking for.
• Sell goods direct to customer without other distribution channels.

Potential B2C problems

• Systems not always reliable or poorly designed.
• Shipping challenge can completely avoidable by connect to supply chain solutions.
• Employee deals with technical problems and customers. Less expertise in a new market segment is a problem, too.
• Each area has difference legal system that made business always be aware.
• All competitors can easy create an online business.
• The price competition reduces profit margins of all companies.
• The competitors appear from everywhere, not only within local area.

Leading aspect of the CIO’s role

If CIOs have an important role in aligning IT into business, they must understand the business. With that understanding, they can create a vision and encourage their firm apply IT to business.

Understanding the Business
Nowadays, understanding the business operation’s environment is important because the relationship with other firms affect the business competes. There are seven approaches for CIO to understand the business:

1. Encourage project teams to study the marketplace
2. Concentrate on lines of business
3. Sponsor weekly briefing
4. Attend industry meetings with line executives
5. Read industry publications
6. Hold informal listening sessions
7. Partner with a line executive

Creating a Vision of the Future and selling it
What is a vision? A vision is a statement of how someone wants future to be or believe it to be. It is used to set direction of an organization. When has a vision, then CIO can formulated a strategy on how to bring the vision into being.

Why develop a vision? A vision of desirable future can provide stability when it sets direction for an organization. In today’s environment, events are likely to appear random. Thus, direction setting and short-term explorations within that space are most appropriate.

Encouraging champions of IT projects: A champion is someone with a vision who gets it implemented by obtaining the funding, pushing the project over difficulties, putting his or her reputation on the line, and taking on the risk of project. CIO’s need champions to encourage IT experimentation, especially by people from the operating units. The champions need three things from IS management: information, resource, and support.

The trends of Information Technology

The trends of IT can recognize through changes in hardware, software, data and communication.

Hardware trends

At first, the main hardware concerns of data processing manager were machine efficiency and tracking new technological development. From 1980s, the trend of personal computer (PC) started. Now, the PCs trend is established. Client-server computing forms the underlying structure. Telco and handheld manufactures raise the trends of Mobile Computing. Telco will handle both voice and data. Wireless involving means people can work anytime-anywhere.

Software trends

Since 1960s, IS management discussed purchasing service from external provider. Then topics expanded to software development life cycle. During the 1990s, software buyers forced driven to open systems. ERP was a major trend in 1990. Like hardware, network centric software is becoming more popular. Web-service is another change in software. The Business Process Management Systems (BPMS) will become the future of software. Therefore, the process centric applications will be the next trend of software.

Data trends

In 1970s, database management systems became the technical solutions for managing data. With distributing data, in 1990s, the trend was expanding from to information resources. Data warehousing and mining had been discussed. Knowledge Management is of prior important in the new economy because of intangibles hold competitive value. Two major data issues now facing CIOs are security and privacy.

Communication trends

LAN and WAN appeared. Then, Internet helped people to search the Web, chat, send email, transfer files, etc. Internet’s protocols have become the standard for LANs and WANs. Wireless is the latest technology.