MASSACHUSETTS INSTITUTE OF TECHNOLOGY SLOAN SCHOOL OF MANAGEMENT 15.565 Integrating eSystems: Technology, Strategy, and Organizational Factors (Primarily for undergraduates, ESD, and non-MBA students) 15.578 Global Information Systems: 1 Communications & Connectivity Among Information Systems (Primarily for Sloan MBA students) Spring 2002 Lecture 1 INTRODUCTIONPERSPECTIVE • ADVANCES IN INFORMATION TECHNOLOGY (IT) PROVIDE OPPORTUNITIES FOR DRAMATICALLY INCREASED CONNECTIVITY AND INTEGRATION AMONG SYSTEMS ENABLING: – NEW BUSINESS STRATEGIES AND OPPORTUNITIES – NEW FORMS OF INTER- AND INTRA-ORGANIZATIONAL RELATIONSHIPS 2------BUSINESS FORCES • GLOBALIZATION • WORLD-WIDE COMPETITION • NEW BUSINESS MODELS • VOLATILE ENVIRONMENT INCREASED CONNECTIVITY • INTER-ORGANIZATIONAL RELATIONSHIPS • INTRA-ORGANIZATIONAL COORDINATION TO INCREASE EFFICIENCY & EFFECTIVENESS • ADAPTABLE ORGANIZATIONAL STRUCTURES INFORMATION TECHNOLOGY (IT) OPPORTUNITIES • CONTINUED DRAMATIC COST/PERFORMANCE AND CAPACITY ADVANCES • NEW IT ARCHITECTURES ENCOMPASSING: EXTENSIVE COMMUNICATION NETWORKS / INTERNET ACCESSIBLE DISTRIBUTED DATABASES ENHANCED HUMAN INTERFACE / WEB APPLICATIONS 3SOME RECENT EXAMPLES AND CHALLENGES • RAYTHEON PREDICTS BIG PROFIT SHORTFALL “Many problems related to integrating acquisitions ..” (BG) • GOING NOWHERE FAST IN CYBERSPACE “Poor integration of the two units (FedEX & RPS) have kept it from capturing much Net traffic ...” (BW) • LACK OF IT INTEGRATION FACTOR IN HMO CRISIS “Harvard Pilgrim had separate financial and billing systems and never fully integrated them ...” (CW) • MARKET MAKES IT PRIORITY IN DRUG MERGER “Competitive pressures make it priority for (Glaxo Wellcome and Smith-Kline Beecham) to combine their systems ...”(CW). 4OPERATIONAL EXAMPLE (FINANCIAL SERVICES) • SEPARATE SYSTEM FOR EACH PRODUCT AREA / COUNTRY Loan Management System Database 1 (Oracle) Cash Management System Database 2 (DB2) Letter of Credit System Database 3 [SQL Server] CONCERNS: - GLOBAL RISK - GLOBAL PROFITABILITY - GLOBAL CUSTOMER STATUS 5Loan Management System Database 1 (Oracle) INTEGRATED INFORMATION FROM DISPARATE SYSTEMS New consumer examples: MaxMiles (freq flyer) Yodlee (bank accounts) 6 Cash Management System Database 2 (DB2) Letter of Credit System Database 3 [SQL Server]WHY IS INTEGRATED INFORMATION IMPORTANT? • WHEN RUSSIA SUSPENDED PAYMENTS ON ITS DEBT A FEW YEARS AGO: - How long did it take financial services organizations to determine impact on them? • WELL, THAT WAS AN EXCEPTIONAL EVENT: -- Unlikely to happen again (except in Brazil, Argentina, LTCM, …) - Never happened before 7“Citicorp faces record loss of $2.5 billion in quarter” - 1987 Merrill Lynch makes management changes - Boston Globe, p.41, May 5, 1987 Air Force general defends B-1 8INTERACTION OF STRATEGY, TECHNOLOGY, AND ORGANIZATIONAL FACTORS Success Technology Actions Organizational Actions Strategic Applications 9COURSE STRUCTURE Part 1: STRATEGIC CONNECTIVITY [20%] Part 2: PHYSICAL CONNECTIVITY [30%] (Communications, Networking, Internet Technology - emerging technologies, e.g., ATM, DSL) Part 3: LOGICAL CONNECTIVITY [30%] (Distributed databases, Web, and data semantics - emerging technologies, e.g., XML, Web Services) Part 4: ORGANIZATIONAL CONNECTIVITY [20%] (Loosely-coupled organizations, Intra-organization data standards) 10STUDENT BACKGROUND • NAME, DEPARTMENT, YEAR • RELATED BACKGROUND – PRIOR IT-RELATED COURSES – EXPERIENCE • STRATEGY AND APPLICATIONS • COMMUNICATION TECHNOLOGY • DATABASE TECHNOLOGY • ORGANIZATIONAL ISSUES • WHY 15.565 / 15.578? 11COURSE OPERATION • MATERIALS – COURSE READINGS (MOSTLY ARTICLES -- FROM COPYTECH) – SUPPLEMENTAL READINGS (DEWEY LIBRARY AND WEB) – COPY OF LECTURE NOTES • ASSIGNMENTS (Subject to change) – ASSIGNED READINGS, BE PREPARED FOR CLASS … – 4 WRITTEN HOMEWORK ASSIGNMENTS (HW) [20%] – TERM PROJECT (578) / COMPUTER PROJECT (565) [25%] – CLASS PARTICIPATION [10%] • EXAMINATIONS – MID-TERM [20%] – FINAL [25%] 12TEN REASONS WHY YOU MIGHT NOT LIKE THIS CLASS 1. MULTI-CULTURE (STRATEGY / TECHNOLOGY / ORGANIZATION) - There is at least one area that you know too much about or do not like 2. DOES NOT FOCUS PRIMARILY ON LATEST “BUZZWORDS” - Addresses issues of lasting long-term importance 3. SOME READINGS MORE THAN A YEAR OLD - Sometimes really good ideas last more than a year 4. COURSE STILL EVOLVING 5. CONSIDERABLE WORK LOAD (BUT CONSISTENT WITH CREDITS) 6. HIGH EXPECTATIONS 7. THE FACT I COULD NOT THINK OF FOUR MORE … • WE WILL WORK TO MAKE COURSE VALUABLE AND ENJOYABLE • FILL IN STUDENT INFORMATION SHEET BEFORE YOU LEAVE