Professor Peter Weill - Director, Center for Information Systems Research (CISR)

Course Description

In recent years there have been spectacular failures of large information technology (IT) investments-major firm resource planning (ERP) systems initiatives that were never completed, e-business initiatives that were ill-conceived or poorly executed and new systems developed that were never used effectively. In contrast, some firms get above industry average returns from their IT investments year after year. These successful firms not only make better IT decisions, they also implement better, year after year. These firms must have better IT governance – they have the right people making and monitoring IT-related decisions more effectively than their competitors.

In this course we take the strategic perspective of the general manager and study how these leading firms get more value from their IT investments. The course focuses on the business value that can be achieved rather than the details of the technology. Issues around IT governance will pervade the course. An IT background is not required and this is not a "technical" course.

IT is pervasive in today's firms. For many firms IT is the single largest capital investment, often exceeding 50% of capital expenditure. IT is an important vehicle for firms to achieve their business goals and has enabled radically lower cost structures, new levels of customer service, new products, new markets and changed the nature of many jobs. No longer can all the IT decisions be delegated to the technical personnel of the firm. New skills are now demanded of all managers including dealing with IT issues with confidence and competence. Managers are required to make complex IT investment and capability decisions involving technical, competitive, financial, and organizational choices.

This is an integrative course including issues of business strategy, finance and the study of organizations and people also covered in other parts of the MBA. The creation of business value requires the successful integration of these issues with the potential of IT.

The course will commence by exploring a firm's different management objectives for investing in IT and introduce the concepts of IT Governance and the IT portfolio. Like any other investment portfolio the IT portfolio must be aligned with strategic objectives and balanced for risk versus return. Careful consideration will be given to the relationship between business strategy and the IT portfolio and assessing and firm's alignment.

After this introductory material two major topics will be addressed: IT Enabled Business Models and Ensuring Business Value.

Despite the "dot com" phenomena, the strategies of e-Business began 20 years ago and will continue well into the future. The rise and fall of the "dot com" did serve as a wake up call to traditional firms about how to do business differently. E-Business - the implementation of IT enabled business models - is now being led by traditional firms such as UPS, Fidelity and Schwab that generate more than 70% of their total revenues on line. The "e" will soon drop but the fundamental tenets: integrated value nets, single point of customer contact, and straight through processing will become part of the ongoing management toolkit and part of any firm's business model.

The focus of this part of the course is to understand some of the viable IT enabled business models for existing businesses. This part commences by introducing the concept of business models and then identifies the atomic business model building blocks that firms can combine and tailor to create a unique business model. The implementation of these models are studied via a series of case studies including MIT Sloan cases on UPS, Delta, and Manheim as they strive for the optimal combination of online and physical business models.

After consideration of the possibilities, we will move to the pragmatic issues of ensuring business value covering topics including: IT governance, the IT investment decision, providing the IT infrastructure and the role of the Chief Information Officer (CIO).
 
We will explore these issues via lectures, case studies, and seminar sessions where groups will present short sessions on topics and generate class discussion. Assessment will be based on a group presentation, an individual term paper, and contribution to class learning.

A large part of the learning will occur during the preparation of a term paper on a topic of the students' choosing. A number of suggested topics are provided on the assignments page and sample projects from previous years will be on the class server.

The course aims to provide:

• A practical understanding of the opportunities to create business value from IT
• A practical understanding of the way business value is created and the potential barriers
• A series of frameworks to help understand how to generate business value from IT
• A set of case studies of how business value was or was not generated
• A forum to discuss the issues and learn from each other in a collegial way
• An opportunity to apply the concepts in a project

Spring 2003 was the last time that this course was taught as 15.568B. In the future, this course will be named 15.571, Generating Business Value from IT.


Course Goals

Students should:

• Be prepared, as general managers, to lead the firm in the appropriate use of information technology to achieve the strategic intent;
• Understand from a business perspective how to generate business value from IT investments

Objectives

Students will:

• Be able to perform a business analysis to determine where information technology can provide business value
• Understand the concept of managing the information technology portfolio
• Be able to design and evaluate a firm's IT governance
• Be able to prepare an information technology investment proposal
• Understand why some firms are better able to convert their IT investments into business value
• Understand the strategic opportunities and threats of e-Business
• Have insight into the viable e-Business models
• Have experience in analyzing the potential impacts and opportunities of e-Business in a firm or industry
• Have gained insight into the way e-Business influences business strategy and changes the basis for competition
• Be able to contribute to the information technology planning process
• Be aware of the evidence regarding the impact of information technology on firm performance
• Be able to contribute to establishing the firm's IT architecture

Schedule and Preparation for Sessions

The schedule contains the details of the course with each major topic in bold. This course has three main methods of learning:

Class Meetings and Case Studies (all sessions except 14, 22, and 24). There are a few lecture/discussion sessions on the concepts with important pre-readings. The others sessions are detailed case studies that require significant preparation and discussion in class.

Term Paper (out of session time). There is a term paper for each student or pair of students to explore one topic in more detail. Completing the term paper in pairs is preferable but individually submitted papers are acceptable. To receive feedback, a one-page proposal is due between sessions 16 and 17 (non-compulsory and non-graded).

Group Presentations (sessions 14, 22, 24). Please read the group project topics listed below. By two days after session #4, you will need to email your top three choices for group projects (i.e. select to be in groups 1 through 6) to the TA. We will make every effort to accommodate your choices. To provide group stability, students are required to commit to take (and not drop) the course by the end of the second week of classes.

To gain most value from the cases it is important to come ready to discuss, argue, interpret, and give advice on the major issues. The cases will be run on a very interactive basis with all participants given an opportunity to contribute. To focus your reading and analysis a list of discussion questions for each case is provided at the back of this document.

When preparing case studies, I suggest three steps:

1. Read the discussion questions for the case.
2. Read the case and perform an industry analysis (e.g., Porter 5 factor analysis) and identify the critical success factors for the firm. These concepts will be discussed in sessions 1 and 2.
3. Prepare brief answers for each discussion question and meet with your group if time permits.
   

Please see the note on case analysis "The Use of Cases in Management Education" below.

The list of readings for sessions is prioritized in order of importance. You are expected to have completed the readings even though each reading may not be discussed in detail in every class. All readings are in the course pack or the required text.

Readings are of four types.

1. Cases that must ALL be carefully prepared.
2. Readings that are to be read carefully. These are listed in the pre-reading column, e.g., Timmers, P. Business Models for Electronic Markets.
3. Readings specified as (skim) are important topic areas in which you should have only a brief "overview" understanding.
4. Readings specified as (further) are recommended for students who are particularly interested in the topic. These readings are not provided in the reading pack.

The course is more heavily loaded with readings in the early sessions. There are no readings in the last 6 sessions to clear time for the term paper. Please plan your time for the course accordingly.


Reading Materials

Text

Text for the course:

• Weill, P., and M. Vitale. Place to Space: Migrating to eBusiness Models. Harvard Business School Press, 2001.
• A Course Pack available at the Sloan copy center.

Recommended, but not required, text is:

• Weill, P., and M. Broadbent. Leveraging the New Infrastructure: How Market Leaders Capitalize on Information Technology. Harvard Business School Press, 1998.

Both texts are available at the campus bookstore.

Cases, Articles, and Book Chapters

For a list of assigned course readings, see the readings section.

Books

The related resources page offers a list of books recommended for those interested in learning more about some of the topics covered in this course.


Assessment

The assessment of the course will be have the following components:

Please do not exceed the word limits for the group assignment or term paper, as the extra material will not be assessed. Instead liberally use appendices for all supporting materials.

For more information about the different assessments, see the assignments page.


The Use of Cases in Management Education

(Extracts from The Use of Cases in Management Education by Professor E. Raymond Corey, Harvard Business School, 1976.)