Virtual Networking

Module 8 DQ 2 
Many corporations are using the virtual network approach. Describe this approach in your own words. What are some advantages? What are the disadvantages?
Optional: Extranet Design
For additional information, the following is recommended: Review the Extranet Design page on the Horsburgh.com website.
http://www(dot)horsburgh(dot)com/Home/h_extra.html
Objectives: 
1. Connect information systems to business strategy.
2. Evaluate outsourcing versus in-house development of information systems.
WEEK 8 LECTURE NOTES
Managing Information Technology
Introduction
For most working professionals, it is hard to remember what life was like before the Internet. It is difficult to fathom that this modern, commonplace technology has been used in most organizations for only the past ten years or so. The Internet has revolutionized the workplace and significantly changed how most people spend their time at work. Just take away e-mail, Intranet sites, and Blackberries and see how much productivity is lost!
The Internet Economy
It should come as no surprise that by the mid 1990s the Internet captured the hearts and minds of many entrepreneurs and business executives as a means to change the way we conduct business. The problem, according to Michael Porter and others, is that many entrepreneurs and business executives confused the Internet with strategy. Rather than thinking of ways in which the Internet could enhance strategy, they simply adopted the Internet as their strategy. This turned out to be a fatal mistake for the vast majority of Internet start-ups, and even caused some of the more traditional companies to lose their focus and make a few missteps.
The financial services industry provides a case in point. In the mid 1990s, many medium- and large-sized banks decided to build Internet banks separate from their traditional brick-and-mortar operations. The onslaught of stand-alone Internet banks, such as E-TRADE, forced them into head-to-head competition. Within five years, almost all these banks had either closed the doors on their Internet subsidiaries or integrated them into the parent organization, offering a full suite of products and services online as a complement to what was offered in branches and call centers.
As Porter points out, the key is not whether to use the Internet or not, because no business today can afford to ignore the Internet technology. The trick is figuring out how to use the Internet in ways that build on sound business practices and strategies. In essence, the Internet has become a critical factor in how businesses position themselves strategically. Trade-offs between Internet and traditional approaches will factor into every link of the value chain, from inbound logistics to after-sales service.
The Rise and Fall of the Dotcoms
Companies such as eBay and Amazon.com are the success stories. They have taken direct marketing and sales to new heights via the Internet. Yet it is more than just technology that gives them their competitive edge. Their successful outcomes are due to the use of strategic planning around a strong product line combined with leading-edge technology. A closer look at Dell Computer's strategic use of vendors and inventory management will show how this computer company continues to offer consumers what other companies seem unable to duplicate. There is no doubt that Dell has used technology as part of its strategic relationships with suppliers and customers. It is a model for how strategy and technology can no longer be considered discreetly, but rather are essential parts of the entire strategic business planning process.
Companies that exceed the competition in matching strategy and technology have a clear advantage. Yet many of the dotcoms have failed because they were missing the key ingredient: a product the consumer wanted. The combination of all three strategy, technology, and products are needed to build a robust electronic business.
Many dotcoms also engaged in practices that were simply not sustainable over time. Michael Porter points out several on the revenue and cost sides of the profit equation. Many of the dotcoms of the late 1990s were notorious for subsidizing the purchase of their products and services in order to attract customers to their Web sites. Once buyers become accustomed to artificially low prices it is very difficult to raise them without significant customer attrition. It is difficult to build brand loyalty with customers who were attracted because of price. The dotcoms often subsidized by acting as advertising portals for other vendors. As Porter suggests, this artificially depressed the costs if doing business on the Internet. These artificial businesses were bound to fail in the absence of strong client attraction and retention capabilities.
The Invasiveness of Information Technology
Technology affects every part of the human life. Whether one uses a DVR to record a favorite TV show or a Blackberry to send e-mails from the airport, technology has affected how people think, what people do, and how people spend their leisure time. Almost every product that people depend on today comes with an on-off switch and requires some type of power. Some people feel technology has become too invasive and people have little choice but to turn on, tune in, and be engulfed with high-speed tools intended to simplify our lives. The question may become: Do people lose a sense of self and meaning when forced to use so much technology? In the business context, another question begs asking: How much information is too much? When does too much information actually become counterproductive? Are we losing our creativity and ability to innovate?
Consider the different technology advances of our lifetime. If you map out in chronological order the acquisition and use of technology, it will show that the pace of acquisition and the sophistication of the technology has grown more rapidly in the past ten years than the ten years prior or the ten years prior to that. Chips that now fit on the tip of a finger have more capability than computers that used to take up entire buildings.
There is a certain irony in the fact that technology provides both the means by which massive amounts of information can be transferred and shared and at the same time the very obstacle that often prevents us from having the right information we need to make sound and timely decisions. The technology itself is neither good nor bad we simply need to understand the impact it has people. As Naisbitt (2001) points out, "Humans have introduced technology without thinking about relationships will change, about exactly what will be enhanced and what will be displaced, what will be diminished" (p. xv).
An example of this is in virtual team environments. Team members may never meet face to face with the manager or with each other. Interrelationships between managers and employee, once built on face-to-face activity and trust building, are relegated now to phone conversations once a week or month. Sales people, armed with the latest in wireless technologies, never come into the office anymore to find a supportive peer group or learn new techniques. New hires are left to mentor themselves with online programs.
Technology and Knowledge Management
One of the most controversial topics about the use of technology in organizations relates to knowledge management. As our economy has evolved from the technology economy to the knowledge economy, many organizations have mistakenly equated technology with knowledge management. However, information is not the same as knowledge, and technology provides only one piece of the knowledge management puzzle. Technology can enhance, but not replace entirely, the human ingredient to knowledge management. What is knowledge management? In most organizations, knowledge management requires answering the following questions:
• What do we, as an organization, know?
• Where is that knowledge located? (E.g., information technology systems, procedures manuals, people's heads.)
• How can we get our arms around this knowledge? (E.g., capture it, make sense of it, house it.)
• How can this knowledge be shared and leveraged for competitive advantage?
• How can we use what we know to generate new knowledge?
Conclusion
Technology has revolutionized the way we work today. Over the past ten years, we have seen that technology is a mixed blessing for organizations. Thoughtful leaders will learn from the experience of the Internet economy and the rise and fall of the dotcoms that technology is not a replacement for sound business strategy. Firms still have to show how they add value for their customers. Other challenges related to technology include information overload and the invasiveness of technology, which often leads to undesirable consequences, including the loss of the high touch or human side of doing business. As businesses are required to capture and leverage what they know, leaders must understand that technology provides only part of the solution. Simply housing large amounts of information on an Intranet site, for example, is not managing knowledge.
References
Hagel III, J., and Brown, J. S. (2001).Your next IT strategy. Harvard Business Review, 79(9), (p. 105-113). Retrieved October 26, 2005, from EBSCOHost database. AN: 5329301.
Naisbitt, J. (2001). High tech, high touch: Technology and our accelerated search for meaning.London: Nicholas Brealey.
Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review, 79(3), (p. 62). Retrieved October 26, 2005, from EBSCOHost database. AN: 4147416.