Ministry of International Trade and Industry What is IT governance? Govern: "… to control and direct the making and administration of policy …" (Webster's Dictionary) IT governance: anizational capacity to control the formulation and implementation of IT (information technology) strategy and guide to proper direction for the purpose of petitive advantages for the corporation. 2 Changes of Business Paradigms by IT (1): Rearrangement of the Business Model Itself (The case of ) Search Example of pany that has been essful in using IT to change business paradigms. The customer action of purchasing books Conventional bookstore: “Sales Agent”(Supplier-oriented concept) Access “Customer required e to the bookstore.” “es to your house.” (On-line access) Navigation “Customer searches through shelves.” “Easy to find books that you want. System knows your preferences and guides you accordingly.”(Provides customized information based on purchasing history.) Availability “Limited stock of books. Those books not in inventory have to be ordered, which takes time.” “Just access the service to get any book you want.”(3 million titles) Purchasing “Sold at publisher’s suggested retail price.” “Even best-sellers sold at a discount to market price.”(20-40% off) Bringing home “Customer carries.” “Delivered to your door.”(Next-day shipping —) : “Purchasing Agent”(Consumer-oriented concept) Ordinary bookstore (automation of sales activities) On-line access Like the “new books” rack in a conventional store. Like sales in a conventional store. Same price as a conventional store. Possible to be delivered, but it’s quicker e to the store and buy it yourself. 3 Changes of Business Paradigms by IT (2): Reforming Business Processes (The GE procurement system) Prior to 1995 1996: Company pany EDI Inquiry Bid Order Delivery Inquiry Bid Order Delivery Delivery Procurement time/Procurement costs: Slig
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