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Chapter 3: Achieving Competitive Advantage with Information Systems
INTERACTIVE SESSION: TECHNOLOGY Auto Makers Become Software Companies
minimize highway congestion. The system would also
As the smartphone market continues to expand,
require an industry standard, which does not exist
another industry has begun getting "smarter" with
as of yet. Ford has doubled its investment in vehicle-
Software and apps: the automobile industry. Ford,
to-vehicle communication technologies and BMW
BMW. and other automobile companies are enhancing
is also continuing to develop ways for vehicles to
their vehicles with on-board software that improves the
communicate with one another on the road to avoid
customer experience, and the auto industry is working
on technology that will allow cars to be managed via
collisions.
With the inclusion of software in their cars,
the cloud.
automakers are entering uncharted territory. They
Automakers are finding that software is a way of
must now devote resources to updating and testing
adding more "value" and freshness to their products
their software, as well as establishing ways to
without having to invest so heavily in new vehicle
provide the updated software to their customers. Car
production. It takes Ford Motor Company, for exam-
companies need to coordinate their car development
ple, about two and one-half years to plan, design, and
build a new car. Design and production, including cycles more closely with their software development
cycles. Also, many of the technologies included in
metal stamping equipment and assembly line setup.
must be finalized long before the car rolls off the automobile software packages raise the same privacy
line. But the auto makers can create a new software concerns surrounding location tracking that have
interface for a car within months and update it again often plagued smartphone manufacturers and app
and again over the life of the car without much lead developers.
time. This enables Ford and other auto makers to sig- Ford is grappling with the best way to roll out
nificantly improve the driving experience and add software upgrades to its customers. The company
new features to cars years after they are built.
has been mailing USB sticks to 250,000 customers
Ford is perhaps the automaker doing the most whose cars have an advanced touchscreen control
to innovate with software and apps. Its MyFord panel running the MyFord Touch interface. The
Touch interface is an in-dash touchscreen available stick contains a software upgrade that will improve
for select vehicles with controls for navigation. navigation controls, the music and phone features,
music, phone integration, and temperature. Ford as well as the ability to control car temperature. The
has upgraded this interface and the Sync software upgrade also contains code that will upgrade system
behind the interface, adding tablet and smartphone speed and improve the interface based on common
integration and better voice response. In 2010 criticisms from Ford owners.
Ford added support for the online music streaming Although Ford says it plans to continue issuing
service Pandora, which is very popular among software upgrades this way, the company hopes that
young potential buyers. This update enables drivers customers will get into the habit of checking the Ford
to connect their tablets and smartphones to the Sync Web site for software upgrades on their own. Though
system to access music and other apps using voice most car owners are used to the technology in their
commands.
cars remaining constant throughout the life of the car,
Chairman Bill Ford Jr. has championed the use of newer cars are poised to change all of that.
software to alleviate urban congestion by investing in Ford has hired "human-machine interface
technology that responds to the problems created by engineers," whose job is to analyze how their
traffie in the biggest cities. Theoretically, technology customers interact with the software in their cars.
might help cars to avoid traffic jams, recommend Often, these engineers use customer feedback to make
routes that drivers feel more comfortable with, reserve changes to the software. Customers complained that
parking spaces in advance and possibly to even drive too much information was available on each screen
themselves.
To manage vehicles in this way, cars need to be
of the interface, so Ford moved the most commonly
connected to some kind of central system, which would
used features to more prominent positions on screen
coordinate with public transit and other transportation
and increased their font size, relegating the rest to
methods, and to do this, cars need to be equipped
submenus. Feedback has been positive. Ford has also
with software that can monitor and enhance vehicle
asked dealers to dedicate more time and personnel to
function at the most basic levels. The eventual system
hands-on technology training to help customers master
its interface.
would require that cars feed increasing amounts of
information to systems whose purpose would be to
GM. Daimler, and other companies are all
developing new features for their cars that operate
aus der
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Part 1: Information Systems in the Digital Age
online in the cloud. Users will be able to remotely track
their cars (you'll never forget where you parked again
and diagnose problems with the car, such as low tire
pressure or the need for an oil change. Corporations
will be able to track employee use of company cars
by interpreting car sensors and engine readouts.
Manufacturers will be able to aggregate and analyze
the data from customers' cars to identify quality
problems and, if necessary, quickly issue recalls. Just
as with apps, the possibilities are limited only by the
imagination of automakers.
GM will allow its app developers to access its
computer systems to improve app function, which raises
a familiar set of privacy concerns. Auto analysts believe
that automakers will make mistakes as they learn how to
properly handle sensitive customer data and to provide
robust privacy options. On the other hand, automakers
are hoping that younger customers who have grown up
using Facebook are less likely to care about privacy, and
features that collect highly targeted information about a
car's location and driving habits.
BMW is also investing a whopping $100 million
in mobile apps, hoping to market them to their
customers as "premium services." Some analysts are
skeptical of the decision to invest that much money.
but BMW believes that mobile apps will become an
increasingly attractive selling point for customers
of its BMWi electric and hybrid cars. Although the
future of cars sharing information with other nearby
cars is still years away, automakers are excited by
the possibilities afforded by smart software and
apps.
Sources: Jaclyn Trop. Tired of Silicon Valley? Try Motor City." The New
York Tunes, July 1, 2017: lan Scherr and Mike Rawisey. "Drive into the Future."
The Wall Street Journal. March 11. 2017: Michelle Marsta. "Ford Gogle
Facebook Team Up to Reconsider Mobility. Weck, March 28, 2013. Ian Sherr
"Cars Pump Up IQ To Get Edge." The Wall Street Journal January 13, 2012:
Chris Murphy, 4 Way Ford Is Exploring Next Gen Car Tech Information
Weck. July 27, 2012: Mike Ramsey. "Avoiding Gridlock with Smart Autos,"
The Wall Street Journal. February 27, 2012. Joseph B. White, New Driver's
Ed: Tutors to Decode High Tech Dashboards." The Wall Street Journal. May
8. 2012: and Chris Murphy, "Ford is Now a Software Company Information
Week. November 28, 2011: and "Why BMW Suddenly Loves Mobile Apps."
Information Week. March 2. 2011
CASE STUDY QUESTIONS
1. How is software adding value to automakers'
products?
2. How are the automakers benefiting from
software-enhanced cars? How are customers
benefiting?
3. What value chain activities are involved in
enhancing cars with software?
4. How much of a competitive advantage is software
providing for automakers? Explain your answer.
Extending the Value Chain: The Value Web
Figure 3.2 shows that a firm's value chain is linked to the value chains of its suppliers,
distributors, and customers. After all, the performance of most firms depends not only on
what goes on inside a firm but also on how well the firm coordinates with direct and indirect
suppliers, delivery firms (logistics partners, such as FedEx or UPS), and, of course, customers.
How can information systems be used to achieve strategic advantage at the industry level?
By working with other firms, industry participants can use information technology to develop
industry-wide standards for exchanging information or business transactions electronically,
which force all market participants to subscribe to similar standards. Such efforts increase
efficiency, making product substitution less likely and perhaps raising entry costs--thus
discouraging new entrants. Also, industry members can build industry-wide, IT-supported
consortia, symposia, and communications networks to coordinate activities concerning
government agencies, foreign competition, and competing industries.
Looking at the industry value chain encourages you to think about how to use information
systems to link up more efficiently with your suppliers, strategic partners, and customers.
Strategic advantage derives from your ability to relate your value chain to the value chains
of other partners in the process. For instance, if you are Amazon.com, you would want to
build systems that
Make it easy for suppliers to display goods and open stores on the Amazon site
Make it easy for customers to pay for rends
Purchase answer to see full
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