IS 8950; Spring 2005 Edited by Dr. Solomon Negash with credits to Dr. Randy Hinds IS Strategic...

IS 8950; Spring 2005IS 8950; Spring 2005Edited by Dr. Solomon NegashEdited by Dr. Solomon Negash

with credits to Dr. Randy Hindswith credits to Dr. Randy Hinds

IS Strategic Perspective

What is a “Strategy”?

“A plan or method for achieving a specific goal!”

Purpose of Strategy?

““Any strategy must identify, as far as possible, Any strategy must identify, as far as possible, where the organization wants to bewhere the organization wants to be in the in the futurefuture & & assessassess accurately accurately where it is nowwhere it is now in order to in order to

decide decide how best to get therehow best to get there, given the , given the alternative options & resources available.” alternative options & resources available.”

Ward, J. & Peppard, J. (2002). Strategic Planning for Information Systems (3rd Edition), John Wiley & Sons: New York

What is “Strategic”?

“. . . of great importance within an integrated whole

or to a planned effect!”

Orndorf, K. (July/August 2002). Developing Strategic Competencies: A Starting Point,, The Information Management Journal

Why an IS Strategy?

““Over the long term, any organization will get the information Over the long term, any organization will get the information systems it deserves, according to the approach adopted to systems it deserves, according to the approach adopted to

the use & management of IS/IT.” the use & management of IS/IT.”

Business opportunities are missedBusiness opportunities are missed

Duplication of effort/inaccurate & inadequateDuplication of effort/inaccurate & inadequateinformation for business managementinformation for business management

IS planning is incoherent & incompatible IS planning is incoherent & incompatible with business planningwith business planning

Lack of understanding/no or miscommunicationsLack of understanding/no or miscommunications

IS productivity is low/costs are highIS productivity is low/costs are high

Consider the alternatives:


What is “Strategizing”?

“Developing a vision, mission, objectives, strategies, & critical

factors for the enterprise!”

Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

““Current”Current”

StateState

““Future”Future”

StateState

“Strategizing” Elements


Strategy

Objectives & Goals

Critical Success

Critical Failure Factors

Strengths & Weaknesses

Opportunities

Threats

Business Processes

Mission

IT: a Service Provider or Strategic Partner?

IT is for efficiencyIT is for efficiency

Budgets are driven by external Budgets are driven by external benchmarksbenchmarks

IT is separable from the businessIT is separable from the business

IT is seen as an expense to controlIT is seen as an expense to control

IT managers are technical expertsIT managers are technical experts

IT is for business growthIT is for business growth

Budgets are driven by business Budgets are driven by business strategystrategy

IT is inseparable from the businessIT is inseparable from the business

IT is seen as an investment to IT is seen as an investment to managemanage

IT managers are business problem IT managers are business problem solverssolvers

Service ProviderService Provider Strategic PartnerStrategic Partner

Venkatraman, N. (1999). Valuing the IS Contribution to the Business, Computer Science Corporation

““The enterprise can exploit information appropriately only by The enterprise can exploit information appropriately only by managing business, organizational, & technical issues.” managing business, organizational, & technical issues.”

Strategic Actions


Top Top ManagementManagement

OrganizationalOrganizational TechnologyTechnology


Strategic Actions


OrganizationalOrganizational TechnologyTechnology

Review organization’s purposeReview organization’s purpose

Determine information needsDetermine information needs

Identify possible threatsIdentify possible threats

Review IT trendsReview IT trends

Identify core competencies & Identify core competencies & processprocess

Consider new organizational formsConsider new organizational forms

Allocate appropriate resources Allocate appropriate resources



Strategic Actions



TechnologyTechnology

Consider different organizational formsConsider different organizational forms

Define roles & responsibilities to manage Define roles & responsibilities to manage information &information & IT at different organizational levelsIT at different organizational levels

Institute internal educational programsInstitute internal educational programs

Establish formal change management to implement Establish formal change management to implement & & integrate systems holistically integrate systems holistically

OrganizationalOrganizational

OrganizationalOrganizational


Strategic Actions


Top Top ManagementManagement Create a “strategic” capabilityCreate a “strategic” capability

Educate the IT organizationEducate the IT organization

Integrate planning & review of application portfolios Integrate planning & review of application portfolios within business planswithin business plans

Ensure business & departmental managers accept Ensure business & departmental managers accept responsibility for ownresponsibility for own

specific applicationsspecific applications

Plan & management thePlan & management theinfrastructureinfrastructure

TechnologyTechnology

Strategic Actions


““Many IS fail, not because of Many IS fail, not because of technical issuestechnical issues, , but because the target part of the enterprise is but because the target part of the enterprise is

unable or unwilling to make use of it.”unable or unwilling to make use of it.”

Bottom LineBottom Line

““Don’t waste time trying to enforce a single Don’t waste time trying to enforce a single methodology.”methodology.”

““Any approach is good if it fits the Any approach is good if it fits the organizational culture; integrates organizational culture; integrates

business, information, & IT requirements; business, information, & IT requirements; & solves problems.”& solves problems.”

Data ProcessingData Processing

to improve operational efficiency by automating information-based processes

Strategic Information SystemsStrategic Information Systems

to improve competitiveness by changing the nature or conduct of business

Three-Era Model

Management Information SystemsManagement Information Systems

to increase management effectiveness by satisfying their information requirements for

decision making

““Just as good MIS rely on good operational DP systems for Just as good MIS rely on good operational DP systems for accurate, timely information, SIS rely on good DP or MIS systems accurate, timely information, SIS rely on good DP or MIS systems

for appropriate information provisioning or dependent for appropriate information provisioning or dependent processing.”processing.”

MISMIS

Management Management Information Information

SystemsSystems

DPDPData Data

ProcessingProcessing

SISSISStrategicStrategic

InformationInformationSystemsSystems

Three-Era Model

AspectAspect DPDP MISMIS SISSIS

Technology

Computers Distributed Networks

ObjectivesEstablish IS/IT Competence

Build Credibility Develop Partnerships

AudienceIS Staff & Operational Managers

Business Managers

Executive Committee & Board of Directors

Strategies

Discipline & ControlsDamage Control

“Hug” the UserMake it Easy to do Business with IS

Use IT to solve business problemsShow how IT is integral to business strategy

PitfallsPromising more than IS can deliver

Trying to direct the business strategy using IT

Automating processes; no re-engineering

Timeframe < 1 Year 1-2 Years 2-5 years

Success Criteria

No news is good news

IS is consulted about business decisions

IS is at the decision-making table

IS/IT Role Service Provider Consultant Team Player

Strategic IS Success Factors

External, not internal focus

Adding value, not cost reduction

Sharing the benefits

Understanding Customers

Business-driven, not technology-driven

Incremental development

Using the information gained from the systems to develop the business

Management Implications

IT StrategyIT Strategy

Business StrategyBusiness Strategy

IS StrategyIS Strategy

IS Strategy Triangle

Business StrategyBusiness Strategy

Information StrategyInformation StrategyOrganizational Organizational StrategyStrategy

StrategicStrategicIntegrationntegration

ExternalExternal

InternaInternal

Functional IntegrationFunctional IntegrationIT DomainIT DomainBusiness DomainBusiness Domain

Information Information Systems, Systems,

Infrastructure, & Infrastructure, & ProcessesProcesses

Organizational Organizational Infrastructure, & Infrastructure, &

ProcessesProcesses

Information Information Technology Technology

StrategyStrategy

Business Business StrategyStrategy

Strategic Alignment Model

““It’s not the computerization that’s important . It’s not the computerization that’s important . . . it’s the discipline you have to bring to your . . it’s the discipline you have to bring to your

processes. You have to do your thinking processes. You have to do your thinking before you computerize it or else the computer before you computerize it or else the computer

simply goes on strike.”simply goes on strike.”

January 12, 2004January 12, 2004

“If there is an overall lesson that can be learned from experience it

is that, since new technologies continually come & go, the pursuit of opportunities through IT must

be driven, not by what is technologically feasible but by

what is strategically desirable.”

Opportunity driver


IT Portfolio InvestmentsIT Portfolio Investments

InfrastructureInfrastructure

TransactionalTransactional

Informational

Informational

StrategicStrategic

Increased control Better information Better integration Improved quality

Increased sales Competitive advantage Competitive necessity Market positioning Innovative services

Cut costs Increased throughput

Weill & Broadbent (1998). Leveraging the New Infrastructure, Harvard Business School Press

Business integration Business flexibility & agility Reduced marginal cost of

business unit’s IT

Reduced IT costs over time Standardization

“In the near future somebody will write a book about how executives in the 1990s spent too much money on IT

because they were afraid to manage it properly. They put their trust in technological experts to deliver business

value from IT investments.” B.E. Battles & D. Mark

“Companies That Just Don’t Get IT”12/09/96

Computer

Buying for

the

Terminally

Stupid

““Management theory, more than any other branch of Management theory, more than any other branch of academia, is propelled by two primal human instincts: fear & academia, is propelled by two primal human instincts: fear &

greed”greed”John Micklethwait & Adrian WooldridgeJohn Micklethwait & Adrian Wooldridge

The Witch DoctorsThe Witch Doctors

““Unacknowledged Legislators”Unacknowledged Legislators”


““A good deal of corporate planning . . . is like a ritual rain A good deal of corporate planning . . . is like a ritual rain dance; it has no effect on the weather that follows, but those dance; it has no effect on the weather that follows, but those

who engage in it think it does . . . instruction related to who engage in it think it does . . . instruction related to corporate planning is directed at improving the dancing, not corporate planning is directed at improving the dancing, not

the weather.”the weather.”Russell AckoffRussell Ackoff

Wharton Business SchoolWharton Business School


““People use the word ‘guru’ only because they do not want People use the word ‘guru’ only because they do not want to say ‘charlatan’.”to say ‘charlatan’.”

Peter DruckerPeter Drucker

Strategic Visioning versus Strategic Visioning versus PlanningPlanning

PlanningPlanning

Requires tools for Requires tools for collecting, collecting,

understanding, & understanding, & manipulating datamanipulating data

Relates to the Relates to the investigation & investigation &

rearrangement of rearrangement of existing categoriesexisting categories

VisioningVisioning

Holistic insight & Holistic insight & creative ideas . . . creative ideas . . .

requires requires imagination & imagination & inventivenessinventiveness

Not about Not about exploring existing exploring existing

categories but categories but inventing new onesinventing new ones

““Strategic planning often gets in the way of Strategic planning often gets in the way of strategic thinking because executives engaged in strategic thinking because executives engaged in

planning often focus on the manipulation of planning often focus on the manipulation of numbers rather than creating a fresh vision.”numbers rather than creating a fresh vision.”

Martin (1995). The Great Transition, American Management Association (amacom): Washington, DC

““Often, the problem stems from a lack Often, the problem stems from a lack of IT—business alignment”of IT—business alignment”

Jerry LuftmanJerry LuftmanMeasure your business—IT alignmentMeasure your business—IT alignment

(December 2003) Optimize(December 2003) Optimize

““Alignment addresses both how IT is Alignment addresses both how IT is aligned with the business & how the aligned with the business & how the

business should or could be aligned with business should or could be aligned with IT.”IT.”

“ “ . . .terms such as harmony, linkage, . . .terms such as harmony, linkage, fusion, fit, match, & integration are fusion, fit, match, & integration are

frequently used synonymously with the frequently used synonymously with the term alignment”term alignment”

Jerry Luftman (2004)Jerry Luftman (2004)Competing in the Information Age: Align in the SandCompeting in the Information Age: Align in the Sand

Top-10 CEO/CIO ConcernsTop-10 CEO/CIO Concerns

1.1. IT & Business AlignmentIT & Business Alignment

2.2. IT Strategic PlanningIT Strategic Planning

3.3. Security & PrivacySecurity & Privacy

4.4. Attracting, Developing, & Retaining IT ProfessionalsAttracting, Developing, & Retaining IT Professionals

5.5. Measuring the Value of IT InvestmentsMeasuring the Value of IT Investments

6.6. Measuring the Performance of the IT OrganizationMeasuring the Performance of the IT Organization

7.7. Speed & AgilitySpeed & Agility

8.8. Creating an Information ArchitectureCreating an Information Architecture

9.9. Reducing ComplexityReducing Complexity

10.10. Reengineering Business ProcessesReengineering Business Processes

Society for Information Management (SIM)

““Much of the key information required is often in the Much of the key information required is often in the heads of employeesheads of employees at all levels of the organization & at all levels of the organization &

needs to be elicited through needs to be elicited through discussiondiscussion. However, . However, discussion & workshops will be discussion & workshops will be wasted effortwasted effort & &

frustratingfrustrating for business people if used to establish facts for business people if used to establish facts that can be obtained from that can be obtained from available documentationavailable documentation.”.”

SWOT SWOT

SSTRENGTHSTRENGTHSSSTRENGTHSTRENGTHS

WWEAKNESSESEAKNESSESWWEAKNESSESEAKNESSES

OOPPORTUNITIESPPORTUNITIESOOPPORTUNITIESPPORTUNITIES

TTHREATSHREATSTTHREATSHREATS

““The SWOT analysis provides information that is The SWOT analysis provides information that is helpful in matching the firm’s IS/IT resources & helpful in matching the firm’s IS/IT resources &

capabilities to the competitive environment in which capabilities to the competitive environment in which it operates.”it operates.”

Manufacturing gap versus industry leader

Increase operating performance

Maintain advantage

Catch up

Increase Flexibility Responsiveness Differentiate products and services

High

Low

HighLow Marketing gap versus industry leader

IT-based Investment

Strategic Grid

Competitive Forces

Generic Strategies

Competitive Scope

Cost leadership

Cost focus

Differentiation

Differentiation focus

Broad Target

Lower Cost Differentiation

Narrow Target

Competitive Advantage

Value Chain

Organization and IT Design Challenge

Partnership of the Three Constituencies

General Management

User ManagementIT Management

Assessing Organizational Effectiveness

Defining direction and building infrastructureEnvironmental context and resources

Purpose core values

Organizational capabilities, resources, and leadership

Strategy

Executing and adapting

Control Authority

Information and communication infrastructure

Decisions and actions

Creating and sustaining value

Value creation

Partner loyalty

Society and government loyalty

Shareholder loyalty

Employee loyalty Custom

er loyalty

Evolving Business Model

Expand

Exit

Enhance

Exten

d

Enhance

Add functionality or features to current product/service offerings or improve

performance of existing business

Exit

Exit a business or market or drop a product/service offering

Expand

Add new product/service offerings or enter new geographic markets

Extend

Enter new line of business and/or add new business models

Blueprint of “Big—Small” Business

IS 8950; Spring 2005 Edited by Dr. Solomon Negash with credits to Dr. Randy Hinds IS Strategic...

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