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Developing Business/InformationTechnology Strategies
Section I
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Learning Objectives
Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage.
Discuss the role of planning and business models in the development of e-business strategies, architectures, and applications.
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Learning Objectives (continued)
Identify several change management solutions for end user resistance to the implementation of new e-business strategies and applications.
Identify the importance of business & IT alignment
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Section I
Planning Fundamentals
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Organizational Planning (continued)
Strategic Planning
Strategic Visioning
Tactical Planning
Operational Planning
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Organizational PlanningThe Planning Process Evaluating
organizational accomplishments Analyzing the business, economic, political, and societal environment
Anticipating and evaluating the impact of future developments
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IT Strategy
Set of decisions made by IT and senior management
Deployment of technology infrastructures Relationship of technology choices to business
choices
An I/T Strategy is a set of discrete actionable interventions which ensure that the firm I/T capabilities deliver value towards strategic
business objectives in a cost efficient manner
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IT Strategy (ctd)
I/T strategy may impact all aspects of the I/T portfolio : applications, communication, infrastructure, processes, governance, organization …
Not a one-shot activity : needs to be constantly refined and aligned with business priorities
Impact of an I/T strategy must be measurablemeasurable in terms of business value - revenue/margin growth, cost reduction etc.
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The IT strategic plan process Understand
business issues
Align IT strategy to business
within business context
Determine the implementation
strategy
Define the budget to implement initiatives /
SLAs
Define the IT strategic initiatives
• Input from the Business strategic plan
• Identify the evolution scenariosscenarios that impact the IT strategy
• Understand the evolution in terms of
BusinessOrganizationRelations
• Implement a Project OfficeProject Office to manage all the initiatives in
Infrastructure ApplicationsProcesses
• Plan initiatives within the scenarios
• Identify benefits / costs of the initiatives
•Costs•Resources•Timing
• Select initiative through the Master PlanMaster Plan tool
• Establish
periodic reviews
• Define
Application
service level
• Short-term
staffing needs
• Yearly budget
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OBJECTIVES IDENTIFICATION
OBJECTIVES IDENTIFICATION
IMPLEMENTATION METHODS
IMPLEMENTATION METHODS INITIATIVES DEFINITIONINITIATIVES DEFINITION
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The Scenario Approach to Planning Teams participate in a “microworld” A variety of business scenarios are created Alternative scenarios are created by teams
or by business simulation software based on..A variety of developments, trends, and
environmental factors
Align IT strategy to business
within business context
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Scenario Planning GridIMPACT ON FIRM
FE
AS
IBIL
ITY
High Priority
Medium Priority
Low Priority
HIGH MEDIUM LOW
HIG
HM
ED
IUM
LO
W
Strategy A
Strategy BStrategy C
Strategy D
Align IT strategy to business
within business context
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Planning for Competitive Advantage Especially important in today’s competitive,
complex environment Involves an evaluation of potential benefits and
risks May include the competitive forces and
competitive strategies models, as well as a value chain model of basic business activities
Use a strategic opportunities matrix to evaluate strategic potential
Align IT strategy to business
within business context
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Planning for Competitive Advantage (continued)
Align IT strategy to business
within business context
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Planning for Competitive Advantage (continued)
T Strategies
O Strategies
W Strategies
S StrategiesStrengths
WeaknessesOpportunities
Threats
SWOT Analysis Recommend strategies that ensure best alignment
between external and internal environments
Align IT strategy to business
within business context
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Business Models and Planning
A conceptual framework that expresses the underlying economic logic and system that prove how a business can deliver value to customers at an appropriate cost and make money.
Specifies how the business will organize and operate
Focuses attention on how all the essential components fit into a complete system
Align IT strategy to business
within business context
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e-Business Planning
3 major components
Strategy development
Resource management
Technology architecture
Determine the implementation
strategy
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e-Business Planning (continued)
IT architecture major componentsTechnology platformData resourcesApplications architecture IT organization
Determine the implementation
strategy
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Examples of IT Planning Process Results
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IT Strategic Initiatives
Year 0Year 0 TodayToday Long-term
Long-term
• Different applications• Lack of integration• Missing communication• Mix of owned and in-service
applications• Islands of country I/T organizations
• Common e-mail system• Company reporting system• Network separation and upgrade• Parent companies applications
cloning• Applications migration• Video-conferencing and mobile
communication
• New HR system• New finance system• Single engineering
releasing system• Virtual office for managers• Logistic harmonization• Document/Project
management
• Common applications• Applications reference models• Unique infrastructure• Common I/T policies and
standards• Personal productivity• Mobile interconnectivity• Ubiquitous service availability
TIME
TomorrowTomorrow
ILLUSTRATIV
E
ILLUSTRATIV
E
Define the IT strategic initiatives
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IT Strategy Implementation Execute the strategy Commitment and engagement of senior
business managementMust occur prior to implementation planning
Strategic Alignment MaturityAbility to adapt in harmonious fashion
Adoption of Measurement CriteriaMeasure effects in several different dimensions
Define the budget to implement initiatives /
SLAs
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Periodic Review
Define budget / time / resources for projects selectedEnsure initial assumptions are correctEnsure implementation of plans are on
schedule
Measurements are captured and reported
Define the budget to implement initiatives /
SLAs
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Section II
Implementation Challenges
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Implementation
A process of carrying out the plans for change in e-business strategies and applications that were developed during the planning process.
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Implementing IT
Requires managing the effects of major changes in key organizational dimensions such as business processes organizational structureManagerial rolesEmployee work assignmentsStakeholder relationships
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Dismissal
Migration to New platforms
Align to business:
Function evolution
Maintain/ Improve
LOW HIGH
HIGH
• Application A• ...
• Application B• ...
• Application C• ...
• Application D• ...
Company Strategy
Business Requirements
IT Implications
Current portfolio evaluation
Alig
nmen
t to
Bus
ines
s
Technological Alignment
Gap identification
NEW APPLICATIONS DEVELOPMENT
APPLICATION PORTFOLIO ANALYSIS
• ...
1 2 3 4 5
5
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3
2
1
Comparing application portfolio with business requirements
ILLUSTRATIVE
ILLUSTRATIVE
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Change Management
People are a major focus of organizational change managementDeveloping innovative ways to measure,
motivate, and reward performanceDesigning programs to recruit and train
employees in the core competencies Also involves analyzing and defining all
changes facing the organization
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End User Resistance and Involvement
Change can generate fear and resistance to change
Keys to countering end user resistanceProper education and trainingEnd user involvement in organizational
changes
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Ensuring Strategic AlignmentJerry N. Luftman model
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Information Systems for Competitive Advantage The Technology/Strategy Fit
An IS implementation should create a significant organizational change consistent with the business strategy
IT needs to be aligned to the business goals
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Strategic Alignment Model
Business Strategy–Business Scope–Distinctive Competencies–Business Governance
Organization Infrastructure& Processes
–Administrative Structure–Processes–Skills
IT Strategy–Technology Scope–Systemic Competencies–IT Governance
IT Strategy–Technology Scope–Systemic Competencies–IT Governance
IT Infrastructure & Processes
–Architecture–Processes•Skills
IT Infrastructure & Processes
–Architecture–Processes•Skills
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Alignment Maturity
Process which evaluates the IT/business alignment status of a specific organization It has a defined number of levels and
representations (5 levels)
It is based on a defined set of criteria (six key criteria)
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Strategic Alignment Maturity Levels1. Initial/Ad Hoc Process
Business and IT not aligned
2. Committed Process Organization commits to becoming aligned
3. Established Focused Process Established and Focused on business objectives
4. Improved/Managed Process Reinforcing concept of IT as “Value Center”
5. Optimized Process Integrated/Co-adaptive business and IT strategic
planning
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Strategic Alignment Maturity Criteria
1. Communications
2. Competency/value measurements
3. Governance
4. Partnerships
5. Scope and Architecture
6. Skills
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IT Business Alignment Maturity Criteria
Level 1 Level 2 Level 3 Level 4 Level 5
Weight Initial Process Committed Process Established Process Improved ProcessOptimized process/ BEST PRACTICE
CommunicationUnderstanding of business by IT Minimum Limited IT awareness Senior & Mid-mgt Pushed down t/r org Pervasive
Understanding of IT by business Minimum Limited bus. awareness Emerging bus awareness Business aware of potential Pervasive
Inter/Intra organization learning / education Casual, ad hoc Informal Regular, clear Unified/bonded Strong and structured
Protocol rigidity Command & Control Limited, relaxed Emerging, relaxed Relaxed; informal Informal
Knowledge sharing Ad hoc Semi-structuredStructured around key
processes Institutionalized Extra-enterprise
Liaison(s) effectiveness None or ad hoc Limited tactical tech base Formalized, regular meetingsBonded; effective at all
internal levels Extra-enterprise
Competency / Value MeasurementsIT metrics Technical, not bus. Relation Cost efficiency Traditional financial Cost effectiveness Extended to ext. Partners
Business metrics Ad hoc - not it related At the functional org. Traditional financial Customer-focused Extended to ext. Partners
Balanced metrics Ad hoc - unlinkedBusiness & IT metrics not
linkedEmerging bus & IT metrics
linked Business & IT metrics linked Bus, partner & IT metrics
Service level agreements (SLAs) Sporadically present Technical, at functional levelEmerging across the
enterprise Enterprise-wide Extended to ext. Partners
Benchmarking Not generally practiced Informal Emerging Routinely performed Routine with partners
Formal assessment / reviews None Some, mostly for problems Emerging formality Formally performed Routinely performed
Continuous improvement None Minimum Emerging Frequently Routinely performed
Governance
Business strategic planning Ad hoc Basic plan - functional Some inter-org planningManaged across the
enterpriseIntegrated across & outside
the org
IT strategic planning Ad hoc Functional tactical plan Focused plan; some inter-orgManaged across the
enterpriseIntegrated across & outside
the org
Organization structureCentral/decentral; CIO
reports to CFOCentral/decentral, some co-
location; CIO to CFOCentral/dec; some federation;
CIO to COOFederated; CIO reports to
COO or CEOFederated; CIO reports to
CEO
Budgetary controlCost center; erratic
spending Cost center; functional org.Cost center; some
investments Investment centerInvestment center; profit
center
IT investment managementCost based; erratic
spending Cost base; ops/maint. Focus Traditional; process enablerCost effectiveness; process
driverBus value; extended to bus
partners
Steering committee Not formal / regular Periodic communication Regular clear communic. Formal; effective committees Partnership
Prioritization process Reactive Occasional responsive Mostly responsive Value add; responsive Value added partner
Strategic Alignment Template
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Weight Initial Process Committed Process Established Process Improved ProcessOptimized process/ BEST PRACTICE
Partnership
Business perception of IT valuePerceived as cost of
business IT emerging as an asset IT as an asset IT is seen as a driverIT co-adapts with the
business
Role of IT in strategic business planning No seat at business table Bus process enabler Business process enabler Bus strategy enabler IT co-adapts with bus
Shared goals, risk, rewards, penaltiesIT takes risk with little
rewardIT takes most risk with little
reward Risk tolerant; IT some rewardRisk acceptance and
rewards shared Risk & rewards shared
IT program management Ad hoc Standards defined Standards adhered Standards evolve Continuous improvement
Relationship / Trust style Conflict/minimum Primarily transactionalEmerging valued service
provider Valued service provider Valued partnership
Business sponsor / champion None Limited at functional org At the funct. Org At the HQ level At the CEO level
Scope and Architecture
TraditionalTraditional (email,
accounting) Transaction (ESS, DSS)Expanded scope; bus process
enablerRedefined scope (bus
process driver) Advanced
Enabler / driver None Partial Emerging Recognized Bus strategy driver
External None Partial EmergingSubstantial role with clients
and partners External scope
Standards articulation None or ad hoc Standards defined Emerging enterprise std. Enterprise stds Inter-enterprise stds
Architectural integration (functional org) No formal integration Early attempts at integration Integrated key processes Integrated Integrated
Architectural integration (enterprise) No formal integration Early attempts at integrationEmerging enterprise
architectureStandard enterprise
architecture Enterprise architecture
Architectural integration (inter-enterprise) No formal integration Early attempts at integration Emerging with key partners With key partners With all partners
Architectural transparency, agility, flexibility None Limited Focused on communication Emerging across the org Across the infrastructure
Manage emerging technology None or ad hoc Limited EmergingSubstantial attention and testing of emerging tech Routine
Skills
Innovation, entrepreneurship Discouraged Dependent on funct. Org Risk tolerantEnterprise, partners and IT
mgrs The norm
Cultural locus of power In the business Functional org Emerging across org Across the org All execs; CIO & partners
Management style Command & Control Results consensus based Consensus; results based Profit / Value based Relationship based
Change readiness Resistant to change Dependent on funct. Org Recognized need for change High, focused High, focused
Career crossover, training None Minimum Dependent on funct. Org Across the org Across the enterprise
Social, political, interpersonal environment trusting Minimum Transactional environment
Emerging around IT & business
Achieved among IT and business Across the enterprise
Hiring and retaining No program Technology focusedTech/bus focus; retention
programFormal program for hiring
and retain best talentsEffective program for hiring &
retain best talents
Grand Total
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Discussion Questions
Planning is a useless endeavor, because developments in e-business and e-commerce, and in the political, economic, and social environments are moving too quickly nowadays. Do you agree with this statement?
“Planning and budgeting processes are notorious for their rigidity and irrelevance to management action.” How can planning be made relevant to the challenges facing an e-business enterprise?
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Discussion Questions (continued)
What planning methods would you use to develop e-business and e-commerce strategies and applications for your own business?
What are several e-business and e-commerce strategies and applications that should be developed and implemented by many companies today?
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Discussion Questions (continued)
How can a company use change management to minimize the resistance and maximize the acceptance of changes in business and technology?
“Many companies plan really well, yet few translate strategy into action.” Do you think this is true?
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Discussion Questions (continued)
What major business changes beyond e-business and e-commerce do you think most companies should be planning for the next ten years?