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Planning IT Strategy is a uselessexercise, because developments in e-business and e-commerce and in thepolitical, economic, and societalenvironments are moving too quicklynowadays. Do you agree or disagree
with this statement ? Why?
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Chapter
11Developing Business/IT
Strategies
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Learning Objectives
Discuss the role of planning in the businessuse of information technology, using thescenario approach and planning forcompetitive advantage as examples
Discuss the role of planning and businessmodels in the development of business/ITstrategies, architectures, and applications
Identify several change managementsolutions for end user resistance to theimplementation of new IT-based businessstrategies and applications
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Planning Fundamentals
Information technology has created aseismic shift in the way companiesdo business
Just knowing the importance andstructure ofe-business is not enough
You must create and implement anaction plan that allows you to make thetransition from an
old business design to a new e-businessdesi n1-4
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Components of OrganizationalPlanning
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Planning
Strategic Planning Deals with the development of an
organizations mission, goals, strategies,and policies
Begins with strategic visioning questions
Tactical PlanningThe setting of objectives and the
developmentof procedures, rules, schedules, andbudgets
Operational Planning Done on a short-term basis to implement 1-6
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Strategic VisioningQuestions
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The Scenario Approach
Gaining in popularity as a lessformal, but more realistic, strategicplanning methodology
Teams of managers and plannersparticipate in microworld or virtual worldexercises
Business scenarios are created andevaluated
Alternative scenarios are then created
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Trends that Affect StrategicPlanning
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Planning for CompetitiveAdvantage
Strategic business/IT planning Involves evaluating the potential benefits
and risks of using IT-based strategies andtechnologies for competitive advantage
The following models can help generateideas for the strategic use of IT tosupport initiatives
Competitive forces
Competitive strategies
Value chain
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Strategic OpportunitiesMatrix
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SWOT Analysis
SWOT stands for
Strengths: a companys corecompetencies
and resources Weaknesses: areas of substandard
business performance compared to others
Opportunities: potential for new business
markets or innovative breakthroughs thatmight expand current markets
Threats: anything that has the potentialfor business and market losses
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Business Models andPlanning
Business model answers vitalquestions about the fundamentalcomponents of a business
Who are our customers?
What do our customers value?
How much will it cost to deliver thatvalue?
How do we make money in thisbusiness?
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Questions for all BusinessModels
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Customer value Are we offering somethingdistinctive or at a lower costthan our competitors?
Scope To which customers is this value beingoffered?
What range of products/servicesoffered embody this value?
Pricing How do we price the value?
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Questions for all BusinessModels
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Revenue source Where do the rupees come from?Who pays for what value and when?
What are the margins in each market,and what drives them?
What drives value in each source?
Connectedactivities What do we have to do to offer thisvalue and when?
How connected are these activities?
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Questions for all BusinessModels
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Implementation What structure, systems, people, andenvironment do we need to carry outthese activities?
What is the fit between them?
Sustainability What is it about the firm that makesit difficult for other to imitate it?
How do we keep making money?
How do we sustain our competitiveadvantage?
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Questions for all BusinessModels
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Capabilities What are our capabilities andcapabilities gaps?
How do we fill these gaps?Is there something distinctive aboutthese capabilities that lets us offerthe value better than other firms?
Is this capability hard to imitate?What are the sources of thesecapabilities?
Q ti S ifi t E
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Questions Specific to E-Business Models
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Customer Value What is it about Internet technologiesthat allows us to offer customerssomething distinctive?
Can Internet technologies help usto solve a new set of problems for
customers?
Scope What is the scope of customers thatInternet technologies enable us to
reach?Does the Internet alter the product orservice mix that embodies the firms
products?
Q ti S ifi t E
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Questions Specific to E-Business Models
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Pricing How does the Internet make pricingdifferent?
Revenue source Are revenue sources different withthe Internet?
What is new?
Connectedactivities
How many new activities must beperformed as a result of the Internet?
How much better can Internettechnologies help us performexisting activities?
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Questions Specific to E-Business Models
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Implementation How do Internet technologies affect thestrategy, structure, systems, people,and environment of the firm?
Capabilities What new capabilities do we need?What is the impact of Internettechnologies on existing capabilities?
Sustainability Do Internet technologies makesustainability easier or more difficult?
How can the firm take advantageof it?
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Business Models as PlanningTools
A business model forces rigorouslyand systematic thinking about thevalue and
viability of business initiatives
The strategic planning process is thenused
to develop unique business strategiesthatcapitalize on a business model
The goal is to gain a competitive 1-21
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The Business/IT PlanningProcess
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The Business/IT PlanningProcess
The business/IT planning process hasthree major components
Strategic development
Resource management
Technology architecture
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Information TechnologyArchitecture
The IT architecture is a conceptualdesignthat includes these major
components
Technology platform
Data resources
Application architecture
IT organization
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Balanced Scorecard
The balanced scorecard measures acompanys activities in terms of visionand strategies
The system has four processes
Translating vision into operational goals
Communicating the vision and linking itto individual performance
Business planning
Feedback/learning and strategy adjustment1-25
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Balanced Scorecard
The business perspectives a scorecardmeasures
Financial: reflects financial performance,such as cash flow or ROI
Customer: measures having a directimpact on customers, such as time toprocess phone calls
Business process: reflects theperformance of key business processes,such as time spent prospecting or processcosts
Learning/growth: the companys learning
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Identifying Business/ITStrategies
The most valuable Internetapplications allow companies to
Transcend communication barriers
Establish connections that enhanceproductivity
Stimulate innovative development Improve customer relations
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Strategic Positioning Matrix
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Strategic strategies
Cost and Efficiency Improvements
Use the Internet as a fast, low-cost way tocommunicate and interact with others
Use of e-mail, chat systems, discussiongroups, and company websites
Performance Improvement inEffectiveness
Major improvements in businesseffectivenessrecommended
Increase use of Internet-basedtechnologies,such as intranets and extranets 1-29
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Strategic Strategies
Global Market Penetration
Capitalize on a high degree of customerand competitor connectivity and use of IT
Use e-commerce websites with value-added information services and extensiveonline customer support
Product and Service Transformation
Develop and deploy new Internet-basedproducts and services that strategicallyreposition it in the marketplace
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E-Business StrategyExamples
Market Creator: be among the first tomarketand remain ahead of the competition
by continuously innovating Channel Reconfiguration: use the
Internet
as a new channel to directly accesscustomers, make sales, and fulfillorders
Transaction Intermediary: Use theInternet 1-31
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E-Business StrategyExamples
Infomediary: use the Internet to reduce thesearch cost; offer a unified process forcollecting the information needed to make alarge purchase
Self-Service Innovator: provide acomprehensive suite of services that thecustomers employees can use directly
Supply Chain Innovator: use the Internet tostreamline supply chain interactions
Channel Mastery: use the Internet as a salesand service channel
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Business Application PlanningProcess
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Comparing PlanningApproaches
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E-Business ArchitecturePlanning
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Implementation
Many companies plan changes very well
Few manage to convert a plan into actionThis is true even if senior management
consistently identifies e-business as anarea of great opportunity
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Implementing InformationTechnology
Many businesses have undergonemultiplemajor reorganization since the early1980s
Business process reengineering Installation and upgrades of an ERP system Upgrading legacy systems to be Y2K
compliant
Creating shared service centersJust-in-time manufacturing Sales force automation Contract manufacturing
The introduction of euro currency 1-37
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Impact and Scope ofImplementing IT
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Intranet Enterprise PortalChallenges
Security, security, security
Defining the scope and purpose of theportal
Finding the time and the money
Ensuring consistent data quality
Getting employees to use it
Organizing the data
Finding technical expertise Integrating the pieces
Making it easy to use
Providing all users with access1-39
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Enterprise Resource Planning Challenges
Getting end user buy-in
Scheduling/planning
Integrating legacy systems/data
Getting management buy-in
Multiple/international sites and partners
Changing culture and mind-sets
IT training
Getting, keeping IT staff
Moving to a new platform
Performance/system upgrades
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End User Resistance andInvolvement
Any way of doing things generatessome resistance from the peopleaffected
CRM projects have a history of failure Up to 75 percent of CRM projects fail to
meet their objectives
This is often due to sales forceautomation problems and unaddressedcultural issues
Sales staffs are often resistant to, orfearful 1-41
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Keys to Solving End UserResistance
Keys to solving end user resistanceproblems
Education and training
End-user involvement in organizationalchanges and system development
Requiring involvement and commitment of
top management and all stakeholders Systems that inconvenience or frustrate
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Obstacles to KM Systems
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Change Management
People factors have the highest levelof difficulty and the longest time to
resolveof any dimension of change
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Key Dimensions of ChangeManagement
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Change Management
Implementing a new e-businessapplicationmay involve
Developing an action plan
Assigning managers as change sponsors
Developing employee change teams Encouraging open communications and
feedback about organizational changes
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Change Management
Key tactics recommended by changeexperts
Involve as many people as possible in e-
business planning and applicationdevelopment
Make constant change an expected partof the culture
Tell everyone as much as possible abouteverything, as often as possible, in person
Make liberal use of financial incentives andrecognition
Work within the com an culture, not1-47
A Change Management
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A Change ManagementProcess