O'Brien MIS, 6th ed

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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



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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



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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



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Planning for Competitive Advantage (continued)



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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



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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



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e-Business Planning

3 major components

Strategy development

Resource management

Technology architecture


strategy

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e-Business Planning (continued)

IT architecture major componentsTechnology platformData resourcesApplications architecture IT organization


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


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


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

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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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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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What major business changes beyond e-business and e-commerce do you think most companies should be planning for the next ten years?

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O'Brien MIS, 6th ed