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:
Ward, J. & Peppard, J. (2002). Strategic Planning for Information Systems (3rd Edition), John Wiley & Sons: New York
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
Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA
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
Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA
Top Top ManagementManagement
OrganizationalOrganizational TechnologyTechnology
““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
Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA
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
Top Top ManagementManagement
““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
Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA
Top Top ManagementManagement
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
““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
Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA
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
Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA
““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
Ward, J. & Peppard, J. (2002). Strategic Planning for Information Systems (3rd Edition), John Wiley & Sons: New York
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”
““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
““Unacknowledged Legislators”Unacknowledged Legislators”
““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