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Developing Business/IT

Strategies

Chapter

11Chapter

11

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Why Study Planning Fundamentals?Why Study Planning Fundamentals?

• Information technology has created a seismic shift in the way companies do business. Just knowing the importance and structure of e-business is not enough. You need to create and implement an action plan that allows you to make the transition from an old business design to a new e-business design.

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IT as a Revenue-Producing AssetIT as a Revenue-Producing Asset

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Organizational Planning ProcessOrganizational Planning Process

• Team building, modeling and consensus

• Evaluating what an organization has accomplished and the resources they have acquired

• Analyzing their business, economic, political and societal environments

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Organizational Planning ProcessOrganizational Planning Process

• Anticipating and evaluating the impact of future developments

• Building a shared vision and deciding on what goals they want to achieve

• Deciding what actions to take to achieve their goals

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Organizational Planning ProcessOrganizational Planning Process

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Strategic PlanningStrategic Planning

Definition:

• Development of an organization’s mission, goals, strategies, and policies

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Operational PlanningOperational Planning

Definition:

• Planning done on a short-term basis to implement and control day-to-day operations

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Scenario ApproachScenario Approach

Definition:

• Teams of managers and other planners participate in what management author Peter Senge calls microworld, or virtual world, exercises

• Microworld - simulation exercise that is a microcosm of the real world

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Trends Shaping Strategic PlanningTrends Shaping Strategic Planning

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Why Plan for Competitive Advantage?Why Plan for Competitive Advantage?

• Betting on new IT innovations can mean betting

the future of the company.

• Leading-edge firms are sometimes said to be

on the “bleeding edge”.

• Almost any business executive is aware of

disastrous projects that had to be written off,

often after large cost overruns, because the

promised new systems simply did not work.

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Strategic Opportunities MatrixStrategic Opportunities Matrix

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What is SWOT Analysis?What is SWOT Analysis?

• SWOT analysis is used to evaluate the impact that each possible strategic opportunity can have on a company and its use of information technology

• Strengths – core competencies

• Weaknesses – substandard business performance

• Opportunities – potential for new markets or innovative breakthroughs

• Threats – potential for losses posed by competitive forces

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Business ModelBusiness Model

Definition:

• 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

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Business Model ComponentsBusiness Model Components

• Customer Value – Is the firm offering its customers something distinctive or at a lower cost than its competitors?

• Scope – To which customers is the firm offering this value? What is the range of products/services offered that embody this value?

• Pricing – How does the firm price the value?

• Revenue Source – Where do the dollars 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?

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Business Model ComponentsBusiness Model Components

• Connected Activities – What set of activities does the firm have to perform to offer this value and when? How connected are these activities?

• Implementation – What organizational structure, systems, people, and environment does the firm need to carry out these activities? What is the fit between them?

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Business Model ComponentsBusiness Model Components

• Capabilities – What are the firm’s capabilities and capabilities gaps that need to be filled? How does a firm fill these capabilities gaps? Is there something distinctive about these capabilities that allows the firm to offer the value better than other firms and that makes them difficult to imitate? What are the sources of these capabilities?

• Sustainability – What is it about the firm that makes it difficult for other firms to imitate it? How does the firm keep making money? How does the firm sustain its competitive advantage?

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Business/IT Planning ProcessBusiness/IT Planning Process

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Business/IT Planning Process ComponentsBusiness/IT Planning Process Components

• Strategy Development – developing business strategies that support a company’s business vision

• Resource Management – developing strategic plans for managing or out-sourcing a company’s IT resources

• Technology Architecture – making strategic IT choices that reflect an information technology architecture designed to support a company’s e-business and other business/IT initiatives

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What is IT Architecture?What is IT Architecture?

• A conceptual design that includes:

• Technology Platform – networks, computer systems, system software and integrated enterprise application software

• Data Resources – databases

• Applications Architecture – business applications

• IT Organization – organizational structure of the IS function and distribution of IS specialists

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Strategic Positioning MatrixStrategic Positioning Matrix

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Business/IT StrategiesBusiness/IT Strategies

• Cost and Efficiency Improvements – use Internet as a fast, low-cost way to communicate and interact with customers, suppliers, and business partners

• Performance Improvement in Business Effectiveness – widespread internal use of Internet-based technologies to improve information sharing and collaboration within the business and with trading partners

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Business/IT StrategiesBusiness/IT Strategies

• Global Market Penetration – build e-commerce websites with value-added information services and extensive online customer support

• Product and Service Transformation – use the Internet for electronic commerce transaction processing with customers at company websites, and e-commerce auctions and exchanges for suppliers

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Business Application PlanningBusiness Application Planning

Definition:

• Includes the evaluation of proposals made by the IT management of a company for using information technology to accomplish the strategic business priorities developed earlier in the planning process

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Business Application PlanningBusiness Application Planning

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E-business Architecture PlanningE-business Architecture Planning

Definition:

• Combines contemporary strategic planning methods like SWOT analysis and alternative planning scenarios with more recent business modeling and application development methodologies like component-based development

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E-business Architecture PlanningE-business Architecture Planning

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ImplementationImplementation

Definition:

• A process that carries out the plans for changes in business/IT strategies and applications that were developed in the planning process

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Scope and Level of Business ChangeScope and Level of Business Change

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Enterprise Resource Planning ChallengesEnterprise Resource Planning Challenges

• Getting end user buy-in

• Scheduling/planning

• Integrating legacy systems/data

• Getting management buy-in

• Dealing with multiple/international sites and partners

• Changing culture/mind-sets

• IT training

• Getting, keeping IT staff

• Moving to a new platform

• Performance/system upgrades

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End User Resistance SolutionsEnd User Resistance Solutions

• Proper education and training

• End user involvement in organizational changes, and in the development of new information systems

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Obstacles to Knowledge Mgmt SystemsObstacles to Knowledge Mgmt Systems

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Dimensions of Change ManagementDimensions of Change Management

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Change Management TacticsChange Management Tactics

• Involve as many people as possible in e-business planning and application development

• Make constant change an expected part of the culture

• Tell everyone as much as possible about everything as often as possible, preferably in person

• Make liberal use of financial incentives and recognition

• Work within the company culture, not around it

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Change Management ProcessChange Management Process