Developing Business/IT Strategies

Chapter11

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

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• Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples

• Discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications

• Identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications

Learning Objectives

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Planning Fundamentals

• IT created a seismic shift

– Just knowing the importance and structure of e-business is not enough

– Must be able to transform an old business design to a new e-business design

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RWC 1: IT/Business Alignment

• One Goal – Winning Customers– Every executive– Every manager– Every employee

• Critical Skills– Meeting or beating goals– External customer focus– Identifying and seizing commercial opportunities

• Differentiating component – IT Capability– More than providing systems– Be part of the system

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Components of Organizational Planning

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Scenario Approach

• Gaining popularity

• Less formal

• Virtual world (microworld) exercises

• Business scenarios are created and evaluated

• Alternative scenarios are then created

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Strategic Visioning Questions

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Trends that Affect Strategic Planning

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Strategic Opportunities Matrix

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SWOT Analysis

• Strengths – Core competencies and resources

• Weaknesses– Areas of substandard business performance

• Opportunities– Potential for new business markets or innovative

breakthroughs

• Threats– Potential for business and market losses

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Business Models and Planning

• Vital questions

– Who are our customers?

– What do our customers value?

– How much will it cost to deliver that value?

– How do we make money in this business?

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Questions for Business Models

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The Business/IT Planning Process

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Information Technology Architecture

• Conceptual design components

– Technology platform

– Data resources

– Application architecture

– IT organization

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Balanced Scorecard

• Measures activities in terms of vision and strategies– Financial performance

– Impact on customers

– Performance of key business processes

– Company’s learning curve and growth

• Four processes

– Translate vision into operational goals

– Communicate vision and link to performance

– Business planning

– Feedback/learning and strategy adjustment

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Balanced Scorecard Example

www.steelwedge.com

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Identifying Business/IT Strategies

• Valuable Internet applications

– Transcend communication barriers

– Establish connections that enhance productivity

– Stimulate innovative development

– Improve customer relations

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Strategic Positioning Matrix

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Strategic Matrix

• Cost and Efficiency Improvements– Low internal and low external connectivity

– Recommend – Use the Internet as a fast, low-cost way to communicate and interact with others

• Performance Improvement in Effectiveness– High internal but low external connectivity– Recommend – Increase use intranets and

extranets

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Strategic Strategies

• Global Market Penetration– High external but low internal connectivity

– Capitalize with e-commerce websites using value-added information services and extensive online customer support

• Product and Service Transformation– High external and high internal connectivity– Develop and deploy new Internet-based

products and services to create a new strategic position in the marketplace

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E-Business Strategy Examples

• Market Creator

• Channel Reconfiguration

• Transaction Intermediary• Infomediary:

• Self-Service Innovator

• Supply Chain Innovator

• Channel Mastery

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Business Application Planning Process

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Comparing Planning Approaches

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E-Business Architecture Planning

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Implementation Challenges

• Implementation – Do what you planned to do

– Critical skill for managers

• Many companies are good at planning

• Few are good at executing the plan– Even if senior management consistently identifies

e-business as an area of great opportunity and critical need

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RWC 2: Project Success

• People skills critical to project success– Teamwork– Support during tough times

• Bad relationships leading cause of failure• Managers tend to go to software instead of

building relations• Showing progress at short intervals helps

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Implementing Information Technology

• Developments that have generated organizational change– Business process reengineering– ERP systems– Y2K compliance– Shared service centers– Just-in-time manufacturing– Sales force automation– Contract manufacturing– Introduction of Euro currency

• E-business is the latest catalyst

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Impact and Scope of Implementing IT

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Impact and Scope of Implementing IT

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End User Resistance and Involvement

• Change generates resistance

• Examples:

– Customer Relationship Management (CRM)

– Knowledge Management Systems (KM)

• CRM failures

– CRM failure rate up to 75 percent

– Causes for failure

• Sales force automation problems

• Unaddressed cultural issues

• Sales staffs fearful and thus resistant

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Obstacles to KM Systems

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Keys to Solving End User Resistance

• Create relationships– Understand the end-user’s situation

• Provide education and training

• Require involvement and commitment– End-users

– Top management

– All stakeholders

• Eliminate frustration and inconvenience

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Key Dimensions of Change Management

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Change Management Programs

• Develop a change action plan

• Assign managers as change sponsors

• Develop employee change teams

• Encourage open communications and feedback about organizational changes

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Change 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, in person

• Make liberal use of financial incentives and recognition

• Work within company culture, not around it

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A Change Management Process

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Avnet Marshall’s Transformation

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RWC 3: Crucial Strategic Planning Elements

• Alignment between business and IT– IT strategic plan to improve the business-IT

relationship– Articulate how IT fits into business and overall

business strategy.

• Apply clear strategy to business activities

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RWC 4: The Science behind Change

• Implementing changes is very challenging• Employees resist change• Understanding can lead to smoother

transitions• Not everyone is motivated by ambition• Education and training aid with acceptance