Linking Performance to Strategy in Technology-based Organizations

Paul FordStudentUniversity of Maryland University CollegeTechnology Management 680

“All enterprises, regardless of what they produce or the services they deliver, are really information businesses.”

~Louis Columbus, a Vice President of Marketing at iBASEt and a contributor to Forbes Magazine covering articles on CRM, Cloud Computing, ERP and Enterprise Software.

“The accuracy, speed and precision of IT systems means the difference between winning or losing customers, keeping supply chains profitable, and solidly translating new concepts into revenue-producing products and services. The world’s best-run services businesses have customer-driven IT as part of their DNA; it is very much who these companies are internally.” (Columbus)

Outline of presentationKey Concepts behind Linking Performance to business strategy.Who are the Technology-based organizations that already link performance to their business strategies.Key Takeaways from organizations that linked performance to business strategy in 2012References

Key Concepts – Strategic IS Alignment

IT and IS must be fully integrated and actively involved in the strategic management process.The worlds best run companies recognize that tasks, structure, technology and people are the key elements that drive the business. A change in anyone of these elements affects the othersThe framework for this concept was developed more than 40 years ago by Harold Leavitt.

Structure

Tasks Technology

People

Key Concepts – Strategic IS AlignmentLeavitt’s Diamond

Key Concepts - continuedStrategic fit is about the alignment between the external and internal environments.This translates into how the firm is positioned in the IT marketplace and how the IS infrastructure systems should be managed.Four alignment perspectives:• Strategy Execution alignment• Technology Transformation alignment• Competitive Potential alignment• Service Level alignment

Key Concepts – Functional Integration and Strategic Fit• Functional Integration and Strategic Fit can be developed using

Henderson and Venkatraman’s strategic alignment model.

Key Concepts – Strategic IS Alignment

With IT/IS fully integrated with all functional structures in the organization, the organization should determine its goals and objectives for a predetermined period of time, i.e., 3-5 years out.IT infrastructure, IT processes and strategy must be tightly fitted so that the plans made by IS supports the distinct business units or product lines.

Key Concepts –Find a Sponsor

Raise awareness among senior management of the strategic opportunities made by IT. You’ll need a sponsor to green light this strategy.Ex Ante EvaluationEx Post Evaluation in conjunction with Balanced Scorecard (Shown in next slide)Distribution of IT efforts

The Balanced Scorecard Framework

Financial

Performance

Objectives Measures Targets Initiatives

Customers

Objectives Measures Targets Initiatives

Strategy

Internal

Processes

Objectives Measures Targets Initiatives

Learning & Growth

Objectives Measures Targets Initiatives

Other Frameworks

ValITCobITMicrosoft Operations Framework (MOF)

COBIT sets good practices for the “journey” of contributing to the process of value creation, while Val IT sets good practices for the “destination” of optimizing business value from IT investments. At the same time, MOF is the operational framework that deals with the nuts and bolts of planning, delivering, operating, and managing IT services.

Val IT is concerned with the end-state of enterprise governance; COBIT is focused on the IT controls required to achieve that end-state; and MOF details the operational implementation (service management) of the IT controls required to achieve the desired enterprise governance end-state.

Technology-based organizations are characterized by rapid innovation and intense competition.

No matter what domain the company operates it must be able to link performance to its chosen strategy.

Tech ConglomerateInternetConsumer

Electronics

Bio-TechnologyTelecomsTechnology

Who are the technology-based companies?

Most Admired Companies Making IT A Competitive AdvantageAccentureAmazonAppleCleveland ClinicGeneral ElectricGoldman SachsGoogleHospital Corporation of America

IBMIntermountain Healthcare

JP Morgan ChaseKaiser PermanenteMayo ClinicMicrosoftNestleProcter & GambleProgressive InsuranceSchlumbergerTargetToyotaWells Fargo

Key Takeaways

Customer-driven IT is the single most admired trait of all 21 companies in the list. Associated with this attribute is the proven ability of these enterprises to manage complex e-commerce systems & platforms, support multichannel management, in addition to continually show the ability to innovate quickly.

Key TakeawaysEnterprises need to consider how the business successes their investments in IT are enabling can be used for branding and recruitment. Providing benchmark performance data and stories of how IT helped create entirely new markets and solve customer problems needs to be used for recruiting. Many of the 21 companies mentioned are doing this, using success stories as a catalyst for driving recruitment efforts for analytics, cloud computing and systems integration experts.

Key TakeawaysDon’t underestimate the disruptive power of cloud computing and mobility to completely re-order enterprise systems quickly. Gartner mentions that there are enterprises whose IT organizations would have made the list had they not slowed down. While not directly stated, Gartner warns IT departments to not become complacent over time. From personal experience working in IT departments however, it is clear that complacency is a leading career hazard. It’s imperative for CIOs to keep challenging their organizations to stay intensely focused on new developments, seeking out how they can be used to strengthen business strategies.

Key TakeawaysFour of the top five factors that most impressed respondents about the admired companies are customer-related. Customer-facing IT (15%); followed by an integrated/standardized/unified IT organization and process framework (13%); exceptional use of CRM (11%); customer-centered innovation (9%); and product design & offerings (9%) are the most mentioned attributes of the highest-performing companies. Multiple responses were allowed to this area of the survey. The following graphic provides an analysis of which factors most impressed the C-level executives who were respondents to the survey.

References

CEO and Senior Executive Survey 2013: 21 Top Companies Admired for Competitive IT, 25 March 2013, G00247316, Analyst(s): Mark Raskino, https://www.gartner.com/doc/2387316Capability: ITIL/COBIT-Based Management Process, https://technet.microsoft.com/en-us/library/bb821261.aspx MOF to COBIT/Val IT Comparison and Cross-Implementation Guide , June 2009, Voon and SalidoIntegrated Performance Management, A Guide to Strategy Implementation, Verweire and Van Den Berghe