IS Strategic Perspective

1. IS 8950; Spring 2005 Edited by Dr. Solomon Negash with credits to Dr. Randy Hinds IS Strategic Perspective

2. “A plan or method for achieving a specific goal!” What is a “Strategy”?

3. Purpose of Strategy? “Any strategy must identify, as far as possible, where the organization wants to be in the future & assess accurately where it is now in order to decide how best to get there, given the alternative options & resources available.” Ward, J. & Peppard, J. (2002). Strategic Planning for Information Systems (3rd Edition), John Wiley & Sons: New York

4. “. . . of great importance within an integrated whole or to a planned effect!” What is “Strategic”? Orndorf, K. (July/August 2002). Developing Strategic Competencies: A Starting Point,, The Information Management Journal

5. Why an IS Strategy? Consider the alternatives: • Business opportunities are missed • Duplication of effort/inaccurate & inadequate information for business management • IS planning is incoherent & incompatible with business planning • Lack of understanding/no or miscommunications • IS productivity is low/costs are high “Over the long term, any organization will get the information systems it deserves, according to the approach adopted to the use & management of IS/IT.” Ward, J. & Peppard, J. (2002). Strategic Planning for Information Systems (3rd Edition), John Wiley & Sons: New York

6. “Developing a vision, mission, objectives, strategies, & critical factors for the enterprise!” What is “Strategizing”? Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

7. “Future” State “Current” State “Strategizing” Elements • Mission • Strategy • Objectives & Goals • Critical Success • Critical Failure Factors • Strengths & Weaknesses • Opportunities • Threats • Business Processes Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

8. IT: a Service Provider or Strategic Partner? Service Provider Strategic Partner • IT is for efficiency • Budgets are driven by external benchmarks • IT is separable from the business • IT is seen as an expense to control • IT managers are technical experts • IT is for business growth • Budgets are driven by business strategy • IT is inseparable from the business • IT is seen as an investment to manage • IT managers are business problem solvers Venkatraman, N. (1999). Valuing the IS Contribution to the Business, Computer Science Corporation

9. Top Management Organizational Technology Strategic Actions “The enterprise can exploit information appropriately only by managing business, organizational, & technical issues.” Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

10. Top Management • Review organization’s purpose • Determine information needs • Identify possible threats • Review IT trends • Identify core competencies & process • Consider new organizational forms • Allocate appropriate resources Organizational Technology Strategic Actions “The enterprise can exploit information appropriately only by managing business, organizational, & technical issues.” Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

11. Top Management • Consider different organizational forms • Define roles & responsibilities to manage information & IT at different organizational levels • Institute internal educational programs • Establish formal change management to implement & integrate systems holistically Organizational Technology Strategic Actions “The enterprise can exploit information appropriately only by managing business, organizational, & technical issues.” Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

12. Top Management • Create a “strategic” capability • Educate the IT organization • Integrate planning & review of application portfolios within business plans • Ensure business & departmental managers accept responsibility for own specific applications • Plan & management the infrastructure Organizational Technology Strategic Actions “The enterprise can exploit information appropriately only by managing business, organizational, & technical issues.” Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

13. Strategic Actions Bottom Line “Don’t waste time trying to enforce a single methodology.” “Any approach is good if it fits the organizational culture; integrates business, information, & IT requirements; & solves problems.” “Many IS fail, not because of technical issues, but because the target part of the enterprise is unable or unwilling to make use of it.” Darnton & Giacoletto (1992). Information in the Enterprise,, Digital Press: Burlington, MA

14. Data Processing to improve operational efficiency by automating information-based processes Management Information Systems to increase management effectiveness by satisfying their information requirements for decision making Strategic Information Systems to improve competitiveness by changing the nature or conduct of business Three-Era Model

15. DP Data Processing MIS Management Information Systems SIS Strategic Information Systems Three-Era Model “Just as good MIS rely on good operational DP systems for accurate, timely information, SIS rely on good DP or MIS systems for appropriate information provisioning or dependent processing.”

17. 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

18. Business Strategy IS Strategy Management Implications IT Strategy

19. IS Strategy Triangle Business Strategy Organizational Strategy Information Strategy

20. Information Technology Strategy Business Strategy External Strategic Integration Information Systems, Infrastructure, & Processes Organizational Infrastructure, & Processes Internal Business Domain IT Domain Functional Integration Strategic Alignment Model

21. January 12, 2004 “It’s not the computerization that’s important . . . it’s the discipline you have to bring to your processes. You have to do your thinking before you computerize it or else the computer simply goes on strike.”

22. Opportunity driver “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.” Ward, J. & Peppard, J. (2002). Strategic Planning for Information Systems (3rd Edition), John Wiley & Sons: New York

23. Informational Strategic Transactional Infrastructure • Business integration • Business flexibility & agility • Reduced marginal cost of business unit’s IT • Reduced IT costs over time • Standardization IT Portfolio Investments • Increased sales • Competitive advantage • Competitive necessity • Market positioning • Innovative services • Increased control • Better information • Better integration • Improved quality • Cut costs • Increased throughput Weill & Broadbent (1998). Leveraging the New Infrastructure, Harvard Business School Press

24. “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

25. “Unacknowledged Legislators” “Management theory, more than any other branch of academia, is propelled by two primal human instincts: fear & greed” John Micklethwait & Adrian Wooldridge The Witch Doctors

26. “Unacknowledged Legislators” “A good deal of corporate planning . . . is like a ritual rain dance; it has no effect on the weather that follows, but those who engage in it think it does . . . instruction related to corporate planning is directed at improving the dancing, not the weather.” Russell Ackoff Wharton Business School

27. “Unacknowledged Legislators” “People use the word ‘guru’ only because they do not want to say ‘charlatan’.” Peter Drucker

28. Planning • Requires tools for collecting, understanding, & manipulating data • Relates to the investigation & rearrangement of existing categories Visioning • Holistic insight & creative ideas . . . requires imagination & inventiveness • Not about exploring existing categories but inventing new ones Strategic Visioning versus Planning “Strategic planning often gets in the way of strategic thinking because executives engaged in planning often focus on the manipulation of numbers rather than creating a fresh vision.” Martin (1995). The Great Transition, American Management Association (amacom): Washington, DC

29. “Often, the problem stems from a lack of IT—business alignment” Jerry Luftman Measure your business—IT alignment (December 2003) Optimize

30. “Alignment addresses both how IT is aligned with the business & how the business should or could be aligned with IT.” “ . . .terms such as harmony, linkage, fusion, fit, match, & integration are frequently used synonymously with the term alignment” Jerry Luftman (2004) Competing in the Information Age: Align in the Sand

31. Top-10 CEO/CIO Concerns IT & Business Alignment IT Strategic Planning Security & Privacy Attracting, Developing, & Retaining IT Professionals Measuring the Value of IT Investments Measuring the Performance of the IT Organization Speed & Agility Creating an Information Architecture Reducing Complexity Reengineering Business Processes Society for Information Management (SIM)

33. “Much of the key information required is often in the heads of employees at all levels of the organization & needs to be elicited through discussion. However, discussion & workshops will be wasted effort & frustrating for business people if used to establish facts that can be obtained from available documentation.”

34. STRENGTHS WEAKNESSES OPPORTUNITIES THREATS SWOT “The SWOT analysis provides information that is helpful in matching the firm’s IS/IT resources & capabilities to the competitive environment in which it operates.”

35. High Increase operating performance Catch up Manufacturing gap versus industry leader Increase Flexibility Responsiveness Differentiate products and services Maintain advantage Low Low High Marketing gap versus industry leader IT-based Investment

36. Strategic Grid

37. Competitive Forces

38. Competitive Advantage Lower Cost Differentiation Cost leadership Broad Target Differentiation Competitive Scope Differentiation focus Cost focus Narrow Target Generic Strategies

39. Value Chain

40. Organization and IT Design Challenge

41. General Management IT Management User Management Partnership of the Three Constituencies

42. Defining direction and building infrastructure Executing and adapting Creating and sustaining value Environmental context and resources Control Authority Partner loyalty Society and government loyalty Decisions and actions Purpose core values Strategy Value creation Organizational capabilities, resources, and leadership Information and communication infrastructure Employee loyalty Customer loyalty Shareholder loyalty Assessing Organizational Effectiveness

43. Extend Enter new line of business and/or add new business models Enhance Add functionality or features to current product/service offerings or improve performance of existing business Extend Enhance Expand Exit Exit Exit a business or market or drop a product/service offering Expand Add new product/service offerings or enter new geographic markets Evolving Business Model

44. Blueprint of “Big—Small” Business