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Aligning IT With Business Strategy

Aligning IT With Business Strategy. David Caruso VP & Research Fellow AMR Research Inc. The Good News:. IT Has A Seat in the Boardroom Now… The Bad News: Major IT implementations targeting traditional cost savings haven’t achieved expectations

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Aligning IT With Business Strategy

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  1. Aligning IT With Business Strategy David Caruso VP & Research Fellow AMR Research Inc.

  2. The Good News: • IT Has A Seat in the Boardroom Now… The Bad News: • Major IT implementations targeting traditional cost savings haven’t achieved expectations • Changing business models push the action beyond the ERP footprint • The new focus: Strategic applications - Global processes – 2nd order benefits

  3. Technology Investment Gets Competitive The visible reasons: • Entering new markets & channels • Dealing with a network supply chain model • Cost reduction in mainstream activities… The power play: • Industry leaders are focusing core competencies to dominate markets

  4. Compete with innovation Capture market share & margins Compete on price High Tech Margin Model Pounds Sell price Mfg cost Time

  5. IT Governance: Where Does the Corporate World Stand? • Leaders: Top 20% - The Value managers • In place business-led IT governance councils • Middle of the Pack: 50% - Transitional players • ERP steering committees- now concerned with wringing value out of systems • The Rest: remaining 30% - Late starters • No formal business/IT operating models

  6. AMR IT Governance Council Model Technology Strategy/ Infrastructure Requirements Business Strategy Organisation design Application Portfolio/ New investment requests Market Needs/ Competitive strategy/ Benchmarks IT Budget/constraints Education Key Performance Indicators Program management Prioritised & funded IT Plans Executive Ownership Communication IT Governance Council Business & IT Alignment Right team Right Agenda ROI & Reporting Guidelines

  7. Seven Habits of Highly Effective IT Governance • Clarity of Mission • Organised for action • Well crafted agenda • Control of the Budget • Standardised processes • Messages that matter • Executive ownership of benefit delivery

  8. When It All Goes Right… • Industry example: Fujitsu • Process Focus: • Established Benchmarks, Process Improvement, Measurement… • Chief strategic thrust: • Use Process and Technology to Impact Competitive Position. • Tools: • Extended ERP to Fully Realise Business Process Design • Results: • Build cycle-- 21 days down to 2.3 days • Inventory cycle - 60 days down to 27 • Forecasting Accuracy - 70% up to 85% • On-time Deliveries - 80% up to 92% • Sales doubled to $1.5B--headcountdown 20% 300% ROI in First Year

  9. Institutionalising IT and Business Alignment Marketplace Benchmarks Critical Success Factors Compare Corporate Financial Performance Drive Accrue KPIs Corporate Business Processes KPIs Divisional Business Processes KPIs Operating Business Processes

  10. The IT Win: Align Yourself with your Business Partners • Talk their language • Educate them • Provide Aggressive Assessments of Cost and Time • Focus on Time-to-Benefit • Show them how to measure success for the Initiatives

  11. Thank you, David Caruso AMR Research

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