Strategy IT Reengineering Virtual Value Chain Analysis

1. Strategy & ITReengineeringVirtual Value Chain Analysis

2. 3 Questions Where is your organization today? Where does your organization want to be? How do you plan to get there?

3. The goal ...Better, Faster, Cheaper, More ...

4. Better, faster, cheaper, more ... Assumes you are in the �right business�. Relies on knowledge of business processes.

5. Information Technology (IT) Any technologies that relate to the collection, storage, manipulation, and reporting of information.

6. Assess the organization Where is your organization, what is its history? Does your organization have problems? To what extent do they relate to organizational history? To what extent do they relate to technology?

7. Where is your organization today? Centralized , Decentralized, Federated, or Distributed Stand alone PCs, LANs, WANs, Virtual net, Hybrid

8. Where does the organization want to be? Assess business goals Assess technology alternatives

9. Strategic Uses of IT Innovative Technology (long-term) Barriers, Risks, Rewards Innovative IT Use (either short or long-term) Incremental addition to existing infrastructure Barriers, Risks, Rewards

10. Where does the organization want to be? Rubber-band theory of change alternatives Tension between current state and desired state Lower expectations or Raise current state Political theory of change alternatives The art of the �possible� American vs. Japanese views of change

11. Where does your organization want to be? Innovation theory of change -- critical success factors Champions User involvement in decisions Availability of technical experts Visibility of pilot project(s) that MUST be successful Cultural �fit� of the innovation with the organization Perceived business need

12. Where does your organization want to be? Innovation theory of change -- Successful deployment of innovations are more difficult The more radical The greater the knowledge barriers The more inter-organizational The more innovative the technology The more necessary a technical infra-structure ... the innovation

13. Where do you want to be? What is good/bad about the organization structure and position? What are business goals - short & long term? What are technology goals and how do they relate to business goals? Are the goals realistic?

14. How do you plan to get there? Critical path planning -- ID tasks, task durations, develop CP chart, define staff needs Ensure each innovation issue is planned and successful: Champions, user invovement, technical expertise, pilot visibility, cultural �fit�, business needs Institutionalize the change process along with the technology

15. The Learning Organization (Senge) Adaptable learning -- coping Fitness to standard Fitness to need Generative learning -- creating Determining latent need

16. The Learning Organization --Leadership Coach vs. manager and development of Governing Ideal P&P, Strategy, Structure Effective learning processes Determining latent need Foster personal purpose and commitment

17. The Learning Organization -- Systems Thinking Interrelationships, not things, processes or snapshots SOLVE THE REAL PROBLEM Distinguish detail complexity from dynamic complexity Focus on high leverage areas Avoid symptomatic solutions

18. Reengineering and Adding Value

19. Hallmarks of Reengineering A process perspective value added and cycle time criteria Dramatic improvement goals Culture changes from stove pipe to cross functional Participant changes to empowered and skilled Technology changes from legacy to client/server

20. The Reengineering Enablers HR IT empowerment outsourcing job enlargement teams gain-sharing pay for skills, not headcount flextime workflow or document tracking applications integrated packages (CIM, SAP) �advisory� tools (DSS/AI) data warehouses desktop, laptop, or palmtop computers linking (communications) technologies

21. Where is reengineering successful? Executive championship -- more is better Size -- �small is beautiful� Recent business performance -- poor Financial resources -- deep pockets Age of process -- newer Geographic dispersion -- one site Time available to make change -- long Nature of process -- non-core

22. Hammer�s Principles Organize around outcomes, not tasks Have output users do the process Process information when it is produced Treat geographically dispersed resources as if they were centralized Combine parallel activities Have workers make decisions Build control into the process Capture information once, at source

23. Reengineering Analyze business area and systems Develop matrices: organization � process organization � application organization -- data application � process application � data Define potential changes Make recommendations for Radical change Incremental change

24. BREAK

25. Using Reengineering to �Jump the Curve�

26. Exploiting the Virtual Value Chain Market place ... Marketspace

29. Marketspace -- Many business axioms don�t apply Law of Digital Assets -- not used up, can be reharvested, can change the competitive dynamics of their industries New economies of scale -- Size doesn�t matter on the Web New economies of scope -- Single set of digital assets provide value across different/disparate markets Transaction-cost Compression -- VVC transaction costs lower than PVC AND decline sharply per unit cost (60s - $1/customer, 90s - $ .01/customer) Rebalance supply and demand -- sense and respond rather than make and sell

30. Value-Chain Analysis What is business doing now? -- strategy & assumptions What are environmental influences? -- industry, competition, society, strengths/weaknesses What should the business be doing? -- assumptions, strategy testing, alternatives, choice

31. Value-Chain Analysis -- Generic Strategies Low cost producer Differentiation Market niche

32. Value-Chain Analysis -- Competitive Stance First mover Technological leader Continuous innovation More IT investment than competition

33. Virtual Value-Chain Analysis (Rayport & Sviokla) Vendor --> Manufacturer --> Distributor --> Wholesaler --> Retailer --> End buyer (Customer) vs. Vendor --> Virtual Market --> End buyer

34. IT Value-Chain Alternatives Electronic linking & communication Electronic customer/supplier relationships Virtual components Virtual business

35. Is perfection possible? MS acceptable level of errors Need for 'knowledge management' Human information processing limitations System/IT information processing limitations

36. Assess your organization - Plan your future? What should the business be doing? � ID assumptions, strategy testing, alternatives, choice Generic Strategy - low cost, differentiated product, niche Competitive Stance -- Bleeder, Leader, Sheep, Laggard, Incremental innovator Value Chain Analysis and IT alternatives

37. Summary IT can support any way of organizing, any way of doing business. Faster, cheaper, better, more � rely on intimate understanding of a business, its goals and its culture. Analysis of real and virtual value chains identify opportunities. Humans are at the heart of any system and are both its strongest and weakest links.

38. Where to get more information The T-Form Organization, H.C. Lucas, Jr., Jossey-Bass, 1996. Process Innovation, T. H. Davenport, Harvard Business School Press, 1993. Jumping the Curve, N. Imparato & O. Harari, Jossey-Bass, 1994. Rayport & Sviokla, Harvard Business Journal, 1995-8

39. Summary Learn about systems by learning how it fits in an organization OO is one of several methods for analyzing and building applications OO is best for real-time applications which have non-persistent data

40. OO Summary Prepare for analysis -- obtain requirements, develop app summary, identify classes and methods Develop class hierarchy diagram Develop state-transition diagram Develop process flow/activity diagram Design messages between class/objects

41. OO Summary Determine the extent of parallelism Design architecture � 1, 2, or n-tier Determine service/shadow class/object needs Define program packages Define service modules Program � test � convert � implement - maintain

42. Thank you!