Determining the Business Information System Strategy

1. Determining the BusinessInformation System Strategy

2. How the IS/IT Strategy Should be? • The strategy must not only identify what is eventually required, BUT must also understand accurately how much already been achieved • The strategy must be integrated not only in terms of information, systems, and technology via a coherent set of actions BUT also in terms of process of adaptation to meet changing needs of business as they evolve

3. Main Factors Affect Applications Portfolio • External long term – external business environment • External short term – external IS/IT environment • Internal long term – internal business environment • Internal short term – internal IS/IT environment and current application portfolio

4. External Long Term – External Business Environment • The state of industry: • Profitability • Growth • Structure • The capability of IS/IT in changing products, markets, and interrelationship of the industry

5. External Short Term – External IS/IT Environment • The actual use of IS/IT by competitors • The opportunities created by IS/IT to change the balance of competitive forces and influences on the industry, both in : • the existing value chain • by new entrants • Products/service substitution

6. Internal Long Term – Internal Business Environment • How new IS/IT applications could more effectively support or enhance the business strategy of the enterprise • How new IS/IT applications could enable the business to adopt a more appropriate strategy to suit the future business environment

7. Internal Short Term – Internal IS/IT Environment and Current Application Portfolio • The degree to which existing systems support the chosen strategy and the critically of those system to avoiding business disadvantages and/or sustaining existing advantages • The existing approach to IS/IT management and its appropriateness to the business strategy • The IS/IT resources and competencies the organization has or can easily acquire

8. Framework in Using Tools and Techniques Effectively • The main object of determining the IS/IT strategy is to: • identify the required applications and their priorities and • Able to deploy resources to achieve them successfully

9. Framework in Using Tools and Techniques Effectively (Continued..) The inputs and tool kit

10. Framework for Determination of the Business IS Strategy Identifying how IS/IT could impact the strategy Establishing the Relative Priorities for IS/IT Investments

11. Three Components of the Portfolio • The existing applications • The current systems and all systems are being developed for near future use (<= 1 year) • The strengths and the weaknesses should be understood • The required applications • Applications that will be necessary to achieve the business objectives and strategy • The potential applications • Applications that might prove valuable in the future

12. Understanding the Industry and the Potential Impact of IS/IT on Products and Markets • The key issues: • Business unit and their relationships • Stage of maturity of the industry • Product and customer portfolio of BU and contribution to revenues and profits and demand on resources • The competitive forces affecting the BU and corporate (SWOT analysis) • The key competencies required to succeed in the industry and the relative status of the organization’s competencies in each dimension – customer, product, and operation

13. Interpreting Business Objectives and Strategy • Business objectives and strategies are product of a number of consideration what the organization: • Might do (based on environment) • Wants do (based on values and views of the executives) • Must do (to survive) • Can do (based on resources and capabilities) • Overall business objectives can be analyzed for example by using BSC • The objectives need to be prioritized (high, medium, and low) and measurement criteria established

14. Interpreting Business Objectives and Strategy (continued...) • Another way of structuring objectives for use in determining IS/IT requirements: • Permanent objectives (mission and overall goals of the company – long term) • Strategic objectives (medium term) • Tactical objectives (short term) • Permanent and strategic objectives can be assessed in terms of CSF

15. Analyzing the Industry (External) Value Chain and the Information Flows • Useful for understanding information flow in overall industry (supplier, customer, and competitors as well) • Can lead to an extension of the IS requirements and potentially new or modified objectives • Analysis such as data flow analysis and entity modeling can be uses to define the detailed information involved

16. Determining CSFs • CSF is commonly used tool in the IS Strategies toolkit • Usually used together with BSC (Modul 4) • Should be noted: interpreting CSF’s in terms information and information systems needs reference to activities of the business and its organizational structure

17. Determining the Strategic Potential • Key issue in this stage is how the key business processes relate to and are affected by the organization’s systems in the value chain • Analysis of value chain can be used • Besides, CSF can be used to define new information needs and potential system options

18. Determining the Strategic Potential(Continued..) • However, the feasibility in developing or changing processes and systems will depend on: • Effectiveness of existing internal systems in linking the chain together • Possibility and economics of obtaining additional information, and • The willingness of suppliers and customers to cooperate, based on benefits they perceive

19. Analyzing the Internal Value Chain and Organizational Relationships • Objective: • to identify what the business does and how it could be better carried out (by analysis of the internal values chain) • To show how it is structured to do it, will produced a degree of mismatch (analysis of the organization)

20. Identify Critical Business Processes and Activities • It is done based on CSFs and the way in which the company add value/incurs cost and is managed

21. Identify Critical Business Processes and Activities (continued..) • Potential for business improvement will vary depending on the relationship between the value adding, cost, and CSFs associated with activities and processes: • A high cost, low value adding activity with few CSFs→ cost reduction possibilities from IS/IT investment • A high value adding activity can be made more effectively through IS/IT investment but only if its improvement relates directly to agreed business CSFs • Where a number of activities are associated with a CSF, they need to be assessed collectively in term of options for enhancing the value or reducing the cost of each, via IS/IT developments • If an activity adds little value and is not associated with any of CSFs, it is option to improve it by IS/IT

22. Assessment of the New options for Investment • After understanding the relationship between the value chain, the organization structure, and the critically of processes and activities, it is now possible to assess the value of various IS/IT opportunities developed earlier through the “creative” thinking route • Overall route through the creative thinking: • What could IS/IT do for firms in terms of changing business parameters and relationships? • What could IS/IT do for the organization, based on its particular position within the industry? • What options offer most immediate benefit in terms of the business objectives/strategy and the way the company operates and is managed?

23. Determining the Future Application Portfolio • Creative route will produce ideas that will be categorized as: • High potential: worth evaluating further • Strategic: the idea relates directly to the business strategy