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Strategic IT Management

Strategic IT Management. The Computing Eras ---. STRATEGIC GRID – CASH & MCFARLAN. Strategic MIS Grid. Level of Dependence on Existing Applications Level of Dependence on Planned Applications. Planned Applications. Low. High. Factory. Strategic. High. Existing Applications. Support.

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Strategic IT Management

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  1. Strategic IT Management

  2. The Computing Eras ---

  3. STRATEGIC GRID – CASH & MCFARLAN

  4. Strategic MIS Grid • Level of Dependence on Existing Applications • Level of Dependence on Planned Applications Planned Applications Low High Factory Strategic High Existing Applications Support Turnaround Low

  5. Level of Dependence on Existing Applications How critical is it that existing systems run in a reliable, cost efficient fashion 24 hors a day, 7 days a week, 52 weeks a year? High Dependence: Reliable functioning of the systems is at the absolute core what the company must do right if it is going to be successful. Low Dependence: If there is unevenness is computer services, it is irritating but not fatal.

  6. Strategic Impact of the Planned Applications How crucial are the new systems that are going to be developed over the next few years? High Impact: IT development is on the short list of three or four things the firm must do right to be successful and profitable. Low Impact: IT developments will be useful but not on the short list of three or four things that have to be done right.

  7. IT Management Environments-- A. Strategic What is under development is absolutely critical to the firm’s long-term success and the firm is highly dependent on IT on a daily basis. IT’s position in the organization is right at the TOP. B. Turnaround What is under development is very important, but there is more tolerance for uneven support by existing systems. Oil Industry

  8. IT Management Environments-- C. Factory Smooth operation of existing technology is crucial for survival, but future IT developments are not a major element of differentiation. Credit Card Processing Operation. D. Support What is under development is not on the shortlist of things that must be done right and problems with existing IT systems are irritating but not fatal. Consulting Firms, Grocery Stores.

  9. Strategic MIS Grid Planned Applications Low High Factory Strategic High Existing Applications Support Turnaround Low

  10. Generic IS Strategies Centrally Planned • Totally integrated with business strategy • Very demanding in terms of top management time • Could be very difficult to be made effective • Desires complete understanding of the business situation Leading Edge • Acceptance of the fact that IT will create competitive advantage • Results in many wasted investments • Requires senior management commitment • Could be expensive

  11. Generic IS Strategies Free Market • Internal services must compete with outside vendors • Requires little attention from the top management • Could lead to duplication of efforts/investments Monopoly • The department is a sole source of service within organization • User satisfaction is the main measure of effectiveness • Innovation could be slow due to lack of competition • Users usually do not perceive their role in IT activity

  12. Generic IS Strategies Scarce Resources • Careful management of IT resources using financial controls • Investments analyzed in hard financial terms • IT treated as a cost centre • IT not considered as a business weapon • Most popular strategy to be found in organizations Necessary Evil • IT deployed basically to fulfill legal requirements • Investments made only for very high return projects

  13. Strategic MIS Grid • Suitability of IT Environments Planned Applications Low High • Factory • Monopoly • Scarce Resources • Strategic • Centrally Planned • Leading Edge High Existing Applications • Support • Scare Resources • Free Market • Turnaround • Leading Edge • Free Market • Centrally Planned Low

  14. Failures of Conceptualization • Project fails to meet a real customer need • Use of product does no become ingrained in user behaviour • Project is too easy to replicate • Project wakes up a sleeping giant • Project triggers a monopoly litigation • Technology lowers entry barriers • Project is rejected by the customer culture

  15. Failures of Execution Dimensions of Implementation Risk: • Structuredness: • Greater the Structuredness, lower the risk • Lesser the Structuredness, higher the risk • Company-relative technology: • More familiar the technology, lower the risk • Less familiar the technology, higher the risk • Size: • Larger the project, higher the risk • Smaller the project, lower the risk

  16. Implementation Risk Matrix

  17. Twelve Principles of Killer App Design • Reshaping the Landscape • Outsource to the Customer • Cannibalize your markets - develop new ones • Treat each customer as a market segment of one • Create communities of value

  18. Twelve Principles of Killer App Design(contd) • Building New Connections • Replace rude interfaces with learning interfaces • Ensure continuity for the customer, not yourself • Give away as much information as you can • Structure every transaction as a joint venture - between you and the customer

  19. Twelve Principles of Killer App Design • Redefining the Interior • Treat your assets as liabilities - and digitize ASAP • Destroy your value chain - or someone else will • Manage innovation as a portfolio of options • Hire the children - they’re tech savvy

  20. Long Term Competitiveness thru IT Assets • The three IT Assets • build a strong IT Staff • procure a reusable technology • develop a partnership between IT and business management

  21. Challenges for IT Exploitation • Business and IT Vision • Design an IT Architecture • Delivery of IS Systems

  22. We deploy IT to overcome weaknesses in our current operations We see IT as an expense to be managed We view IT outsourcing as a threat to our operations We use one rigid criterion for assessing value from IT Our IT operations reflect a captive, internal monopoly We view IT as a fundamental driver of future business We see IT as a resource to be leveraged Our sourcing strategy balances insourcing with outsourcing We adopt multiple criteria for measuring IT value Our IT operations act as a solutions integrator to business requirements IT Role Profiling

  23. Developing an IT Architecture IT Architecture Business Vision Business Organization Business Strategy IT Strategy Shared IT Vision

  24. Interpreting Technology Hype – Gartner Research Peak of Inflated Expectations VISIBILITY Plateau of Productivity Slope of Enlightenment Trough of Disillusionment Technology Trigger MATURITY

  25. Magic Quadrants – Vendor PositioningGartner Research Ability to Execute Completeness of Vision

  26. The Competitive Advantage Three Generic Strategies related to Competitive Advantage Cost Leadership Product Differentiation Focus

  27. Porter’s Five Force Model Threat of New Entrants The Industry : Existing Rivals Bargaining Power of Customers Bargaining Power of Suppliers Threat of Substitute Products

  28. Opportunity Framework New Entrants Erect/Demolish Entry Barriers Suppliers Erode/Share the Bargaining Customers Switching Costs/Customer Information Substitute Products/Services Innovate New Products/More Value Existing Rivalry Change the Basis of Competition

  29. Six Key Questions • Can IT be used to create defensible entry barriers • Can IT help us induce switching costs • Can IT help us change the ground rules of competition • Can IT help us change the competition from cost-based competition to sustainable product differentiation • Can we use IT to build links to our suppliers • Can IT be used as a part of the product No : We are more closer to Support-Factory side of the grid Yes - We are more close to the Strategic-Turnaround side of the grid

  30. Porter’s Five Force Model Threat of New Entrants The Industry : Existing Rivals Bargaining Power of Suppliers Bargaining Power of Customers • The New Forces : • Globalization • Digitization • Deregulation Threat of Substitute Products

  31. NOLAN’S STAGE GROWTH MODEL

  32. Leavitt’s Balancing Act

  33. Mapping of Organizational Culture on Nolan’s Stage Growth Model

  34. Mapping of Contemporary IT on Nolan’s Stage Growth Model

  35. The Four C’s of Digital Transformation • Commerce - the way we transact • Content - the information we use • Community - the people we interact with • Collaboration - the ways we interact with them

  36. First Mover Advantages -- • Today, first movers walk away with all the marbles • Internet Life Cycle - the adoption curve rises quickly and falls quickly against PLC • You’ve got to think differently • Can you deliver function without form : • CRM • Diagnostic • Software applications • Can you set up a mega-exchange - Planet-M Bottomline - Web is not kind to followers

  37. B-2-B Challenges --- • Like CISCO, Intel has used digital transformation to : • Cut costs • Increase customer satisfaction • Maintain growth • Empower employees

  38. B-2-B e-Business Results --- • CISCO, FedEx and Intel experience suggests that this leads to : • Lowering latencies • Lowering operational costs • Creating seamless partnerships • Virtual manufacturing

  39. B-2-C E-Commerce -- • Advertise - “We are here” - Can you sustain interest • Who’s out there - • Internet population has grown multifold • Online shopping is increasing • More people, more frequently access the Net

  40. B-2-C E-Commerce --Popular Myths • Hits is a good measuring stick • Great content leads to repeat visits • To get traffic to site, depend on search engines • Web is just like TV • You need to be cutting edge to succeed

  41. To succeed in B-2-C E-Commerce -- • Your entire supply chain must be optimized • Forget the level playing field - indulge in one-to-one marketing • Greater operational efficiencies • Expanded customer base Bottomline - Can your systems evolve?

  42. E-Business Mantra --- • The winning strategy is fast and flexible • The winning system is versatile and scalable • The winning team is totally committed • Settle for nothing less.

  43. Concluding Remarks • Emerging technologies are providing level playing field • Process innovation is a must • Proprietary architectures are indispensable for CA • Just good products are not enough • Architectures should be able to evolve • Cannibalization of old ideas is essential • IT Leadership has no substitute

  44. YOU & I A man is flying around in a hot air balloon, and realizes that he is lost. He reduces altitude and spots a man down below. He lowers the balloon near the man and shouts: “Excuse me, but can you tell me where I am?” The man down below says: “Yes! You’re in a hot air balloon, hovering 30 feet above this field.” “You must work in Information Technology” says the balloonist. “As a matter of fact, I do!” replies the man, “how did you know?” “Well,” says the balloonist, “everything you’ve told me is technically correct, but it’s of no use whatsoever.” The man below says: “Well then! You must be in upper management!” “I am,” replies the balloonist, “but how did you know that?” “Because you don’t know where you are of where you’re going, and you expect me to be able to help! Plus, you’re just as lost as you were before we met, but now you think it’s all my fault!”

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