How to hear this lecture

1. How to hear this lecture Click on the icon: to hear the narration for each slide. Partnership for Performance

2. fisher.osu.edu Fisher logo IT Strategy and Alignment Dr. Rajiv Ramnath Director Collaborative for Enterprise Transformation and Innovation (CETI) Department of Computer Science and Engineering, College of Engineering The Ohio State University Ramnath.6@osu.edu http://www.ceti.cse.ohio-state.edu Partnership for Performance Partnership for Performance

3. The Business Context – Brief Recap • The 5 forces that act on firms determine the competitive position • Organizations try to compete in scope and cost or focus. • The value chain determines HOW the company does its work • There are linkages in the value chain • Competitive strategy determines how the value chain should be constructed and linked. • Engineering the value chain (using frameworks like the Balanced Scorecard) brings competitive advantage Ref: How Information Gives You Competitive Advantage, Porter and Millar Partnership for Performance

4. How IT Provides Competitive Advantage

5. How Information Technology Provides Competitive Advantage • Depends on “information intensity” of products and industry structure • Each step has a physical and an information component • IT optimizes the performance of the step • Capture knowledge of how to do it right • Automate the step • Do the step better by exploiting information • Build reconfigurable systems • IT helps exploit linkages better • Coordination among the linkages needs information coordination • Documentation costs are reduced • A company’s information is also its product. Example: Lexis-Nexis, credit reporting agencies, product service and support • Changes industry structure • IT has changed cost structure of firms • Internet has increased reach of firms • Helps spawn new businesses around information processing • B2B integration Ref: How Information Gives You Competitive Advantage, Porter and Millar Partnership for Performance

6. Where IT is Needed Now - Services • Environmental Trends … • Globalization • The removal of “friction” • Uniform quality of most “products” manufactured anywhere • Outsourcing of almost anything • Global movement up Maslow’s Hierarchy of Needs • Have Created the Need for Service Innovation: • Beyond operational excellence • Not product innovation but service innovation • Characterizing Services: • Physical and informational component • High variation among transactions • Continued negotiation during service delivery • Little cost amortization • Oscillation around satisfaction • High touch requirement • Decisions made on secondary factors – opinion, trust and relationships • Must be delivered at the point of the need • Local presence is an advantage Partnership for Performance

7. How IT Can Help - Examples • The removal of “friction” in service delivery • Of the informational part of the service • High variation among transactions • Understand variation through knowledge capture and delivery • Through clustering techniques help create tailored services • Continued negotiation during service delivery • Coordinate the negotiation • Provide information for the negotiation (what-if tools) • Little amortization of costs (small proportion of fixed costs relative to variable costs) • Codifying expert knowledge electronically converts variable costs to fixed costs • Oscillation around satisfaction • Electronic standardization of processes increase satisfaction • Electronic capture of satisfaction • High touch requirement • Provide increased sense of touch through customer analysis and delivery of customer information to service provider • Decisions made on secondary factors – opinion, trust and relationships • Replace intuition with captured information • Must be delivered at the point of the need • Provide location identification and location based delivery • Local presence is an advantage • Remove distance; enhance local presence with local add-ons. Ref: Services Science-A New Field for Today's Economy, Paulson Partnership for Performance

8. How Can IT Help – Computing Aspects of “Services Science” • Modeling • E.g. object-oriented modeling of businesses in the CBM • Analysis • E.g. data mining • Process enablement and improvement • Workflow enablement • Business process re-engineering • Systems monitoring and management • Autonomic computing for self-healing, optimization etc. • Better capacity planning • Automated system provisioning • Enhancing insights from other fields: • Computational models on how people and groups work and interact (based on social sciences research) • Operations research algorithms Partnership for Performance

9. Counterpoint: IT is Just a Utility • IT cannot provide sustainable competitive advantage • Too easy to copy once implemented • E.g. UPS tracking service • Hence no incentive for innovation by single companies • Does create ECONOMIC value across businesses • Hence must be created by the government and managed like a utility • Discussion: Is this true? Ref: IT Doesn’t Matter, Carr Partnership for Performance

10. Business-IT Alignment

11. Business-IT Alignment Is Many Things • Goal: IT that delivers a sustainable competitive advantage in a manner compatible with the Business • This notion will affect everything that we study in this course • Intellectual dimension: • Linking between the business plan and the IT plan. • Congruence between the business strategy and the IT strategy. • The fit between business needs and information system priorities • Cultural dimension: • Communication and behavioral styles • Structural dimension (formal and relationship-based): • External alignment – with technology changes, suppliers • Matching business organization – e.g. decentralized vs. centralized IT deployment, management, personnel • Alignment of project management style to business needs • E.g. Agile vs. Structured processes • This is a continuous process Ref: IT Alignment What Have We Learned, Chan, Reich Partnership for Performance

12. Enterprise Architecture – A Framework for IT Alignment

13. What is Enterprise Architecture? • In a complex system of which IT is an integral part, EA is a decision support process i.e. a means of: • Informing the business decision making process • Understanding organization structure and function and technology dependencies • Identifying an IT portfolio • Supported by a EA roles • Documented using a framework • Represented by a meta-model • Stored in a repository Ref: A Simple Guide to Enterprise Architecture, Bailey Partnership for Performance

14. EA Metamodel Ref: A Simple Guide to Enterprise Architecture, Bailey Partnership for Performance

15. EA Artifact Example – IT Portfolio – City of Columbus Ref: IT-Enabled Sense and Respond Strategies in Complex Public Organizations, Ramnath, Landsbergen Partnership for Performance

16. Thank you! Partnership for Performance