Project and Information Systems: IS Strategy Triangle Model

1. Project and Information Systems:IS Strategy Triangle Model Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

2. PM (and any Business) should focus on: Entrepreneur 企 业 家   creativity

4. Learning Objectives • Understand the concepts of Project and Information Systems • Understand IS Triangle Strategy Model and how to employ it to improve competitive advantage for project management • Understand Porter’s Competitive Advantage Strategy and how to apply it to create/improve organization competitive advantage

5. IS vs. IT ? IS = IT Why?

6. MIS M I S Which component is more important?

7. Computers Impact The good news: Computers allow us to work 100% faster. The bad news: They generate 300% more work.

8. Question? • What is the only entity remains unchanged in the business? • Answer: • “Change”

9. INTRODUCTION • Shouldn’t managers rely on experts when it comes to making the decisions on IS for their organizations? • Managers today need to know about their organization’s capabilities and uses of information as much as they need to understand how to obtain and budget financial resources. • A manager who does not understand the basics of managing and using information cannot expect to be successful in today’s business environment.

10. Figure I.1 - Reasons why business managers should participate in information systems decisions Reasons: • IS must be managed as a critical resource change • IS enables ________ in the way people work together. • IS are part of (and integrate) almost every aspect of business. • IS enable or inhibit business ___________ and new __________. opportunities strategies business challenges from competitors • IS can be used to combat ____________

11. Technology vs. Technique • Technology • is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. • It can also refer to the collection of such tools, machinery, and procedures. • Technique • Personal habits • Work style

12. Failed IS Projects • Standish Group found that 67 percent of all software projects are challenged • Late, over budget or fail to meet performance criteria. • Managing a business project means managing an information systems project. • Why? • Many systems use or integrate the Internet.

13. Successful IS Projects • To succeed, “a” general manager must be a project manager and must learn how to manage this type of risk. • Executive management no longer has an option but to consider skilled IT project management as fundamental to business success.

14. The Need for Project Management • Critical for companies today: the ability to adapt existing business processes faster than the competition • Typical adaptation projects include: • “Rightsizing” the organization (what is another name?) • Reengineering business processes • Adopting more comprehensive, integrative processes

15. What are the three elements in the “Project Triangle”? • What is the center in the triangle?

16. Project Triangle(Project Management Trade-offs) Cost Time The center of project triangle is QUALITY Scope The objective of the PM is to define project’s scope realistically and ultimately deliver quality of product/serviceon time, on budget and within scope.

17. Typical Project Management trade-offs Scope Product: quality, features, functions Project: work required to deliver product/service Time – the time required to complete the project Cost – all the resources required to carry out the project. Cost vs. Quality The quality of a system will normally impact its cost. Figure above shows the three sides of the project triangle.

18. Project Manager’s Role The project manager will typically be involved in: Ensuring progress of the project according to defined metrics.. _____________ Ensuring progress toward deliverables within _____ and _________________ Running coordination meetings. Negotiating for resources on behalf of the project. Business projects are often initiated because of a successful business case.  A successful project begins with a well-written business case (i.e., spells out components of the project.) • Identifying risks. time resource constraints But, not to determining the best fit of the project in the organizations vision

19. The GreatDividing Line BetweenSUCCESSand FAILURE Can be Expressed In Five Words “I Did Not Have ______” TIME

20. develop Mission guide Strategy create Tactic Planning is everything ...What are Two Major Outputs for an organization? Vision Customers, market, competition Products, Services N

21. What is “Strategy”? • A strategy is a plan of action designed to achieve a vision. • The science or art of combining and employing the means of war in planning and directing large military movements and operations. • "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".

22. Strategy vs. Tactics • Strategy versus Tactics • Long range versus day-to-day • Dreaming versus doing • Doing the right thing versus doing things right • The fundamental principles of strategy are the same for all, all times, and all situations. Only tactics change, and tactics are modified to the times. • In warfare, battlefield tactics is how to handle one’s army when it is face-to-face with the enemy. “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” Sun Tzu

23. Strategy vs. Tactics • Name an example of Strategy vs. Tactics “All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” Sun Tzu

24. Direction for business Supports business Needs and priorities Infrastructure and services Information System Strategy Triangle Business (Firm) Strategy Where is the business going and why? IT impact and potential Organizational Strategy IS/IT Strategy What is required? How it can be delivered? 1. Architecture/Infrastructure 2. MIS organization (Sourcing, Governance etc.) 3. Funding

25. Direction for business Supports business Needs and priorities Infrastructure and services Information System Strategy Triangle PROJECT MANAGEMENT Business (Firm) Strategy Where is the business going and why? IT impact and potential Organizational Strategy IS/IT Strategy What is required? How it can be delivered? 1. Architecture/Infrastructure 2. MIS organization 3. Funding Information Resources can be used efficiently and effectively.

26. Information System Strategy Triangle • A business strategy is a well-articulated vision of where the business seeks to go and how it expects to get there. • An organizational strategy is the organization’s design, as well as the choices it makes to define, set up, coordinate, and control its work processes. • IS strategy is the plan the organization uses in providing information systems and services.

27. WHY STRATEGY? • Why is it important for business strategy to drive organizational strategy and IT strategy? What might happen if business strategy were not the driver?

28. Why is it important for business strategy to drive organizational strategy and IT strategy? What might happen if business strategy were not the driver? Typically, managers seem to think that changing or upgrading an information system (or even a component of an information system) will only positively impact a business. Quite the opposite, in fact, is true. By making changes in organizational strategy or IT strategy first, the triangle is "out of balance" and there will be consequences in the affected areas. For example, building a virtual organization, but not changing the business strategy to something like … "insuring our people are productive and have the widest possible work place opportunities" can lead to significant disconnects between workers, their managers, and their customers. And, worse, without supplying the virtual worker with the appropriate information system (a computer at home, a laptop, etc) will lead to a decrease in productivity by the virtual worker, and a major disruption of business operations.

29. Example • Give an example in which a company fails to perform well because it does not align its three strategies. • Any? • too much focus on IT • used to be considered as a “hardware” company (Mainframe, Mini-computers, PC, DOS etc.) • new division established in early 1990: GLOBAL SERVICIE DIVISION • it now becomes a “Service” corp. – “TOTAL solution”

30. Louis V. Gerstner, Jr. IBM former CEO and president (1992-2002) Prior to joining IBM, Mr. Gerstner served for four years as chairman and chief executive officer of RJR Nabisco, Inc. This was preceded by an 11-year career at American Express Company, where he was president of the parent company and chairman and CEO of its largest subsidiary, American Express Travel Related Services Company. Prior to that, Mr. Gerstner was a director of the management consulting firm of McKinsey & Co., Inc., which he joined in 1965. In January 2003 he assumed the position of chairman of The Carlyle Group, a global private equity firm located in Washington, DC.

31. HW • Each Group finds out another example (not limited to the high-tech industry) and analyze it using the IS/IT Triangle Strategy model.

32. Another Example? • Give another example (not in the high tech industry) in which a company fails to perform well because it does not align its three strategies. • Any? • too much focus other than IT • inefficient organization structure • Inefficient IT usage

33. FORD IS Strategy Triangle: Old Strategy Business (Firm) Strategy TOO MANY BRANDS/ FOCUSES Organizational Strategy IS/IT Strategy COMPLICATED and Inefficient structure Inefficient and ineffective IT usage N

34. FORD IS Strategy Triangle:New Strategy (ONE FORD) ONE FORD STRATEGY: One Team, One Plan, One Goal A simple-sounding plan with big consequences Business (Firm) Strategy Organizational Strategy IS/IT Strategy SIMPLE and Efficient Structure Efficient and Effective IT Usage and Support N

36. Alan Mulally: President and CEO, Ford Motor Company In September 2006 Prior to joining Ford in September 2006, Mulally served as executive vice president of The Boeing Company, and president and chief executive officer of Boeing Commercial Airplanes. In that role, he was responsible for all of the company’s commercial airplane programs and related services. Mulally also was a member of the Boeing Executive Council and served as Boeing’s senior executive in the Pacific Northwest. Management style Mulally negotiated four new agreements with United Auto Workers, which has brought down labor costs from $76/hour to $55/hour.

37. BRIEF OVERVIEW OF BUSINESS STRATEGY FRAMEWORKS

38. Striving for Competitive Advantage • Firm level: Industry & Competitive Analysis • Business level • Competitive Forces Model (more details will be discussed next class) • Competitive Strategy • D’Aveni’s Hypercompetition Model (7s) • Value-Chain Analysis

39. Business Strategy Frameworks • Porter’s Generic Strategies Framework (and its variants) • Hypercompetition and the New 7-Ss framework (D’Aveni) N

40. Figure 1.2: Porter’s Generic Strategy Framework – 3 Strategies for achieving Competitive Advantage Competitive Advantage Uniqueness Perceived by Customer Lower Cost Position Industrywide (Broad Target) Overall Cost Leadership Differentiation Competitive Scope Particular Segment only (Narrow Target) Focus Competitive Mechanism N Dr. Chen,The Trends of the Information Systems Technology TM -40

41. Porter’s Competitive Advantage Strategies • Cost leadership: be the cheapest • Differentiation: focus on making your product and/or service stand out for non-cost reasons • Focus: occupy narrow market niche where the products/services can stand out by virtue of their cost leadership or differentiation.

42. Business Strategies and its Competitive Advantage Uniqueness Perceived by Customer Lower Cost Position Industrywide (Broad Target) Cost Leadership Differentiation Alliance Innovation Growth Competitive Scope Particular Segment only (Narrow Target) Cost Focus Differentiation Focus Knowledge-based economy Industrial economy Competitive Mechanism N Dr. Chen,The Trends of the Information Systems Technology TM -42

43. BRIEF OVERVIEW OF ORGANIZATIONAL STRATEGIES

44. Summary of Key Strategy Frameworks • Generic Strategies: Competitive Advantage (CA) through low cost, differentiation or focus • Hypercompetition: CA is temporary, created through speed and aggression in the market • to be introduced next class

45. Porter’s Model vs. Hypercompetition Model

46. Competitive (Value) Advantage Figure - Business Level: The Value Chain N

47. Production and Manufacturing Sales and Distribution Engineering Marketing Service Manufacturing Industry Value Chain Product and Service Flow Support Activities Administrative and Other Indirect Value Added Research and Development Primary Activities N Dr. Chen,The Trends of the Information Systems Technology

48. Four Important Entities for a Successful Enterprise • Capital （资本） • Technical （技术） • Human （人才） Information • _________ （信息）

49. Essential Value Propositions for a Successful Company • __________ Model • __________ Competency • outsourcing • offshoring • __________ • Set corporate goals and get executive sponsorship for the initiative Business Core Execution

50. Major Issues for the Next Society 1. Internationalization 4I + 1K 2. Technology Internationalization Integration Innovation Information and Knowledge 3. Population