1. 1 Developing Business/Information Technology Strategies Section I

2. 2 2 Learning Objectives Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage. Discuss the role of planning and business models in the development of e-business strategies, architectures, and applications.

3. 3 3 Learning Objectives (continued) Identify several change management solutions for end user resistance to the implementation of new e-business strategies and applications. Identify the importance of business & IT alignment

4. 4 4 Section I Planning Fundamentals

5. 5 5 Organizational Planning (continued) Strategic Planning Strategic Visioning Tactical Planning Operational Planning

6. 6 6 Organizational Planning The Planning Process Evaluating organizational accomplishments Analyzing the business, economic, political, and societal environment Anticipating and evaluating the impact of future developments

7. 7 7 IT Strategy Set of decisions made by IT and senior management Deployment of technology infrastructures Relationship of technology choices to business choices An I/T Strategy is a set of discrete actionable interventions which ensure that the firm I/T capabilities deliver value towards strategic business objectives in a cost efficient manner

8. 8 8 IT Strategy (ctd) I/T strategy may impact all aspects of the I/T portfolio : applications, communication, infrastructure, processes, governance, organization … Not a one-shot activity : needs to be constantly refined and aligned with business priorities measurable Impact of an I/T strategy must be measurable in terms of business value - revenue/margin growth, cost reduction etc.

9. 9 9 The IT strategic plan process Understand business issues Align IT strategy to business within business context Determine the implementation strategy Define the budget to implement initiatives / SLAs Define the IT strategic initiatives Input from the Business strategic plan scenarios Identify the evolution scenarios that impact the IT strategy Understand the evolution in terms of  Business  Organization  Relations Project Office Implement a Project Office to manage all the initiatives in  Infrastructure  Applications  Processes Plan initiatives within the scenarios Identify benefits / costs of the initiatives Costs Resources Timing Master PlanSelect initiative through the Master Plan tool Establish periodic reviews Define Application service level Short-term staffing needs Yearly budget 12345 OBJECTIVES IDENTIFICATION IMPLEMENTATION METHODS INITIATIVES DEFINITION

10. 10 The Scenario Approach to Planning Teams participate in a “microworld” A variety of business scenarios are created Alternative scenarios are created by teams or by business simulation software based on..  A variety of developments, trends, and environmental factors Align IT strategy to business within business context 2

11. 11 Scenario Planning Grid IMPACT ON FIRM FEASIBILITY High Priority Medium Priority Low Priority HIGHMEDIUMLOW HIGH MEDIUM LOW Strategy A Strategy B Strategy C Strategy D Align IT strategy to business within business context 2

12. 12 Planning for Competitive Advantage Especially important in today’s competitive, complex environment Involves an evaluation of potential benefits and risks May include the competitive forces and competitive strategies models, as well as a value chain model of basic business activities Use a strategic opportunities matrix to evaluate strategic potential Align IT strategy to business within business context 2

13. 13 Planning for Competitive Advantage (continued) Align IT strategy to business within business context 2

14. 14 Planning for Competitive Advantage (continued) T Strategies O Strategies W Strategies S Strategies Strengths Weaknesses Opportunities Threats SWOT Analysis Recommend strategies that ensure best alignment between external and internal environments Align IT strategy to business within business context 2

15. 15 Business Models and Planning A conceptual framework that expresses the underlying economic logic and system that prove how a business can deliver value to customers at an appropriate cost and make money. Specifies how the business will organize and operate Focuses attention on how all the essential components fit into a complete system Align IT strategy to business within business context 2

16. 16 e-Business Planning 3 major components Strategy development Resource management Technology architecture Determine the implementation strategy 3

17. 17 e-Business Planning (continued) IT architecture major components  Technology platform  Data resources  Applications architecture  IT organization Determine the implementation strategy 3

18. 18 Examples of IT Planning Process Results

19. 19 IT Strategic Initiatives Year 0 Today Long- term Different applications Lack of integration Missing communication Mix of owned and in-service applications Islands of country I/T organizations Common e-mail system Company reporting system Network separation and upgrade Parent companies applications cloning Applications migration Video-conferencing and mobile communication New HR system New finance system Single engineering releasing system Virtual office for managers Logistic harmonization Document/Project management Common applications Applications reference models Unique infrastructure Common I/T policies and standards Personal productivity Mobile interconnectivity Ubiquitous service availability TIME Tomorrow ILLUSTRATIVE Define the IT strategic initiatives 4

20. 20 IT Strategy Implementation Execute the strategy Commitment and engagement of senior business management  Must occur prior to implementation planning Strategic Alignment Maturity  Ability to adapt in harmonious fashion Adoption of Measurement Criteria  Measure effects in several different dimensions Define the budget to implement initiatives / SLAs 5

21. 21 Periodic Review Define budget / time / resources for projects selected  Ensure initial assumptions are correct  Ensure implementation of plans are on schedule Measurements are captured and reported Define the budget to implement initiatives / SLAs 5

22. 22 Section II Implementation Challenges

23. 23 Implementation A process of carrying out the plans for change in e-business strategies and applications that were developed during the planning process.

24. 24 Implementing IT Requires managing the effects of major changes in key organizational dimensions such as  business processes  organizational structure  Managerial roles  Employee work assignments  Stakeholder relationships

25. 25 Dismissal Migration to New platforms Align to business: Function evolution Maintain/ Improve LOWHIGH Application A... Application B... Application C... Application D... Company Strategy Business Requirements IT Implications Current portfolio evaluation Alignment to Business Technological Alignment Gap identification NEW APPLICATIONS DEVELOPMENT APPLICATION PORTFOLIO ANALYSIS... 12345 5 4 3 2 1 Comparing application portfolio with business requirements ILLUSTRATIVE

26. 26 Change Management People are a major focus of organizational change management  Developing innovative ways to measure, motivate, and reward performance  Designing programs to recruit and train employees in the core competencies Also involves analyzing and defining all changes facing the organization

27. 27 End User Resistance and Involvement Change can generate fear and resistance to change Keys to countering end user resistance  Proper education and training  End user involvement in organizational changes

28. 28 Ensuring Strategic Alignment Jerry N. Luftman model

29. 29 Information Systems for Competitive Advantage The Technology/Strategy Fit  An IS implementation should create a significant organizational change consistent with the business strategy IT needs to be aligned to the business goals

30. 30 Strategic Alignment Model Business Strategy –Business Scope –Distinctive Competencies –Business Governance Organization Infrastructure& Processes –Administrative Structure –Processes –Skills IT Strategy –Technology Scope –Systemic Competencies –IT Governance IT Strategy –Technology Scope –Systemic Competencies –IT Governance IT Infrastructure & Processes –Architecture –Processes Skills IT Infrastructure & Processes –Architecture –Processes Skills

31. 31 Alignment Maturity Process which evaluates the IT/business alignment status of a specific organization  It has a defined number of levels and representations (5 levels)  It is based on a defined set of criteria (six key criteria)

32. 32 Strategic Alignment Maturity Levels 1. Initial/Ad Hoc Process  Business and IT not aligned 2. Committed Process  Organization commits to becoming aligned 3. Established Focused Process  Established and Focused on business objectives 4. Improved/Managed Process  Reinforcing concept of IT as “Value Center” 5. Optimized Process  Integrated/Co-adaptive business and IT strategic planning

33. 33 Strategic Alignment Maturity Criteria 1. Communications 2. Competency/value measurements 3. Governance 4. Partnerships 5. Scope and Architecture 6. Skills

34. 34 Strategic Alignment Template

35. 35

36. 36 Discussion Questions Planning is a useless endeavor, because developments in e-business and e-commerce, and in the political, economic, and social environments are moving too quickly nowadays. Do you agree with this statement? “Planning and budgeting processes are notorious for their rigidity and irrelevance to management action.” How can planning be made relevant to the challenges facing an e- business enterprise?

37. 37 Discussion Questions (continued) What planning methods would you use to develop e-business and e-commerce strategies and applications for your own business? What are several e-business and e-commerce strategies and applications that should be developed and implemented by many companies today?

38. 38 Discussion Questions (continued) How can a company use change management to minimize the resistance and maximize the acceptance of changes in business and technology? “Many companies plan really well, yet few translate strategy into action.” Do you think this is true?

39. 39 Discussion Questions (continued) What major business changes beyond e-business and e-commerce do you think most companies should be planning for the next ten years?