1. Developing Business/IT Strategies
Chapter 11
Developing Business/IT Strategies
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Objectives
Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples
Discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications
Identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications

3. Planning Fundamentals
IT created a seismic shift
Just knowing the importance and structure of e-business is not enough
Must be able to transform an old business design to a new e-business design
Information technology has created a seismic shift in the way companies do business
Just knowing the importance and structure of e-business is not enough
You must create and implement an action plan that allows you to make the transition from an old business design to a new e-business design

4. RWC 1: IT/Business Alignment
One Goal – Winning Customers
Every executive
Every manager
Every employee
Critical Skills
Meeting or beating goals
External customer focus
Identifying and seizing commercial opportunities
Differentiating component – IT Capability
More than providing systems
Be part of the system

5. Components of Organizational Planning
Strategic Planning
Deals with the development of an organization’s mission, goals, strategies, and policies
Begins with strategic visioning questions
Tactical Planning
The setting of objectives and the development of procedures, rules, schedules, and budgets
Operational Planning
Done on a short-term basis to implement and control day-to-day operations

6. Virtual world (microworld) exercises
Scenario Approach
Gaining popularity
Less formal
Virtual world (microworld) exercises
Business scenarios are created and evaluated
Alternative scenarios are then created
Gaining in popularity as a less formal, but more realistic, strategic planning methodology
Teams of managers and planners participate in microworld or virtual world exercises
Business scenarios are created and evaluated
Alternative scenarios are then created

7. Strategic Visioning Questions

8. Trends that Affect Strategic Planning
Planning for Competitive Advantage
Strategic business/IT planning
Involves evaluating the potential benefits and risks of using IT-based strategies and technologies for competitive advantage
The following models can help generate ideas for the strategic use of IT to support initiatives
Competitive forces
Competitive strategies
Value chain

9. Strategic Opportunities Matrix

10. SWOT Analysis Strengths Weaknesses Opportunities Threats
Core competencies and resources
Weaknesses
Areas of substandard business performance
Opportunities
Potential for new business markets or innovative breakthroughs
Threats
Potential for business and market losses
SWOT stands for
Strengths: a company’s core competencies and resources
Weaknesses: areas of substandard business performance compared to others
Opportunities: potential for new business markets or innovative breakthroughs that might expand current markets
Threats: anything that has the potential for business and market losses

11. Business Models and Planning
Vital questions
Who are our customers?
What do our customers value?
How much will it cost to deliver that value?
How do we make money in this business?
Business model answers vital questions about the fundamental components of a business

12. Questions for Business Models
Business model answers vital questions about the fundamental components of a business

13. The Business/IT Planning Process
Business Models as Planning Tools
A business model forces rigorously and systematic thinking about the value and viability of business initiatives
The strategic planning process is then used to develop unique business strategies that capitalize on a business model
The goal is to gain a competitive advantage in an industry or marketplace
The business/IT planning process has three major components
Strategic development
Resource management
Technology architecture

14. Information Technology Architecture
Conceptual design components
Technology platform
Data resources
Application architecture
IT organization
The IT architecture is a conceptual design that includes these major components
Technology platform
Data resources
Application architecture
IT organization

15. Measures activities in terms of vision and strategies
Balanced Scorecard
Measures activities in terms of vision and strategies
Financial performance
Impact on customers
Performance of key business processes
Company’s learning curve and growth
Four processes
Translate vision into operational goals
Communicate vision and link to performance
Business planning
Feedback/learning and strategy adjustment
The balanced scorecard measures a company’s activities in terms of vision and strategies
The business perspectives a scorecard measures
Financial: reflects financial performance, such as cash flow or ROI
Customer: measures having a direct impact on customers, such as time to process phone calls
Business process: reflects the performance of key business processes, such as time spent prospecting or process costs
Learning/growth: the company’s learning curve, such as how many hours are spent training staff
The system has four processes
Translating vision into operational goals
Communicating the vision and linking it to individual performance
Business planning
Feedback/learning and strategy adjustment

16. Balanced Scorecard Example

17. Identifying Business/IT Strategies
Valuable Internet applications
Transcend communication barriers
Establish connections that enhance productivity
Stimulate innovative development
Improve customer relations

18. Strategic Positioning Matrix

19. Cost and Efficiency Improvements
Strategic Matrix
Cost and Efficiency Improvements
Low internal and low external connectivity
Recommend – Use the Internet as a fast, low-cost way to communicate and interact with others
Performance Improvement in Effectiveness
High internal but low external connectivity
Recommend – Increase use intranets and extranets
Strategic Matrix
Cost and Efficiency Improvements
Use the Internet as a fast, low-cost way to communicate and interact with others
Use of , chat systems, discussion groups, and company websites
Performance Improvement in Effectiveness
Major improvements in business effectiveness recommended
Increase use of Internet-based technologies, such as intranets and extranets

20. Global Market Penetration
Strategic Strategies
Global Market Penetration
High external but low internal connectivity
Capitalize with e-commerce websites using value-added information services and extensive online customer support
Product and Service Transformation
High external and high internal connectivity
Develop and deploy new Internet-based products and services to create a new strategic position in the marketplace
Strategic Strategies
Global Market Penetration
Capitalize on a high degree of customer and competitor connectivity and use of IT
Use e-commerce websites with value-added information services and extensive online customer support
Product and Service Transformation
Develop and deploy new Internet-based products and services that strategically reposition it in the marketplace

21. E-Business Strategy Examples
Market Creator
Channel Reconfiguration
Transaction Intermediary
Infomediary:
Self-Service Innovator
Supply Chain Innovator
Channel Mastery
Market Creator
Be among the first to market and remain ahead of the competition by continuously innovating
Channel Reconfiguration
Use the Internet to directly access customers, make sales, and fulfill orders
Transaction Intermediary
Use the Internet to process purchases
Infomediary:
Use the Internet to reduce the search cost
Offer a unified process for collecting the information needed to make a large purchase
Self-Service Innovator
Provide a comprehensive suite of services that the customer’s employees can use directly
Supply Chain Innovator
Use the Internet to streamline supply chain interactions
Channel Mastery
Use the Internet as a sales and service channel

22. Business Application Planning Process

23. Comparing Planning Approaches

24. E-Business Architecture Planning

25. Implementation Challenges
Do what you planned to do
Critical skill for managers
Many companies are good at planning
Few are good at executing the plan
Even if senior management consistently identifies e-business as an area of great opportunity and critical need
Implementation
Do what you planned to do
Critical skill for managers
Many companies plan changes very well
Few manage to convert a plan into action
This is true even if senior management consistently identifies e-business as an area of great opportunity

26. People skills critical to project success
RWC 2: Project Success
People skills critical to project success
Teamwork
Support during tough times
Bad relationships leading cause of failure
Managers tend to go to software instead of building relations
Showing progress at short intervals helps

27. Implementing Information Technology
Developments that have generated organizational change
Business process reengineering
ERP systems
Y2K compliance
Shared service centers
Just-in-time manufacturing
Sales force automation
Contract manufacturing
Introduction of Euro currency
E-business is the latest catalyst
Many businesses have undergone multiple major reorganization since the early 1980s
Business process reengineering
Installation and upgrades of an ERP system
Upgrading legacy systems to be Y2K compliant
Creating shared service centers
Just-in-time manufacturing
Sales force automation
Contract manufacturing
The introduction of euro currency
E-business is the latest organizational change

28. Impact and Scope of Implementing IT

29. Impact and Scope of Implementing IT
Intranet Enterprise Portal Challenges
Security, security, security
Defining the scope and purpose of the portal
Finding the time and the money
Ensuring consistent data quality
Getting employees to use it
Organizing the data
Finding technical expertise
Integrating the pieces
Making it easy to use
Providing all users with access
Enterprise Resource Planning Challenges
Getting end user buy-in
Scheduling/planning
Integrating legacy systems/data
Getting management buy-in
Multiple/international sites and partners
Changing culture and mind-sets
IT training
Getting, keeping IT staff
Moving to a new platform
Performance/system upgrades

30. End User Resistance and Involvement
Change generates resistance
Examples:
Customer Relationship Management (CRM)
Knowledge Management Systems (KM)
CRM failures
CRM failure rate up to 75 percent
Causes for failure
Sales force automation problems
Unaddressed cultural issues
Sales staffs fearful and thus resistant
Any new way of doing things generates some resistance from the people affected
CRM projects have a history of failure
Up to 75 percent of CRM projects fail to meet their objectives
This is often due to sales force automation problems and unaddressed cultural issues
Sales staffs are often resistant to, or fearful of, using CRM systems

31. Obstacles to KM Systems

32. Keys to Solving End User Resistance
Create relationships
Understand the end-user’s situation
Provide education and training
Require involvement and commitment
End-users
Top management
All stakeholders
Eliminate frustration and inconvenience
Understanding the end-user’s situation
Education and training
End-user involvement in organizational changes and system development
Requiring involvement and commitment of top management and all stakeholders
Systems that inconvenience or frustrate users cannot be effective, no matter how technically elegant or efficient

33. Key Dimensions of Change Management
People factors have the highest level of difficulty and longest time to resolve of any dimension of change management.
Thus, people are a major focus of organizational change management. This includes
activities such as developing innovative ways to measure, motivate, and reward performance.
It is important to design programs to recruit and train employees in the core competencies required in a changing workplace.

34. Change Management Programs
Develop a change action plan
Assign managers as change sponsors
Develop employee change teams
Encourage open communications and feedback about organizational changes

35. Change Management Tactics
Involve as many people as possible in e-business planning and application development
Make constant change an expected part of the culture
Tell everyone as much as possible about everything, as often as possible, in person
Make liberal use of financial incentives and recognition
Work within company culture, not around it

36. A Change Management Process
A process of change management. Examples of the activities involved in successfully managing organizational change caused by the implementation of new business processes.
This eight-level change management model is only one of many that could be
applied to manage organizational changes caused by new business/IT strategies and
applications and other changes in business processes.
This model suggests that the business vision created in the strategic planning phase should be communicated in a compelling change story to the people in the organization. Evaluating the
readiness for changes within an organization and then developing change strategies and choosing and training change leaders and champions based on that assessment could be the next steps in the process.

37. Avnet Marshall’s Transformation
Avnet Marshall moved through several stages of organizational transformation as it implemented various e-business and e-commerce applications, driven by the customer value focus of its Free.Perfect.Now business model.

38. RWC 3: Crucial Strategic Planning Elements
Alignment between business and IT
IT strategic plan to improve the business-IT relationship
Articulate how IT fits into business and overall business strategy.
Apply clear strategy to business activities
The alignment between business and IT strategy is crucial to business success; sometimes it is IT that makes it happen.
For most CIOs, putting together an IT strategic plan which helps to improve the business-IT relationship is very important.
Businesses may not have a clear strategy or they may have some strategies, but they may not apply to all the business activities taking place.
IT can help the business articulate how IT fits into business and influence overall business strategy.

39. RWC 4: The Science behind Change
Implementing changes is very challenging
Employees resist change
Understanding can lead to smoother transitions
Not everyone is motivated by ambition
Education and training aid with acceptance
Implementing changes needed by new information systems in an organization is very challenging as employees resist change .
Understanding the science behind change and resistance to change can lead to more effective approaches to foster involvement and smooth out transitions to new systems.
One of the biggest mistakes managers make is assuming that everyone is motivated by ambition.
Many people are motivated as much or more by the work they do as they are by the opportunity to move up in the hierarchy.
One way to manage change is through education and training. Employees accept change if they are provided proper education and training on the new system that is being implemented.