1. Information Systems and Organisations
NCC Education - Title Master
Lecture 4:
Organisational Strategy and IS

2. Scope and Coverage This topic will cover: Strategy and IS/IT Strategy
Ensuring alignment of technology with strategy
Organisational and stakeholder perspectives
Note – we use the terms IS and IT synonymously in this lecture
NCC Education - Slide Master

3. Learning Outcomes By the end of this topic students will be able to:
Describe and discuss organisational strategy and IS/IT strategy
Consider how IS/IT strategy may be aligned with organisational strategy
Appreciate the importance of different organisational and stakeholder perspectives

4. Contents Organisational strategy
Aligning IS/IT to organisational strategy
Measuring success in strategy execution
Strategy execution and the Balanced Scorecard
Emphasis – Technology and Organisations

5. Strategy – Definition
What is Strategy ?

6. Business Strategy
Business strategy (organisational strategy) is the way in which an organisation employs its resources (people, assets and financial resources)
......starting from the premise that it has a purpose
Definitions of strategy can be circular, and people (academics) argue about words ... but
We can think of an organisations strategy simple as ‘what it does’ to create value

7. VMOST – Strategy Context
Vision – how we want things to be in the future
Mission – broadly, what are we going to do to get there
Objectives – specific aims/targets 1 to 2 years out
Strategy – how will we use our resources
Tactics – doing it

8. Competitive Strategies
Michael Porter considers there to be 2 basic business strategies which are:
Cost Leadership (having the most cost effective products and/or services)
Differentiation (having products/services that are unique or are perceived to be unique)
Further - these can be:
Broadly applied (across a whole market)
Narrowly applied - Focused (concentrating upon specific market niches)

9. Value Disciplines 1
The 3 disciplines are in conflict so, it is impossible to do all three with equal success in practice; so competing organisations usually aim to excel in 1 or 2 of them, and attempt to reach an ‘industry benchmark’ performance in the 3rd
Customer Intimacy
Product Leadership
Operational Excellence

10. Value Disciplines 2 Customer Intimacy
Knowing and understanding the customer and their buying habits
Understanding customers business and selling products and services that meet and anticipate their needs.

11. Value Disciplines 3 Product Leadership
Concentrating upon innovation and brand development. Operating in dynamic and developing markets. Having new and innovative products and services

12. Value Disciplines 4 Operational Excellence
Concentrating upon efficiency of internal operations and supply chain
Striping out cost wherever possible and maintaining quality whilst offering competitive prices

13. Strategy and CSFs How are we going to measure if we are getting there?
Objectives
1. Where do we want our organisation to go?
Strategy
2. How are we going to get there?
J Rockart – 1970’s
Critical Success Factors
3. What must be right?
Key Performance Indicators
4. How will we know if
we have achieved it?
How are we going to
measure if we are getting
there?
Critical Information Set
5. So what information is critical
to our success?
What information do
we need?

14. Critical Success Factors Model
OBJECTIVES
What are we aiming to do in business terms
A business target – for example expressed in terms of growth, market position, reputation, profitability, shareholder value etc.
STRATEGY
How do we intend to meet our objectives
A method of competing, for example based upon cost, differentiation, focus etc
CRITICAL SUCCESS FACTORS
What must be right if we are to execute our strategy
We must be able to say that we have achieved all of our CSF s.. Examples, customer satisfaction, cost leadership
KEY PERFORMANCE INDICATORS
How will we know that our CSF s are being achieved
A performance measure
CRITICAL INFORMATION SET
What information is needed to provide our KPI s
Internal
Needed to compute
External
the KPI s
Source; Rockart, 1979

15. CSF s Example O To be number one in market share by volume S
Cost leadership in the market
CSFs
Lowest priced product in the market
Gain market share
KPIs
Average price ranking against competitors
Cumulative market share
CIS
Internal
Product sales by volume and value
External
Total market sales by volume and value
Source; Rockart, 1979

16. Alignment of IS/IT with Strategy
Produce the right information
Align investments to ensure that the correct IS/IT is implemented
Use the people resources of the organisation to take advantage of IS/IT to further the strategic goals
(Donald Marchand – Strategic Information Alignment)

17. Strategic Information Alignment (SIA)
Add Value
Customers willing to pay for value added using information 1 2 3 4 5 6 7
Minimise
Risks
Reduce
Costs 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Information used to enable decisions that reduce costs
or to increase efficiencies in processes
Information used to help control business risk
Information used to help produce innovative products, services and delivery methods
Source;
Adapted from
Donald Marchand, (2000)
‘Competing with Information’
Create New Reality (innovation)

18. SIA Example - Commodity
Add Value
Future strategic alignment 1 2 3 4 5 6 7
Current strategic alignment
Minimise
Risks
Reduce
Costs 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Create New Reality (innovate)

19. Competitive Forces Threat of New Entrants Competition Bargaining
Can IT/IS be used
To help create barriers
to entry?
Threat of
New Entrants
Can IT/IS be used
Help do things better and more cost effectively than competitors?
Can IT/IS be used
to reduce the bargaining power of suppliers?
Competition In
Market
Bargaining
Power of
Customers
Bargaining
Power of
Suppliers
Can IT/IS be used
to help ‘lock’ in
Customers to our value proposition?
Threat of
Substitute
Products or
Services
Can IT/IS be used
to create better or changed products of services?

20. Strategy as an Emergent Process
A deliberate strategy may be overcome by events and be unrealised
An organisation may find itself executing an ‘emergent’ strategy that derives from events
Technological change can be a source of both deliberate strategies and emergent ones that evolve because of technological possibilities
Realised strategy comes from combination of these influences

21. Making Strategy Relevance
Since organisations are not machines it is important to take a balanced view of strategy execution
The organisation needs more than short-term goals (e.g. short term financial success) these need to be balanced by longer term aims
This leads to the idea of a balanced scorecard (Kaplan and Norton) incorporating internal, external and stakeholder perspectives

22. Innovation and Learning
Balanced Scorecard
Financial Perspective
Goals
Measures
How do we look to
Shareholders ?
How do
Customers see us ?
Financial Perspective
Goals
Measures
Customer Perspective
Financial Perspective
Goals
Measures
Internal Business
Perspective
Financial Perspective
Goals
Measures
Innovation and Learning
Perspective
What must we
excel at ?
How can we continually
improve and create value ?

23. Strategy - Metaphors
Strategy as a formal planning process exhibits a mechanist/structuralist approach
The relevance of such an approach in a rapidly changing world is frequently challenged
Organicism and contextualism seem best suited to the reality of many modern organisations where emergent strategies are often important
....but a plan is still needed to act as a basis for resource allocation

24. References
Boddy, D., Boonstra ,A., Kennedy, G. (2008) Managing Information Systems : strategy and organisation 3rd ed. FT Pearson. ISBN-13: XXX

25. Lecture 4 - Organisational Strategy and IS
Any Questions?
NCC Education - End Slide Master