1 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 Developing Business/Information Technology Strategies

2 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives (continued)  Identify several change management solutions for end user resistance to the implementation of new e-business strategies and applications.

4 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section I Planning Fundamentals

5 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Organizational Planning  The Planning Process  Team building, modeling, & consensus  Evaluating organizational accomplishments and the resources they have acquired  Analyzing the business, economic, political, and societal environment  Anticipating and evaluating the impact of future developments

6 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Organizational Planning (continued)  The planning process (continued)  Building a shared vision and deciding on goals  Deciding what actions to take to achieve goals

7 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Organizational Planning (continued)  Strategic Planning  Strategic Visioning  Tactical Planning  Operational Planning

8 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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

9 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. The Scenario Approach to Planning (continued)

10 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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

11 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Planning for Competitive Advantage (continued)

12 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Planning for Competitive Advantage (continued)  SWOT analysis  Strengths (internal)  Weaknesses (internal)  Opportunities (external)  Threats (external)

13 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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.

14 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Business Models and Planning (continued)  Specifies what value to offer customers, and which customers to provide this value to using which products and services at what prices.

15 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Business Models and Planning (continued)  Specifies how the business will organize and operate  Focuses attention on how all the essential components fit into a complete system

16 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. e-Business Planning  The e-Business planning process has three major components  Strategy development  Resource management  Technology architecture

17 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. e-Business Planning (continued)  IT architecture major components  Technology platform  Data resources  Applications architecture  IT organization

18 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Identifying e-Business Strategies  The Strategic Positioning Matrix  Cost and efficiency improvements  Low level of connectivity and use of IT  Strategy: use the Internet and Web to communicate and interact

19 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Identifying e-Business Strategies (continued)  Strategic Positioning Matrix (continued)  Performance improvements in business effectiveness  High level of internal connectivity and pressures to substantially improve business processes, external connectivity is low  Strategy: making major improvements in business effectiveness. Use intranets and extranets to connect the organization with stakeholders

20 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Identifying e-Business Strategies (continued)  Strategic Positioning Matrix (continued)  Global Market Penetration  Must capitalize on a high degree of customer and competitor connectivity and use of IT.  Strategy: develop e-business and e- commerce applications to optimize interaction with customers and build market share.

21 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Identifying e-Business Strategies (continued)  Strategic Positioning Matrix (continued)  Product and Service Transformation  All stakeholders are extensively networked  Strategy: implement Internet-based technologies including e-commerce websites and e-business intranets and extranets.

22 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Identifying e-Business Strategies (continued)

23 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. e-Business Application Planning  Begins after the strategic phase has occurred  Includes..  Evaluation of proposals for using IT to accomplish the strategic priorities  Evaluation of the business case for investing in e-business development projects  Developing and implementing e-business applications and managing the development projects

24 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. e-Business Application Planning (continued)  Another alternative for planning – e-business architecture planning  Combines contemporary methods and alternative planning scenarios with methodologies such as component-based development

25 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Section II Implementation Challenges

26 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Implementation  A process of carrying out the plans for change in e-business strategies and applications that were developed during the planning process.

27 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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

28 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Implementing IT (continued)

29 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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

30 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. End User Resistance and Involvement (continued)  End user involvement in the development of new information systems  Involvement and commitment of top management and all business stakeholders

31 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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

32 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Change Management (continued)  Key tactics for change  Involve as many people as possible  Make constant change an expected part of the organizational culture  Tell everyone as much as possible about everything as often as possible, preferably in person

33 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Change Management (continued)  Key tactics for change (continued)  Make liberal use of financial incentives and recognition  Work within the company culture

34 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Change Management (continued)

35 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Change Management (continued)  A change management process  Create a change vision  Define a change strategy  Develop leadership  Build commitment

36 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Change Management (continued)  Change management process (continued)  Manage people performance  Deliver business benefits  Develop culture  Design organization

37 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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?

38 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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?

39 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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?

40 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. 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?

41 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 – The Rowe Cos. & Merrill Lynch  What are the benefits and possible limitations of the Rowe Companies ROI methodologies for IT project planning?  What is the business value of the ROI evaluation methodology required for project planning by Merrill Lynch?

42 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  Do you agree with the IT investment decisions being made by the Rowe Companies in response to changing economic conditions?

43 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 1 (continued)  How can a company identify, measure, and compare the business/IT innovation as well as the profitability of IT projects in their planning process?

44 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 – Verizon, F.X. Coughlin, & A-dec  Implementation challenges  What business benefits resulted from the integration projects of Verizon Wireless, F.X. Coughlin, and A-dec?

45 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  What change management challenges surfaced in each project?  Where those challenges handled properly by the companies involved?

46 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 2 (continued)  What are several change management actions these companies could have taken to increase the acceptance of their IT integration challenges?  What other change management methods could be used to improve the acceptance of business/IT changes like those implemented at each company?

47 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 – PeopleFirst, Cessna, Allstate, & Sprint  Challenges of Implementing CRM Systems  What are several reasons for the high failure rate in implementing CRM systems?

48 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 (continued)  What could PeopleFirst and Cessna have done to avoid the failures in their first tries at implementing CRM systems?

49 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 3 (continued)  How have Allstate and Sprint Corp. helped to ensure their successful CRM implementations?  What are other things companies could do to help implement CRM systems?

50 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 – Corning Inc.  Business/IT Planning Strategies in Challenging Times  Do you agree with how CIO Richard Fishburn has defended Corning’s IT department from an economic downturn?

51 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 (continued)  Why is aligning IT projects with business objectives a good business/IT strategy in challenging economic times?  And in good times?

52 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 4 (continued)  Does Corning’s business/IT planning process for its new production and supply chain system prove the value of aligning IT with business goals?

53 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 – Cincinnati Bell  Change Management Challenges of Business Convergence  Was the reorganization of Cincinnati Bell as revealed in this case a good business strategy?

54 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 (continued)  Were the change management methods revealed in this case adequate for the changes being made?

55 McGraw-Hill/Irwin Copyright © 2004, The McGraw-Hill Companies, Inc. All rights reserved. Real World Case 5 (continued)  What further changes should be made in IT systems to better support Cincinnati Bell’s business convergence?