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  • Figure IT 7eU provides opportunity to discuss overview of IT’s role in corporate strategy setting and its intricate importance to performance as business solutions and the resulting profitability. Throughout the “semester” student learning will be evolving surrounding this chart making it good to begin by going back to it to integrate learning.
  • What advice would you give management to better align strategy & IT? Communication is key success factor. IT should present “ here’s what’s in it for you” sort of approach to the organization’s leaders. They should be seen as a strategic necessity by being one.
  • Informational slide. Figure illustrates the relationship among businesses, IS, & IT strategy.
  • Discuss opportunities associated with each issue. Success stories in any category will be success potential in the others.
  • IT personnel must be business-savvy. They must demonstrate their business expertise with their involvement. People outside IT typically don’t care about IT….they just know they need it.
  • IT should be a critical “go to” point; not a bottleneck.
  • At any one point in time, one characteristic is most important. All are critical to success of the organization.
  • What is at least one underlying critical skill? Ability to communicate effectively.
  • The IT “product” is no different than any other. These resource attributes are critical for any competitive advantage; inside (to avoid outsourcing), or outside.
  • Is there ever a real “sustained” competitive advantage? No, it’s always just a matter of time before advantage is eroded, or lost.
  • Informational slide. Table provides definitions for IS resources & capabilities, & suggests the degree to which they embody the attributes described in the table.
  • Ask students to provide “other.”
  • It is NO surprise that 36% of the CIO time is spent on relationships/ 24% on operations & strategy.
  • Use the article for discussion for best practices such as listen from both up & below the CIO level; often there is no planning at all; don’t just start with the business plan, participate in the building of the business plan as a strategic force within & for the company.
  • Effective strategy is no accident. It must be planned, implemented, evaluated, adjusted, etc.
  • Intelligence throughout the organization of how we are doing versus goals & objectives, made possible with the use of dashboards, is critical.
  • Informational slide. Illustrated here, from the architecture, planners can define organizational databases & identify applications that support business strategies.
  • Good example. If critical success factors are not met, it is necessary to build appropriate applications. The critical success factor approach encourages managers to identify what is important to their performance & then develop good indicators of performance in those areas.
  • Drilling down the balanced scorecard so that it is really a tool for improving performance.
  • Scenario planning is critical to minimize risk of the unexpected.
  • Discuss potential ethical dilemmas associated with outsourcing.
  • Is it possible to write outsourcing performance clauses in such a way as to avoid these risks? Yes, but very difficult to enforce, monitor, etc.
  • The text states that after all is considered, the benefits of outsourcing may be small. Do students think the trend will move back internal to the organization? What about on-shore sourcing rather than off-shore? How might some of these strategies be implemented? Strong employee involvement; trust is key.
  • Facilitate discussion of risks of offshore outsourcing. Task students to come up with ways to minimize these risks.
  • The article focuses thought around the potential loss of intellectual property in outsource arrangements. Students should be guided to think critically about this risk & ways to minimize it, if that is even possible. For instance, don’t outsource what can be stolen such as intellectual property. Instead, outsource things that are routine & that can be automated.

Transcript

  • 1. Chapter 13 IT Strategy and Planning Information Technology for Management Improving Performance in the Digital Economy 7 th edition John Wiley & Sons, Inc. Slides contributed by Dr. Sandra Reid Chair, Graduate School of Business & Professor, Technology Dallas Baptist University 13-1 Copyright 2010 John Wiley & Sons, Inc.
  • 2. Chapter Outline
    • 13.1 Alignment of Business and IT Strategies
    • 13.2 IT Strategy Initiation
    • 13.3 IT Strategic Planning
    • 13.4 Outsourcing, Offshoring and IT as a Subsidiary
    • 13.5 Managerial Issues
    13-2 Copyright 2010 John Wiley & Sons, Inc.
  • 3. Learning Objectives
    • Explain the importance of aligning the business strategy and IT strategy and how this alignment is achieved.
    • Recognize the challenges to IT-business alignment and how to address them.
    • Recognize why IT plays a critical strategic role within organizations.
    • Explain how IT is providing value to businesses.
    13- Copyright 2010 John Wiley & Sons, Inc.
  • 4. Learning Objectives – cont’d
    • 5. Describe IT strategic planning within organizations.
    • Understand the major reasons for outsourcing.
    • Understand how to manage outsourcing and offshoring opportunities.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 5. Copyright 2010 John Wiley & Sons, Inc. 13- Figure IT7eU
  • 6. Copyright 2010 John Wiley & Sons, Inc. 13- 13.1 Alignment of Business and IT Strategies
  • 7. Business & IT Strategies – Survey Data
    • 87% surveyed believe IT is critical to their companies’ strategic success.
    • Few work with IT to achieve strategic success.
    • 33% of leaders reported that IT is very involved.
    • 30% reported business executive responsible for strategy works closely with IT division.
    • Alignment improves revenue.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 8. Figure 13.1 Copyright 2010 John Wiley & Sons, Inc. 13- The relationship among business, IS, and IT-strategies. (Source: Ward and Peppard, 2002.)
  • 9. IT & Business Alignment
    • IT must align function’s strategy, structure, technology & processes with those of the business units toward common goals.
    • IT must align strategy with organizational strategy.
    • IT strategic alignment goal to ensure that IT priorities, decisions & projects are consistent with overall business needs.
    • Shared ownership & shared governance structure that crosses organizational lines & makes executives responsible for success of key IT initiatives.
    Copyright 2010 John Wiley & Sons, Inc. 13- Click link for an article with more: How to Develop a Shared Vision: The Key to IS Strategic Alignment
  • 10. Table 13.1 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 11. Activities Central to Alignment
    • Understanding IT & corporate planning.
    • CIO is member of senior management.
    • Shared culture & good communication.
    • Deep commitment to IT planning by senior management.
    • Shared plan goals.
    • Deep end-user involvement.
    • Joint architecture/portfolio selection.
    • Identity of plan factors.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 12. Challenges in Achieving IT-Business Alignment
    • Promoting collaboration between IT & organizational business units.
    • Persuading senior management about importance of IT to business.
    • Contributing to strategic planning & business growth initiatives.
    • Identifying opportunities for business process automation & improvement.
    • Improving internal & external user experience & satisfaction.
    Copyright 2010 John Wiley & Sons, Inc. 13- Top Business Issues Facing CIOs & IT Directors for what industry leaders forecast….
  • 13. Strong CIO Characteristics
    • Political savvy.
    • Influence leadership & power.
    • Relationship management.
    • Resourceful.
    • Strategic planner.
    • Does what it takes.
    • Leads employees effectively.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 14. Table 13.2 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 15. Copyright 2010 John Wiley & Sons, Inc. 13- 13.2 IT Strategy Initiation
  • 16. Critical Strategic Role of IT
    • Global economy is defined by innovate use of IT.
    • Companies must determine use, value & impact of IT to identify opportunities & create value which supports overall strategic vision.
    • CIO is key mover in upper management.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 17. Value Add by IT
    • Direct – by reducing cost through efficiencies.
    • Indirect – increased revenue through improved productivity and/or reduction in employees.
    • Enabling temporary or sustained competitive advantage.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 18. Competitive Advantage Thru IT
    • Gained by providing real or perceived value to customers.
    • Resources must be considered valuable by customers.
    • Resources must be considered as rare.
    • Resources must be appropriable.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 19. Table 13.3 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 20. Sustained Competitive Advantage
    • Imitability – can another firm copy the resource?
    • Mobility – easily acquired resource?
    • Substitutability – is an acceptable alternative available?
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 21. Table 13.4 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 22. Table 13.5 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 23. Figure 13.2 Copyright 2010 John Wiley & Sons, Inc. 13- How CIOs spend their time. (Source: Luftman, 2007.)
  • 24. Copyright 2010 John Wiley & Sons, Inc. 13- 13.3 IT Strategic Planning
  • 25. Good IT Planning Processes
    • Yearly, quarterly, monthly.
    • Planning is continual, not one-time.
    • May result in formal IT strategy, or annual reevaluation.
    • Organizational planning of IT resources done throughout the organization.
    • End-users must understand.
    Copyright 2010 John Wiley & Sons, Inc. 13- Mistakes: Strategic Planning Don'ts (and Dos)
  • 26. Steering Committees
    • Direction setting
    • Rationing
    • Structuring
    • Staffing
    • Communicating
    • Evaluating
    • Governing
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 27. Figure 13.3 Copyright 2010 John Wiley & Sons, Inc. 13- IT strategic planning process. (Source: Drawn by J. Sipior.)
  • 28. Business Service Management
    • Approach for linking KPIs of IT to business goals to determine impact on business.
    • KPIs measure actual performance of critical aspects of IT such as projects, servers, networks against predefined goals such as growing revenue, lowering costs, reducing risk.
    • KPIs measure real-time performance or predict future results. Proactive vs. reactive.
    • KPIs measures results of past activity.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 29. Figure 13.4 Copyright 2010 John Wiley & Sons, Inc. 13- Business service management (from FireScope). (Source: firescope.com/solutions/businessservicemanagement/FireScope delivers a single view into the business impact of IT operations by aggregating all IT technology and business metrics into realtime dashboards, customizable for the needs of each member of IT. Used with permission.)
  • 30. Figure 13.5 Copyright 2010 John Wiley & Sons, Inc. 13- Business systems planning (BSP) approach.
  • 31. Table 13.6 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 32. Critical Success Factors
    • What objectives are central to organization?
    • Critical factors to meeting objectives?
    • What decisions or actions are key?
    • What variables underlie decisions & how are they measured?
    • What information systems can supply measures?
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 33. Figure 13.6 Copyright 2010 John Wiley & Sons, Inc. 13- Critical success factors-basic processes.
  • 34. Scenario Planning
    • Ensure not focusing on catastrophe to exclusion of opportunity.
    • Allocate resources more prudently.
    • Preserve options.
    • Ensure not still “fighting the last war.”
    • Give opportunity to rehearse testing & training of people to go through process.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 35. Table 13.7 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 36. Resource Allocation
    • Consists of developing plans for hardware, software, data communications & networks, facilities, personnel, financial resources need to execute master plan.
    • May be contentious process due to limited resources.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 37. Copyright 2010 John Wiley & Sons, Inc. 13- 13.4 Outsourcing, Offshoring, and IT as a Subsidiary
  • 38. Reasons To Outsource
    • Desire to focus on core competency.
    • Cost reduction.
    • Improve quality.
    • Increase speed to market.
    • Faster innovation.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 39. Table 13.8 Copyright 2010 John Wiley & Sons, Inc. 13-
  • 40. Risks Associated with Outsourcing
    • Shirking – vendor deliberately underperforms while claiming full payment.
    • Poaching – vendor develops a strategic application for a client & then uses it for others.
    • Opportunistic repricing – client enters into long-term contract & then vendor changes financial terms or overcharges for unanticipated enhancements & contract extensions.
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 41. Hidden Costs of Outsourcing
    • Benchmarking & analysis
    • Investigating & contracting with a vendor
    • Transmitting work & knowledge to outsourcer
    • Ongoing staffing & management of outsourcing relationship
    • Transitioning back to in-house
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 42. Strategies for Risk Management in Outsourcing
    • Understand project
    • Divide & conquer
    • Align incentives
    • Write short-period contracts
    • Control subcontracting
    • Do selective outsourcing
    Copyright 2010 John Wiley & Sons, Inc. 13- Top 10 Risks of Offshore Outsourcing
  • 43. Evaluating Outsourcing
    • How well is business value delivered?
    • Balanced scorecard is useful tool to measure value of outsourcing relationship.
    • Multi-vendor approach should include measures for each.
    Copyright 2010 John Wiley & Sons, Inc. 13- The hidden risk in outsourcing overseas
  • 44. Copyright 2010 John Wiley & Sons, Inc. 13- 13.5 Managerial Issues
  • 45. Leaders Must…
    • Align IT strategy & business strategy
    • Organize for effective planning
    • Initiate IT strategy
    • Undertake IT strategic planning process
    • Deal with outsourcing & offshoring
    Copyright 2010 John Wiley & Sons, Inc. 13-
  • 46. Copyright 2010 John Wiley & Sons, Inc.
    • All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the Information herein.
    Copyright 2010 John Wiley & Sons, Inc. 13-