IT-Enabled Business Capabilities
    For Turbulent Environments

                    Omar A. El Sawy and Paul A. Pavlou,
 ...
Contents
     Executive Summary
1.
     The Business Capabilities Trifecta
2.
     Prioritizing The Capabilities In The Tr...
1. Executive Summary
    Turbulent environments

    IT-enabled business capabilities

        Operational capabilities
...
2. The Business Capabilities
                            Trifecta




                                             정보자원관리론...
A. The Business Capabilities Trifecta
    Operational capabilities may no longer match the rapidly

    changing environm...
B. A Collaborative Trio
    Operational capabilities

        The planned ability to effectively execute substantive day-...
C. Dynamic Capabilities
    A measurable model of dynamic capabilities

        Sensing the environment
    
           ...
D. Improvisational Capabilities
    Insufficient time for formal planning

    Managers must adapt new conditions on-the-...
E. IT Infra Capas and the Biz Capas Trio
                               Strategic Advantage




                          ...
F. IT Infrastructure vs IT Infra Capabilities
    IT infrastructure is the sets of IT hardware, software, and

    networ...
3. Prioritizing The Capabilities In
                      The trifecta




                                             정보...
A. Trade-Off
    An organization’s dynamic and improvisational capabilities are

    the primary predictors of its long-t...
A. Trade-Off (continued)
    The more turbulent the environment, the more resources are

    needed to build and enhance ...
4. T. E. Require IT To Be Woven
        Into The Enterprise Fabric




                                             정보자원관리...
A. Connection, Immersion, Fusion
    Relationship between IT infrastructure and the business

    context has been change...
5. Emerging IT Infrastructures
      For Turbulent Environments




                                             정보자원관리론
국...
A. Influence to Dynamic Capabilities
    IT infrastructure capabilities can affect an enterprise’s strategic

    advanta...
B. Influence to Improvisational Capabilities
    IT infrastructure capabilities can improve an enterprise’s

    awarenes...
C. Three Types of Architectures
    Event-driven Architectures

        To help create real-time enterprises that can rea...
C. Three Types of Architectures (continued)
    Service-oriented Architectures(SOAs)

        Based on Web services that ...
C. Three Types of Architectures (continued)
    Self-learning Architectures

        Each time a business process is exec...
6. Managing The IT Function In
        Turbulent Environments




                                             정보자원관리론
국민대...
A. The Application Infrastructure
    The IT infrastructures typically implemented in enterprises

    today are encumber...
A. The Application Infrastructure (continued)
    The Application Infrastructure

        The core needs tightly controll...
B. The IT Human Resource Infrastructure
    The IT Human Resource Infrastructure

        The IT fusion mindset requires ...
7. CIO Guidelines For
               Overcoming T. E. Hurdles




                                             정보자원관리론
국민대...
A. Hurdles and Guidelines
    Hurdle No. 1: IT Seen Primarily as an Enable of Operational

    Capabilities
        Enter...
A. Hurdles and Guidelines (continued)
    Hurdle No. 5: Difficulty of Funding Emerging IT Infrastructures

    for Busine...
8. Applying The Lessons Of Our
             Research In Practice




                                             정보자원관리론
...
A. Two trade-offs
    The first trade-off is between IT support for short-term

    efficiencies in the enterprise’s exis...
Thank you! 

      http://www.slideshare.net/SkyKiDS/itenabled-
                               business-capabilities




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IT-Enabled Business Capabilities For turbulent Environments

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IT-Enabled Business Capabilities For turbulent Environments

  1. 1. IT-Enabled Business Capabilities For Turbulent Environments Omar A. El Sawy and Paul A. Pavlou, MIS Quarterly Executive, 2008, pp.139-150. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 1 / 31
  2. 2. Contents Executive Summary 1. The Business Capabilities Trifecta 2. Prioritizing The Capabilities In The Trifecta 3. Turbulent Environments Require IT To Be Woven Into The 4. Enterprise Fabric Emerging IT Infrastructures For Turbulent Environments 5. Managing The IT Function In Turbulent Environments 6. CIO Guidelines For Overcoming Turbulent Environment 7. Hurdles Applying The Lessons Of Our Research In Practice 8. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 2 / 31
  3. 3. 1. Executive Summary Turbulent environments  IT-enabled business capabilities  Operational capabilities  Dynamic capabilities  Improvisational capabilities  Operational → Dynamic and Improvisational  Relationships between IT infrastructure capabilities and IT-  enabled business capabilities Emerging IT infrastructures  Event-drive  Service-oriented  Self-learning  Guidelines for CIOs to overcome the hurdles  정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 3 / 31
  4. 4. 2. The Business Capabilities Trifecta 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 4 / 31
  5. 5. A. The Business Capabilities Trifecta Operational capabilities may no longer match the rapidly  changing environment Market demand  Consumer preferences  New technology developments  Technological breakthroughs  Enterprises must rapidly innovate, adapt, and reconfigure themselves to  match the changing environment Enterprises need Dynamic capabilities and Improvisational  capabilities to successfully compete in turbulent environments 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 5 / 31
  6. 6. B. A Collaborative Trio Operational capabilities  The planned ability to effectively execute substantive day-to-day activities,  such as manufacturing, logistics, and sales. Dynamic capabilities  The planned ability to effectively reconfigure existing operational  capabilities to match the shift in business environment. Improvisational capabilities  The learned ability to spontaneously reconfigure existing resources in  real time to build new operational capabilities that better match novel environmental situations. The Business Capabilities Trifecta  정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 6 / 31
  7. 7. C. Dynamic Capabilities A measurable model of dynamic capabilities  Sensing the environment  The ability to spot, interpret, and pursue the need for changing the  enterprise’s operational capabilities by understanding market needs and identifying new internal and external opportunities. Learning  Acquiring, assimilating, and developing new knowledge needed to revamp  operational capabilities with new knowledge and skills. Integrating knowledge  Embedding new knowledge into the new operational capabilities by creating a  shared understanding and collective sense-making. Coordinating activities  Orchestrating and deploying discrete reconfigured tasks, resources, and  activities embedded in the new operational capabilities. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 7 / 31
  8. 8. D. Improvisational Capabilities Insufficient time for formal planning  Managers must adapt new conditions on-the-fly by acting  outside their formal plans. Improvisation is likely to be a repeated activity that is  enhanced with practice. Enterprises engage in improvisation in an organized manner.  Dynamic capabilities stress disciplined flexibility, “Logic of  opportunity.” Improvisational capabilities require creativity and  intuition, “Logic of responsiveness.” 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 8 / 31
  9. 9. E. IT Infra Capas and the Biz Capas Trio Strategic Advantage Operational Capabilities Environmental Turbulences Dynamic Improvisational Capabilities Capabilities IT Infrastructure Capabilities 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 9 / 31
  10. 10. F. IT Infrastructure vs IT Infra Capabilities IT infrastructure is the sets of IT hardware, software, and  networks, including applications software and database management software, that are available to the enterprise. IT infrastructure capabilities are the enterprise’s ability to be  aware of what functionalities the IT infrastructure has to offer, to understand when and how to use them, and, when using them, to take advantage of specific IT functionalities and their combinations. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 10 / 31
  11. 11. 3. Prioritizing The Capabilities In The trifecta 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 11 / 31
  12. 12. A. Trade-Off An organization’s dynamic and improvisational capabilities are  the primary predictors of its long-term strategic advantage in turbulent environments. Operational capabilities can only offer a series of short-term  temporary advantages that are likely to be fleeting as the environment changes and new contingencies emerge. The more turbulent the environment, the more valuable an  enterprise’s dynamic and improvisational capabilities become. The case of IndyMac Bank’s e-MITS system  정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 12 / 31
  13. 13. A. Trade-Off (continued) The more turbulent the environment, the more resources are  needed to build and enhance an enterprise’s operational capabilities. In moderately turbulent environments, dynamic capabilities are  the primary influential capability in reconfiguring existing operational capabilities. In highly turbulent environments, improvisational capabilities  completely dominate the reconfiguration process. As turbulence increases to very high levels, improvisation  capabilities become more influential than dynamic capabilities. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 13 / 31
  14. 14. 4. T. E. Require IT To Be Woven Into The Enterprise Fabric 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 14 / 31
  15. 15. A. Connection, Immersion, Fusion Relationship between IT infrastructure and the business  context has been changed during the last 20 years. Connection(1970s) > Immersion(1990s) > Fusion(most  recently) Connection: IT was viewed as a tool that supported business processes.  Immersion: IT infrastructure was viewed as a business enabler.  Fusion: IT becomes part of the integral fabric of an enterprise.  Fusion is the most effective form of IT-business coupling in  turbulent environments. The necessary shared mindset is most common in progressive  enterprises in industries that are undergoing major IT-enabled business transformation. Case of Marshall Industries  정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 15 / 31
  16. 16. 5. Emerging IT Infrastructures For Turbulent Environments 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 16 / 31
  17. 17. A. Influence to Dynamic Capabilities IT infrastructure capabilities can affect an enterprise’s strategic  advantage indirectly. IT infrastructure capabilities help an enterprise to:  Stay responsive to market intelligence by affectively sensing the  environment. Acquire, assimilate, and use knowledge by effectively  coding, synthesizing, and sharing knowledge to generate new learning. Make information visible and accessible, facilitate information sharing and  support rich communication, which in turn enhances the enterprise’s ability for integrating knowledge. Allocate resources to tasks, monitor performance, and indentify  synergies among people and tasks, thus enhancing the enterprise’s ability for coordinating activities. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 17 / 31
  18. 18. B. Influence to Improvisational Capabilities IT infrastructure capabilities can improve an enterprise’s  awareness of internal and external conditions by: Providing access to information.  Providing enhanced information flows that enable the information to be  shared. Enhancing collaboration.  IT infrastructure capabilities facilitate the sharing and building  of colleagues’ ideas through brainstorming and real-time interaction. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 18 / 31
  19. 19. C. Three Types of Architectures Event-driven Architectures  To help create real-time enterprises that can react quickly to market  events A “publish/subscribe” architecture that enabled information about  business events to be distributed in real time across private and public networks on an exception basis Based around the techniques and tools of complex event processing in  distributed enterprise systems. Vigilant Information Systems  “alertly watchful”  The concept of an observe-orient-decide-act(OODA) loop. They include:  Observing requirements  Orienting requirements  Deciding requirements  Acting requirements  정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 19 / 31
  20. 20. C. Three Types of Architectures (continued) Service-oriented Architectures(SOAs)  Based on Web services that allow applications to be more modular  (“Lego-like”) First, an SOA allows different flexible different flexible configurations of  smaller modules to be more easily enabled and activated. Second, the domain knowledge needed to outsource the development of  a smaller application module is much less, resulting in much faster application development time. Third, an organized approach to getting things done quickly yields higher  quality applications than when “fighting fires” under time pressure. An effective way of conserving IT investments because it removes the  need for massive integration and re-integration expenditures when requirements change. Moving to an SOA and Web services creates a whole new set of  enterprise requirements. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 20 / 31
  21. 21. C. Three Types of Architectures (continued) Self-learning Architectures  Each time a business process is executed, the architecture can “learn”  on-the-fly. A self-learning architecture expands the knowledge-creating capacity of  business processes and enriches the interactions between processes and all who touch them. A case of Dot Hill  정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 21 / 31
  22. 22. 6. Managing The IT Function In Turbulent Environments 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 22 / 31
  23. 23. A. The Application Infrastructure The IT infrastructures typically implemented in enterprises  today are encumbered by legacy architectures. CIOs need to make changes in both the application  infrastructure and the IT human resources (HR) infrastructure. The Applications Infrastructure  CIOs can take operational steps at the application infrastructure level to  cement more effective contextual coupling. “Venture systems” layer is the application layer that is closest to the  customer. This means the layer needs to be the most dynamic and highly configurable. “Simultaneous loose/tight coupling” is providing reconfigurability at the  top layer rather than the ERP/transactions layer. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 23 / 31
  24. 24. A. The Application Infrastructure (continued) The Application Infrastructure  The core needs tightly controlled specifications and requirements, and a  disciplined way of maintaining architectural integrity as modifications are made in response to business requirement changes. There also needs to be a mutual accommodation across the business  units, the IT department, and IT vendors. One approach is to have an acceptable level of user-controlled  reconfigurability in applications sensitive to changes in the business environment. Standardized software applications are used in a best of breed fashion in  some contexts. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 24 / 31
  25. 25. B. The IT Human Resource Infrastructure The IT Human Resource Infrastructure  The IT fusion mindset requires that system developers receive extensive  training on the business context. And that business users are trained to be savvy about IT in the  application context. In enterprises in highly dynamic environments that worried the most  about contextual coupling at the application level, system developers were continually trained to act as business partners, rather than just as problem solvers and requirements translators. A “slowing down to go faster” principle is most important when the  pace is frenzied. IT developers who interface directly with demanding business customers,  who are using their dynamic improvisational capabilities, are especially crucial. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 25 / 31
  26. 26. 7. CIO Guidelines For Overcoming T. E. Hurdles 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 26 / 31
  27. 27. A. Hurdles and Guidelines Hurdle No. 1: IT Seen Primarily as an Enable of Operational  Capabilities Enterprises should put dynamic and improvisational capabilities in the  foreground and relegate operational capabilities on the background. Hurdle No. 2: Improvisation Seen as Unacceptable  Enterprises should develop improvisational capabilities for highly  turbulent environments. Hurdle No. 3: IT Not Woven Into the Enterprise’s Business  Fabric Enterprises should consider IT as integral to the business fabric.  Hurdle No. 4: Limited Availability of IT Infrastructures for  Supporting Dynamic and Improvisational Capabilities Enterprises need to focus on leveraging the effects of their IT infras on  dynamic and improvisational capabilities, rather than operational ones. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 27 / 31
  28. 28. A. Hurdles and Guidelines (continued) Hurdle No. 5: Difficulty of Funding Emerging IT Infrastructures  for Business Agility Enterprises should embrace emerging reconfigurable IT infrastructures  sooner, rather than later. Hurdle No. 6: Resistance to Loose/Tight Coupling  The IT department should embed IT processes into the enterprise’s  business units. Hurdle No. 7: The Temptation to Cut Corners  Enterprises should implement IT HR policies that foster inner calm and  discipline. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 28 / 31
  29. 29. 8. Applying The Lessons Of Our Research In Practice 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 29 / 31
  30. 30. A. Two trade-offs The first trade-off is between IT support for short-term  efficiencies in the enterprise’s existing operational capabilities and processes, and support for its dynamic and improvisational capabilities. The second trade-off is between reconfiguring existing  operational capabilities by leveraging dynamic (planned reconfiguration) capabilities and improvisational (spontaneous reconfiguration) capabilities, versus deploying IT infrastructures that enable these capabilities. 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 30 / 31
  31. 31. Thank you!  http://www.slideshare.net/SkyKiDS/itenabled- business-capabilities 정보자원관리론 국민대학교 비즈니스IT전문대학원 차상민 (skykids@skykids.kr) 2009-05-08 31 / 31

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