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IT Strategy 2.0: Balancing Innovation and Implementation
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IT Strategy 2.0: Balancing Innovation and Implementation

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The new challenges facing the CIOs in large organizations

The new challenges facing the CIOs in large organizations

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  • 1. Alignment in the 21st Century: Balancing Innovation and Implementation Professor N. Venkatraman Boston University School of Management SAP Users Group @ Maastricht April 20, 2007
  • 2. Imagine life without…… (c) Venkatraman, 2007 2
  • 3. Yet.. there are conflicting views on the role and value of IT…  “expensive.. But necessary evil”  “Am I getting value from IT investments?”  “Are we investing in the right areas?”  “Can IT become my core competence?”  “Why not outsource and offshore?”  “I see my competitors using IT strategically..”  “I know that IT will become more central in the future… but I do not know how to extract value” (c) Venkatraman, 2007 3
  • 4. My Agenda Alignment in the 21st century: Innovation and Implementation IT Strategy 2.0 Reframing the Business--IT Conversation (c) Venkatraman, 2007 4
  • 5. New Excitement.. circa 2007  CIO as the Chief Innovation Officer!  I.T contributing to Revenue and Growth  From Business Process Reengineering to Crafting Business Model Innovations  Pervasiveness of I.T in products, processes and services (c) Venkatraman, 2007 5
  • 6. 66 (c) Venkatraman, 2007 © N. Venkatraman, 2006
  • 7. Source: Bill Gates
  • 8. We see I.T everywhere now.. (c) Venkatraman, 2007 8
  • 9. A Car is a computer on wheels connected to the network (c) Venkatraman, 2007 9
  • 10. Software is shaping next generation business processes.. (c) Venkatraman, 2007 10
  • 11. with new web functionality… (c) Venkatraman, 2007 11
  • 12. We see convergence and overlap across industries and markets (c) Venkatraman, 2007 12
  • 13. Four conversation questions 1.How different will your business landscape be in the next 3-5 years? 2.What’s the role of Innovation.. especially business model innovation for your future success? 3.Is I.T central to business model innovations? 4.How important is I.T to achieving your current business profitability? (c) Venkatraman, 2007 13
  • 14. Alignment 1.0 IT Business Strategy Strategy (c) Venkatraman, 2007 14
  • 15. We have captured value from IT + + People Processes Technology OO + IT = EOO 15 (c) Venkatraman, 2007 15
  • 16. Alignment 1.0 Mechanisms  Business process reengineering (massive scale)  Decentralize and centralize (adapt over time)  Standardize to reduce inefficiency  Outsource and multi-source IT functionality  Cross-functional global teams  Service level agreements  Business--IT partnerships  Etc… (c) Venkatraman, 2007 16
  • 17. Alignment 1.0 Scorecard B If we are charitable.. (c) Venkatraman, 2007 17
  • 18. Alignment 2.0: The Network Era Network Era Client/Server Era Mainframe Era (c) Venkatraman, 2007 18
  • 19. We are in an era of global network Live Connect Work Create Consume Play (c) Venkatraman, 2007 19
  • 20. And globalization of work and business processes (c) Venkatraman, 2007 20
  • 21. Innovation… The new focus? (c) Venkatraman, 2007 21
  • 22. My view on business model innovations Moore’s Law Products Processes Services People Metcalf’s Bandwidth Law Law (c) Venkatraman, 2007 22
  • 23. Alignment 2.0: New Perspective, New Mandate Drives Business I.T. Strategy Strategy Shapes (c) Venkatraman, 2007 23
  • 24. Alignment Agenda 2.0 Innovation Strategic Focus Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 24
  • 25. Alignment Agenda 1.0 focused on operational, execution issues Innovation Strategic Focus Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 25
  • 26. Alignment Agenda 2.0: Building Blocks (1) Innovation Strategic Focus Cost Center Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 26
  • 27. Cost Center Focus Best in class global IT infrastructure Business Case Lowest delivered cost benchmarked against external referent; not directly connected to strategy Organization Detached from business operations Sourcing Best-in-class global sourcing partners and vendors (c) Venkatraman, 2007 27
  • 28. Alignment Agenda 2.0: Building Blocks (2) Innovation Strategic Focus Profit Cost Center Center Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 28
  • 29. Profit Center Focus Support current business operations Business Case Contributions to customer value and current profitability levels Organization Embedded (and partnering) with business operations Sourcing Selective use of best-in-class global sourcing partners and vendors (c) Venkatraman, 2007 29
  • 30. IT and Implementation Benefits Data Results Information Knowledge Action } } } } Design Expertise Process Execution Gap Gap Gap Gap (c) Venkatraman, 2007 30
  • 31. Alignment Agenda 2.0: Building Blocks (3) Innovation Growth Center Strategic Focus Profit Cost Center Center Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 31
  • 32. How to think about innovation? Moore’s Law Business Metcalf’s Model Law Innovation Bandwidth Law Supporting the growth agenda (c) Venkatraman, 2007 32
  • 33. Growth Center Focus Support future growth trajectories through new business model innovations Business Case Contributions of IT to business model innovations Organization Embedded within business operations—shared responsibility Sourcing Selective use of innovation network partners and vendors (c) Venkatraman, 2007 33
  • 34. Alignment Agenda 2.0: Building Blocks (4) Innovation Growth Investment Center Center Strategic Focus Profit Cost Center Center Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 34
  • 35. What’s your experimentation equation? Google’s equation is 70-20-10. What’s your equation? (c) Venkatraman, 2007 35
  • 36. Investment Center Focus Influence future growth trajectories through selective experimentation Business Case Allowing for experimentation of plausible business models Organization Decoupled from current operations Sourcing Selective use of innovation network partners and vendors (c) Venkatraman, 2007 36
  • 37. The building blocks have different personalities… Innovation Growth Investment Center Center Strategic Focus Profit Cost Center Center Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 37
  • 38. These building blocks are also dynamic Innovation Strategic Focus Implementation Business IT/IS Leadership Responsibility (c) Venkatraman, 2007 38
  • 39. Where’s Your IT Capital Allocated? What % for Innovation? What % for Implementation? (c) Venkatraman, 2007 39
  • 40. Where’s Your IT Core Competence? IT Competence for Innovation? IT Competence for Implementation? (c) Venkatraman, 2007 40
  • 41. Where’s Your IT Sourcing focused? IT Sourcing for Innovation? IT Sourcing for Implementation? (c) Venkatraman, 2007 41
  • 42. Where’s Your IT Mandate? IT Mandate for Innovation? IT Mandate for Implementation? (c) Venkatraman, 2007 42
  • 43. What about IT Performance Metrics? IT Performance Metrics for Innovation? IT Performance Metrics for Implementation? (c) Venkatraman, 2007 43
  • 44. There’s legacy ‘management’ problem We say innovation.. But we manage IT for implementation We say future.. But we manage IT for today We say shared business-IT responsibility but we blame IT for the problems (c) Venkatraman, 2007 44
  • 45. Managing for the future with I.T. Value creation for today and No Business tomorrow innovation without IT Inf chn Te y or ol teg ma og ra tio y St n Leadership (c) Venkatraman, 2007 45
  • 46. Your Challenges  The impact of I.T will be more than ever before  Pervasive  Fast changing  Value potential  Management of IT is equally important  Multiple roles within enterprises  Leadership and strategy linkages (c) Venkatraman, 2007 46
  • 47. Putting these ideas into action Clarity of Mandate for IT through management workshops Recognition of the four building blocks for business innovation and implementation Reinforce joint business-IT responsibility Develop an IT Strategy 2.0 scorecard (c) Venkatraman, 2007 47
  • 48. Are you ready to take on the expanded IT mandate to win?? Thank You Very Much