Linking IT to Business Strategy
Business Change Framework costs require require competitive  forces changes in  performance lead times quality changes to ...
Project Success and Failures: Statistics <ul><li>The Robbins-Gioia Survey, USA.  232 survey respondents from different ind...
Project Success and Failures: Statistics <ul><li>The Chaos report, USA.  The survey covered 8,380 applications through IT ...
Statistic cont. <ul><li>The OASIG study, UK.  Sample based on 45 experts employed by universities and consultancies.  </li...
<ul><ul><ul><li>If building construction had the same ratio of cancellations as IT projects, more than half of the office ...
Delivery of IS / IT Projects 75% Do not integrate business and technology  objectives 65% Do not address training or skill...
Linking IT to Business Strategy IS Strategy   IT Strategy HOW CAN IT BE DELIVERED WHAT   IS REQUIRED Business Strategy   H...
Identifying Opportunities and Requirements Where are we now ? Where do we  want to be ? How do we get there ? Existing Bus...
Establishing the Direction Structured  Techniques internal / external business environment internal / external IT / IT env...
Translating Business Objectives into Information System Requirements
Generic Competitive Strategies Cost Leadership Differentiation (Cost Leadership) Focus Differentiation Competitive Advanta...
IT and Competitive Strategy Cost Leadership Differentiation (Cost Leadership) Focus Differentiation Competitive Advantage ...
Analysis of Competitive Forces Industry Competitors Rivalry among existing firms Suppliers Potential Entrants Buyers Subst...
Analysis of Competitive Forces Industry Competitors Rivalry among existing firms Suppliers Potential Entrants Buyers Subst...
IT and Competitive Forces Industry Competitors Rivalry among existing firms Suppliers Potential Entrants Buyers Substitute...
The Value Chain Primary Activities Support Activities Firm  Infrastructure Human Resource Management Technology Developmen...
Firm Infrastructure  Human Resource Management Technology Development Procurement Operations Inbound Logistics Outbound Lo...
Definition of Terms
Firm Infrastructure  Human Resource Management Technology Development Procurement Operations Inbound Logistics Order Proce...
 
The Value  System Suppliers Distributors Buyers Competitors Value and Demand Information Cost and Supply Information
Value Chain Analysis Firm Infrastructure  Human Resource Management Technology Development Procurement Operations Inbound ...
The Value  System Suppliers Distributors Buyers Competitors Examine the interaction between organisations Can IT reduce co...
Critical Success Factors Defined Goals CSF’s Information needs Sld;lksdf  sss  df;l sdflksf  dsf  sfsfk lskfjksjdflskfs lk...
Critical Success Factors Analysis
Information Audit Significant Problem Needs Attention OK Accurate Complete Available Response Re-key Forecasting Marketing...
Vehicle parts Supplier  Critical Success Factors <ul><li>High availability of product lines. </li></ul><ul><li>Motivated p...
Competitive Performance Prioritised Customer Service Criteria Worse    Same   Better 1. SPEED OF DELIVERY 2. AVAILABILITY ...
 
Examples of CSF’s
EXTRAORDINARY CUSTOMER SATISFACTION QUALITY IMPROVEMENT IMPROVED  SALES / SERVICE EXPERIENCE COST REDUCTION PRO-ACTIVE TO ...
Extraordinary customer satisfaction
The Impact of CSF Analysis <ul><li>Manager's efforts become more focussed </li></ul><ul><li>Key information needs subjecte...
 
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Linking It To Business Strategy Session 4

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  • Firm Infrastructure Human Resource Management Technology Development Procurement Operations Inbound Logistics Order Processing Outbound Logistics Marketing and Sales Service Margin Design of Automated System Transportation Services Inbound Material Handling Inbound Inspection Parts Picking and Delivery Component Fabrication &amp; Assembly Fine Tuning &amp; Testing Maintenance Facilities Operation Advertising Promotion Sales Force Service Reps Spare Parts Systems Recruiting Training Recruiting Recruiting Component Design Assembly Line Design Machine Design Testing Procedures Energy Management Materials Engergy Electrical &amp; Electronic Parts Other Parts Supplies Information System Development Computer Services Transportation Services Market Research Sales Aids &amp; Technical Literature Service Manuals and Procedures Media Services Agency Supplies Travel and Subsistence Spare Parts Travel and Subsistence Value Chain for a Copier Manufacturer Subdividing a Generic Value Chain
  • EXAMPLES OF IT APPLIED TO PRIMARY VALUE CHAIN ACTIVITIES Inbound Logistics: Just in time ordering sytems linked directly to suppliers sales systems. Operations: Single Bill of Materials system, accessible throughout the organisation. Manufacturing problem tracking system. Outbound Logistics: Batching and delivery systems Marketing and Sales: Geographical information systems that identify customer buying patterns and demographics. On-line product catalogues and direct order entry by customers. Service: On-line workshop manuals. On-line “expert” fault finding and repair advice.
  • Competitive Performance Prioritised Customer Service Criteria Worse Same Better 1. SPEED OF DELIVERY 2. AVAILABILITY OF PRODUCT 3. HELPFUL OFFICE STAFF 4. FREQUENCY OF DELIVERY 5. ADVERSITING &amp; PROMOTION 6. PRODUCT PRICING 7. PRODUCT RANGE COVERAGE 8. ORDER COMPLETENESS 9. PRODUCT QUALITY 10. BROCHURES &amp; LITERATURE 11. EASE &amp; METHOD OF ORDER 12. TRAINING AND ADVICE . . 40. DISPUTES RESOLVED QUICKY That’s getting leverage by focussing on what’s important
  • EXTRAORDINARY CUSTOMER SATISFACTION QUALITY IMPROVEMENT IMPROVED SALES / SERVICE EXPERIENCE COST REDUCTION PRO-ACTIVE TO MARKET AND GOOD LOGISTICS IT CONTRIBUTION ?
  • Linking It To Business Strategy Session 4

    1. 1. Linking IT to Business Strategy
    2. 2. Business Change Framework costs require require competitive forces changes in performance lead times quality changes to business processes are achieved through changes in organisation location technology applications data operations
    3. 3. Project Success and Failures: Statistics <ul><li>The Robbins-Gioia Survey, USA. 232 survey respondents from different industries including government, IT, Communications, financial, utilities, and healthcare: </li></ul><ul><ul><li>51% viewed their ERP implementation as unsuccessful </li></ul></ul><ul><li>KPMG, Canada. The survey covered1,450 public and private sector organizations: </li></ul><ul><ul><li>Over 61% of the IT projects that were analyzed were deemed to have failed </li></ul></ul>
    4. 4. Project Success and Failures: Statistics <ul><li>The Chaos report, USA. The survey covered 8,380 applications through IT executive managers in large, medium, and small companies across major industry segments: banking, securities, manufacturing, insurance and government organizations: </li></ul><ul><ul><li>31% of the projects will be cancelled before they ever get completed </li></ul></ul><ul><ul><li>52.7% of projects will cost over 189% of their original estimates </li></ul></ul><ul><ul><li>Only 16.2% of software were completed on-time and on-budget </li></ul></ul>
    5. 5. Statistic cont. <ul><li>The OASIG study, UK. Sample based on 45 experts employed by universities and consultancies. </li></ul><ul><ul><li>The bottom line is: 7 out of 10 IT projects “fail” in some aspect. </li></ul></ul><ul><li>Seventy-four percent of all IT projects fail, come in over budget or run past the original deadline... 28 percent of projects fail altogether. Source: The Standish Group </li></ul><ul><li>Every year, $75 billion is spent on failed IT projects in the U.S. Source: The Standish Group </li></ul>
    6. 6. <ul><ul><ul><li>If building construction had the same ratio of cancellations as IT projects, more than half of the office buildings in the world which were larger than 30 stories tall would be abandoned before completion. </li></ul></ul></ul><ul><ul><ul><li>&quot;The average height of buildings in New York City would be only three stories and there would be no skyscrapers at all.&quot; </li></ul></ul></ul>IT Systems Introduction An Interesting FACT
    7. 7. Delivery of IS / IT Projects 75% Do not integrate business and technology objectives 65% Do not address training or skill requirements 40% fail or are abandoned 80% are delivered later or over budget 80 - 90% FAIL TO DELIVER Overall only 10-20% meet their success criteria
    8. 8. Linking IT to Business Strategy IS Strategy IT Strategy HOW CAN IT BE DELIVERED WHAT IS REQUIRED Business Strategy HOW DO WE MAKE THE LINK ?
    9. 9. Identifying Opportunities and Requirements Where are we now ? Where do we want to be ? How do we get there ? Existing Business and IS / IT environment Future Business and IS / IT environment Opportunities and Requirements
    10. 10. Establishing the Direction Structured Techniques internal / external business environment internal / external IT / IT environment informal thinking where do opportunities exist ? What problems should be resolved?
    11. 11. Translating Business Objectives into Information System Requirements
    12. 12. Generic Competitive Strategies Cost Leadership Differentiation (Cost Leadership) Focus Differentiation Competitive Advantage Competitive Scope narrow target broad target <ul><li>costs lowest industry wide </li></ul><ul><li>efficient scale facilities </li></ul><ul><li>tight cost and o/head control </li></ul><ul><li>cost reductions through experience </li></ul><ul><li>avoidance of marginal accounts </li></ul><ul><li>products / services set apart from rivals </li></ul><ul><li>trade-off between cost position and product / service enhancement </li></ul><ul><li>particular buyer group, segment of the product line, or geographic market targeted </li></ul><ul><li>costs lower than industry wide competitors </li></ul>• products / services set apart from industry wide competitors Cost Leader in strong competitive position – Buyer can only drive price down to the level of the next most efficient competitor Differentiated Product in strong position – less vulnerable to market pressures because of customer brand loyalty, less sensitive to price. However the differentiating factors may result from expensive R&D or expensive materials. Focus strategy is where a particular buyer group / segment of product line or geographic market is chosen and a great deal of effort is expended to meet their needs either by competing on cost or differentiated products or services or a combination of both.
    13. 13. IT and Competitive Strategy Cost Leadership Differentiation (Cost Leadership) Focus Differentiation Competitive Advantage Competitive Scope <ul><li>substitute labour / old technology </li></ul><ul><li>maximise resource utilisation through improved planning and control </li></ul><ul><li>collect operational data for purposes of management control </li></ul><ul><li>reduce lead time to launch new products </li></ul><ul><li>improve response to customer through improved flexibility and reduced lead times in both production planning and control and manufacturing </li></ul><ul><li>establish fast and efficient lines of communication to specific customers </li></ul><ul><li>collect market and operational data in order to target customers, products and services </li></ul>broad target narrow target
    14. 14. Analysis of Competitive Forces Industry Competitors Rivalry among existing firms Suppliers Potential Entrants Buyers Substitutes threat of new entrants bargaining power of suppliers bargaining power of buyers threat of substitute products or services
    15. 15. Analysis of Competitive Forces Industry Competitors Rivalry among existing firms Suppliers Potential Entrants Buyers Substitutes threat of new entrants bargaining power of suppliers bargaining power of buyers threat of substitute products or services <ul><li>Entry Barriers </li></ul><ul><li>economies of scale </li></ul><ul><li>propriety product differences </li></ul><ul><li>brand identity </li></ul><ul><li>switching costs </li></ul><ul><li>capital requirements </li></ul><ul><li>access to distribution </li></ul><ul><li>absolute cost advantages </li></ul><ul><li>proprietary learning curve </li></ul><ul><li>access to necessary inputs </li></ul><ul><li>proprietary low-cost product design </li></ul><ul><li>government policy </li></ul><ul><li>expected retaliations </li></ul><ul><li>Determinants of Supplier Power </li></ul><ul><li>differentiation of inputs </li></ul><ul><li>switching costs of suppliers and firms in the industry </li></ul><ul><li>presence of substitute inputs </li></ul><ul><li>supplier concentration </li></ul><ul><li>importance of volume to supplier </li></ul><ul><li>cost relative to total purchases in the industry </li></ul><ul><li>impacts on inputs on cost or differentiation </li></ul><ul><li>threat of forward integration relative to threat of backward integration by firms in the industry </li></ul><ul><li>Determinants of Substitution Threat </li></ul><ul><li>relative price performance of substitutes </li></ul><ul><li>switching costs </li></ul><ul><li>buyer propensity to substitute </li></ul><ul><li>Rivalrv Determinants </li></ul><ul><li>industry growth </li></ul><ul><li>fixed (or storage) costs / value added </li></ul><ul><li>intermittent overcapacity </li></ul><ul><li>product differences </li></ul><ul><li>brand identity </li></ul><ul><li>switching costs </li></ul><ul><li>concentration and balance </li></ul><ul><li>informational complexity </li></ul><ul><li>diversity of competitors </li></ul><ul><li>corporate stakes </li></ul><ul><li>exit barriers </li></ul>Determinants of Buver Power <ul><li>Bargaining Leverage </li></ul><ul><li>buyer concentration versus firm concentration </li></ul><ul><li>buyer volume </li></ul><ul><li>buyer switching costs relative to firm switching costs </li></ul><ul><li>buyer profits </li></ul><ul><li>buyer information </li></ul><ul><li>ability to backward integrate </li></ul><ul><li>substitute products </li></ul><ul><li>Price Sensitivitv </li></ul><ul><li>price/total purchases </li></ul><ul><li>product differences </li></ul><ul><li>brand identity </li></ul><ul><li>impact on quality / performance </li></ul><ul><li>buyers profits </li></ul><ul><li>decision makers' incentives </li></ul><ul><ul><ul><ul><ul><li>dfg </li></ul></ul></ul></ul></ul>
    16. 16. IT and Competitive Forces Industry Competitors Rivalry among existing firms Suppliers Potential Entrants Buyers Substitutes threat of new entrants bargaining power of suppliers bargaining power of buyers threat of substitute products or services Can IT Build Barriers to Entry ? Can IT Change the Balance of Power is Supplier Relationships ? Can IT Generate New Products ? Can IT Build in Switching Costs ? Can IT Change the Basis of Competition ?
    17. 17. The Value Chain Primary Activities Support Activities Firm Infrastructure Human Resource Management Technology Development Procurement Operations Inbound Logistics Outbound Logistics Marketing and Sales Service Profit = Value Added - Cost general management, planning, finance, accounting, legal, government affairs, and quality management Recruitment, hiring, training, development, and compensation of personnel Improving processes and products through the application of technology Acquisition of materials consumables as well as resources required to perform activities receipt, storage, movement and management of materials transformation of materials into a product storage, movement and distribution of a product to a customer promotion and selling of a product support of product once in service with a customer
    18. 18. Firm Infrastructure Human Resource Management Technology Development Procurement Operations Inbound Logistics Outbound Logistics Marketing and Sales Service Margin Marketing Management Advertising Sales Force Administration Sales Force Operations Technical Literature Promotion
    19. 19. Definition of Terms
    20. 20. Firm Infrastructure Human Resource Management Technology Development Procurement Operations Inbound Logistics Order Processing Outbound Logistics Marketing and Sales Service Margin Design of Automated System Transportation Services Inbound Material Handling Inbound Inspection Parts Picking and Delivery Component Fabrication & Assembly Fine Tuning & Testing Maintenance Facilities Operation Advertising Promotion Sales Force Service Reps Spare Parts Systems Recruiting Training Recruiting Recruiting Component Design Assembly Line Design Machine Design Testing Procedures Energy Management Materials Engergy Electrical & Electronic Parts Other Parts Supplies Information System Development Computer Services Transportation Services Market Research Sales Aids & Technical Literature Service Manuals and Procedures Media Services Agency Supplies Travel and Subsistence Spare Parts Travel and Subsistence Value Chain for a Copier Manufacturer
    21. 22. The Value System Suppliers Distributors Buyers Competitors Value and Demand Information Cost and Supply Information
    22. 23. Value Chain Analysis Firm Infrastructure Human Resource Management Technology Development Procurement Operations Inbound Logistics Outbound Logistics Marketing and Sales Service Margin Examine each Activity Examine each Activity Can IT reduce costs of add value ? Can IT reduce costs or add value through enhanced co-ordination integration and information flows ?
    23. 24. The Value System Suppliers Distributors Buyers Competitors Examine the interaction between organisations Can IT reduce costs or add value through enhances co-ordination, integration and information flows ?
    24. 25. Critical Success Factors Defined Goals CSF’s Information needs Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; EXISTING Management reports Decision Support Tools REQUIRED Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf lklklklk s;dfl; sdlkf;l l; s;ld l;k l sdf ;l;l ; ;l; ; ;l ;;;;l; Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf sjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf sjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf sjldf Sld;lksdf sss df;l sdflksf dsf sfsfk lskfjksjdflskfs lksdfjskdflsflsl lksdflsjldkflksjldf ‘ for any business the limited number of areas in which results, it they are satisfactory, will ensure successful competitive performance for the organisation’
    25. 26. Critical Success Factors Analysis
    26. 27. Information Audit Significant Problem Needs Attention OK Accurate Complete Available Response Re-key Forecasting Marketing Order Processing Design Production Control Goods Inwards Inventory Management Despatch Manufacturing Assembly Accounting Process Planning Purchasing Production Planning
    27. 28. Vehicle parts Supplier Critical Success Factors <ul><li>High availability of product lines. </li></ul><ul><li>Motivated people - trained in procedures. </li></ul><ul><li>Exemplary service to target market sectors. </li></ul><ul><li>‘ YES’ to customers on a complete range of part numbers in shorter time than the competitors. </li></ul><ul><li>Efficient distribution system for all part numbers. </li></ul><ul><li>High quality data capture and systems for management and control. </li></ul><ul><li>Faster inventory turn than any competitor. </li></ul><ul><li>Ability to persuade suppliers to give higher commitment than to anyone else. </li></ul><ul><li>Price flexibility - part number, product line,customers, order type, - and the ability to measure results. </li></ul><ul><li>Purchasing capability - lowest cost, supplier support, stock cleanse and return, warranty handling etc. </li></ul>
    28. 29. Competitive Performance Prioritised Customer Service Criteria Worse Same Better 1. SPEED OF DELIVERY 2. AVAILABILITY OF PRODUCT 3. HELPFUL OFFICE STAFF 4. FREQUENCY OF DELIVERY 5. ADVERSITING & PROMOTION 6. PRODUCT PRICING 7. PRODUCT RANGE COVERAGE 8. ORDER COMPLETENESS 9. PRODUCT QUALITY 10. BROCHURES & LITERATURE 11. EASE & METHOD OF ORDER 12. TRAINING AND ADVICE . . 40. DISPUTES RESOLVED QUICKY
    29. 31. Examples of CSF’s
    30. 32. EXTRAORDINARY CUSTOMER SATISFACTION QUALITY IMPROVEMENT IMPROVED SALES / SERVICE EXPERIENCE COST REDUCTION PRO-ACTIVE TO MARKET AND GOOD LOGISTICS IT CONTRIBUTION ?
    31. 33. Extraordinary customer satisfaction
    32. 34. The Impact of CSF Analysis <ul><li>Manager's efforts become more focussed </li></ul><ul><li>Key information needs subjected to detailed and on-going examination </li></ul><ul><li>Emphasis moves from supply to demand of management information </li></ul>

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