Today’s Turbulent Business Environment•Greater uncertainty•Increased commoditization•Nontraditional entrants with competitive offeringsShorter half-life of information (moving strategic enablers to commodity)•Tighter spending•New technologies•New products & services•Changing customer demands and higher levels of personalizedpreferences•Multiple pricing, service, and utility models•Government regulations, legal compliance, and safety standards•Increased transparency of information due to the blurring betweencustomers, competitors, and suppliers IS THIS REALLY NEW???
IT Problems:• Business plans do not include IT plans• IT plans do not include business plans• IT plans focus on technology rather than directly addressing business strategies• Business managers do not see IT as supporting theirstrategies• IT projects do not support business strategies. IT spending on infrastructure and application maintenance does not support strategy• Company budgets do not reflect the results of IT planning• IT plans are shelf-ware that does not guide management decisions, projects, or budgets• IT governance practices are ineffective IS THIS REALLY NEW???
STRATEGY FORMULATION VISION (WHERE) (BHAGS) S L AN P •MOTIVATION H IT W ES •GOVERNANCE ANALYSIS V C TI •RESOURCES JE OB STRATEGY (HOW) •PROJECT IMPLEMENTATION •MEASUREMENTS •REWARDS MISSION (WHAT) tLUFTMAN
STRATEGY ANSWERS HOWdo we attain our aspirationsto decide whether to continue, start, or stopto differentiate core versus context
Strategy That CountsBreaks new groundMattersPerpetually evolvesProvides sustainable advantageUnique Versus a plan to convert specific resources you have (or can get) into specific resources you really want or need.
Four Barriers to Strategy Implementation Vision Barrier Only 5% of the workforce understands the strategy People Barrier Management Barrier Only 25% of managers 9 of 10 companies 85% of executive have incentives fail to execute strategy teams spend less than linked to strategy one hour/ month discussing strategy 60% of organization don’t link budgets to strategy Resource BarrierSource: Five key principles of corporate performance management by Bob Paladino
Sample IT SWOT AnalysisStrengths: Weaknesses:• Major transaction control systems are relatively new, • A single point of IS contact for end user operational functionality adequate well documented, maintainable, and problem diagnosis and resolution has not been operationally efficient. established• The IS department has demonstrated competence and • There are limited data center performance effectiveness in adding new technologies (e.g., client/server measurement systems. systems) • There has been only limited transaction based• The IS Department has demonstrated competence and systems development productivity. effectiveness in applications development in group decision • There is a high degree of technology specialization support systems (narrowness) among IS professional staff and a• Our outsourcing partner seems to manage a reliable, cost limited degree of business orientation. effective data center. • There is a limited departmental use of information• There is a substantial in-house electronic mail operation, technology beyond simple decision support and frequented by most managers in the company. participation in common transaction processing• There is substantial user manager computing expertise in systems both line and staff organizations.Opportunities: Threats:• Expand successful relationship with the Marketing • The IS department’s effectiveness is threatened by organization to R&D. pockets of user negativism, especially among top• Use the recent BPR to identify integration priorities. management.• Establish an executive steering committee with all divisions • End-users are developing a high degree of technical represented competence, which they may employ in a non-• SA Maturity assessment integrated fashion. • The accelerating pace of technological change and proliferation of information technologies pose risks of control loss, obsolescence, and difficulty in maintaining IS professional staff competence. • The extensive internal communication networks and user accessibility to external databases pose security risks to our data. • The IS department is still not an integral part of company’s business planning process.
Sources of Strengths and Weaknesses Financial issues People issues Operational issues Product and Market issues Cash flow and cash Quality (meaning the ability, Current product portfolio Warehousing, management experience and attitude) of managers transport and and employees logistical factorsFinancial structure Concentration of skills and expertise Research and technical expertise, Distribution channels, including (to what extent is the fate of the and the ability to develop popular discount structures and dealership or business in the hands of a talented new products franchise operations few?)Financial reporting Levels of motivation Market research systems Pricingsystems Information management Brand perceptionAbility to raise Rates of pay systemscapital Customer service Ability to attract and retain Supply chainsCredit-control the best peopleactivities Production lead times and Overall market potential for theRisk-management Scope and effectiveness of training efficiency productsystems methods Flexibility of people and their ability to New processes that Experience of the marketing adapt to changing situations reduce costs and mix (knowing which sales increase efficiency activities are most effective) Organizational culture: does it promote efficiency or frustrate it? Stock control Organizational structure: is it still relevant and effective? Levels of delegation and empowerment, and productivity in terns of quality and quantity of work competed The degree of initiative that is both allowed and taken Levels of pressure (a strength) and stress (a weakness) Effectiveness of communication channels
Sources of Strengths and Weaknesses 1 of 2Financial People issues Operational issues Product and marketissues issues Quality (meaning the Current productCash flow and ability, experience portfolio Warehousing,cash and attitude) of transport andmanagement managers and employees logistical factors Concentration of Research and Distribution channels,Financial skills and expertise technical expertise, including discountstructure (to what extent is the and the ability to structures and fate of the business develop popular dealership or in the hands of a new products franchise operations talented few?)Financial Levels of motivation Market research Pricingreporting systemssystems Information Bran perceptionAbility to Rates ofraise pay managementcapital systems
Sources of Strengths and Weaknesses 2 of 2Credit-control Ability to attract and retain Supply chains Customeractivities the best people serviceRisk- Scope and effectiveness of training Production lead Overall marketmanagement methods times and efficiency potential for thesystems product Flexibility of people and their ability New processes that Experience of to adapt to changing situations reduce costs and the marketing increase efficiency Organizational culture: does it mix (knowing promote efficiency or frustrate it? Stock control which sales activities are Organizational structure: is it still most effective) relevant and effective? Levels of delegation and empowerment, and productivity in terms of quality and quantity of work competed The degree of initiative that is both allowed and taken Levels of pressure (a strength) and stress (a weakness) Effectiveness of communication channels
Sources of Opportunities and Threats (MIS760)Opportunities (Ansoff) Threats (Porters Barriers to Entry) Industrial actionNew markets (including export market) Political and regulatory developmentsNew technologies Economic issues Trade factorsNew products and product enhancements Mergers and other developments amongMergers, acquisitions and divestments competitorsNew investment New market entrantsFactors affecting competitors’ fortunes Competitors’ pricing actions Competitors’ market innovationsCommercial agreements and strategic Environmental factors partnerships Natural disastersPolitical, economic, regulatory and trade Crises, notably including health and safety liability developments problem Key staff attracted away from the business Security issues, including industrial espionage and the security of IT systems Supply chain problems Distribution and delivery problems Bad debts (resulting from the misfortunes of others) Demographic factors and social changes affecting customers’ tastes or habits
Stakeholders External Internal Stakeholders Stakeholders•Competitors Contributions Contributions •Board Members•Creditors •Employees•Customers/Clients The •“End User” Partners•Local Communities Company •IT•General public •Managers•Governments •Senior Managers•Regulators Inducements Inducements •Stockholders•Suppliers/Vendors•Unions
Key Stakeholders (with regards to major problems & opportunities)Stakeholder Role Responsibilities Current State Desired State (who) of Affairs of Affairs Sponsor Champion Business Partners IT StaffCompetitors
Sponsors Decision-Making Spectrum Unilateral Consult-and- Build Consensus Unanimous More (One-Sided) Decide LessLeader LeaderControl Control Consider the following questions:•Does the BU have the leadership focus & capability to make thiseffort happen?•Are stakeholders incentives in harmony with this new offeringscriteria for success?•Are the stakeholders capable of the change required?
Alternatives• Problem/Opportunity 1 – Alternative a . . – Alternative n . .• Problem/Opportunity n – Alternative a . . – Alternative n . .
TINA – There Is No Alternative – Here’s what we know about the future. Now let’s go meet it. Three R’s: Regulations, Restraint, and Rules
Next StepsStep Step Description Assigned Target Issues/Comments and objectives Responsibility Completion and Date Dependencies1 Market recommendations2 Secure: Sponsor (who?) Champion (who?) Team (who?)3 Proof of concept Prototype4 Establish a beachhead5 Phased deployment
Recommendations and Next Steps should answer the following:• How is this relevant to what I do?• What, specifically, should I do? specifically• How will I be measured and what are the consequences?• What tools and support are available?• WIIFM-What’s in it for me? For us? WIIFM• Next steps are the specific things that must be immediately done to carry out your recommendationsGive stakeholders what they need to act, QUICKLY!!!
EXAMPLE OF REQUIRED DETAILPROBLEMS/OPPORTUNITIES: OLD KITCHEN & BATHROOMALTERNATIVES: DIFFERENT DESIGNERS/CONTRACTORS - KITCHEN: CABINETS (MODERN, COLONIAL, DARK/LIGHT…) VENDORS FOR OVEN, REFRIGERATOR, DISHWASHER - BATHROOM: STYLE (MODERN/TRADITIONAL, LIGHTS, COLORS)RECOMMENDATIONS: XYZ CONTRACTOR KITCHEN: STYLE (MODERN, MAPLE), KITCHEN AID APPLIANCES BATHROOM: STYLE (TRADITIONAL, WHITE; TOTO) THESE ARE THE BEST CHOICES BECAUSE…NEXT STEPS: OBTAIN SPOUSE APPROVAL (today) -CONTRACT WITH XYZ (Tuesday) -REVIEW/APPROVE XYZ PLAN; GIVE $10K DEPOSIT (2 weeks) -ORDER APPLIANCES AND FIXTURES (Saturday)
2007 Top “10” IT Management Concerns1. Attracting, Developing, and Retaining IT Professionals2. IT and Business alignment3.Build business skills in IT4. Reduce the cost of doing business5. Improve IT Quality6. Security and privacy7. Manage Change8.IT Strategic Planning9. Making better use of Information10. Evolving CIO leadership role
How is IT viewed in Most Companies?• Necessary Evil• Does not meet commitments• Speaks another language• Large expense; questionable value• Strategic Enabler• Driver of Shareholder Value
Corporate executives were asked:Which subjects are included in your formal business strategy? Product strategy 51%E-business strategy 49% Sales/marketing 43% Customer service 43%Competitive position 38% IT’s Role 35% Manufacturing 8%SOURCE: CUTTER CONSORTIUM, ARLINGTON, MASS, FEBRUARY 2002
What is the Manager of key data, communications, role of IT at hardware, and software your Vital utility, like electricity company ? Tool for improving business- process efficiency Resource for creating new business processes Instrument for cutting costs within the company Core part of decision-making team that sets overall strategy Responsible primarily for technology maintenance Cost Center and drain on corporate resources Note: Multiple Profit Center responses allowed 10 20 30 40 50 60 70 % of respondentsRef: Optimize Research
Where is the Value From IT Investments? External IT Business StrategicInvestments Transformation Benefits Internal Every business is an information business. Information is the glue that holds value chains & organizations together.
THE GENERIC VALUE CHAIN FIRM INFRASTRUCTURE M HUMAN RESOURCE MANAGEMENT AR SUPPORT G ACTIVITIES IN TECHNOLOGY DEVELOPMENT INBOUND OUTBOUND MARKETING SERVICE OPERATIONS LOGISTICS LOGISTICS & SALES MA RG N I PRIMARY ACTIVITIESMichael Porter, HBR, 1985
THE IT VALUE CHAIN Architecture, Portfolio, and Service Support Activities Delivery IT Finance Sourcing, Staff & Vendors Risk, Security, & Compliance Facilities & Operations Margin IT EnablementPrimary Activities Demand/ Solutions Service Relationship Development Support Management
Strategic Alignment Model Functional fit Business Information Marketing Manufacturing Strategy Technology Strategy and Engineering Strategy StrategyStrategic fit Complex cross alignments Business Technology Marketing Manufacturing & Infrastructure Infrastructure Infrastructure Engineering Infrastructure
The Strategic Alignment Model BUSINESS IT Business Strategy IT Strategy Business Technology Scope Scope Distinctive Business Systemic IT competencies Governance competencies GovernanceStrategic Fit Administrative IT Structure Architecture Processes Skills Processes Skills Organizational IT Infrastructure Infrastructure Functional Integration
Sources of Competence Consumers and Corporation Supplier baseBusiness unit consumer as and partnersas the source communities as a portfolio of as a source ofof knowledge a source of competencies competence competence Stage 1: Stage 2: Stage 3: Stage 4: Pre-1990 1990 Onward 1995 Onward 2000 Onward We need to engage IT as an enabler/driver in all of these!!! That is the focus of our course. REF: The Future of Competition – Co-Creating Unique Value with Customers, by C.K. Prahalad, Venkat Ramaswamy
EXAMPLE: TEN IT COMPETENCIES 1.Global Networking Networking expertise of the highest order. Design, build and manage global WANs. 2.Project and Process Management This need is already strong and will not wane in the foreseeable future. Enterprises will look for ways to measure the expertise of project and process managers, such as through certification programs. The end of Y2K work will unleash a herd of experienced managers, but there will still be a shortfall. 3.Vendor / Contract negotiations and Competency in this area has developed due to the management widespread use of outsourcing and other external sources. 4.IS Human Capital Management The coordination of training and development of IS staff. It will be a bigger focus as companies struggle to migrate legacy workers to new technologies and align business goals. 5.Cross-platform security Encompasses date and networking security expertise for Web-enabled existing applications. 6.E-Commerce A hybrid of marketing and technical knowledge 7.Web and Database Integration Ability to connect legacy databases to the Internet. Knowledge of Web languages (HTML,JAVA) and SQL. 8.Information and Knowledge Defines the flow of information through the company Architecture or on a website. This competency is not well defined in many companies today. It may be part of the knowledge officer or Webmaster. 9.Data warehousing/database design Delivery of high-value applications including e- and administration. commerce. 10.Customer service / CRM IS – professional who are adept at building customer- service systems (particularly Web-based)Ref :Gartner Group
CORE IT COMPETENCIES Dynamic Planning Metrics Relationship Performance Procurement Report Management IT Products Digital Catalog Innovation Techtonics Enterprise Portfolio Value Arch Management Management Points of Personal Interaction Value Cards Alignment Biz& IT Architecture Strategy Asset Packaging & Network Management Selling Biz Imperatives Servers, Compliance Plan Market Infrastructure Storage, Development Middleware & Executive Policy Information Services DBMS User Interface Business Maintain Integrate Logic Process Technology Application Service Manage Development Business Security Security Center Human Continuance Business Capital Process & Operations Fulfillment Integration Program Data Center Mgmt Enterprise Program Program Mgmt Infrastructure Governance & Office Application Help Desk Scope & Risk Mgmt Scale, Deliver & ManageSource: META Group
IT Management Competencies (1 of 2) Business Deployment •Examination of the potential business value of new, emerging IT •Utilization of multidisciplinary teams throughout the organization •Effective working relationships among line managers and IT staff •Technology transfer, where appropriate, of successful IT applications, platforms, and services •Adequacy of IT-related knowledge of line managers throughout the organization. •Visualizing the value of IT investments throughout the organization •Appropriateness of IT policies •Appropriateness of IT sourcing decisions •Effectiveness of IT measurement systems External Networks •Existence of electronic links with the organization’s customers •Existence of electronic links with the organization’s suppliers •Collaborative alliances with external partners (vendors, systems integrators, competitors) to develop IT-based products and processes. Line Technology Leadership •Line managers’ ownership of IT projects within their domains of business responsibility •Propensity of employees throughout the organization to serve as “project champions”Ref:ZMUD
IT Management Competencies (2 of 2) Process Adaptiveness •Propensity of employees throughout the organization to learn about and subsequently explore the functionality of installed IT tools and applications •Restructuring of business processes, where appropriate, throughout the organization •Visualizing organizational activities throughout the organization IT Planning •Integration of business strategic planning and IT strategic planning •Clarity of vision regarding how IT contributes to business value •Effectiveness of IT planning throughout the organization •Effectiveness of project management practices IT Infrastructure •Restructuring of IT work processes, where appropriate •Appropriateness of data architecture •Appropriateness of network architecture •Knowledge of and adequacy of the organization’s IT skill base •Effectiveness of software development practices Data Center Utility •Appropriateness of processor architecture •Adequacy of quality assurance and security controlsRef:ZMUD
The only true IT Core Competency: AT&T The 26-terabyte data warehouse contains two years of telephone records and is used by 3,000 employees for functions such as marketing analysis and pricing calculations LAND REGISTRY The 20-terrabyte transactional database contains land-ownership records for all of England and Wales, including documents that date back to the 1700s. EXPERIAN The data warehouse is used for direct marketing to consumers and is one of the busiest in the world, handling nearly 900 simultaneous queries during peak times. BOEING The transactional database contains information on every aircraft assembled and is one of the biggest and fastest in the world, processing nearly 300 transactions per second. DEPARTMENT OF DEFENSE When completed in two years, with an initial projected capacity of 5 petabytes, the data warehouse and repository will hold medical records for 9 million military personnel. WHAT ARE COMPANIES DOING WITH THE INFO THEY HAVE ABOUT THEIR CUSTOMERS?
Strategy vs Organization Matrix g l ORGANIZATION ha ring g Pu actu VP P el ro in sin eV nt ns nt ur g t nu tive Ma pme es ou ou sin Co les utiv ct nt ve ct W eh fa lC s/ Ma ecu De u e lo f ec nu id od les ar gaSTRATEGY rc an Ex Ex es W Pr Sa Le Sa Pl Pr / /# / /Improve InventoryControlStreamline Order Cycle / # / @Expand Product Line / / / / @# @ / @ /Increase AdvertisingPenetration / @ @Tie Production toDemand / # @ / /Expand SellingRelationships @ # @Reduce Raw Materials@ Essential / # Desirable # Primary Responsibility
Process vs Strategy Matrix n sh ling to Pr ion v an i o Tie trat Ad STRATEGY l Inv s m uct Ex r Cy ne ion el ip e Pr pan cle d in ne se lat nd S De od li nt ve tL Pe ea Or ream od d Co pro uc cr ro paPROCESS de In Im Ex St Re @Design Product @Develop ManufacturingProcess / @ @ /Process Customer @ Major ImpactOrder / Minor @ @ @ /Control Product ImpactInventory @ @ @Analyze MarketplaceMarket Vehicles
Process vs Organization Matrix g l ORGANIZATION ha ring g Pu actu VP P el ro in sin eV t ns nt en ur g t e es ou ou sin Co tiv les tiv ct m nt ve ct W eh fa lC lop s/ Ma ecu Sa ecu De odu e f nu sid les nu ar ga PROCESS rc an Ex Ex W Ma Pr e Sa Le Pl Pr @ / # @ Develop Manufacturing Process / / / @ / # / / / Design Product / @ # @ @ Process Customer Order @ @ @ @ Analyze Marketplace / # / / Control Product Inventory @ # @ Market Product # @ / @ @ Establish Business Direction@ Major Involvement / Minor Involvement # Primary Responsibility
Where do we go from here?1. Establish team & commitment.2. Define “as is” & “to be” using the model.3. Evaluate “as is” “to be” via a gap analysis.4. Prioritize gap analysis.5. Develop strategic planning approach.6. Review conclusions with stakeholders.7. Carry out plan.
AS IS Presentations•If working – Use your company/organization •Must team up with co-workers•If not working – work in team of at least 4 •Select case from included cases •Cannot use Kodak or Air Products •Research on web for additional information•As Is Analysis: Use forms on next 2 pages •1 chart (1 page ONLY) for Business As Is •1 chart (1 page ONLY) for IT As Is
BUSINESS As-IsBUSINESS STRATEGYBUSINESS SCOPE PRODUCTS/SERVICES: CUSTOMERS/CLIENTS: COMPETITORS:DISTINCTIVE COMPETENCIESBUSINESS GOVERNANCE INTERNAL DECISIONS: GOVERNMENT REGULATION: STRATEGIC PARTNERS:BUSINESS INFRASTRUCTUREORGANIZATION STRUCTUREKEY PROCESSESH/R
AS IS Presentations•Considerations •Split Business Segments when discussing Business Strategy (Products, Customers, Competitors) •Every company has ALL 38 IT processes; focus on the ones that are very good and are in need of improvement •Include major products & vendors when discussing Key Technologies and Architecture •Marketing should always be included as a Business Process •When discussing Competencies “10 years of profit” is not a competency; how they made the profit is •Do not forget Skills in HR
AS IS Presentations•Presentations •10 minutes •All team members must present •Bring hard copy to class Good Luck!
Metrics to Include in Appendix¢ As-Is¢ To-Be¢ SWOT¢ Stakeholders¢ Alternatives¢ Recommendations¢ Next Steps¢ Governance Archetype¢ Alignment Maturity Assessment¢ TVO¢ Others???¢ Lessons Learned
Three Planning Horizons Primary Horizon Focus Issues Responsibility 3-5 years Strategic Vision architecture, Senior Management business goals, mission CIO Resource allocation, Middle Managers 1-2 years Tactical project selection CIO6 months – 1 year Operational Project management, IS Professionals meeting time and budget Line Managers Partners
Scenario Planning Grid Impact on Firm High Medium LowProbability of Occurrence High High Priority! Medium Medium Priority Low Low Priority
FIVE STEPS IN INTERVIEW PREPARATION Read Background MaterialM Establish Interviewing Objectivesi Decide Whom to Interviewn Prepare the Intervieweer Decide on Question Types and Structure o Open-Ended Questions i Closed Questions i Probes TELL ME MORE, I’LL LISTEN
Interview Agenda1. Define the Goals2. Ask the Right Questions3. Connect to the Bottom Line4. Understand Costs and Resources5. Focus on the Right Things6. Adopt Effective Process to Produce Action7. Tackle the Practical Problems8. Make the Right Decisions9. Plan for the Right Results10. Keep Score11. Deal with Culture12. Chart the Path to Implementation13. Define What’s Next14. Answer the “So What?” Question
INTERVIEW GUIDE (1 of 3)1. IntroductionB. Courtesies Make introductions and thank interviewee for agreeing to participate.D. Research Objectives Relay that the point of the interview is to understand what information would be most valuable to interviewees so that they may be better served. This will require understanding: The activities they perform and any trends/changes. The associated information requirements. The potential value to them of this information.
INTERVIEW GUIDE (2 of 3)Introduction (contd.)C. Guidelines Discuss how the results will be treated. Usually it is helpful to state that they will be not be asked for any proprietary or confidential information and will not be quoted without permission. Provide a brief overview of the questions you plan to ask and how long the discussion should last. Get confirmation that they are comfortable with this and ask if there are any questions.5. Questions to askBefore asking the pre-defined questions, the interviewer should develophypotheses on the answers to test specific ideas on possibleopportunities and to keep the discussion focused.
INTERVIEW GUIDE (3 of 3)A. Wrap-up A. Background Capture any relevant information on the background of the interviewee such as: Role and responsibility. Experience. Name, address, phone number. B. Closing Thank the interviewee for his/her time. Ask for referrals and permission to follow up if needed. Provide an honorarium as needed.