TECHNICAL AND VOCATIONAL TEACHERS’ COLLEGE

PROGRAMME: DIPLOMA IN ICT WITH EDUCATION

COURSE: PAM 310 PROJECT MANAGEMENT

UNIT 3: ORGANIZATIONAL CONTEXT OF IS DEVELOPMENT

Aims and objectives

The aims of this lecture are to:
• Explain the nature of business strategy
• Understand the relation between the business and the IS strategy

3.1 INTRODUCTION

Most business processes come with a collection of activities that take one or more kinds
of input and create an output of value to the consumer. Big businesses depend on well
defined strategies to continue to exist on the market place.

This is all about context: the business context within which systems projects are created;
how the strategy of an organization determines its shape and how that shape determines
the business processes and their systems. This context begins with a ‘systems planning
activity’ that determines which projects are started according to the needs of the
enterprise. The systems planning function enables business plans to be translated into
developed computer systems to meet business goals. Typical business goals might be
related to profit, or growth, or market share but could also focus on customer services,
safety or staff development. Business goals lead to the identification of key result areas
which specify in turn the need for new systems. Information systems management is
therefore concerned with the development of new systems to contribute to the
achievement of the business’s key result areas.

3.2 STRATEGY

Strategy is the pattern or plan that integrates an organization’s major goals, policies and
actions into a cohesive whole. In other words, it pulls together and gives meaning to
everything an organization does. A well formulated strategy helps to organize resources
into a unique and feasible force based on the competences and shortcomings of the
organization, on anticipated changes in the environment and activities by competitors.

In other words, strategy is the result of a careful analysis and it is purposeful; it is a plan
for achieving something.

James Quinn (1991) observes that strategy is the pattern or plan that integrates
organizations major goals, policies and actions into a cohesive whole. A strategy is a plan
for achieving something. A good strategy is:

• Clear.

1
 • Keeps the initiative; It must support empowerment and enhance commitment.
• Concentrated; It must concentrate resources at the place and the time where they
will generate maximum advantage.
• Flexible; It must be well balanced to take advantage of changes that occur in the
industry in order to maintain the organization’s competitive edge over its
competitors.
• Well Led; For a strategy to be successful, commitment is required.
Acceptance alone is not enough. Good leadership is needed to turn a strategy into
a competitive advantage.
• Full of surprises ; Your strategy should be seeking to gain an advantage
over others. You must aim at gaining advantage out of proportion to the
effort expended by doing the unexpected.

A strategy can also be seen as:

A Plan - This is a consciously intended course of action to deal with a situation e.

g plan to increase the speed of uploading and downloading of files to and from the
internet respectively.
A pattern - This is different from a consciously intended course of action. It means
consciously behaving in a certain way that leads to formalizing this pattern of behavior in
a strategy.
A position - This refers to how a firm or organization positions itself in the market.
This could be any market e.g. communication, systems development, database
development, transport, electricity, etc. Examples of positions: Our position is that we
will do business analysis, project management and high level design, our position is
that we will be active in the public sector but not in local government.
A perspective - A strategy can be seen as a set of values. Individuals are united by
common thinking or behavior. This can be easily applied to a project team to create a
shared vision of how the team will behave and work together.

3.3 DEVELOPING A STRATEGY

It is very important to understand how strategies are developed in order to understand the
strategy at hand. The following are the development stages of a strategy

• Investigate the existing situation to collect as much data as you can on the
facts of the case and people’s views and feelings about them.
• Develop alternative courses of action based on what we know about the
situation under review.
• Evaluate these decisions in terms of likely outcomes and consequences. E.g. in
upgrading the mobile telecommunications technology or online banking
network, you may experience network failure, negative impact on the business or
services during commissioning and testing.
• Choose the decision to be implemented based on outcomes or consequences
and evaluation of likely risks associated with the choice.
• Implement the decision or solution and follow up it up.

2
3.3.1 Greenleys Strategic Management Model

Analyzing the environment - This is concerned with investigating the internal and
external environments of the business and developing a comprehensive understanding
of its strengths, weaknesses, competition and market within which it is operating.

Planning the direction - This determines the future you want for your business. We
might create a vision of the business we want to be, our overall philosophy for doing
business and the range of activities that are to be considered. Planning might be done at
corporate level, division level or lower level.

Planning the strategy - This is about designing the means for going in your
planned direction. The question must be asked: How are we going to achieve the goal?
You may want to pursue more than one approach at the same time; Organizational
structures may have to be changed in order to speed up moves towards the
planned direction e.g. introduction of new roles and positions or departments, changes in
hierarchy, etc.

Implement the strategy - This is putting it all into action and monitoring and
controlling the implementation.

3.3.2 Tools used in Strategy formulation

There are many analytical tools to help in this strategic management process, but most
are concerned with offering ways of analyzing the current situation. The following are
some analysis tools used;

3.3.2.1 SWOT (Strengths, weaknesses, opportunities, threats) analysis

This identifies Strengths, weaknesses, opportunities and threats that an organization

faces. Strengths and weaknesses are an assessment of the internal factors while
opportunities and threats are ways of defining the external environment.

3
 Fig 3.1 SWOT matrix as adapted from Cradle & Yeates

Segment A – We identify those activities in which we are strong and where good
opportunities exist. We are playing from our strengths into a receptive market so our
strategy for these activities is to overcome external threats that may arise, because the
market is attractive to others, by eliminating any weak aspects of our overall
performance.
Segment B - The organisation identifies weaknesses internally although there are
existing external opportunities. Without strategic internal action opportunities will be
taken by the organization’s competitors.
Segment C - This is the worst place for any organization to find itself. These types of
organisations or projects have internal weaknesses and external threat from competitors
or the environment. A strategy formulated in such a situation is difficult to follow i.e. a
strategy to reduce internal weaknesses and external threats. In the long run, a decision
may be made to discontinue the product/service or leave the market.
Segment D - This is where the firm has internal strength but facing external threats. The
internal strength can be used to deflect or overcome/challenge the external threats. It is
generally not encouraged to engage in unnecessary competitive battles.

3.3.2.2 BCG (Boston Consulting Group) Matrix Technique

This technique models the relationship between a product or service’s current and future
potential and how management wants to deal with it.

4
 BCG matrix as adapted from Cradle and Yeates

Wild Cats – are the potential good businesses of the future. They are usually new
products or services are new with a low market share but with a high potential for
growth.
Stars – are the products that are profitable now and are expected to do well in future.
They are market leader products in growth markets needing investment to keep them
there. It is hoped that as many wild cats as possible will become stars. It is likely that
organizations will invest in new systems for stars.
Cash cows - These are current high income earners. They provide the majority current
profit and are a source of investment funding for wild cats and stars. They are not
expected to provide significant future revenue. Investing in information systems will be
based around increasing profits by greater cost control or increasing market share so that
the cash cow can move back to becoming a star.
Dogs - In this case products and services have little or no contribution to today’s profits
and are not expected to make any contribution in the future. These are typically products
that have lost their market share to competitors or are in declining markets.

It is very important to know the state of the organisation or project so that appropriate
strategies are developed to meet the current and future needs (internal and external) of
the organisation or project.

5
3.4 COMPETITION AND STRATEGY

According to porters view, the essence of strategy formulation is dealing with

competition. He sees the competitive world as a violent environment within which the
business position of an organisation is determined by five forces acting on it called the
porters five forces model.

3.4.1 Porter’s Five forces Model

Fig 3.3 Porter’s Five Forces Model as adapted from Cradle and Yeates

New Entrants - These also pose a threat to the competition. If the market place looks
good and competition is weak new entrants may want to enter the market. The threat
posed depends on barriers that prevent them from joining the market, the retaliation from
competitors in the marketplace and the determination to get over the barriers.
Substitute Product/Service - Substitute products and services also present a threat to the
existing competition. The advent of the word processor and then the powerful word
processing packages on the latest-technology personal computers wiped out the
typewriter industry. Technological changes are often the driving force behind the arrival
of substitute products.
Suppliers - These can exert pressure on participants in an industry by reducing the
supply of the product and by increasing prices. Suppliers are powerful if there are few of

6
them and if they are bigger and stronger than the enterprises in the industry to which they
sell.
Buyers - Buyers can also influence competition if they purchase in large volumes
resulting in suppliers competing for their business. Rivalry Between Existing Suppliers
- This exists if there are many organizations of similar size and there is often fierce price
competition.

3.4.2 Robson’s Analysis of Five Forces and its Opportunities

Wendy Robson has modified Porters 5 forces model to show opportunities for
information systems as shown below:

Fig 3.4 Robson’s analysis of the five forces and IS opportunities

Royal Bank of Scotland’s use of IS to support the direct line insurance business enabled
the bank to generate new products and services. For the UKs supermarket giants, the
Tesco club card and similar products elsewhere use information systems to increase the
cost to the customer of switching to a rival such as ASDA or Sainsbury.

Below are 3 Robson’s strategies in response to 5 competitive forces:

1 To go for a low cost strategy and seek to be the overall cost leader and use
Information Systems to reduce overall costs.
2 To distinguish or differentiate products and services from competitors offerings
and aim to use ISs to enhance this differentiation.
3 To concentrate on a particular market segment to use IS to identify support
activity in the markets segments or niches.

7
3.4.3 Examples of information systems applications

Robson also lists the IS applications that might support low-cost and differentiation
strategies. In pursuit of low-cost strategy in manufacturing we might see;

• Stock planning.
• Process control system (e.g. water treatment plant, or purification process of
cobalt)
• Stock control.
• Prioritizing of calls (Utility companies, hospitals, police stations, ambulance
services, etc)
• Financial planning and budgeting
• Total Quality Management (TQM) systems

Finally, what of generic IS strategies for organizations? Gregory Parsons offers 6

strategies for the development of Information Systems in organizations.

1 Centrally Planned: Planning cycles for business and IS are closely linked and
where IS strategy is embedded in planning of the business strategy. The Is
function is a service provider and closely linked to the users it serves.
2 Leading edge: This is where there is a belief that innovative technology can
create organizational gains and that risky investment can generate big payback.
The IS function is therefore the promoter of new ideas and technologies, always
watching technological developments.
3 A free market: Users make decisions since they are the ones who have to live
within the results and deliver profits. The role of the IS function here is to behave
like a competitive business unit – perhaps even a profit centre – achieving its
financial targets through charging its users and relying on its knowledge of the
business to give it an edge over external competitors.
4 Monopoly: This is the opposite of free trade. It is founded on the belief that
information is a corporate asset that should be available across the whole
company and that this will happen only if there is a single supply source that
everyone is obliged to use. The danger for the IS department is that it becomes
slow moving, unresponsive to customers, concentrating on the delivery of large
integrated systems that take a long time to deliver, by which time users’ needs
may have changed.
5 Scarce source: This is where the scope of the IS function is deliberately limited
by budget constraints and users’ projects compete for service from the scarce
resources using strict cost/benefit criteria. It has a negative impact on the
development of information as a resource.
6 Necessary evil: This is where an organization sees development of ISs as a
necessary evil and believes that information is not important to their business. The
role of the IT department is to provide a minimal level of resources and skill. This
is not an attractive place to work.

8
3.5 STRATEGY AND CULTURE

It is important to address human issues (cultures) that influence the way organizations are
structured and managed and consequently how projects could be best managed in these
environments.

The link between strategy, systems and organizational culture is explained in the 7-S
model below developed Mckinsey Management Consulting firm. This model proposes
that there are other factors in addition to strategy that make an organization effective.

1. Strategy
This is the action an organisation takes based on its assessment of the
environment which it defines as its customers and competitors. Strategy defines
how it aims to improve its position against competitors.
2. Structure
Clear ideas about strategy can enable organisational structures to be created that
in turn enable the strategy e.g. diversity strategy calls for a decentralized
structure.
3. Systems
In order to understand how an organisation works, you have to look at systems
because these are the things that keep the organisation going.
4. Style
Management style and the power it has are important in shaping the strategy and
culture of an organization.
5. Skills
These are the dominating abilities or capabilities of an organisation.
6. Staff
This addresses issues of recruitment, employee appraisal, pay scales, morale,
motivation, attitudes, commitment, etc. Often top management is reluctant to get
involved into these issues yet top performing companies pay extraordinary
attention to managing the development and progress of tomorrow’s managers.
7. Shared values
These are guiding concepts and aspirations that make you want to work there.
Each of the 7-S play a powerful part in determining the organisational success and
accepting the project as an organisation is the true test of a good Project Manager.

Different organisations have different cultures and many questions can be asked e.g.

• Is shoprites culture different from game stores?

• Is Zamtels culture different from Zain Zambia?
• Is Zain Zambia’s culture different from MTN Zambia?

In organisations, there are deep set beliefs such as:

• The way work should be organised.

• The way authority should be exercised.

9
 • The way employees should be rewarded.
• The way employees should be rewarded.
• The combination of obedience and initiative is looked for in subordinates.
• Do hours, mode of dressing, or personal eccentricities matter?
• Are there rules and procedures or only results?

All the above are part of the culture of an organisation. Organisational culture reflects the
underlying assumptions about the way work is done, what is acceptable and what is not,
what behaviours and actions are encouraged and discouraged. Many organisations are
writing down these unwritten rules and it is recommended that projects do the same.

10