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Establishing business strategy with information technology
Maaikel Klein Klouwenberg, William J.D. Koot and J. Alphons M. van Schaik It is important to choose not only the correct strategy but also the right set of applications and the right infrastructure

Why the emphasis on IT?
Motives for setting up an architecture and an infrastructure It has already been explained in many articles that information technology (IT) undergoes a development inside every organization, from a means to improve the efficiency and effectiveness of the organization to a means to influence the strategic position of the company, when applied more intensively. The way in which management controls IT has changed simultaneously[1,2] (Figure 1). In the first stages of automation, efficiency is the primary goal and the attention of management is mainly focused on technology. In this stage, the automation professional is an “extra-terrestrial” expert, who decides what is best for the organization. In later stages, the effective functioning of the organization becomes as important a goal as efficiency. The management then becomes conscious of the fact that, next to technology, the design and structure of the organization is a decisive factor. User participation, information planning and the appointment of steering committees are manifestations of this. These organizations more and more recognize the need for a methodical approach to IT planning, as a result of disruptions in management, fusion or reorganization, cost increase, or new usage possibilities. To an increasing extent, organizations which have more experience with automation realize that IT cannot only improve the efficiency and effectiveness, but also that it is of decisive importance to the company’s success. IT usage planning then acquires a strategic quality in these organizations[3]. IT functions as a catalyst in all this. These organizations set up a business architecture and an IT architecture, based on an objective, qualitative and quantitative investigation into the current use of information technology[4]. What can the strategic contribution of IT comprise? A good strategy cannot easily be copied by competitors, because of the organizational, financial, social and technical
Information Management & Computer Security, Vol. 3 No. 5, 1995, pp. 8-20 © MCB University Press Limited, 0968-5227

cost and the trial period involved in attaining the strategy: or, as Toffler[5] states: “There is no one to copy anymore”. Every organization has its own profile, environment and aims. Strategy indicates how the organizational structure should be designed and what the use of IT should be and should, therefore, be sufficiently concrete and specific. A specific strategy leads to a unique interpretation of the architecture and the infrastructure. A good strategy focuses less and less on the product or the service itself and more and more on the rendering of services, reputation and so forth. This is especially applicable to products which have become a “commodity”; they are produced by many suppliers and their quality is usually high enough. This is why strategies in the same branch differ to a high degree. For example, a great difference arises when the bottom of the market is the focus; for example, East European cars such as Skoda and Lada, or, on the other hand, the top of the market, for example, the German top cars, Mercedes and BMW. Quality control, tailor-made products and product innovation are applied in a very different way. This leads to very different information needs and to a unique use of IT within the same car branch. Quality control, tailor-made products and innovation are of vital importance, for example, to Mercedes. The use of IT should strongly support these business processes in particular, and constantly offer the management of this car manufacturer the appropriate steering information. Realization of architecture and infrastructure In practice the realization of strategy, architecture and infrastructure is an iterative process[6]. The opportunities of technology can, for instance, create restrictions, so that basic assumptions must be adjusted. Besides, the process is often laborious, full of doubts and obscurities. This is mainly caused by the fact that, in strategy planning, choices are under discussion with respect to the market approach, the way of functioning, priorities and so forth. These steps
The authors acknowledge the contributions of their colleagues: M.V. Batelaan, A. Kranenkonk, A.H.J.B. Scholgerrits, H.G. Westandorp, P. Woudstra and J.T.M. van der Zee, without whom this work would not have been completed.

These debates can include figures from branch analysis. On the basis of this the organization structure and organization processes will be designed in the “business architecture” (see below) and the “IT architecture” derived from this. quantification. Nolan growth curve and the focus of management Resources IT era Management emphasis Business strategy Business support of a business vision is a creative and often laborious process. “Implementation” deals with the introduction of the business architecture and IT architecture. after all. This section explains which abstract and particularly concrete parts the business strategy should consist of. for the sake of clarity (see Figure 2). by organizing workshops with senior management and clients in order to evoke an active picture and debates. These objectives. The realization give a clear time horizon. A good illustration of such a business vision is the example of a chemical producer with “from now on no more accidents”. because it functions as a co-ordinating directive framework. The development of a business vision should not. scenario-analyses and simulations. give challenging objectives. Figure 2. but specifically focused on the organization. Combank then translated this vision into specific business objectives. indicate direction and priorities. it is quantified (number of accidents). and how a company can move from abstract ideas to concrete clues. Some even go as far as saying: “An organization without a business vision is a control-instrument”[7]. for example. it is challenging (no accidents) and it has a clear time horizon (from now on). It is. Business vision What is a business vision? A business vision is a management vision of the way in which the organization should function in order to survive and in order to be competitive in the years to come. the vision of management itself[9]. Establishing a business vision Senior management is sometimes inclined to keep itself apart from the development of a business vision. Business strategy The business strategy should offer sufficient clues in order to work on the strategic use of IT in a concrete way. in turn. A large bank (here given the fictitious name “Combank”). It contains the requisite elements (direction.ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 9 Figure 1. Some criteria for a good business vision are that it should: q q q q Data processing era Technology Efficiency Effectiveness Strategy Time are described in a linear way. however. Combank determined the design criteria for the business and IT organizations which would most enable achievement of these action items. This business vision contains ingredients for an adequate business strategy. or “do-wells”. were solidified in action items. define measurable aims. Finally. Existing strategic plans are often too vague and subject to multiple interpretations. focused on the commercial market. Architecture development process Building interim organization platforms Develop business strategy Building business architecture Design I/T architecture Design I/T infrastructure Design and develop systems Building interim I/T platforms . The essence of the business vision is in reaching an agreement on five common principles: (1) How do we compete and with what image? (2) How do we earn our money? (3) How do we organize it all? (4) How do we reach a value added for our stakeholders? (5) How do we turn this organization into a sought after employer? A good business vision should be “inspiring enough to cause people to consider that it is worthwhile to give it their time and energy”[8]. timing). challenge. The development of an architecture starts with the business strategy. be delegated too much or contracted out. a business vision is vital for a good strategy formulation. The “IT infrastructure” is the technical filling-in of the IT architecture. has as its business vision: “To be the leading bank in the wholesale market in 1995”. Yet. For this reason the business vision should be established in an interactive way with the management. It gives direction by pointing out safety (accidents). A business vision should be a challenge: not vague.

Dowells are chosen specific items. The business objectives should be solidified even more in the form of “do-wells”. This fictitious bank is located in the wholesale market. various ways can be considered in which the business vision “To be the leading bank for the wholesale market in 1995” can be pursued. inspiration. know the client’s needs. Clients who desire tailor-made services can not be served by such a bank. In this way. short. with many iterations and individual considerations.or long-term orientation. seminars and workshops. so that every client can choose from the standard products. clients. opinions and ideas of clients (on the product quality. however. offering tailor-made services. Because of the low price. The business objectives can be addressed in several ways. Do-wells can be of an economical. market share versus profitability. a careful consideration by the senior management preceded this. chose – among others – the following do-wells: q q seven-day. In our example. In practice. but flexibility and tailor-made service for these wholesale clients who desire this. Our example. A business vision does not. price. to be able to provide new. tailor-made services are not possible. in view of the way in which the business vision will be realized. Combank chooses the wholesale market segment (bank for companies) and not the private segment. as well as of a social nature. Several fundamental questions play a role here. Combank. for example by means of: q q q q opinions and visions of the management itself. improving the image. offering standard services against the lowest price. the business objectives are formulated as follows: know the client’s needs before he does. of which a company must be capable (capabilities). standard products which can be tailor-made per client very quickly. 24-hour availability.5 or the results of value chain analyses of the industrial column[10]. The main part of this process takes place in terms of debates. define in which way all this can be realized. quantitative and qualitative analysis of the branch. estimations of market developments and other considerations play an important role. but they still give the specific establishment of IT and the arrangement of the organization little on which to hold. improving the commercial qualities of employees. For example if it concerns choices such as: q q q profitable products portfolio. In this line. suppliers and replacement products[12]. business visions are only realized by means of creation. Our example. in order to realize the objectives. Experience in establishing a business vision is therefore essential. Therefore a business vision should be translated into “business objectives”. the establishment of a business strategy up to the design criteria is a painful process. “Managing” this process requires knowledge of and experience in strategic planning processes. In practice. The choices concern the well-known “Ps”: product. Choices must be made. Quantitative and qualitative elements can be used as a source for the business vision: q q q q q q q introduce new products in a timely fashion. Therefore the objectives should be solidified even more. the value chain and the market. Of course. little overhead. client-oriented. for example by: q q q q better trained commercial employees. chooses no mass products and no low prices. Business objectives The “passion” of the senior management is often necessary in order to realize a business vision because many difficult choices must be made. or in what the company should be specifically proficient. results of “opportunity” workshops where ideas for the use of IT have been assembled. a business objective can be defined as the policy choice. A “do-well” should be specified in terms of the following five aspects: q . Also. flexible business hours. In this market one could have chosen to offer a large set of products against a low price.). “Do-wells” The business vision and the objectives do not sufficiently explain which aspects of the rendering of services should be reinforced. These are examples of well articulated business visions. promotion and place[11] and also strategic factors such as competition. however. Combank.10 INFORMATION MANAGEMENT & COMPUTER SECURITY 3. cost effectiveness regardless of volume. dependent on the pressure of work. even frustration and perspiration. competitors. service. etc. Combank. Personal visions. The objectives indicate a global direction for the organizations. growth or consolidation. technological and an organizational nature.

it has been indicated that the organization was transformed from a product-oriented to a client-oriented organization. Combank. In practice. The account manager should be informed about all the products and opportunities. securities. because one person becomes not only the contact person but is also commercially responsible for all products. In the Combank example the following design criteria have been chosen: q q management and that its effective involvement and ability to change will be thoroughly put to the test. the organizational changes are often restricted to: q q q Account manager: an account manager is responsible for the client. In the section at issue. the translation of the strategy into an architecture and infrastructure is described. a set of organizational and IT demands which should be realized by the architecture and which are derived from the business vision and the organizational redesign. By simulation of business processes and the advanced use of applications. Figure 1). much has already been written and spoken about the fact that automation gives rise to not only technical. but also organizational consequences and changes. Design criteria seem to be very simple remarks: “A client should have a contact point within the bank and therefore we appoint an account manager. They should be translated into the organization of business functions and IT. . Actually.). on the basis of which the organization and the IT are modelled. the design criteria are the do-well essentials. (5) Horizon: the period in which the do-well should be realized. Besides. The appointment of an account manager actually means a complete reorganization. an automation of the existing organization takes place. In the example. new insights and problems often arise which lead to a refinement of the business strategy. The operating procedure to be followed is described in a linear way. in working out the business architecture. in. of course. So. in fact. Where. knowledge and organization – a total re-orientation. for example. Design criteria Do-wells specify the chosen capabilities which should be developed. This means – among other things – that a seemingly simple problem must be solved: one client view for the whole organization. In this way. he/she was only informed about the products sold by his/her own division. a process acquires a more cyclic nature. for example. rearranging of departments. Like many large organizations. is to determine the business processes in the business architecture. Client information: an account manager should be able to obtain all the information about a client from one workstation. (3) IT consequences: the consequences a do-well has for the information technology. a prototype of the “account manager system” can be shown. organization of business functions. in the old situation. etc. Just indicating this change in the business strategy is. In this way. Design criteria are. The company has now translated the business vision (“To be the leading bank in the wholesale market in 1995”) into a number of concrete items of which it should be capable (“know the clients and his needs. Business architecture In the last section it has been demonstrated that strategy has important organizational and technological consequences. Combank. The first step. the effects of the improved use of IT can only be expected when the company processes have also been effectively structured and when the responsibilities (of. deposits. (4) Organizational consequences: consequences for the staff. the more powerful a do-well will be. The sale of products also went via these divisions. this has consequences for the organization structure. In the case of organizations applying information technology in order to improve efficiency and effectiveness (beginning of the Nolan-phases. Each product had its own division (loans.ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 11 (1) Message: the clearer the message. national payments. the account manager and the supporting specialist departments) are well defined! In practice. In the business architecture. our bank was product-oriented. such a change has important consequences for the supporting data systems. data systems existed per division (with their own client file). attention is therefore paid to the redesign (blueprint) of the organization and the way in which the organization should function in the future. the management can form a picture of the consequences and advantages of the different design criteria.” In practice this means a total transformation. the adaptation of job description. with some necessary changes. foreign payments. In short – in terms of capabilities. In the past few years. It will be obvious that such a reorganization must be guided by the senior the description of the administrative procedures. etc. insufficient to make the organization function in this way. after developing the business strategy. etc.). (2) Testability: the possibility to determine to what extent the objectives have been realized. However. the data systems in the new situation should be linked to each other in such a way that one picture arises of all contracts and transactions of a client. The existing organization and IT will have to be modelled on this basis. Up to now. lease.

marketing and promotions. if necessary. Examples of business functions are: initiating payment. because certain choices concerning the arrangement of business functions are made comprehensible. supported by. acquisition. That is why the information needs are described. Therefore an intensive exchange of thoughts with the senior management. (3) Application access blueprint: in order to approach the information. should not lead to a “client-unfriendly” arrangement of assignments (customers are too often referred to someone else). All the logical locations together.12 INFORMATION MANAGEMENT & COMPUTER SECURITY 3. differs from the functions of the account manager in place and in opening time. form the business functions blueprint. In the application access blueprint the necessary applications are described. q The centralization/decentralization differs from the head office and the district office managements. On the left. The strategic design criterion “account management” requires that we recognize which business functions account management is going to include. In principle. supported. on the centraldecentralized axis. in dealing with stocks and shares and leasing. the following considerations play a role: q The combination of business functions carried out by the manned transaction point. (2) Data access blueprint: in order to implement the company positions. business functions. approving a proposal. on the right. It will. by putting frames around a number of logical locations. from “sales planning”. be desirable to let a number of functions be carried out on a lower level. These business functions form a complete whole. those functions at the most decentralized level. practised at a central level. It also induces the adjustment of design criteria. however. Simulations of business processes and the corresponding applications are often useful. The essence of the business function blueprint is that the senior management makes choices for the design of processes and responsibilities which support the strategy. in order to let the senior management make the right choices for the optimum organization of the company. In practice the blueprint appears to give the senior management an excellent cause for discussion. can be seen. is called “logical locations”. up to “approving payment transactions and proposals”. The eventual design criteria should determine the essential choices concerning logical locations. Strategy. Business function blueprint The various activities of the organization are separated into several dozen business functions on an operational. The concept of the logical locations gives an opportunity – in co-operation with the (senior) management – to model Figure 3. moreover. “selecting a product”. This.5 The business architecture is divided into three closely related blueprints (see Figure 3): (1) Business function blueprint: this blueprint describes the dividing of company processes into responsibility fields and where they are put into practice (centralized-decentralized). “acquisition”. for the sake of efficiency. by specialists. company process simulations. The “account management” in the middle column consists of six business functions. for example. Figure 4 explains which logical locations a large or small office includes. the account manager will carry out the commercial conversations. architecture and infrastructure Business function blueprint Data access blueprint Application access blueprint Business architecture Data storage blueprint IT architecture Technology blueprint Application process blueprint Communication blueprint Management controls Business capabilities IT infrastructure IT services IT components . for example. and company planning. which consist of a number of logical locations. applications are necessary. q The mobility of a travelling shop differs from a shop on the corner of the street. The basis of account management is that as much responsibility as possible is given – through a process of decentralization – to the account manager and that he can estimate which products interest the client. A first look at the blueprint often results in the question “Where can I see the ‘Amsterdam office’ or ‘Brussels office’?” These are concrete locations. all information is necessary. is necessary so that the right choices can be made. Figure 4 shows a number of business functions of the bank. withdrawing money. In defining the logical locations. management and strategic level. The arrangement of a number of business functions into “account management” for example. as a result of the business strategy.

The design criterion “client view” should reveal itself in a data access blueprint. This gives the supermarket customers the opportunity to pay for their shopping by using the point-of-sales terminal (chipcards). It does not concern all the details of this information. but also in balance. payment. and also the opportunity of withdrawing money. are combined and placed near large supermarkets. Also. Data access blueprint IT supports a business strategy by giving the right information. but the information needs in outline. where the logical locations. the distinction is made between the creation of information. In order to make this last distinction. the traditional matrix business functions/data groups arises. because of the arrangement into logical locations. By making an inventory of the information needs per business function. It can be imagined that our bank designs a concrete location “kiosk”. order and invoice. it is necessary to know the assignments and responsibilities of . Therefore it is necessary to determine which information is necessary and where. client. In practice.ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 13 Figure 4. Logical locations arranged as concrete locations HQ Regional Branch office Automated service Beyond the branch Central management centre Company planning Human resource management External reporting Marketing and product development Define market segment Marketing and promotions Product development Credit/risk committee Approve proposal Assess client risk Local management centre Sales planning Operational management Manned transaction point Deposit money Withdraw money Initiate transaction Initiate payment Customer enquiry Account management Sales planning Acquisition Select products Submit proposal Approve transaction Approve payment Approve proposal ATM Deposit money Withdraw money Customer Initiate transaction Initiate payment Customer enquiry Local support unit Open account Initiate payment Retailer/ point of sale Initiate payment Approve payment Product specialization Determine client needs Specify proposal Collateral valuation Monitor proposal product Support centre Process transaction Process payment Confirm client Centralized Decentralized Key Large office Small office the organization in a comprehensible way. product. An account manager will not only be interested in general client data. In the data access blueprint it is determined. This matrix indicates which business functions use which data groups[13]. it can be determined which information and applications are necessary. which information is necessary in order to practise the business function in accordance with the strategy. Business functions blueprint: arranged as logical locations. On the basis of the realization of the business functions blueprint. Moreover. in the case of every logical location per business function. transaction and contract information of all products. it offers an opportunity to design new combinations as a concrete location. also called “data groups”. the business architecture is independent of the accidentally concrete and geographical situation. the updating of information or just the interpreting. Examples of data groups are: personnel. point-of-sales terminal and automated teller machine.

business demands on information supply and. Application access blueprint In the last blueprint. The organizational aspects are therefore mainly realized by means of the technical opportunities (technology push) and not on the basis of strategic and/or organizational considerations. The following items have not yet been described: q q q where the data are stored. The inventory of the information needs is preferably made by means of workshops. In our example. In the application access blueprint it is determined which applications will be used by which logical locations.5 the business functions. have been discussed and established. but also of the product specialist or the back office. Apart from this. in such a way that not too many interfaces between applications arise. the way in which the organization should function in the future is indicated. These three together are the business architecture. appointments with clients are made and sales planning should be set up. transaction information and balance information. Applications are only means to get the right information in the right place. Each application should be described in broad outline. Such descriptions form the starting point for the subsequent realization of applications[14]. In this way. such as: q q application access blueprint is based functions as an aid in this. this gives rise to many important questions. The activities of each business function are discussed and viewed in the light of strategic objectives. more than using information. The difference between business architecture and IT architecture is. on the other. the business architecture offers the possibility to choose the best IT solutions. During the realization. systems will be present which not only provide general client information. The traditional matrix business functions/data groups. Here the organization should again make a choice. applications are necessary. The design criterion in this case requires that all information must be accessible to the account manager. on the one hand. the information needs have been determined. This architecture is called business architecture. In every workshop several users participate. Within the scope of the business needs. Moreover. It is established in the application access blueprint which applications at the different logical locations will be used as suppliers of information (as has been defined in the application access blueprint). product information and contract system). which has been used by system development methodologies for years.14 INFORMATION MANAGEMENT & COMPUTER SECURITY 3. a lively interaction and a clear picture of the real information needs arise. in fact comparable with the distinction between functional and technical design. The consequences of this. The aim of the demarcation is to arrive at strategically relevant. (2) data access. who are well-acquainted with a number of business functions. (3) application access. In this way. the IT architecture fulfils a “bridge” function between. It concerns the balance between not too large and complex systems. In practice. In order to provide this information. realizable and manageable applications. because it can still be regarded as separate from the technical means which are to be introduced. technological opportunities. or only his own clients)? Which relations of a client are actually registered? Which subsidiary enterprises are involved? Who is the director/owner? (What is the actual position of the director/owner?) q q q The collection of necessary applications (the application portfolio) is entirely determined by the information needs as they have been defined. in terms of the necessary information and the necessary applications. this “bottom up” method will benefit the acceptance. on which the . The recording (creating) of complaints could. The business architecture is dominated by managerial and organizational questions (what). or merely those of his branch office. Account management is. be the responsibility of the account manager. which hardware and data communication are necessary. In the business architecture. but also contract information. IT Architecture The distinction between business architecture and IT architecture is of major importance. of course. In many organizations the architecture is mainly determined by technical and economical considerations. The business architecture describes this in a more functional sense. the senior management has chosen a business process structure and responsibility in accordance with the business strategy. for instance. The answers to these When are we dealing with an actual client? Which clients is the account manager allowed to see (all clients. where the data are processed. An account manager will initiate new contracts and must be supported in this (the outline of sales scenarios. along with which information needs are important in this. The IT architecture translates the more functional description into technical solutions. Up to now three blueprints have been described: (1) business function.

user-friendliness and safeguarding. In this way the data group “client” is applied at different logical locations. product specialist. In fact. first of all. on the basis of the business strategy and the business architecture. It is essential that the best solution is chosen. Central storage of data has. this central storage of information is available at the other logical locations mentioned. In this part. through the discussion with IT technologists. “imaging “. has consequences for the response times. for example. In Figure 5 the four different IT blueprints are shown in one blueprint in a simplified form. accessibility of systems. the outlines for communication and technology arise. etc. Contracts. “non-stop computing” can realize the business architecture and what the financial and technical consequences are of this. At Combank. the response time problem has been overcome by making use of intelligent terminals. but . payment orders. advantages in terms of control and safeguarding. This requires discussions between the designers of the business architecture and IT technologists. so that only the information which meets the selection criteria has to be sent (co-operative processing). transaction orders. The technologists should describe the technical feasibility and the manageability of the chosen solutions. the Figure 5. A central storage of data is only natural when different logical locations make use of them. will directly have consequences for the communication. By doing so. The central storage however. this immediately influences the required technology and place of processing. Additional measures should therefore be taken. of course. account manager. such as the processing centre. Moreover. The question where/what is a matter of cost and technical opportunities. data should be stored as near as possible to the place of usage and the “creator”. Data storage blueprint In general. which means that the choice must be made where to store the data. (3) Technology blueprint: this indicates requirements and types of technology. Most data. hardware management.ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 15 questions are translated. the blueprints may be described separately. In this stage. the place of storage is determined for each file and the place of processing for each application. Of course. Subjects of discussion might be in how far solutions such as “distributed databases” or “co-operative processing”. the extent of the applications and the intensity of the communication. the four blueprints are discussed which together form the IT architecture: (1) Data storage blueprint: this indicates the storage place of various files and databases. IT architecture HQ Support centre Product specialization Account management Regional Branch office Data storage Client Contract Contract loan Contract deposit Transaction-order Payment-order Invoice Customer statement Data storage Product Proposal Collateral Transaction-order Complaints Data storage Sales plan (4) Communication blueprint: this denotes the data flows among locations. (2) Application processing blueprint: this denotes the place of processing of various applications. In short. The four different blueprints are mutually related and they should match each other closely. Other criteria are the intensity and the nature of the data application. It will often be necessary to collect a number of quantitative data about the size of the data groups. are Application processing Current account system Processing loans Processing deposit Processing payment T/X trading system Securities system Balance inquiry Application processing Collateral valuation Contracting system Credit scoring Transaction system Product information Application processing Customer profile Customer profitability Sales planning system Negotiation planning Mainframe Mini PCs Central Distributed applied at different places. In the Combank example. but they may not be regarded separately. The technologists should take into account aspects such as. given the business architecture. invoice and customer statements are also stored in the processing centre. it is important to choose the best possible technical solutions. however. central storage in the processing centre of the relation data has been chosen (see Figure 5). in the IT architecture. among others. The choice for a place of data storage. given the business architecture and the state of technology. into automation directions (how) and eventually in the choice of specific makes and types of technical means: the IT infrastructure (with what).

In the description of the IT infrastructure. IT service. Application processing blueprint Of each application it must be determined where the software “runs”. or at different places at the same time (cooperative processing). specific (new) technological products and telecommunication supplies. Product data. For example. This elaboration is expressed in brands and types of hardware and support software. On the basis of the assessment of the nature and the extent of the communication (for example: real-time. arguments such as costs. That is why this information in our example is stored in a decentralized way. In the realization of the IT architecture. pressure on the communication “traffic”) it can be indicated which type of data communication is suitable (leaselines. certain technical solutions are proposed. costs). new products will have to be developed. of the use of distributed databases for which the technology is not generally applicable. This implies a logical means of communication between the logical locations mentioned. and on the other. datanet 1. mini-computers have been chosen at a regional level. At first it was sufficient to indicate that there was a need for mini-computers and workstations. a further technical elaboration is made of the infrastructure. in terms of speed. but also used by “account management”. The present opportunities of technology also play an important role in all this. voice/images. “Knowing the client’s needs” requires flexibility in the long term. etc. simple/intelligent terminals. on the basis of the business strategy and the business architecture. fibre optics). Technology blueprint In this blueprint the choice for the technical means is established in outline. Furthermore. Therefore. the business architecture in which the use of data and systems is established. dependent on the completion of the IT architecture. the technical opportunities. It is possible to design the “ideal” architecture in which the entire data storage and processing take place where the user is located. Although the solution of minicomputers may be more expensive. The emphasis of the usage is on “product specialization”. Again and again one has to question whether the . This means that in the realization of the IT infrastructure. IT infrastructure The IT infrastructure is described as the setting-up and management of the whole hardware. The basis of this is. Communication blueprint Communication patterns arise as a result of the preceding blueprints. central storage is not necessary. The IT architecture describes in outline the choices for data storage. response times. in such a way that the business architecture and IT architecture can be implemented successfully. At Combank. it was chosen in view of the flexibility. is used at the logical locations “marketing and product development”. technical opportunities and organizational requirements play a role. software and data communication supply. local/long-distance communication opportunities. In this discussion. together with the technologists. for example. The system “product information”. consultation and discussion take place. The IT infrastructure distinguishes itself from the IT architecture in that concrete services and products are specified. Also. Think. At the end of this phase. but to have carried out the entire processing in a centralized way. The eventual choice is made at the technical infrastructure. on the one hand. in addition to management consultants. specific brands and types of products are determined. for example. This consideration was made by going back to the business strategy. A too conservative IT architecture undermines the business architecture. On the basis of the nature and extent of the usage.16 INFORMATION MANAGEMENT & COMPUTER SECURITY 3. non-stop computing. In this phase it is determined which specific requirements the systems should meet. for example. mini-computers for “product specialization” and PCs for “account management”. is personal and should not be used by other officials. information experts must also be involved. processing. it is important that the consequences of all the technical choices for the business architecture are discussed. or where the data are processed by the system. It should be decided. The “sales plan” which an account manager makes. These are the types of technical means for the storage. processing and presentation of data computers for batch processing. the German car manufacturer will have to invest in the data processing capacity for the quality control function and for research and development. distributed databases and the corresponding machines. and the choice of intelligent terminals to reduce the response time of central systems. for example. choices have been made for all the necessary components for the development and functioning of the applications. the product data are stored there. It might have been cheaper not to have put in minicomputers. co-operative processing and user interfaces. are stored and processed at the logical location “product specialization”. which should be taken into consideration in the discussion with the technologists. In consideration of this. Such an architecture also has potential disadvantages (controllability. technology and communication. for instance. whether the processing should take place at one location. the following already-defined basic assumptions are often revised: q The originally defined do-wells and design criteria. In this phase.5 disadvantages as well. “product specialization” and in “account management”. For instance. so that it has been decided to “run” the application there (Figure 5).

These instruments consist of: procedures. techniques and tools for system development (CASE tools). displays. personal computers. If EDI facilities are offered to the outside . together with the corresponding quantitative data and the technological basic choices made. in this phase the technological possibilities are examined. Within this scope. These services not only take care of the transport of data. among other things. What does the IT infrastructure comprise? The IT infrastructure its not only a matter of hardware. however. Other examples of IT services are: q expert systems for the assessment of credit applications. The software for the steering of all these components is included. to deal with the already available data in an efficient way[15]. speed of processing. this may. the following components are recognized in the IT infrastructure: (1) IT components. that it should be subsequently determined. In the Combank example. The period in which transactions should be processed is also a relevant aspect (updating account data) for the realization of the infrastructure. In the past. (2) IT services. q image systems for document processing. data communication possibilities. from which consequences arise regarding the demands for the compatibility of the IT components. q client-server concepts for bank offices (local networks and database servers). Consultation with these parties should follow. The previous components. determine the requirements for the hardware. data communication connections and disk units. (3) IT company facilities. SWIFT for the international transaction transfer and BEANET for the point-of-sales terminals. application programmers had to set up and develop their file organization on their own. 24 hour availability is assumed. The components are formed by the various hardware components. They are thoroughly worked out in the IT infrastructure. if attention is not paid to control instruments as well. This means. This situation may arise in the use of point-of-sales terminals. Note that. the price/output-relation and the ease of operation. for example. but also offer a surplus value in the form of data presentation (storage and conversion facilities (GEISCO and INS)). Nowadays. the application programmers need less time to spend on this. It should be decided what the requirements are for the lifetime of data (account information) and the response time of transactions. q Blueprints of the IT architecture. The same applies to the network management: the software involved takes care of the accurate operation and control of the data communication facilities and offers many facilities for management. It is striking that several specializations of employees occur. lead to the need for computer systems which are in working order during 24 hours a day and which have a failure-sensitivity approaching nil. At this level. EDI (electronic data interchange) applications arise by combining.ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 17 intended realization of the infrastructure is in accordance with the do-wells and design criteria. the database management systems take over a large part of these activities. automated teller machines and electronic banking. these are. In this case one must think of EDI-applications in particular. In addition to this. such as compatibility (to what extent can computer systems of different makes and models actually exchange data). The usage of tools sometimes offers the possibility to develop new systems very quickly and at the same time. printers. it becomes possible to develop applications. although it may have been decided that the creation of EDI facilities is desirable. the possibility arises to develop new products and services and to offer these to a third party. which parties are relevant for electronic communication. in a sufficiently effective and efficient way. The value added network services also belong to this. for example. services and facilities cannot be put in. (4) IT control instruments. By combining IT components and IT services in a certain way. methods. where the speed of program development and userfriendliness are important (think of the do-well: “timely introduction of new products”). The blueprints defined in the previous phases. but a complete integration of the information technology supply. there should be certainty about the needs and the opportunities of cooperative processing. at the level of management. a 7 day. and the quality and experience of the automation personnel. a Videotex system and an application for the processing of bank giro orders and for giving balance information. at certain places within the infrastructure. q the opportunities of end-user computing. IT services are services which execute specific assignments for applications. Input of OLTP (online transaction processing) computers may be necessary. the so-called database administrators and network managers. In the choice of hardware components other factors prevail. consisting of computers. Consequently. Defining win-win situations is a part of this. If.

because a large gap between the interested parties (or the company) and the (internal and external) suppliers of automation services already exists. some important questions should be answered: q Are (inter)national standards sufficiently used? q Does there exist a need for these. The costs of hardware. cannot always be linked. but it requires a lot from the data storage structure. and more directly by this. to make it possible for others to connect to the infrastructure. communication and control should be weighed against each other. “Open” means that the threshold. but it should also be possible to make cross-sections (through product groups). Next he may ask for credit information of a specific client and may also want to compare these data with data of other. User-friendliness requires computer capacity and may have consequences for the fillingin of blueprints. The answer to the question is a straightforward yes.5 world. at the workstation. a client help desk. the criteria are: q the costs. An example of user-friendliness is the requirement that for every use at every place of work. The IT infrastructure will function better if the products and services are connected and attuned better. After all. and q the use of products which are freely available on the market. This means that the account manager. All the factors mentioned influence the parts of the IT infrastructure. The company will profit more. . however. At Combank an account manager must usually be able to obtain all the information about a client from one display. when asking for client data. These factors are. the user interface and possibly the data communication facilities. the suppliers publish more about the opportunities and desirability of EDI than senior managers of companies propagate the advantages of the usage of EDI. such as electronic payment and electronic banking. given the relationships with suppliers and consumer? q Which viewpoint does the company take (according to the do-wells)? If the Combank decides to develop EDI applications. should be set up as well. the inquiry language. The publicity of an attempt at electronic burglary alone may influence the image of a bank. but also to get an insight into the clients’ desires and needs and to keep following these. (2) Cost control. In this case. (4) Accessibility of systems. other factors play a role as well. similar. q connecting as much as possible to the international standardization developments. it is exactly the support of strategically important business processes which can lead to the greatest success. Cost control depends on the question as to whether intelligent terminals are being used. (5) Safeguarding. with the corresponding IT control instruments. Why should attention be paid to IT infrastructure (now)? The question arises whether it is relevant to pay attention to IT infrastructure. it should be questioned whether it is sufficient to deal with just one specific supplier. on the installation of applications and the data storage at the workstation. as best one can in the primary business processes. The system should not only offer the possibility of a top-down approach to data. the more one is capable of putting in the IT infrastructure.18 INFORMATION MANAGEMENT & COMPUTER SECURITY 3. (3) Hardware policy. If one desires to develop EDI applications in particular. In financial transactions extremely large amounts of money are sometimes involved. the same meaning should apply to functiontests. the database system. or not. and these are decisive in the IT policy. clients. and the use of. while the system checks the user’s position. When information becomes more and more valuable. should be able to see which services and products of the bank are used by the client. on the contrary. All this may seem simple. This can also go in the direction of graphic presentations of data. Therefore it is important to select the components and services in such a way that there is sufficient material for a fast and effective creation of new company facilities. Products of different suppliers. not only to support clients with their problems. The system specialists could. It is not unlikely that the account manager will wish to see legal documents present as security for loans (image/document processing). among other things: (1) User-friendliness. because of the desired functionality and the choices made in the IT architecture. The technology should be approached from the strategic perspective of the company and not just the other way around. this means that the IT infrastructure should be “open” in its design. just get to work and start to implement all the technical supplies. the use of a mouse and the use of pull-up and down menus for the entering of data coding. should not be too high or even insurmountable. it becomes necessary to describe the requirements for the logical and concrete access to. If different computer suppliers are employed. The linking of documents and data asks for specific demands on the enquiry system. applications. Factors in the IT infrastructure In developing the IT infrastructure. The IT infrastructure should not only support the most obvious business processes.

less ambitious scenarios are often chosen in practice. the realization of the desired situation is ambitious. the action plan should be articulate about the management procedures to be developed. In practice. to transform the architecture into an actual implementation can. It is much more a matter of the strategic advantage which an organization gains by an effective use of a coherent whole of applications (business capabilities). not every organization has the same objective for the use of IT (see Figure 6). The total end result of the IT infrastructure also indicates that the IT architecture is judged in terms of: q technological feasibility. deviates in a number of important items from the traditional information planning methods. From architecture and infrastructure to implementation The architecture and infrastructure described the desired use of information technology in the desired organization (idealized design[16]). An organization should decide. q descriptions of the local and central database management systems to be used: relational. Because of this. in the short and in the long term. Even if the level of ambition is low. a functional design. as has been defined in the architecture and the infrastructure. The action plan. it should also indicate the necessary maintenance and conversion of the existing application. If the business strategy has appeared to be sufficiently ambitious. q controllability. as well as the approach.g. the essential organizational and technological choices have been made which are necessary for designing an organizational and IT implementation plan. Traditional cost benefit analyses per system are often not applicable. desk-top publishing. voice mail systems. cost of acquisition and development and the operating costs. Conclusion The architecture design method described in this article and the way in which this is realized. taking into account the envisaged end result. distributed. to what extent and at which pace the desired situation should be realized. Implementation In the business architecture.g. however. They can do without a formal information planning method. system development projects can often make a goal-oriented start with. e.ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 19 To sum up. EDI message processors. the importance of establishing the IT infrastructure is that the IT architecture is defined. among which are also client server concepts. These interim platforms take care of a limited part of the desired strategy within a foreseeable period of time (one to two years on average). It would therefore be wise to define so-called “interim platforms”. a description has been made for each of the systems to be developed. the decision making can remain focused on the strategic advantages which are to be gained. In this way. in a concrete sense. The action plan for the realization of an interim platform will not only have to describe the functionality of new applications. The construction and implementation of the different organization changes and applications might. Almost every organization has to deal with a number of obstacles which complicate the realization. where attention is paid to what might be feasible. spreadsheets. never be a five-year plan which can replace all applications and existing operating procedures. on its own. q enquiry languages to be used: CASE tools. take many years. e. which products and services exclude each other (possibly in the short term). The periodic drawing up of priorities and action plans per system is often sufficient. because within such a period of time. direct dialling from the workstation. q complexity. in order to prepare the users adequately. many information plans will be encountered. the necessary temporary infrastructure. e. data directory/dictionary. the financial consequences and the advantages. which have failed because of such long-term implementation procedures. for example. In many cases. Furthermore. objectoriented languages. because in the realization more than one system is chosen. comparable to the “definition study” in a system development project. alterations always occur inside and outside the organization. q descriptions of telematics products and services. Organizations which are at the beginning of the use of IT often focus on efficiency. image systems. the required skills of employees (in quality and quantity). As has been indicated. These scenarios should obviously be deduced from the business strategy. knowledge and experience of the employees. q descriptions of the program packets to be used: word processing. in our opinion. In . expert systems. executive applications. the IT architecture and the IT infrastructure. electronic mail. whereas the required investments can also be considered in that light. in the shape of: q descriptions of the necessary computer systems: from mainframes to personal computers and workstations.g. In the IT architecture. Alternative implementation scenarios should be presented to the senior management. videotex systems. q economic feasibility. the architecture and the infrastructure have the great advantage that all efforts and investments in the field of IT and organization can be steered in that direction. local/long-distance networks.

process structure and responsibility.T. Walton.. “Produktiviteit van de systeemontwikkeing”. Klein Klouwenberg. Harvard Business Review. Laagland.. and Millar.H. 5. “IT Assessment. 1981. R. Business strategy Business support Data processing era Technology Efficiency Method Subject Stability Focus By Hardware planning Task automation Organization structure Cost reduction DP personnel Effectiveness I/S planning Solving problems Business functions Control Functional management Strategy Architecture Realizing strategy Strategy Benefits Top management Time this organization.E. The Netherlands. A. Stage by Stage. 31 No. Koot.A.. 15. 9. and Schotgerrits. “De veranderende betekenis van de IT organisatie en de informatiedirecteur (CIO)”. Vol. van Schaik is a Consultant at Edgar. 16. In this case. “Ondememingsvisie als managementinstrument”.T.A. Hopstaken.D. 1987. Ze druk. Dunn Management Consultants in London. Kluwer. A. Norton & Co. 1989. V. Vol. R. 7. A. MA. Leiden/Antwerpen. W. UK.20 INFORMATION MANAGEMENT & COMPUTER SECURITY 3.P. .5 Figure 6.M. Leiden. not only the use of IT changes. and van der Zee. In a later stage.. “Up and running: integrating IT and the organization”. 1987. A. information supply without bottlenecks is a necessary. Vol. and van den Hooven. 7 No. and Kranendonk. 4. Chichester and New York.. but not a sufficient condition. John Wiley & Sons. 3. van het automatiseeren. are compelled to function in a more clientoriented way. 1988. p.V. Utrecht. Nolan. Maaikel Klein Klouwenberg and William J. Deventer. No.J. Vol. H. 1987.. 11. D. R. Differences in the use of IT I/T era Experience shows that over time.J. in the information supply and to improve effectiveness. “How information gives comptetitive advantages”. IT is often placed in the existing procedure.D.E. Kranendonk. For this purpose. 3. “Transformatie in organisaties door IT”.. Deventer. Englewood Cliffs.. Leiden/Antwerpen. Harvard Business School Press. B. the right set of applications and the right infrastructure. 1989.. in Handboek Automatisering van der Informatieverzorging. van der Zee. M. 13.L. Porter. 12... 11. Boston. Informatie. 1969.. 1988. Systeemontwerp”. R. 7. Informatie.E. A and De voorkant. J. automation is applied to solve bottlenecks.J.A. W.B. 1989. 1989. Samsom.. 1988. Kluwer. It is even more important to choose the right strategy. Stage by Stage. Most of the wellknown information planning methods are extremely suitable for this type of information planning. Ackoff. Planning and Control”. and in association with these. These organizations discover that the functional organization structure involves obstacles and that information planning should not merely involve the establishing of priorities for individual system development projects. F. Stenfert Kroese B. P. Vol. 12.. JulyAugust 1985.D. NJ. it is necessary to chart the company processes and the information needs. 8. 7 No. P. 1989. Gegsvensmodellen.L. Stenfert Kroese BV. Norton. 3. Informatieplanning: puzzelen met beleid en plan.M. 10. 2. 6. “Bracing the organization for the third wave society”.E. Eeen kwalitatieve en kwantitatieve evaluatie van de informatieverzorging vanuit een strategisch perspectief”.E.T. Koot are both managers at KPMG Nolan. J.B. The (often functionally designed) process structure of the organization usually remains intact.. Prentice-Hall. Stenfert Kroese BV. because of their complexity and the complexity and competitiveness of the market. Kottler. Koot. “M. 1. but also the appropriate information planning method. H. Morssink. 31 No. J. and van der Zee. “Marketing Management: Analysis. Mosmans..M. 14. Toffler. 1990 (handelseditie proefschrift).P.T.M. in Informatie en Informatiebelied. J. A. Hopstaken. Harvard Holland Review. P. Creating the Corporate Future. 20. “Strategic vectors: translating vision into action”. Alphons M. References 1.J.A. 1988.A. B. Increasingly more organizations. and Kranendonk. Informatieplanning in tweevoud. without great changes in assignments or in the organization structure. in Praktijkboek Financieel Management.