Sustainable Engineering Systems

and Environment
MANU 1381

Strategic Planning and Management

In IT

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Acknowledgement of country
Womin djeka (Welcome)
We would like to acknowledge Wurundjeri people of the
Kulin Nations as the Traditional Owners of the land on
which the University stands. We respectfully recognise
Elders past, present and future.

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Teaching Schedule
Week Topic
1 Course Introduction, Defining and Understanding Systems
2 Systems Thinking and Approaches
3 Hard Systems Approaches
4 Soft Systems Approaches / Keynote speech  
5 Information Technology
6 Computer Networking Fundamentals
29 August ‐ 2 September Mid‐semester break
7 Revision
8 IT Strategic Planning and Management
9 Artificial Intelligence
10 Cloud Computing
11 Sustainable Production
12 Pathways to Sustainability

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Learning Outcomes
• To understand the potential for using strategic
planning & management techniques for the
effective application of IT systems.
• To understand the integrative nature of strategic
management based methods as applied to the
development of IT systems.
• To identify appropriate strategic management
approaches to the selection & development of IT &
CT (Communication Technology) based systems,
services & products.
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Information and Communication

Technologies

https://techterms.com/definition/ict
https://www.springer.com/gb/book/9789811516153?gclid=EAIaIQobChMIhrbK9b7I6AIVkxVoCh2H 5
Qw__EAEYASABEgK7jPD_BwE
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Business Process Management BPM

• Globalization is introducing more competition to
businesses, and they have to
• Gain competitive advantages, quicker than other
• BPM initiatives should ensure those advantages
• Investment in resources:
– People
– Optimised system’s structure and functionality, i.e.
subsystems and their relationships
– New technologies in business processes and in ICT
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Business Strategy
• A strategy is the tool by which an organisation can
fulfil its purpose and meet its objectives
• Strategy is concerned with the longer term
• Strategies are usually generated at several levels
within a large corporation

Strategy: An integrated set of actions aimed at increasing the

well-being and strength of an organisation relative to its
competitors. - Ward & Griffiths (1996)
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Business Strategy
Create and maintain competitive advantage for the
business
• Apple introduction of tablet
• Microsoft, Amazon, National Instruments,
MathWorks, ABB, Siemens
• Qantas –created to compete
Measure of success: Delivered value to shareholders
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Business Strategy Example

• Wrist watch market dominated by Swiss in the
past prior to 1970s
• Swiss had >50% of the market
• With 98,000 people employed

• 1970 Quartz technology and digital watch

introduced
• For Swiss industry mindset was mechanical
watch
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Business Strategy Example

• The new technology was embraced by Japanese
Seiko,…, Hong Kong

My watch
From 1980
Bought in USA

Following bad business strategy and mental model

Swiss watch industry in 1988 had just 28,000
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RMIT University Strategy

• RMIT is the first Australian university to adopt a
truly international strategy.
• Face to Face:
• Australia, Vietnam, Hong Kong, Singapore, Spain, Germany
• Online // Worldwide
• We offer global education and research programs that
aim to transform the lives of individuals, cities and
nations.
https://www.rmit.edu.au/about/our-strategy
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RMIT Corporate Structure

Supporting University Strategy
https://www.rmit.edu.au/about/governance-and-management/organisation-structure
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Basic Terminology 1
• Mission: Overriding purpose
• Vision: Desired future state
• Goals: General aim, or determination
• Objectives: Quantification of goals
• Core competencies: Resources, processes, skills
that enable the use of competitive advantage
(what is hard to copy, better than anyone else)
• Strategy: Long term direction
• Control: Monitoring and modifying strategy
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RMIT Mission & Vision

• RMIT exists to create transformative
experiences for students, getting them ready
for life and work, and to help shape the world
with research, innovation, teaching and
engagement.
• A global university of technology, design and
enterprise.
https://www.rmit.edu.au/about/our-strategy/mission-and-vision

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Basic Terminology 2
https://www.rmit.edu.au/about/our-strategy/mission-and-vision

https://www.rmit.edu.au/about/our-strategy

Objectives
Key Terms

Policy
Aims
http://www1.rmit.edu.au/policies
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Aspects of Strategy
• Decision Making
• Integration & Focus
• Implementation
• Long - term timeframe
• Creating value
• Competition
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https://www.topuniversities.com/universities/rmit-university

RMIT vs Competition

08.09.2020

08.09.2021

09.09.2022
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Strategic Decision Making

• Strategic Plan: Identifies specific goal over
a specific period of time for specific
actions.

• Strategic Attitude: Prepares for any action

by formulation and training. i.e. response
mechanisms to external environment
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Stages of Strategic Planning

• Financial Planning
– Planning at the level of the annual budget
• Forecast Based Planning
– Setting time frames
• Externally Oriented Planning
– Setting Objectives to develop competitive advantage
• Strategic Management
– A framework for developing innovation & creativity to
develop and sustain market leadership
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Levels of Strategic Decisions

• Corporate
• Business
• Functional
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Strategic Decisions Steps

Planning Implementation
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Be Realistic
Decide to go for 2-3 big goals
Make SMART goals
• Specific – Increase customer satisfaction by due
date
• Measurable - increase of business revenue
• Achievable – Aim for modest 60-65 % increase
• Relevant - make sense within company
• Time bounds
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Levels within a Corporation

Corporate E.g. RMIT, MIT, CISCO, BHP, GM

E.g. Schools, (BHP) Steel,

Business Petroleum, Minerals

Function E.g. Marketing, Finance

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Corporate Structure
Corporation
Corporate
Region/Division Region/Division Region/Division
A B C

Business
Strategic Business Unit Strategic Business Unit
A1 A2

Product A11 Product A12 Product A13 Product A21 Product A22
Function
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1 Corporate Strategy (CS)

• The key strategic decisions in a multi-business corporation
relate to choosing the businesses in which to invest and
deciding relative priorities for the use of funds and
resources across these businesses.
• CS is the way a company create value through
configuration and coordination of multi market activities
• Assessment is generally in terms of three key criteria:
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2 Business Unit Strategy

• At Strategic Business Unit level management is
concerned with deciding what products or services to
sell into which markets.
• Automotive industry examples
• Keep your market and get new one
• There are also concerns with improving the
efficiency of business operations
• “How to compete successfully in a market ?”
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3 Function - Operational Strategy

Operation of
• resources,
• processes
• people
to deliver business and strategic level goals.
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Strategy and Operation

Strategic Management Operational Management
Ambiguous Routine
Complex Simple
Uncertain Continuous
Risk Taking Risk Adverse
Organisational Wide Specific
Common focus Particular tasks
Predictive Responsive
Fundamental Established practice
Long term implications Short term implications
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Generic Business Strategies

• Become a low cost producer
• Differentiate your products
• Develop new products
– Transform product lines
• Change organisational scope
– Grow in size to gain economies of scale
– Reduce in size to cut costs
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Generic Strategies
Competitive Advantage
Lower Cost Differentiation

Broad Cost Leadership Differentiation

Target Volkswagen Golf Samsung
Competitive
Scope Toyota Corolla
Narrow Cost Focus Differentiation Focus
Target
TESLA EV
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“Boston” Portfolio Matrix

Star Question
High
Market Mark

Growth
Cash Cow Dog
Rate Low

High Low

Market Share
Dominance
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“Boston” Portfolio Matrix

• Stars are high growth products competing in
markets where they are strong compared with the
competition. Often Stars need heavy investment to
sustain growth.
• Cash cows are low-growth products with a high
market share. These are mature, successful products
with relatively little need for investment.
• Question marks have potential, but may need
substantial investment to grow market share at the
expense of larger competitors.
• Dog refers to products that have a low market share in
unattractive, low-growth markets. Dogs may generate
enough cash to break-even, but they are rarely, if ever,
worth investing in. Dogs are usually sold or closed.
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“Boston” Portfolio Matrix

• Activity
• 10 minutes
• Present an example of star
• Present an example of cash cow
• Present an example of question mark
• Present an example of dog
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Product Lifecycle
If the competition is
Taking more customers
D>S D<=S D<S
It again reflects less
Demand, i.e. D<S
So product is in Decline
Growth Rate

State for that company

Time

Introduction Growth Maturity Decline

Demand vs. Supply

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Two Relevant Models

• Competitive Forces Model
• Value Chain Model
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Competitive Forces
Porter’s Five Forces
Potential New Entrants

Suppliers
Buyers
Bargaining
Bargaining
Power
Power

Michael Porter’s
Threat of Substitute Products Framework
or Services

https://www.mindtools.com/pages/article/newTMC_08.htm
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Competition
The nature and intensity of competition within
an industry depends on many factors:
• Industry structure
• Number of companies
• Barriers to entry
• Technology
• Capital requirements
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Porter’s five forces model

3
2

Threat of
1. Volume based Barrier to
Substitutes
or price based Entry
1
Competition
2. Potential new entrants
(threat) The Competitor
3. Treat of substitutes Firm rivalry
(alternative)
4 5
Power of Power
Suppliers Buyers

Bargaining Power
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Porter’s five forces Activity

• Select an organisation/industry which you

are familiar with and use Porter’s five
forces model to analyse it
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Value Chain Model

Procurement is the process of finding
and agreeing to terms, and acquiring
goods, services, or works from an
external source, often via a tendering
or competitive bidding process.

Inbound logistics refers to the

transport, storage and delivery
of goods coming into a business.

Outbound logistics refers to the

same for goods going
out of a business.

Michael Porter's Value Chain 40

 IS/IT Planning
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Ensure that the best outcome can be delivered from the IS/IT:
• Aligning IS demand to business strategy
• Improving the competitiveness & productivity

Business Planning

IS Strategy

What is How it can be

required delivered

IT Strategy
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The Need for IS/IT Strategy

• Business goals may not have been achieved
• There is no framework for consistent decisions
– IT/IS resource levels
– Evaluating investments
– Determining priorities
• Systems/technology not integrated
or
• Selection of the wrong technology
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IS/IT Strategic Planning

• There are many approaches
• No single “best” method
• The approach should match the culture and
resources of the organisation
• The process is important to achieve desired
outcomes
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Barriers to IS/IT Planning

• Poor understanding of IS/IT by senior
management
• Gap between promise and what is delivered
• Difficulty in measuring the benefits
• Short-term management focus
• Inadequate business plans
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Typical Selection Criteria

• Supplier Capability
– Business & financial strength
– Capacity to deliver
– Track record
• Financial/Contractual
– Financial benefits (benefit/cost/risk)
– Contractual
• Technical Service Assessment
– Quality of solution
– Understanding
– Flexibility
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Evaluation
Evaluation involves determining the best balance
between benefits, cost and risk.
• Cost/Benefit analysis
• Effectiveness evaluation: How useful something is
• Efficiency evaluation: How well something is done
• Cost effectiveness / Value for money
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Common Measures
• Net Present Value (NPV)
• Internal Rate of Return (IRR)
– The discount rate at which NPV = 0
• Benefit Cost Ratio (BCR) BCR = PV of Benefit
PV of Costs
BCR > 1 means good investment
PV – Present Value

• Break Even is when profit (benefit) = costs

• Return of investment (ROI), 10% annual average
is considered good https://www.investopedia.com/terms/i/irr.asp
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Net Present Value

• Analyse Loss and Revenue Model in time / cost
today and in the future.
– What I will get later if I invest (lose) today
– $3M in 3 years is less $3M now
– Need to know discount rate % of the money that must
be returned, usually 10-12% more - hurdle rate (HR)
HR>12% is considered OK,
All recalculated to today (Present) / Net Present Value
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Internal Rate of Return (IRR)

• IRR is the annual rate of growth that an investment
should generate.
• It is discount rate at which NPV = 0
• As outflow, the initial investment is always negative
• Subsequent cash flows are positive or negative,
depending on the project outcomes, i.e. possible
further needs for capital injections
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IRR Formula
்
௧
௧ ଴
௧ୀଵ
Where: Ct = Net cash inflow during the period t
C0 = Costs of total initial investment
IRR = Internal Rate of Return
t = Time period number
T = Total number of periods
IRR = The discount rate at which NPV = 0
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Competitive Tendering
• Prepare RFP/RFT
– Request For Proposal (RFP)
– Request For Tender (RFT)
• Obtain responses
• Evaluate responses
• Select preferred organisation
• Negotiate
• Finalise contracts
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Preparing Tender Documents

Specification
•Functions
•Services
•Equipment

Contract Prepare Tender

conditions Documents

Tendering
conditions
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Negotiation Steps
• Identify the parties & issues
• Understand your interests
• Understand their interests
• Share your interests
• “Brainstorm” options
• Reach a negotiated agreement
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Activity

• Select an organisation and discuss its

strategic planning approach.
• What are its values, mission, core
competences, and objectives ?
• Can you separate its corporate, business
and operational strategies ?
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Thank you,
Questions

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