Today’s Turbulent Business Environment

•Greater uncertainty •Increased commoditization •Nontraditional entrants with competitive offerings Shorter half-life of information (moving strategic enablers to commodity) •Tighter spending •New technologies •New products & services •Changing customer demands and higher levels of personalized preferences •Multiple pricing, service, and utility models •Government regulations, legal compliance, and safety standards •Increased transparency of information due to the blurring between customers, competitors, and suppliers

IS THIS REALLY NEW???

• Business plans do not include IT plans • IT plans do not include business plans • IT plans focus on technology rather than directly addressing business strategies • Business managers do not see IT as supporting their strategies • IT projects do not support business strategies. IT spending on infrastructure and application maintenance does not support strategy • Company budgets do not reflect the results of IT planning • IT plans are shelf-ware that does not guide management decisions, projects, or budgets • IT governance practices are ineffective IS THIS REALLY NEW???

IT Problems:

STRATEGY FORMULATION
VISION (WHERE)
(BHAGS)
S AN L

ES V TI C JE STRATEGY (HOW) OB

W

IT

H

P

•MOTIVATION •GOVERNANCE •RESOURCES •PROJECT IMPLEMENTATION •MEASUREMENTS •REWARDS

ANALYSIS

MISSION (WHAT)

t

LUFTMAN

STRATEGY ANSWERS HOW
do we attain our aspirations to decide whether to continue, start, or stop to differentiate core versus context

Strategy That Counts
Breaks new ground Matters Perpetually evolves Provides sustainable advantage Unique
Versus a plan to convert specific resources you have (or can get) into specific resources you really want or need.

STRATEGY

As-Is

Could-Be

Should-Be

How-To

STRATEGY
VISIONING
•Vision / Mission gaps •Competitive landscape •Top Down possibilities

BUSINESS CHOICES
•Global Brand •Constraints •Priorities

As-Is
REVIEW & LEARN

Could-Be
ACTION PLANS

Should-Be
•Tactics •Governance •Resources •Research •Teaching

Do-Do

IMPLEMENTATION/CHANGE

How-To

Four Barriers to Strategy Implementation
Vision Barrier
Only 5% of the workforce understands the strategy

People Barrier
Only 25% of managers have incentives linked to strategy

Management Barrier 9 of 10 companies fail to execute strategy
85% of executive teams spend less than one hour/ month discussing strategy

60% of organization don’t link budgets to strategy

Resource Barrier
Source: Five key principles of corporate performance management by Bob Paladino

SWOT ANALYSIS FOR STRENGTHS WEAKNESSES

OPPORTUNITIES

THREATS

THESE SHOULD BE THE SAME AS YOUR AS-IS COMPETENCIES

THESE ARE YOUR CORE INCOMPETENCIES

(Be specific)

Sample IT SWOT Analysis
Strengths:
• • • • • • Major transaction control systems are relatively new, functionality adequate well documented, maintainable, and operationally efficient. The IS department has demonstrated competence and effectiveness in adding new technologies (e.g., client/server systems) The IS Department has demonstrated competence and effectiveness in applications development in group decision support systems Our outsourcing partner seems to manage a reliable, cost effective data center. There is a substantial in-house electronic mail operation, frequented by most managers in the company. There is substantial user manager computing expertise in both line and staff organizations.

Weaknesses:
• • • • • A single point of IS contact for end user operational problem diagnosis and resolution has not been established There are limited data center performance measurement systems. There has been only limited transaction based systems development productivity. There is a high degree of technology specialization (narrowness) among IS professional staff and a limited degree of business orientation. There is a limited departmental use of information technology beyond simple decision support and participation in common transaction processing systems

Opportunities:
• • • • Expand successful relationship with the Marketing organization to R&D. Use the recent BPR to identify integration priorities. Establish an executive steering committee with all divisions represented SA Maturity assessment

Threats:
• • • The IS department’s effectiveness is threatened by pockets of user negativism, especially among top management. End-users are developing a high degree of technical competence, which they may employ in a nonintegrated fashion. The accelerating pace of technological change and proliferation of information technologies pose risks of control loss, obsolescence, and difficulty in maintaining IS professional staff competence. The extensive internal communication networks and user accessibility to external databases pose security risks to our data. The IS department is still not an integral part of company’s business planning process.

• •

Sources of Strengths and Weaknesses
Financial issues
Cash flow and cash management

People issues
Quality (meaning the ability, experience and attitude) of managers and employees

Operational issues
Current product portfolio

Product and Market issues
Warehousing, transport and logistical factors

Financial structure

Concentration of skills and expertise (to what extent is the fate of the business in the hands of a talented few?) Levels of motivation

Research and technical expertise, and the ability to develop popular new products

Distribution channels, including discount structures and dealership or franchise operations

Financial reporting systems Ability to raise capital Credit-control activities Risk-management systems

Market research systems Information management systems Supply chains

Pricing Brand perception Customer service

Rates of pay Ability to attract and retain the best people

Scope and effectiveness of training methods Flexibility of people and their ability to adapt to changing situations Organizational culture: does it promote efficiency or frustrate it? Organizational structure: is it still relevant and effective? Levels of delegation and empowerment, and productivity in terns of quality and quantity of work competed The degree of initiative that is both allowed and taken Levels of pressure (a strength) and stress (a weakness) Effectiveness of communication channels

Production lead times and efficiency New processes that reduce costs and increase efficiency Stock control

Overall market potential for the product Experience of the marketing mix (knowing which sales activities are most effective)

Sources of Strengths and Weaknesses 1 of 2
Financial issues Cash flow and cash management People issues Quality (meaning the ability, experience and attitude) of managers and employees Concentration of skills and expertise (to what extent is the fate of the business in the hands of a talented few?) Levels of motivation Operational issues Current product portfolio Product and market issues Warehousing, transport and logistical factors Research and technical expertise, and the ability to develop popular new products Distribution channels, including discount structures and dealership or franchise operations

Financial structure

Financial reporting systems Ability to raise capital

Market research systems Information management systems

Pricing

Rates of pay

Bran perception

Sources of Strengths and Weaknesses 2 of 2
Credit-control activities Riskmanagement systems Ability to attract and retain the best people Scope and effectiveness of training methods Flexibility of people and their ability to adapt to changing situations Organizational culture: does it promote efficiency or frustrate it? Organizational structure: is it still relevant and effective? Levels of delegation and empowerment, and productivity in terms of quality and quantity of work competed The degree of initiative that is both allowed and taken Levels of pressure (a strength) and stress (a weakness) Effectiveness of communication channels Supply chains Customer service Overall market potential for the product Experience of the marketing mix (knowing which sales activities are most effective) Production lead times and efficiency New processes that reduce costs and increase efficiency Stock control

Sources of Opportunities and Threats (MIS760)
Opportunities (Ansoff)
New markets (including export market) New technologies New products and product enhancements Mergers, acquisitions and divestments New investment Factors affecting competitors’ fortunes Commercial agreements and strategic partnerships Political, economic, regulatory and trade developments

Threats (Porters Barriers to Entry)
Industrial action Political and regulatory developments Economic issues Trade factors Mergers and other developments among competitors New market entrants Competitors’ pricing actions Competitors’ market innovations Environmental factors Natural disasters Crises, notably including health and safety liability problem Key staff attracted away from the business Security issues, including industrial espionage and the security of IT systems Supply chain problems Distribution and delivery problems Bad debts (resulting from the misfortunes of others) Demographic factors and social changes affecting customers’ tastes or habits

Stakeholders

External Stakeholders •Competitors •Creditors •Customers/Clients •Local Communities •General public •Governments •Regulators •Suppliers/Vendors •Unions
Inducements Contributions

Internal Stakeholders
Contributions •Board Members

•Employees The Company •“End User” Partners •IT •Managers •Senior Managers
Inducements •Stockholders

Key Stakeholders (with regards to major problems & opportunities)
Stakeholder (who) Role Sponsor Champion Responsibilities Current State of Affairs Desired State of Affairs

Business Partners IT Staff Competitors

Sponsors Decision-Making Spectrum
More Leader Control
Unilateral (One-Sided) Consult-andDecide Build Consensus Unanimous

Less Leader Control

Consider the following questions:
•Does the BU have the leadership focus & capability to make this effort happen? •Are stakeholders incentives in harmony with this new offerings criteria for success? •Are the stakeholders capable of the change required?

• Problem/Opportunity 1
– Alternative a . . – Alternative n . .

Alternatives

• Problem/Opportunity n
– Alternative a . . – Alternative n . .

Recommendations
Prioritized Expected Recommendations Benefits & Key Subactions (Quantitative/ (Description) Qualitative) Why Better Than Alternatives Responsibility Risks

TINA – There Is No Alternative – Here’s what we
know about the future. Now let’s go meet it.

Three R’s: Regulations, Restraint, and Rules

Next Steps
Step Step Description and objectives Assigned Responsibility Target Completion Date Issues/Comments and Dependencies

1 2

Market recommendations

3 4 5

Secure: Sponsor (who?) Champion (who?) Team (who?) Proof of concept Prototype Establish a beachhead Phased deployment

Recommendations and Next Steps should answer the following:
• How is this relevant to what I do? • What, specifically, should I do? specifically • How will I be measured and what are the consequences? • What tools and support are available? • WIIFM-What’s in it for me? For us? WIIFM

• Next steps are the specific things that must be immediately done to carry out your recommendations Give stakeholders what they need to act, QUICKLY!!!

EXAMPLE OF REQUIRED DETAIL
PROBLEMS/OPPORTUNITIES: OLD KITCHEN & BATHROOM ALTERNATIVES: DIFFERENT DESIGNERS/CONTRACTORS
- KITCHEN: CABINETS (MODERN, COLONIAL, DARK/LIGHT…) VENDORS FOR OVEN, REFRIGERATOR, DISHWASHER - BATHROOM: STYLE (MODERN/TRADITIONAL, LIGHTS, COLORS)

RECOMMENDATIONS: XYZ CONTRACTOR
KITCHEN: STYLE (MODERN, MAPLE), KITCHEN AID APPLIANCES BATHROOM: STYLE (TRADITIONAL, WHITE; TOTO) THESE ARE THE BEST CHOICES BECAUSE…

NEXT STEPS: OBTAIN SPOUSE APPROVAL (today)

-CONTRACT WITH XYZ (Tuesday) -REVIEW/APPROVE XYZ PLAN; GIVE $10K DEPOSIT (2 weeks) -ORDER APPLIANCES AND FIXTURES (Saturday)

2007 Top “10” IT Management Concerns
1. Attracting, Developing, and Retaining IT Professionals 2. IT and Business alignment 3.Build business skills in IT 4. Reduce the cost of doing business 5. Improve IT Quality 6. Security and privacy 7. Manage Change 8.IT Strategic Planning 9. Making better use of Information 10. Evolving CIO leadership role

How is IT viewed in Most Companies? • Necessary Evil • Does not meet commitments • Speaks another language • Large expense; questionable value • Strategic Enabler • Driver of Shareholder Value

Corporate executives were asked:

Which subjects are included in your formal business strategy?
Product strategy E-business strategy Sales/marketing Customer service Competitive position IT’s Role Manufacturing 8% 38% 35% 43% 43% 51% 49%

SOURCE: CUTTER CONSORTIUM, ARLINGTON, MASS, FEBRUARY 2002

What is the Manager of key data, communications, hardware, and software role of IT at your Vital utility, like electricity company ?
Tool for improving businessprocess efficiency Resource for creating new business processes Instrument for cutting costs within the company Core part of decision-making team that sets overall strategy Responsible primarily for technology maintenance Cost Center and drain on corporate resources
Note: Multiple responses allowed

Profit Center

10
Ref: Optimize Research

20

30

40

50

60

70

% of respondents

Where is the Value From IT Investments?

External IT Investments Business Transformation Internal Strategic Benefits

Every business is an information business. Information is the glue that holds value chains & organizations together.

THE GENERIC VALUE CHAIN
FIRM INFRASTRUCTURE
M
SUPPORT ACTIVITIES

HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT

INBOUND OUTBOUND MARKETING OPERATIONS LOGISTICS LOGISTICS & SALES

SERVICE

G AR IN

MA RG I N

PRIMARY ACTIVITIES
Michael Porter, HBR, 1985

THE IT VALUE CHAIN
Support Activities
Architecture, Portfolio, and Service Delivery IT Finance Sourcing, Staff & Vendors Risk, Security, & Compliance Facilities & Operations

Margin

IT Enablement

Primary Activities

Demand/ Relationship Management

Solutions Development

Service Support

STRATEGIC ALIGNMENT

Strategic Alignment Model
Functional fit
Business Strategy Information Technology Strategy Marketing Strategy
Manufacturing and Engineering Strategy

Strategic fit

Complex cross alignments

Business Infrastructure

Technology Infrastructure

Marketing Infrastructure

Manufacturing & Engineering Infrastructure

The Strategic Alignment Model
BUSINESS
Business Strategy
Business Scope

IT
IT Strategy Technology Scope

Distinctive competencies

Business Governance

Systemic competencies

IT Governance

Strategic Fit
Administrative Structure IT Architecture

Processes

Skills

Processes

Skills

Organizational Infrastructure

IT Infrastructure

Functional Integration

Sources of Competence
Business unit as the source of knowledge Stage 1: Pre-1990 Corporation as a portfolio of competencies Stage 2: 1990 Onward Supplier base and partners as a source of competence Stage 3: 1995 Onward Consumers and consumer communities as a source of competence Stage 4: 2000 Onward

We need to engage IT as an enabler/driver in all of these!!! That is the focus of our course.
REF: The Future of Competition – Co-Creating Unique Value with Customers, by C.K. Prahalad, Venkat Ramaswamy

EXAMPLE: TEN IT COMPETENCIES
1.Global Networking 2.Project and Process Management
Networking expertise of the highest order. Design, build and manage global WANs. This need is already strong and will not wane in the foreseeable future. Enterprises will look for ways to measure the expertise of project and process managers, such as through certification programs. The end of Y2K work will unleash a herd of experienced managers, but there will still be a shortfall. Competency in this area has developed due to the widespread use of outsourcing and other external sources. The coordination of training and development of IS staff. It will be a bigger focus as companies struggle to migrate legacy workers to new technologies and align business goals. Encompasses date and networking security expertise for Web-enabled existing applications. A hybrid of marketing and technical knowledge Ability to connect legacy databases to the Internet. Knowledge of Web languages (HTML,JAVA) and SQL. Defines the flow of information through the company or on a website. This competency is not well defined in many companies today. It may be part of the knowledge officer or Webmaster. Delivery of high-value applications including ecommerce. IS – professional who are adept at building customerservice systems (particularly Web-based)

3.Vendor / Contract negotiations and management 4.IS Human Capital Management

5.Cross-platform security 6.E-Commerce 7.Web and Database Integration 8.Information and Knowledge Architecture 9.Data warehousing/database design and administration. 10.Customer service / CRM
Ref :Gartner Group

Dynamic Planning Digital Innovation

CORE IT COMPETENCIES
Metrics Procurement Relationship Management Performance Report Value Management Enterprise Arch IT Products Catalog Points of Interaction Network Servers, Storage, Middleware & DBMS Business Logic Application Development Business Process & Integration Program Governance & Risk Mgmt Portfolio Management Asset Management

Techtonics

Alignment

Biz& IT Strategy

Architecture

Personal Value Cards

Packaging & Selling

Biz Imperatives

Compliance Policy

Plan

Market

Infrastructure Development User Interface

Executive

Information Services
Maintain Integrate
Service Center Manage Human Capital

Process

Technology Business Continuance Security

Security

Operations Data Center Infrastructure Application

Fulfillment Enterprise Program Mgmt Office

Program Mgmt

Help Desk

Scope & Scale, Deliver & Manage

Source: META Group

IT Management Competencies

(1 of 2)

Business Deployment •Examination of the potential business value of new, emerging IT •Utilization of multidisciplinary teams throughout the organization •Effective working relationships among line managers and IT staff •Technology transfer, where appropriate, of successful IT applications, platforms, and services •Adequacy of IT-related knowledge of line managers throughout the organization. •Visualizing the value of IT investments throughout the organization •Appropriateness of IT policies •Appropriateness of IT sourcing decisions •Effectiveness of IT measurement systems External Networks •Existence of electronic links with the organization’s customers •Existence of electronic links with the organization’s suppliers •Collaborative alliances with external partners (vendors, systems integrators, competitors) to develop IT-based products and processes. Line Technology Leadership •Line managers’ ownership of IT projects within their domains of business responsibility •Propensity of employees throughout the organization to serve as “project champions”

Ref:ZMUD

IT Management Competencies

(2 of 2)

Process Adaptiveness •Propensity of employees throughout the organization to learn about and subsequently explore the functionality of installed IT tools and applications •Restructuring of business processes, where appropriate, throughout the organization •Visualizing organizational activities throughout the organization IT Planning •Integration of business strategic planning and IT strategic planning •Clarity of vision regarding how IT contributes to business value •Effectiveness of IT planning throughout the organization •Effectiveness of project management practices IT Infrastructure •Restructuring of IT work processes, where appropriate •Appropriateness of data architecture •Appropriateness of network architecture •Knowledge of and adequacy of the organization’s IT skill base •Effectiveness of software development practices Data Center Utility •Appropriateness of processor architecture •Adequacy of quality assurance and security controls
Ref:ZMUD

The only true IT Core Competency:
AT&T The 26-terabyte data warehouse contains two years of telephone records and is used by 3,000 employees for functions such as marketing analysis and pricing calculations LAND REGISTRY The 20-terrabyte transactional database contains land-ownership records for all of England and Wales, including documents that date back to the 1700s. EXPERIAN The data warehouse is used for direct marketing to consumers and is one of the busiest in the world, handling nearly 900 simultaneous queries during peak times. BOEING The transactional database contains information on every aircraft assembled and is one of the biggest and fastest in the world, processing nearly 300 transactions per second. DEPARTMENT OF DEFENSE When completed in two years, with an initial projected capacity of 5 petabytes, the data warehouse and repository will hold medical records for 9 million military personnel. WHAT ARE COMPANIES DOING WITH THE

INFO THEY HAVE ABOUT THEIR CUSTOMERS?

Strategy vs Organization Matrix
ORGANIZATION
de nt Pr es i /C on Le tr ga ol lC ou Ex M ecu nse an t l uf ive Pu act VP u rc ha ring si Pr ng od De ve uct lo pm M an en uf t ac tu rin W g ar eh ou Ex si ng Sa ecu le t i v s e VP Sa le s W es t

Pl a

STRATEGY
Improve Inventory Control Streamline Order Cycle Expand Product Line Increase Advertising Penetration Tie Production to Demand Expand Selling Relationships Reduce Raw Materials
@ Essential /

/

/

/ / / / / @# @ / / #
#

ns

@
Desirable

# / / # / @ / @ / @ @ @ / / # @

#

Primary Responsibility

Process vs Strategy Matrix
STRATEGY PROCESS
Design Product Develop Manufacturing Process Process Customer Order Control Product Inventory Analyze Marketplace Market Vehicles
Im Co pro nt ve ro l Inv St Or rea de ml Ex r C ine Pr pan ycl od d e uc tL In in cr e Pe e ne ase Ti tra A to e Pr tio dv De od n m uc an tio Ex d n Re pan la d tio Se ns lli hi ng ps

@ @

/ @ @ @

@ / @ / @ @ @

@ Major Impact / Minor Impact

Process vs Organization Matrix
ORGANIZATION PROCESS
Develop Manufacturing Process Design Product Process Customer Order Analyze Marketplace Control Product Inventory Market Product Establish Business Direction
@ Major Involvement

/ Minor Involvement

Pr es id en t Pl an s /C on tr Le ol ga lC ou Ex ns ec M el an ut uf ive Pu act VP u rc ha ring si Pr ng De odu ve ct lo pm M an en uf t ac tu W rin ar g eh ou Ex si ng ec Sa le utiv s e VP Sa le s W es t

@ / # @ / / / @ / # / / / / @ # @ @ @ @ @ @ / # / / @ # @ # @ / @ @
# Primary Responsibility

Where do we go from here?
1. Establish team & commitment. 2. Define “as is” & “to be” using the model. 3. Evaluate “as is” “to be” via a gap analysis. 4. Prioritize gap analysis. 5. Develop strategic planning approach. 6. Review conclusions with stakeholders. 7. Carry out plan.

AS IS Presentations
•If working – Use your company/organization •Must team up with co-workers •If not working – work in team of at least 4 •Select case from included cases •Cannot use Kodak or Air Products •Research on web for additional information •As Is Analysis: Use forms on next 2 pages •1 chart (1 page ONLY) for Business As Is •1 chart (1 page ONLY) for IT As Is

BU SI NESS A s- Is
BUSIN ESS STR ATE GY
BUSINESS SCOPE PRODUCTS/SERVICES: CUSTOMERS/CLIENTS: COMPETITORS: DISTINCTIVE COMPETENCIES BUSINESS GOVERNANCE INTERNAL DECISIONS: GOVERNMENT REGULATION: STRATEGIC PARTNERS:

BUSIN ESS IN FR ASTR UC TU RE
ORGANIZATION STRUCTURE KEY PROCESSES H/R

IT A s- Is
IT STR ATEGY
TECHNOLOGY SCOPE KEY APPLICATIONS: KEY TECHNOLOGIES: SYSTEMIC COMPETENCIES IT GOVERNANCE

IT INF RASTR UCTU RE
ARCHITECTURE KEY PROCESSES H/R

AS IS Presentations
•Considerations •Split Business Segments when discussing Business Strategy (Products, Customers, Competitors) •Every company has ALL 38 IT processes; focus on the ones that are very good and are in need of improvement •Include major products & vendors when discussing Key Technologies and Architecture •Marketing should always be included as a Business Process •When discussing Competencies “10 years of profit” is not a competency; how they made the profit is •Do not forget Skills in HR

AS IS Presentations
•Presentations •10 minutes •All team members must present •Bring hard copy to class

Good Luck!

Metrics to Include in Appendix
¢ As-Is ¢ To-Be ¢ SWOT ¢ Stakeholders ¢ Alternatives ¢ Recommendations ¢ Next Steps ¢ Governance Archetype ¢ Alignment Maturity Assessment ¢ TVO ¢ Others??? ¢ Lessons Learned

Three Planning Horizons
Horizon
3-5 years

Focus Strategic Tactical

Issues
Vision architecture, business goals, mission Resource allocation, project selection

Primary Responsibility
Senior Management CIO Middle Managers CIO

1-2 years

6 months – 1 year

Operational

Project management, meeting time and budget

IS Professionals Line Managers Partners

Scenario Planning Grid
High Probability of Occurrence High High Priority! Medium Priority Low Priority Impact on Firm Medium Low

Medium

Low

FIVE STEPS IN INTERVIEW PREPARATION
Read Background Material Establish Interviewing Objectives Decide Whom to Interview Prepare the Interviewee Decide on Question Types and Structure Open-Ended Questions Closed Questions Probes TELL ME MORE, I’LL LISTEN

Interview Agenda
1. Define the Goals 2. Ask the Right Questions 3. Connect to the Bottom Line 4. Understand Costs and Resources 5. Focus on the Right Things 6. Adopt Effective Process to Produce Action 7. Tackle the Practical Problems 8. Make the Right Decisions 9. Plan for the Right Results 10. Keep Score 11. Deal with Culture 12. Chart the Path to Implementation 13. Define What’s Next 14. Answer the “So What?” Question

INTERVIEW GUIDE (1 of 3)
1. Introduction
B. Courtesies
Make introductions and thank interviewee for agreeing to participate.

D. Research Objectives
Relay that the point of the interview is to understand what information would be most valuable to interviewees so that they may be better served. This will require understanding: The activities they perform and any trends/changes. The associated information requirements. The potential value to them of this information.

INTERVIEW GUIDE (2 of 3)
Introduction (contd.)
C. Guidelines
Discuss how the results will be treated. Usually it is helpful to state that they will be not be asked for any proprietary or confidential information and will not be quoted without permission. Provide a brief overview of the questions you plan to ask and how long the discussion should last. Get confirmation that they are comfortable with this and ask if there are any questions.

5. Questions to ask
Before asking the pre-defined questions, the interviewer should develop hypotheses on the answers to test specific ideas on possible opportunities and to keep the discussion focused.

INTERVIEW GUIDE (3 of 3)
A. Wrap-up
A. Background
Capture any relevant information on the background of the interviewee such as: Role and responsibility. Experience. Name, address, phone number.

B. Closing
Thank the interviewee for his/her time. Ask for referrals and permission to follow up if needed. Provide an honorarium as needed.