Why is it important?
Evolving environment-Information an economic good Competitive edge necessity (for competition) and advantage (for differentiation) Existing Processes useful, efficient, effective, responsive Progressive New processes emerging, new capabilities developed
Information Technology (IT) has always been a wildcard in business, a source of opportunity and uncertainty, of advantage and risk.
What is IT Strategy?
IT strategy for any organization provides effective, efficient, responsive and flexible systems to meet the current and future business as well as legislative requirements. IT strategy is further subdivided into the following subcomponents:
IT application strategy (identifies applications to address the business needs) classified as Support, Factory, Turnaround or Strategic category Technology management strategy for IT (addresses the choice of long-term view of the technology, their sustainability, availability and reusability) IT management strategy (IT projects must meet the business expectations in desired time, cost and budget; decision on outsourcing vs. doing in-house; change management)
Business Strategy
BS is a set of objectives, plans, and policies for successful competition in markets. Porter defines business strategies such as cost leadership, differentiations, niche focus or innovation which a firm can adopt. Characteristics of BS
It is long-term (3-5 years) in nature. It specifies what the organization's competitive advantage will be. It focuses on a few key areas. The pattern of decisions made over time is, in fact, an organization's business strategy.
Course Objective
To help business executives take important steps on the path of IT enabled transformational change.
Create an environment for executives in defining and executing not only technology strategy, but also business strategy.
Course Outline
Today IT Strategy in Business Strategies for Planning and Applying IT (SISP) Organizing and Leading IT Mid Terms Strategies for IT Program Management, IT Service Management Planning and Measuring Returns on IT Investment
Text Book
Lynda M Applegate et.al. (2007) Corporate Information Strategy and Management, 7th Edition. Tata McGraw Hill
Challenges
Global competition
Individual firms need to operate at same level of efficiency Quality needs to be at par Acceptable prices
Opportunities Provided by IT
IT cuts cost, increases speed and supports business activities through applications, communications and technology (Operational effectiveness and efficiency in Pizza Hut, Dominos) IT provides variation and choice by pooling together capabilities to support the activities of the firm. (Unique value for Toyota and Dell customers) Extending scope and reach to customers through the internet (more products more audiences). Not necessarily selling their own products such as airlines becoming travel companies, hospitals are getting into health tourism, Moser-Baer getting into media distribution.
Companies are spending huge amount to manage their IT . However, businesses struggle to quantify the results of the IT systems and consider it as cost of doing business. Technology has become a core enabler and, in some cases, the primary channel through which business is done. Most of it is done without long-term thinking or proper planning.
Business executives have begun to wrest control from IT executives who have failed to meet the challenges. The ripple effect of one industry, one country or one natural disaster is felt more often in other places, sooner than expected in the changed world where IT is implemented.
This needs IT deployment keeping utmost levels of constant preparedness, "battle ready" conditions and agility in mind.
Incremental improvement Centralizing internal processes such as back-office processes (payroll, purchasing, and benefits management) Business Process Design Re-engineering Core operating process-Supply chain management, new product development Emerging Opportunities Revenue growth from new service offerings that built on internal IT-enabled business processes. Business Transformation IBM Business Transformation Outsourcing (not only outsourcing but into consulting as well)
Response Lag Drivers IT Assets IT Capabilities IT Infrastructure Information Repositories Technical Skills IT Management Skills Relationship Asset
Complementary Resources Technology Characteristics Implementation Process Visibility Uniqueness Complexity Complexity Process Change
Preemption Barrier
Switching Costs
Building Blocks:
Scope Competencies Governance Structure Processes Skills Scope Competencies Governance Infrastructure Processes Skills Strategic Fit
Infrastructure (Internal)
Strategic Fit Functional Integration and Cross-Domain Relationship Need to develop communication with and increase understanding of weaker domains
IT Mgmts Role?
Business Strategy Scope Competencies Governance IT Strategy Scope Competencies Governance Strategy Implementor Performance Criteria for assessing IT financial parameters reflecting a cost center focus Risk? IT reacts to support business processes not viewed as a strategic resource
Performance Criteria for assessing ITBased on customer satisfaction (end-userneeds surveying, service-level contracting) Risk? May lose sight of business strategy; IT viewed as a service function independent of business strategy.
Need for IT external and internal domains Understand strong/weak domains and cross-domain relationships Different roles of business and IT executives Re-conceptualize assessment of the performance of IT
Facilitators of Alignment
Leadership level congruence (business leaderships desire to take along IT leadership in strategy formulation development and execution). IT's ability to identify and partner with business (ITs ability to understand business and develop IT plans linked to the business plan to gain competitive advantage) IT's ability to deliver (how IT delivers and meets its commitment)
If the first two have been done right, the third factor becomes somewhat easy.
Challenges of Alignment
Mismatch between strategic objectives and the deployment of IT (mostly due to the absence of a well-articulated strategy) Limitation in capturing the end-users requirements Lack of uniform and seamless communication of the strategy to the entire organization (to prepare the employees to respond to the strategic IT plan initiatives)