Strategic IT Alignment Group 2 Paul Mak’Abong’o D61/79785/2012 Michael Nganga D61/60676/2013 Cliff Nderi D61/79194/2012 Alex Kamiru D61/79111/2012 Phyllis J Sitienei D61/61469/2013 Rose Katunge D61/60033/2013

introduction What is strategy? A long term plan of action designed to achieve a long-term or overall aim. (Strategic Management, Concept and Cases, Fred R. David, Thirteenth Edition) Companies can only succeed in the long run if they have solid strategies to confront the five competitive forces (Michael Porter’s) Strategic planning involves the buildings of a structured framework to identify the main components of anticipated business needs and possible solutions , identifying and evaluating different approaches to arriving at these solutions and producing a comprehensiveness costed plan and time table for the preferred strategy.

IS STRATEGY IS Strategy involves creating a structured framework for information systems needs as expressed in information requirements and business applications together with information technology solutions. IS strategy is developed in IS strategy Triangle which is a simple framework for understanding the impact of IS on organizations.

IS STRATEGY TRIANGLEGY TRIANGLE

Cont….. Business Strategy drives all other strategies. Organizational and Information Strategy are then dependent upon the Business Strategy. Changes in any strategy requires changes in the others to maintain balance. IS Strategy is affected by the other strategies a firm uses. Four key IS infrastructure components are key to IS strategy i.e. hardware ,software, networking and data These key components are sufficient to allow the general manager to assess critical IS issues CONT..

Purpose of Strategy – IT Alignment Objective is to optimize the value IT contributes to an enterprise. An organization has successfully aligned IT strategy to business strategy when: Support from key executives to participate in developing the IT Strategy. Clear expectations of how IT will contribute to reaching the company’s business goals and objectives. A good working relationship between the IT department and the rest of the organisation. There’s a shared focus on where to expend scarce resources, time and money.

Strategy – IT Alignment is achieved through the completion of four main steps: Set Conditions to Achieve Alignment Scan for Potentially Enabling Technologies Determine IT Value Imperatives Develop IT Vision and Mission

STRATEGIC ALIGNMENT MODEL The concept of the model is based on two building blocks: Strategic fit Functional integration

Strategic fit recognizes that the IT strategy should be articulated externally in terms of the organizational strategy, and internally on how the infrastructure should be managed. Two types of functional integration exist: Strategic integration Operational integration Strategic integration is the link between business strategy and IT strategy reflecting the external components. Operational integration covers the internal domain and deals with the link between organizational infrastructure and processes and IT infrastructure and processes.

Porter’s five forces model Rivalry from competitors in the industry. Threat of new entrants into an industry and its market. Threats posed by substitutes products that can capture the market. Bargaining power of consumers. Bargaining power of suppliers.

What can firms do to counter action of competitive forces? Cost leadership strategies Differentiation strategies Innovation strategies Growth strategies Alliances strategies

What is the role of it to support this strategies? Technology is no longer an afterthought in forming a business strategy but the actual cause and driver. Use of IT to reduce cost of operation eg automation of tasks IT can also be used to lower the cost of logistics by having supply chain systems integrated with supplier for JIT ordering. Cost leadership Use IT to reduce the differentiation feature of competitors. Use IT to develop differentiated products and services. Differentiation Develop unique products and service with the help of IT. Make radical changes to process with the help of IT to reduce costs, improve quality and offer superior customer service Innovation Use IT to promote regional and global businesses. Use IT to diversify product and services offerings. Promoting growth Through development of inter-enterprise IS liked by Internet, Extranet to support relationship with suppliers and other business partners. Developing alliance

Innovation Competitive advantage Organization learning Competitive necessity The move from innovation to competitive advantage quickly becomes competitive necessity when other firms learn how to respond strategically

Value chain model Also developed by Michael Porter. This are activities that are performed on the creation of a product or service. Can be separated in Primary activities Secondary activities Activities either add cost or value to the process of creating product/service Firms should harness IT to then either reduce cost of operations on the value chain or/and increase more value.

Value chain model

What is the role of it to support the value chain? Firm Infrastructure: LAN, WAN Human Resource: HRMIS Technological Development: CAM Procurement: E-Business, E-Commerce Inbound Logistics: Automated Just-In-Time Logistics Operations: CAM, Employee Scheduling Systems Outbound Logistics: Online Point-Of-Sale, Order Processing System Sales and Marketing: Online Marketing Service: CRM Systems