Information Technology Management Strategy & IT

Organizational Strategy IT Strategy Triangle Business Strategy Organizational Strategy IT Strategy All 3 Strategies Need to be in Harmony Multiple Ways to Create Harmony

Business Strategy Frameworks High level strategic business concepts Efficiency ( low cost) vs. Innovation Value disciplines (Tracy & Wiersema) Operational Excellence Product Leadership Customer intimacy More specific strategic business concepts Porter’s Generic Strategies Framework (and its variants) Co-opetition (Brandenburg and Nalebuff) Hypercompetition and the New 7-S’s framework (D’Aveni)

Value Capturing Strategies Product Leadership Leadership requires a primary strategy Operational Excellence Customer Intimacy

Porter’s Value Chain Enterprise Value Chain Joined-up Business Customers Suppliers Enterprise Joined-up Business Intermediaries Vertical Process Integration 3 Ways to Differentiate Low Cost Differentiation as Viewed by Customer Narrow Segment Focus

Hypercompetition and the New 7-S’s framework (D’Aveni) Sustained competitive advantage is not possible Only temporary advantages exist, created by a company’s speed and aggressiveness. Assumes: Every advantage becomes eroded Sustaining an advantage uses too much time and resources. Instead, companies must seek to stay ahead of its competitors by creating temporary advantages These are done in small steps over short competitive cycles. Focus on creating the next temp. advantage.

Co-opetition – The Value Net Enterprise Customers Suppliers Intermediaries/ Complementors Competitors/ Substitutors New Joined-up Business Value Net Virtual integration Differentiation Focus on Customer Needs Co-source Processes Coordinate Partners to Assemble Strategic Advantage

Attributes of the different Value Capturing Strategies Focus on Core Processes of invention, product development, and market exploitation Loosely knit, ad hoc business structure Metrics are on product success and don’t punish experimentation Operations culture is individualistic, out of the box, futuristic, Team based Focus on core processes of solution development, results management, relationship management Operations culture delegates decision making to employees closest to customer Metrics are based on results from carefully selected and nurtured clients. Intent is to create deep and lasting relationships with clients Specific (custom) solutions preferred over general solutions Product Leadership Customer Intimacy Operational Excellence Leadership requires a primary strategy Processes optimized for end to end supply Operations culture is standardized, simplified, tightly controlled, centrally planned Metrics are cost based Integrated, Reliable, High speed transaction systems Standardization “When it absolutely, positively has to be there overnight

Traditional IT Investment Portfolio MIS Decision Support Knowledge Mgn’t Processing Business Activities Orders Sales Shipment Communications Data Base Office Automation Groupware

The Value Chain Information Flows Customers Suppliers Enterprise Joined-up Business Intermediaries Product to Customer Vertical integration Processes are internally focused Product/Service Flow Information Flows

Future State : The Value Net Enterprise Customers Suppliers Intermediaries/ Complementors Competitors/ Substitutors New Joined-up Business Drive from customer need – not products Assemble the solution from the value net to match the need Virtual integration Processes are externally focused & executed by the members of the value net that can best execute them

The Business Organization (Hammer and Champy) Processes Values and Beliefs Jobs and Structures Management and Measurement systems

Hierarchical, flat and matrix organizational structures Region Industry Region 1 Region 2 Region 3 Ind. 1 Position for Ind. 1 in region 1 Pos. for Ind.1 in region 2 Pos. for Ind.1 in region 3 Ind. 2 Pos. for Ind.2 in region 1 Pos. for Ind.2 in region 2 Pos. for Ind.2 in region 3 Ind. 3 Pos. for Ind.3 in region 1 Pos. for Ind.3 in region 2 Pos. for Ind.3 in region 3 Hierarchical Organizational Structure Matrix Organizational Structure Flat Organizational Structure

The networked organization The networked organization is a new form, made possible by IS. Instead of rigid hierarchies, all parts of the company are connected by formal and informal communications.

IT Impact on Organization ( Structure, Processes, Culture)? Computer Transaction systems Databases PC Telecommunications E-mail Internet

How do You Get the 3 in Sync? Business Strategy Organizational Strategy IT Strategy Change Enabler One-way? Two-way? Improvisation?

What Happens When my Business Strategy is Value-Net Based?