Developing Business/IT Strategies Chapter 11 McGraw-Hill/IrwinCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

11-2 Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples Discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications Identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications Learning Objectives

11-3 Planning Fundamentals IT created a seismic shift –Just knowing the importance and structure of e-business is not enough –Must be able to transform an old business design to a new e-business design

11-4 Scenario Approach Gaining popularity Less formal Virtual world (microworld) exercises Business scenarios are created and evaluated Alternative scenarios are then created

11-5 SWOT Analysis Strengths –Core competencies and resources Weaknesses –Areas of substandard business performance Opportunities –Potential for new business markets or innovative breakthroughs Threats –Potential for business and market losses

11-6 Balanced Scorecard Measures activities in terms of vision and strategies –Financial performance –Impact on customers –Performance of key business processes –Company’s learning curve and growth Four processes –Translate vision into operational goals –Communicate vision and link to performance –Business planning –Feedback/learning and strategy adjustment

11-7 Strategic Matrix Cost and Efficiency Improvements –Low internal and low external connectivity –Recommend – Use the Internet as a fast, low- cost way to communicate and interact with others Performance Improvement in Effectiveness –High internal but low external connectivity –Recommend – Increase use intranets and extranets

11-8 Strategic Strategies Global Market Penetration –High external but low internal connectivity –Capitalize with e-commerce websites using value-added information services and extensive online customer support Product and Service Transformation –High external and high internal connectivity –Develop and deploy new Internet-based products and services to create a new strategic position in the marketplace

11-9 E-Business Strategy Examples Market Creator Channel Reconfiguration Transaction Intermediary Infomediary: Self-Service Innovator Supply Chain Innovator Channel Mastery

11-10 Implementation Challenges Implementation –Do what you planned to do –Critical skill for managers Many companies are good at planning Few are good at executing the plan –Even if senior management consistently identifies e-business as an area of great opportunity and critical need

11-11 Implementing Information Technology Developments that have generated organizational change –Business process reengineering –ERP systems –Y2K compliance –Shared service centers –Just-in-time manufacturing –Sales force automation –Contract manufacturing –Introduction of Euro currency E-business is the latest catalyst

11-12 End User Resistance and Involvement Change generates resistance Examples: –Customer Relationship Management (CRM) –Knowledge Management Systems (KM) CRM failures –CRM failure rate up to 75 percent –Causes for failure Sales force automation problems Unaddressed cultural issues Sales staffs fearful and thus resistant

11-13 Keys to Solving End User Resistance Create relationships –Understand the end-user’s situation Provide education and training Require involvement and commitment –End-users –Top management –All stakeholders Eliminate frustration and inconvenience

11-14 Change Management Programs Develop a change action plan Assign managers as change sponsors Develop employee change teams Encourage open communications and feedback about organizational changes

11-15 Change Management Tactics Involve as many people as possible in e- business planning and application development Make constant change an expected part of the culture Tell everyone as much as possible about everything, as often as possible, in person Make liberal use of financial incentives and recognition Work within company culture, not around it