IT ALIGNMENT AND STRATEGIC PLANNING (PART 2) Lecture 9

Challenges and Approaches to IT An overview of strategy The areas requiring IT strategy The vectors for arriving at IT strategy The IT asset and governing concepts A normative approach to developing IT alignment and strategy The challenges of IT strategy and alignment Information technology as a competitive advantage

A Normative Approach to IT Strategies There is no right way to develop an IT strategy and to ensure alignment. Across health care organizations the approaches taken to developing, documenting, and managing an IT strategy are quite varied. Some organizations have well-developed, formal approaches that rely on the deliberations of multiple committees and leadership retreats. Other organizations have remarkably informal processes—a small number of medical staff and administrative leaders meet, in informal conversations, to define the organization’s IT strategy. In some cases the strategy is developed during a specific time in the year, often preceding the development of the annual budget.

1. Strategy Discussion Linkage Organizational strategy is generally discussed in senior leadership meetings. These meetings may be focused specifically on strategy or strategy may be a regular agenda item. Example: a committee of clinical leadership might be asked to develop recommendations for improving patient safety. Regardless of their form, the organization’s CIO should be present at such meetings or kept informed of the discussion and its conclusions.

2. New Technology Review The CIO should be asked to discuss, as part of the strategy discussion or in a periodic presentation in senior leadership forums, new technologies and their possible contributions to the organization’s goals and plans. For example, a multidisciplinary task force could be formed to examine the role of wireless technology in nursing care, materials management, and service provision to referring physicians.

3. Synthesis The CIO should be asked to synthesize, or summarize, the conclusions of these discussions. Synthesis will be needed during the development of the annual budget. And it will be a necessary component of the documentation and presentation of the organization’s strategic plan.

Synthesis Cont. The organization should expect that the process of synthesis will require debate and discussion: for example, trade-offs will need to be reviewed, priorities set, and the organization’s willingness to implement emergent technologies determined. This synthesis and prioritization process can occur in the course of leadership meetings, through the work of a committee charged to develop an initial set of recommendations, and during discussions internal to the IT management team.

IT Strategy and Alignment Challenges Persistent problems with alignment Limitations of alignment Alignment at maturity IT strategy is not always necessary

Persistent Problems with Alignment 1. Business strategies are often not clear or are volatile. 2. IT opportunities are poorly understood. 3. The organization is unable to resolve the different priorities of different parts of the organization. 4. The organization finds that it has not achieved the gains, apparently achieved by others, that it has heard or read about, nor have the promises of the vendors of the technologies materialized. 5. Often the value of IT, particularly in terms of infrastructure, is difficult to quantify, and the value proposition is fuzzy and uncertain.

Limitations of Alignment Although alignment is important it will not guarantee effective application of IT. Planning methodologies and effective use of vectors cannot overcome weaknesses in other factors that can significantly diminish the likelihood that IT investments will lead to improved organizational performance. These weaknesses include poor relationships between IT staff and the rest of the organization, inadequate technical infrastructure, and ill-conceived IT governance mechanisms. IT strategy cannot overcome unclear overall strategies and cannot necessarily compensate for material competitive weaknesses.

Alignment at Maturity IT planning was not a separate process. IT planning had neither a beginning nor an end. IT planning involved shared decision making and shared learning between IT and the organization. The IT plan emphasized themes.

IT Strategy is Not Always Necessary There are many times in IT activities when the goal, or the core approach to achieving the goal, is not particularly strategic, and strategy formulation and implementation are not needed. Replacing an inpatient pharmacy system, enhancing help desk support, and upgrading the network, although requiring well- executed projects, do not always require leadership to engage in conversations about organizational goals or to take a strategic look at organizational capabilities and skills.

IT as a Competitive Advantage Competitive strategy involves identifying goals in ways that are materially superior to the ways that a competitor has defined them (formulation). It also involves developing ways to achieve those goals and capabilities that are materially superior to the methods and capabilities of a competitor (implementation). Competitive strategy should attempt to define superiority that can be sustained.

Core Sources of Advantage IT can be applied in the effort to improve organizational processes by making them faster, less error prone, less expensive, more convenient, and available at more times and places. Leverage organizational processes. Organizations define critical elements of their plans, operations, and environment. These elements must be monitored to ensure that the plan is working, service quality is high, the organization’s fiscal situation is sound, and the environment is behaving as anticipated. Enable rapid and accurate delivery of critical data. Effective customization presumes that an organization knows something about the customer. Differentiation assumes that it knows something about the customer’s criteria for evaluating its kind of organization so that it can differentiate its processes, products, and services in a way deemed to have value. Enable product and service differentiation and occasionally creation. IT can be used to improve or change certain organizational attributes or characteristics. Such attributes or character- istics might involve service quality orientation, communication, decision making, and collaboration. Support the alteration of overall organizational form or characteristics.

Advantage Sustainability It is difficult to sustain an IT-enabled or IT-centric advantage. Competitors, noting the advantage, are quick to attempt to copy the application, lure away the original developers, or obtain a version of the application from a vendor who has seen a market opportunity in the success of the original developers.

References “Health Care Information Systems: A Practical Approach for Health Care Management” By Karen A. Wager, Frances W. Lee, John P. Glaser “Information Systems and Healthcare Enterprises” By Roy Rada

End of Lecture 10-2