Chapter 5 IS/IT Strategic Analysis: The Future Potential

Agenda Criteria for effective planning Business strategic and IS/IT strategic analysis methods –Market leadership –Value Chain –Strategic option generator –Resource life cycle analysis

Criteria for Effective Planning Situation analysis and competitive assessment Evaluation of strategic options Dynamic allocation of resources

Market Leadership By Treacy and Wiersma Three paths to market leadership –Operational excellence: low costs and consistent quality (Wal-Mart) –Customer Intimacy: precisely and tailoring products and services to target market (Home Depot) –Product leadership: product innovation (Johnson and Johnson)

Question How can you utilize application portfolio (high potential, strategic, key operational, and support) to market leadership business strategy?

Value Chain Analysis - I corporate value chain = support activities & primary activities = value added = Value added – cost = margin

Value Chain Analysis - II Support activities –Administration and infrastructure –Human resources management –Product and technology development –Procurement

Value Chain Analysis - III Primary activities –Inbound logistics –Operations –Outbound logistics –Sales and marketing –Services

Value Chain Analysis - Types Natural –The unattainable optimum structure for the industry’s value adding processes and information flows based on what needs to be done Contrived –How (far from optimal ways) thins are currently done

IS/IT Role in Value Chain Analysis Information about the industry Information about the corporate in the industry Information about customers and suppliers to improve the business performance Information flow in the corporate value chain for optimizing performance, reducing costs, and adding value

Question How can you usage application portfolio in value chain to achieve business goals?

Strategic Option Generator - I By Rackoff, Wiseman and Ullrich To identify strategic IS opportunities in relation to three targets –Customers –Suppliers –Competitors

Strategic Option Generator - II Five strategic thrusts –Differentiation –Cost –Innovation –Growth –Alliance

Strategic Option Generator - III Two strategies –Offensive: to create or increase a competitive edge –Defensive: to reduce a competitor’s advantage or prevent a potential disadvantage

Question Can you give an example each for the IS/IT offensive strategy and IS/IT defensive strategy discussed in strategic option generator?

Resource Life-Cycle Analysis By IBM Four main stages –Requirements determination –Acquisition –Stewardship –Retirement or disposal

Points to Remember Criteria for effective planning Business strategic and IS/IT strategic analysis methods –Market leadership –Value Chain –Strategic option generator –Resource life cycle analysis