Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Developing Business/IT Strategies Chapter 11

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 1.Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples. 2.Discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications. Learning Objectives

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 3.Identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Why Study Planning Fundamentals? Information technology has created a seismic shift in the way companies do business. Just knowing the importance and structure of e-business is not enough. You need to create and implement an action plan that allows you to make the transition from an old business design to a new e-business design.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. IT as a Revenue-Producing Asset

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Organizational Planning Process Team building, modeling and consensus Evaluating what an organization has accomplished and the resources they have acquired Analyzing their business, economic, political and societal environments

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Organizational Planning Process Anticipating and evaluating the impact of future developments Building a shared vision and deciding on what goals they want to achieve Deciding what actions to take to achieve their goals

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Organizational Planning Process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Strategic Planning Definition: Development of an organization’s mission, goals, strategies, and policies

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Operational Planning Definition: Planning done on a short-term basis to implement and control day-to-day operations

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Scenario Approach Definition: Teams of managers and other planners participate in what management author Peter Senge calls microworld, or virtual world, exercises Microworld - simulation exercise that is a microcosm of the real world

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Trends Shaping Strategic Planning

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Why Plan for Competitive Advantage? Betting on new IT innovations can mean betting the future of the company. Leading-edge firms are sometimes said to be on the “bleeding edge”. Almost any business executive is aware of disastrous projects that had to be written off, often after large cost overruns, because the promised new systems simply did not work.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Strategic Opportunities Matrix

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. What is SWOT Analysis? SWOT analysis is used to evaluate the impact that each possible strategic opportunity can have on a company and its use of information technology Strengths – core competencies Weaknesses – substandard business performance Opportunities – potential for new markets or innovative breakthroughs Threats – potential for losses posed by competitive forces

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business Model Definition: A conceptual framework that expresses the underlying economic logic and system that prove how a business can deliver value to customers at an appropriate cost and make money

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business Model Components Customer Value – Is the firm offering its customers something distinctive or at a lower cost than its competitors? Scope – To which customers is the firm offering this value? What is the range of products/services offered that embody this value? Pricing – How does the firm price the value? Revenue Source – Where do the dollars come from? Who pays for what value and when? What are the margins in each market and what drives them? What drives value in each source?

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business Model Components Connected Activities – What set of activities does the firm have to perform to offer this value and when? How connected are these activities? Implementation – What organizational structure, systems, people, and environment does the firm need to carry out these activities? What is the fit between them?

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business Model Components Capabilities – What are the firm’s capabilities and capabilities gaps that need to be filled? How does a firm fill these capabilities gaps? Is there something distinctive about these capabilities that allows the firm to offer the value better than other firms and that makes them difficult to imitate? What are the sources of these capabilities? Sustainability – What is it about the firm that makes it difficult for other firms to imitate it? How does the firm keep making money? How does the firm sustain its competitive advantage?

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business/IT Planning Process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business/IT Planning Process Components Strategy Development – developing business strategies that support a company’s business vision Resource Management – developing strategic plans for managing or out-sourcing a company’s IT resources Technology Architecture – making strategic IT choices that reflect an information technology architecture designed to support a company’s e- business and other business/IT initiatives

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. What is IT Architecture? A conceptual design that includes: Technology Platform – networks, computer systems, system software and integrated enterprise application software Data Resources – databases Applications Architecture – business applications IT Organization – organizational structure of the IS function and distribution of IS specialists

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Strategic Positioning Matrix

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business/IT Strategies Cost and Efficiency Improvements – use Internet as a fast, low-cost way to communicate and interact with customers, suppliers, and business partners Performance Improvement in Business Effectiveness – widespread internal use of Internet-based technologies to improve information sharing and collaboration within the business and with trading partners

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business/IT Strategies Global Market Penetration – build e- commerce websites with value-added information services and extensive online customer support Product and Service Transformation – use the Internet for electronic commerce transaction processing with customers at company websites, and e-commerce auctions and exchanges for suppliers

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business Application Planning Definition: Includes the evaluation of proposals made by the IT management of a company for using information technology to accomplish the strategic business priorities developed earlier in the planning process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Business Application Planning

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. E-business Architecture Planning Definition: Combines contemporary strategic planning methods like SWOT analysis and alternative planning scenarios with more recent business modeling and application development methodologies like component-based development

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. E-business Architecture Planning

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Implementation Definition: A process that carries out the plans for changes in business/IT strategies and applications that were developed in the planning process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Scope and Level of Business Change

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Intranet Enterprise Portal Challenges Security Defining the scope and purpose of the portal Finding the time and money Ensuring consistent data quality Getting employees to use it Organizing the data Finding technical expertise Integrating the pieces Making it easy to use Providing all users with access

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Enterprise Resource Planning Challenges Getting end user buy-in Scheduling/planning Integrating legacy systems/data Getting management buy-in Dealing with multiple/international sites and partners Changing culture/mind-sets IT training Getting, keeping IT staff Moving to a new platform Performance/system upgrades

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. End User Resistance Solutions Proper education and training End user involvement in organizational changes, and in the development of new information systems

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Obstacles to Knowledge Mgmt Systems

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Dimensions of Change Management

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. 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, preferably in person Make liberal use of financial incentives and recognition Work within the company culture, not around it

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Change Management Process

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Summary Managing information technology requires planning for changes in business goals, processes, structures, and technologies. Planning is a vital organization process that uses methods like the scenario approach and planning for competitive advantage to evaluate an organization’s internal and external environments; forecast new developments; establish an organization’s vision, mission, goals, and objectives; develop strategies, tactics, and policies to implement its goals; and articulate plans for the organization to act upon.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Summary A good planning process helps organizations learn about themselves and promotes organizational change and renewal. Strategic business/IT planning involves aligning investment in information technology with a company’s business vision and strategic goals such as reengineering business processes or gaining competitive advantages.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Summary Implementation activities include managing the introduction and implementation of changes in business processes, organizational structures, job assignments, and work relationships resulting from business/IT strategies and applications such as e-business initiatives, reengineering projects, supply chain alliances, and the introduction of new technologies.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. Summary Companies use change management tactics such as user involvement in business/IT planning and development to reduce end user resistance and maximize acceptance of business changes by all stakeholders.

Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved. End of Chapter Chapter 11