1. 1 Functional Strategy – IS & IT Geoff Leese November 2006, revised July 2007, September 2008, August 2009

2. 2 Introduction n The need for IS and IT strategies n Where it fits in n Strategic IS/IT questions n Symptoms of an ineffective IS/IT strategy n Formulating an IS/IT strategy n Key inputs to IS/IT strategy n Strategy setting process n Managing the strategy

3. 3 Business advantages of IT/IS n Instant communication n Ability to handle large volumes of data n Integration of data from different sources n Automated analysis and presentation of results

4. 4 The need for an IT strategy n An important source of competitive advantage ä Linking to customers and suppliers ä Improving operational efficiency ä Enabling faster response to environmental change ä Makes switching more difficult if competitors IT systems are incompatible ä Facilitates monitoring and analysis of Key performance indicators ä Enables flexible manufacturing and TQM ä Improves management control

5. 5 Where it fits in Business Strategy Divisional Strategy Divisional Strategy Divisional Strategy Production Strategy IS Strategy Marketing Strategy IT Strategy Manual Systems Strategy Management Strategy Data Policy Comms Policy Architecture Policy Acquisition Policy Organisation Policy Control Policy etc

6. 6 Business,IS and IT strategies Business strategy Describes where the business is heading Define what activities will be carried out by the organisation Will usually require some changes to existing information systems and / or development of new ones Information systems strategy Describes the information and systems needed to support the organisation’s activities It’s the “what” we need to do; demand part of the demand / supply equation Information technology strategy Describes how the information and system needs will be met e.g. what projects, what skills, what technologies It’s the “how” we will do it; supply part of the demand / supply equation

7. 7 Strategic IS/IT questions n What information systems do we need? n How much are we going to invest in IS / IT? n How are we going to organise the IS dept? n How are we going to resource the IS dept? n How much software are we going to buy in? n How much software should we build ourselves? n What technical standards should we employ?

8. 8 Symptoms of an ineffective IS/IT strategy n organisational goals may become unattainable due to systems/technology limitations n systems are not integrated, causing delays. duplication of effort, poor management n systems implementation projects are late, over cost or fail to deliver expected benefits n priorities & plans are always changing, causing conflict & poor productivity n inefficient IS/IT resource usage & investment appraisal n operational opportunities may be left unexploited

9. 9 Organisational & IS/IT Strategy Definition of organisational strategy: ‘an integrated set of actions aimed at increasing the long-term well-being & strength of the organisation’ IS/IT strategy involves three relevant strategies: organisational strategy organisational strategy IS strategy IT strategy

10. 10 Inputs & outputs to IS/IT strategy operational opportunities operational opportunities organisation’s environment organisation’s environment external IS/IT environment external IS/IT environment internal IS/IT environment internal IS/IT environment organisation strategy organisation strategy IS strategy WHAT? IS strategy WHAT? IT Strategy HOW? IT Strategy HOW? future applications future applications current applications current applications strategic IS/IT planning WHERE? strategic IS/IT planning WHERE? needs/ priorities services architecture IS/IT opportunities portfolio management

11. 11 The Strategies: The IS Strategy 1 IS strategy defines the information architecture and applications portfolio(s) at the organisation & function/department levels organisation divisions departments functions Need to define/integrate strategy level before IS strategy can be set Many organisations are simpler than this model - some are more complex. Complexity produces problems of STRATEGIC ALIGNMENT

12. 12 The Strategies: The IS Strategy 2 Purpose: To define & integrate the organisation’s information resources at organisational, divisional & functional level n establish needs & priorities for IS applications n align with business & IT strategies n link with system development & implementation processes n ‘feed forward’ into planning process

13. 13 The Strategies: The IT Strategy 1 Major input & linkage = IS strategy at organisational, divisional & functional levels n decide on standards for hardware/systems & communications software - the infrastructure n agree policies for acquisition, deployment & management of IT resources n align with IS strategy & other organisational & functional strategies, particularly HRM n link with systems development & systems implementation processes

14. 14 Key Inputs: External Environment An assessment of the forces acting on the organisation & its operations: n public economic conditions n power structures & politics n sources of funding Factors of influence: n strategic use of IS/IT facilitates ‘downstream’ drift of benefits n operational, economic & technological environments are changing more frequently n increased change places greater stress on IS/IT effectiveness

15. 15 Key Inputs: Internal Organisational Environment An analysis of information & application needs based on: n mission & objectives ä must be expressed clearly ä must be interpreted accurately n operational activities & processes ä future directions ä analysing cost & value drivers n strengths/weaknesses/competencies n organisational structure & style ä organisation structure & deployment ä management style ä organisational style & image

16. 16 Key Inputs: External IS/IT Environment An assessment of opportunities/threats afforded by the technology ‘market-place’ n technology standards currently available n technology trends emerging n How IS/IT is being used ä by clients ä by suppliers & customers Need to balance: n organisation & IS/IT present & future needs n ‘durability & flexibility’ of new technology n ‘cost & risk’ of new technology n advantages/benefits vs cost/durability

17. 17 Key Inputs: Internal IS/IT Environment An analysis of the effectiveness of IS/IT in the organisation in terms of: n effectiveness of the IS/IT management process n contribution of IS/IT to the organisation n reliability/performance of IS/IT n success of IS/IT implementation processes n skills of IS/IT developers & users

18. 18 n establish strategic direction ä define objectives/targets ä must be understood, agreed & supported ä generate ideas/options for ways/means of achieving n define strategy ä turn ideas and targets into policies ä make plans ä put selected options into practice n implementation ä communicate plans ä implement plans ä monitor implementation Three Stages of Strategy- setting Process

19. 19 Processes for Managing Strategy Define mission & objectives, Assess & select options Define mission & objectives, Assess & select options Strategic planning of options selected Strategic planning of options selected Implement informal strategic thinking vision & opportunity establish strategic direction define strategiesachieve strategies feedback The strategic process may be formal or informal

20. 20 Summary n The need for IS and IT strategies n Where it fits in n Strategic IS/IT questions n Symptoms of an ineffective IS/IT strategy n Formulating an IS/IT strategy n Key inputs to IS/IT strategy n Strategy setting process n Managing the strategy

21. 21 Further reading n The LUCID IT view The LUCID IT view ä Good stuff – including a use of five force diagram and balanced score n HMRC IT strategy HMRC IT strategy n Bennett chapter 12