1. IT and Network Organization Antoine HARFOUCHE, PHD

2. IT and Network Organization STARTEGIC ALIGNMENT IN NETWORK ORGANIZATIONS Session 6:

3. IT and Network Organization Core Concepts Business-IT alignment –is a dynamic state in which a business organization is able to use IT effectively to achieve business objectives –improved its financial performance or marketplace competitiveness. –the ability of IT to produce business value –the harmony between IT and business decision- makers within the organizations

4. IT and Network Organization Why the alignment matters? Operational excellence is central to creating and sustaining strategic advantage and change!

5. IT and Network Organization IS has a key role on the strategic level

6. IT and Network Organization Process Execution Technologies Knowledge Organizationa l Structure Humans PROCESS PERFORMANCE PROCESS OUTCOMES VALUE GENERATED IS can also influence The operational level

7. IT and Network Organization Strategic Alignment

8. IT and Network Organization Five strategies for dealing with competitive forces, enabled by Network organizations –Low-cost leadership –Product differentiation –Focus on market niche –Strengthen customer and supplier intimacy –Blue Ocean Strategy 8 The strategic dimension of the alignment

9. IT and Network Organization Low-cost leadership –Produce products and services at a lower price than competitors while enhancing quality and level of service –Examples: Wal-Mart Product differentiation –Enable new products or services, greatly change customer convenience and experience –Examples: Google, Nike, Apple 9 The strategic dimension of the alignment

10. IT and Network Organization Focus on market niche –Use information systems to enable a focused strategy on a single market niche; specialize –Example: Hilton Hotels Strengthen customer and supplier intimacy –Use information systems to develop strong ties and loyalty with customers and suppliers; increase switching costs –Example: Netflix, Amazon 10 The strategic dimension of the alignment

11. IT and Network Organization BOS: Value Innovation - Objective is to create a completely new industry through fundamental differentiation as opposed to competing in an existing industry by tweaking established models. - BOS advocates creating new uncontested space through what the authors term “value innovation”. This means increasing value by introducing new benefits and services, while simultaneously reducing costs by eliminating less valuable features or services. - COSTS + VALUE -- VALUE INNOVATION --

12. IT and Network Organization To achieve value innovation Kim and Mauborgne propose an analytical tool called the Four Actions Framework. Four key questions challenge an industry’s strategic logic and established business model: - COSTS + VALUE -- FOUR ACTIONS FRAMEWORK -- ELIMINATERAISE WHICH FACTORS CAN YOU ELIMINATE THAT YOUR INDUSTRY HAS LONG COMPETED ON? WHICH FACTORS SHOULD BE RAISED WELL ABOVE THE INDUSTRY’S STANDARD? REDUCECREATE WHICH FACTORS SHOULD BE REDUCED WELL BELOW THE INDUSTRY STANDARD? WHICH FACTORS SHOULD BE CREATED THAT THE INDUSTRY HAS NEVER OFFERED? BOS:

13. IT and Network Organization EXISTING INDUSTRY Fiercely Competitive Increased commoditization = Blood in the water Source: Chan Kim, Renée Mauborgne The aim of BOS is not to out-perform the competition in the existing industry, but to create a new market space or blue ocean, thereby making the competition irrelevant

14. IT and Network Organization The technological dimension of the alignment

15. IT and Network Organization The ICT’s impact on competitive advantage –Transformation, destruction, threat to some industries E.g. travel agency, printed encyclopedia, newspaper –Competitive forces still at work, but rivalry more intense –Universal standards allow new rivals, entrants to market –New opportunities for building brands and loyal customer bases 15 The technological dimension of the alignment

16. IT and Network Organization –Managers set organizational structure for responding to business challenges –In addition, managers must act creatively in: Creation of new Business models Occasionally re-creating the organization 16 The organizational dimension of the alignment

17. IT and Network Organization The IT strategy dimension of the alignment Benefits of personalization Benefits of co-creation Benefits of integrating communication channels in one channel Benefits of e-communication Benefits Virtual Communities Benefits of Disintermediation

18. IT and Network Organization Example: Business Travel Source: Biau & Sun

19. IT and Network Organization Conclusion