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Developing Business/IT Strategies
Chapter11
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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• Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples
• Discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications
• Identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications
Learning Objectives
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Planning Fundamentals
• IT created a seismic shift
– Just knowing the importance and structure of e-business is not enough
– Must be able to transform an old business design to a new e-business design
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RWC 1: IT/Business Alignment
• One Goal – Winning Customers– Every executive– Every manager– Every employee
• Critical Skills– Meeting or beating goals– External customer focus– Identifying and seizing commercial opportunities
• Differentiating component – IT Capability– More than providing systems– Be part of the system
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Components of Organizational Planning
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Scenario Approach
• Gaining popularity
• Less formal
• Virtual world (microworld) exercises
• Business scenarios are created and evaluated
• Alternative scenarios are then created
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Strategic Visioning Questions
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Trends that Affect Strategic Planning
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Strategic Opportunities Matrix
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SWOT Analysis
• Strengths – Core competencies and resources
• Weaknesses– Areas of substandard business performance
• Opportunities– Potential for new business markets or innovative
breakthroughs
• Threats– Potential for business and market losses
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Business Models and Planning
• Vital questions
– Who are our customers?
– What do our customers value?
– How much will it cost to deliver that value?
– How do we make money in this business?
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Questions for Business Models
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The Business/IT Planning Process
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Information Technology Architecture
• Conceptual design components
– Technology platform
– Data resources
– Application architecture
– IT organization
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Balanced Scorecard
• Measures activities in terms of vision and strategies– Financial performance
– Impact on customers
– Performance of key business processes
– Company’s learning curve and growth
• Four processes
– Translate vision into operational goals
– Communicate vision and link to performance
– Business planning
– Feedback/learning and strategy adjustment
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Balanced Scorecard Example
www.steelwedge.com
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Identifying Business/IT Strategies
• Valuable Internet applications
– Transcend communication barriers
– Establish connections that enhance productivity
– Stimulate innovative development
– Improve customer relations
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Strategic Positioning Matrix
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Strategic Matrix
• Cost and Efficiency Improvements– Low internal and low external connectivity
– Recommend – Use the Internet as a fast, low-cost way to communicate and interact with others
• Performance Improvement in Effectiveness– High internal but low external connectivity– Recommend – Increase use intranets and
extranets
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Strategic Strategies
• Global Market Penetration– High external but low internal connectivity
– Capitalize with e-commerce websites using value-added information services and extensive online customer support
• Product and Service Transformation– High external and high internal connectivity– Develop and deploy new Internet-based
products and services to create a new strategic position in the marketplace
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E-Business Strategy Examples
• Market Creator
• Channel Reconfiguration
• Transaction Intermediary• Infomediary:
• Self-Service Innovator
• Supply Chain Innovator
• Channel Mastery
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Business Application Planning Process
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Comparing Planning Approaches
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E-Business Architecture Planning
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Implementation Challenges
• Implementation – Do what you planned to do
– Critical skill for managers
• Many companies are good at planning
• Few are good at executing the plan– Even if senior management consistently identifies
e-business as an area of great opportunity and critical need
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RWC 2: Project Success
• People skills critical to project success– Teamwork– Support during tough times
• Bad relationships leading cause of failure• Managers tend to go to software instead of
building relations• Showing progress at short intervals helps
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Implementing Information Technology
• Developments that have generated organizational change– Business process reengineering– ERP systems– Y2K compliance– Shared service centers– Just-in-time manufacturing– Sales force automation– Contract manufacturing– Introduction of Euro currency
• E-business is the latest catalyst
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Impact and Scope of Implementing IT
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Impact and Scope of Implementing IT
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End User Resistance and Involvement
• Change generates resistance
• Examples:
– Customer Relationship Management (CRM)
– Knowledge Management Systems (KM)
• CRM failures
– CRM failure rate up to 75 percent
– Causes for failure
• Sales force automation problems
• Unaddressed cultural issues
• Sales staffs fearful and thus resistant
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Obstacles to KM Systems
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Keys to Solving End User Resistance
• Create relationships– Understand the end-user’s situation
• Provide education and training
• Require involvement and commitment– End-users
– Top management
– All stakeholders
• Eliminate frustration and inconvenience
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Key Dimensions of Change Management
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Change Management Programs
• Develop a change action plan
• Assign managers as change sponsors
• Develop employee change teams
• Encourage open communications and feedback about organizational changes
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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, in person
• Make liberal use of financial incentives and recognition
• Work within company culture, not around it
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A Change Management Process
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Avnet Marshall’s Transformation
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RWC 3: Crucial Strategic Planning Elements
• Alignment between business and IT– IT strategic plan to improve the business-IT
relationship– Articulate how IT fits into business and overall
business strategy.
• Apply clear strategy to business activities
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RWC 4: The Science behind Change
• Implementing changes is very challenging• Employees resist change• Understanding can lead to smoother
transitions• Not everyone is motivated by ambition• Education and training aid with acceptance