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Chapter

11
Developing Business/IT
Strategies

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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.

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IT as a Revenue-Producing Asset

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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

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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

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Organizational Planning Process

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Strategic Planning

Definition:
• Development of an organization’s
mission, goals, strategies, and policies

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Operational Planning

Definition:
• Planning done on a short-term basis to
implement and control day-to-day
operations

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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

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Trends Shaping Strategic Planning

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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.

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Strategic Opportunities Matrix

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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
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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

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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?
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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?
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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?

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Business/IT Planning Process

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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
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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

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Strategic Positioning Matrix

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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
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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
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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

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Business Application Planning

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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

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E-business Architecture Planning

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Implementation

Definition:
• A process that carries out the plans for
changes in business/IT strategies and
applications that were developed in the
planning process

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Scope and Level of Business Change

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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
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End User Resistance Solutions

• Proper education and training

• End user involvement in organizational


changes, and in the development of new
information systems

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Obstacles to Knowledge Mgmt Systems

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Dimensions of Change Management

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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, preferably in person

• Make liberal use of financial incentives and recognition

• Work within the company culture, not around it

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Change Management Process

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