Information Technology Applications in Business by rmf12915

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Section I

            Developing
            Business/Information
            Technology Strategies
                                                       2




Learning Objectives

   Discuss the role of planning in the
    business use of information technology,
    using the scenario approach and planning
    for competitive advantage.

   Discuss the role of planning and business
    models in the development of e-business
    strategies, architectures, and applications.
                                                   2
                                                   3




Learning Objectives (continued)




   Identify several change management
    solutions for end user resistance to the
    implementation of new e-business
    strategies and applications.

   Identify the importance of business & IT
    alignment

                                               3
                                    4




Section I




        Planning Fundamentals




                                4
                                          5




Organizational Planning (continued)




   Strategic Planning

   Strategic Visioning

   Tactical Planning

   Operational Planning
                                      5
                                  6




    Organizational Planning
The Planning
  Process
   Evaluating
    organizational
    accomplishments
    Analyzing the
    business, economic,
    political, and societal
    environment
   Anticipating and
    evaluating the impact
    of future developments
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                                                                 7




    IT Strategy
  An I/T Strategy is a set of discrete actionable interventions
   which ensure that the firm I/T capabilities deliver value
towards strategic business objectives in a cost efficient manner

   Set of decisions made by IT and senior
    management
   Deployment of technology infrastructures
   Relationship of technology choices to business
    choices


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                                                                     8




IT Strategy (ctd)
   I/T strategy may impact all aspects of the I/T portfolio :
    applications, communication, infrastructure, processes,
    governance, organization …

   Not a one-shot activity : needs to be constantly refined
    and aligned with business priorities


   Impact of an I/T strategy must be measurable in
    terms of business value - revenue/margin growth, cost
    reduction etc.
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                                                                                                                          9




The IT strategic plan process
   1                       2 Align IT        3                        4                      5
                                                                                                 Define the
                            strategy to
       Understand                                 Determine the            Define the             budget to
                             business
        business                                 implementation           IT strategic           implement
                               within
         issues                                     strategy               initiatives           initiatives /
                             business
                                                                                                    SLAs
                              context

• Input from the        • Identify the       • Implement a           • Plan initiatives          • Establish
  Business                evolution            Project Office to       within the                  periodic reviews
  strategic plan          scenarios that       manage all the          scenarios
                          impact the IT        initiatives in
                          strategy                 Infrastructure   • Identify benefits /       • Define
                                                   Applications       costs of the                Application
                        • Understand the           Processes          initiatives                 service level
                          evolution in                                     •Costs
                          terms of                                         •Resources
                                                                                                 • Short-term
                             Business                                     •Timing
                             Organization                                                         staffing needs
                             Relations                              • Select initiative
                                                                       through the               • Yearly budget
                                                                       Master Plan tool



                 OBJECTIVES                      IMPLEMENTATION                           INITIATIVES
               IDENTIFICATION                       METHODS                               DEFINITION

                                                                                                                      9
                                              2 Align IT10
                                               strategy to
                                                business

The Scenario Approach to                          within
                                                business
                                                 context

Planning
 Teams participate in a “microworld”
 A variety of business scenarios are
  created
 Alternative scenarios are created by teams
  or by business simulation software based
  on..
    A variety of developments, trends, and
     environmental factors
                                                  10
                                                                              2 Align IT11
                                                                               strategy to
                                                                                business

Scenario Planning Grid                                                            within
                                                                                business
                                                                                 context


                                       IMPACT ON FIRM

                             HIGH          MEDIUM              LOW
              HIGH




                       High Priority
                          Strategy A
FEASIBILITY

              MEDIUM




                                       Medium Priority
                                              Strategy B
                                              Strategy C
                 LOW




                                                           Low Priority
                                                                 Strategy D




                                                                                  11
                                                 2 Align IT12
                                                  strategy to
                                                   business

Planning for Competitive                             within
                                                   business
                                                    context

Advantage
   Especially important in today’s competitive,
    complex environment
   Involves an evaluation of potential benefits and
    risks
   May include the competitive forces and
    competitive strategies models, as well as a value
    chain model of basic business activities
   Use a strategic opportunities matrix to evaluate
    strategic potential
                                                     12
                                                 2 Align IT13
                                                  strategy to
                                                   business
                                                     within
                                                   business
Planning for Competitive Advantage (continued)      context




                                                     13
                                                          2 Align IT14
                                                           strategy to
                                                            business
                                                              within
                                                            business
 Planning for Competitive Advantage (continued)              context




 SWOT Analysis
    Recommend strategies that ensure best alignment
     between external and internal environments

                                        S             W
 Strengths                          Strategies    Strategies
Weaknesses
Opportunities
                                        O             T
  Threats
                                    Strategies    Strategies
                                                               14
                                                   2 Align IT15
                                                    strategy to
                                                     business
                                                       within
                                                     business
Business Models and Planning                          context




   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.

   Specifies how the business will organize and
    operate

   Focuses attention on how all the essential
    components fit into a complete system
                                                       15
                      3            16

                           Determine the
                          implementation
                             strategy

e-Business Planning
3 major
   components

Strategy
   development

Resource
  management

Technology
  architecture



                              16
                                       3            17

                                            Determine the
                                           implementation
                                              strategy
e-Business Planning (continued)




   IT architecture major components
     Technology   platform
     Data resources
     Applications architecture
     IT organization




                                               17
                               18




Examples of IT Planning
Process Results




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                                                                                                          4            19

                                                                                                               Define the
                                                                                                              IT strategic
                                                                                                               initiatives

    IT Strategic Initiatives                                                            • Common applications
                                                                                        • Applications reference
                                                                                          models
                                                          • New HR system               • Unique infrastructure
                                                          • New finance system          • Common I/T policies and
                                                          • Single engineering            standards
                                                            releasing system            • Personal productivity
                                                          • Virtual office for managers • Mobile interconnectivity
                                                          • Logistic harmonization      • Ubiquitous service availability
                         •   Common e-mail system         • Document/Project
                         •   Company reporting system       management
                         •   Network separation and upgrade
                         •   Parent companies applications
                             cloning
                          •  Applications migration
• Different applications •   Video-conferencing and mobile
• Lack of integration        communication
• Missing communication
• Mix of owned and in-service
  applications
• Islands of country I/T organizations
         Year 0                          Today                    Tomorrow                        Long-
                                                                                                  term
                                                                                              TIME


                                                                                                                 19
                                                                     20
                                                     5
                                                         Define the
                                                          budget to
                                                         implement

    IT Strategy Implementation                           initiatives /
                                                            SLAs




 Execute the strategy
 Commitment and engagement of senior
  business management
     Must   occur prior to implementation planning
   Strategic Alignment Maturity
     Ability   to adapt in harmonious fashion
   Adoption of Measurement Criteria
     Measure     effects in several different dimensions

                                                              20
                                                               21
                                               5
                                                   Define the
                                                    budget to
                                                   implement

Periodic Review                                    initiatives /
                                                      SLAs




   Define budget / time / resources for
    projects selected
     Ensure initial assumptions are correct
     Ensure implementation of plans are on
      schedule


   Measurements are captured and reported

                                                        21
                                        22




Section II




       Implementation Challenges




                                   22
                                                   23




Implementation


   A process of carrying out the plans for
    change in e-business strategies and
    applications that were developed during
    the planning process.




                                              23
                                                24




Implementing IT

   Requires managing the effects of major
    changes in key organizational dimensions
    such as
     business processes
     organizational structure
     Managerial roles
     Employee work assignments
     Stakeholder relationships

                                           24
                                                                                                                       25


Comparing application portfolio
with business requirements
                                                                   APPLICATION PORTFOLIO ANALYSIS

     Company Strategy
                                        HIGH

                                                        5
   Business Requirements                                          Migration               Maintain/
                                                             to New platforms             Improve
                                                        4
                                Alignment to Business




                                                                 • Application A          • Application D
                                                                 • ...                    • ......
                                                                                            •
       IT Implications

                                                        3

 Current portfolio evaluation                                     Dismissal                  Align
                                                        2                                 to business:
                                                                                        Function evolution
                                                                  • Application C
                                                                                          • Application B
                                                                  • ...
                                                                                          • ...
    Gap identification                                  1
                                LOW                          1             2        3          4            5   HIGH
                                                                           Technological Alignment

                                                            NEW APPLICATIONS DEVELOPMENT
                                                     26




Change Management

   People are a major focus of organizational
    change management
     Developing  innovative ways to measure,
      motivate, and reward performance
     Designing programs to recruit and train
      employees in the core competencies
   Also involves analyzing and defining all
    changes facing the organization
                                                26
                                                    27



End User Resistance and
Involvement

 Change can generate fear and resistance
  to change
 Keys to countering end user resistance
     Propereducation and training
     End user involvement in organizational
      changes


                                               27
                                     28




Ensuring Strategic Alignment
       Jerry N. Luftman model




                                28
                                                            29



Information Systems for
Competitive Advantage
 The    Technology/Strategy Fit
   AnIS implementation should create a
   significant organizational change consistent
   with the business strategy
       IT needs to be aligned to the business goals




                                                       29
                                                           30




 Strategic Alignment Model
Business Strategy              IT Strategy
   –Business Scope                –Technology Scope
   –Distinctive Competencies      –Systemic Competencies
   –Business Governance           –IT Governance




Organization                   IT Infrastructure &
Infrastructure& Processes      Processes
   –Administrative Structure      –Architecture
   –Processes                     –Processes
   –Skills                        •Skills
                                                      30
                                                          31




Alignment Maturity
   Process which evaluates the IT/business
    alignment status of a specific organization
     Ithas a defined number of levels and
      representations (5 levels)

     Itis based on a defined set of criteria (six key
      criteria)


                                                     31
                                                                 32


 Strategic Alignment Maturity Levels
1.   Initial/Ad Hoc Process
        Business and IT not aligned
2.   Committed Process
        Organization commits to becoming aligned
3.   Established Focused Process
        Established and Focused on business objectives
4.   Improved/Managed Process
        Reinforcing concept of IT as “Value Center”
5.   Optimized Process
        Integrated/Co-adaptive business and IT strategic
         planning

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                                             33




Strategic Alignment Maturity Criteria

 1.   Communications
 2.   Competency/value measurements
 3.   Governance
 4.   Partnerships
 5.   Scope and Architecture
 6.   Skills
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                                                                                                                                                                                                              34


         Strategic Alignment Template
IT Business Alignment Maturity Criteria

                                                                     Level 1                        Level 2                          Level 3                        Level 4                    Level 5
                                                                                                                                                                                          Optimized process/
                                                   Weight       Initial Process             Committed Process               Established Process              Improved Process             BEST PRACTICE
Communication
   Understanding of business by IT                                   Minimum                  Limited IT awareness               Senior & Mid-mgt              Pushed down t/r org                Pervasive

   Understanding of IT by business                                   Minimum                 Limited bus. awareness          Emerging bus awareness        Business aware of potential            Pervasive
   Inter/Intra organization learning / education                  Casual, ad hoc                     Informal                      Regular, clear                Unified/bonded             Strong and structured
   Protocol rigidity                                           Command & Control                 Limited, relaxed                Emerging, relaxed              Relaxed; informal                  Informal
                                                                                                                               Structured around key
   Knowledge sharing                                                  Ad hoc                     Semi-structured                     processes                  Institutionalized              Extra-enterprise
                                                                                                                                                             Bonded; effective at all
   Liaison(s) effectiveness                                       None or ad hoc            Limited tactical tech base      Formalized, regular meetings         internal levels               Extra-enterprise
Competency / Value Measurements
   IT metrics                                               Technical, not bus. Relation          Cost efficiency               Traditional financial          Cost effectiveness          Extended to ext. Partners
   Business metrics                                            Ad hoc - not it related        At the functional org.           Traditional financial           Customer-focused            Extended to ext. Partners
                                                                                            Business & IT metrics not        Emerging bus & IT metrics
   Balanced metrics                                              Ad hoc - unlinked                    linked                          linked               Business & IT metrics linked    Bus, partner & IT metrics
                                                                                                                               Emerging across the
   Service level agreements (SLAs)                             Sporadically present        Technical, at functional level           enterprise                   Enterprise-wide           Extended to ext. Partners
   Benchmarking                                               Not generally practiced                Informal                        Emerging                  Routinely performed           Routine with partners

   Formal assessment / reviews                                         None                Some, mostly for problems            Emerging formality             Formally performed            Routinely performed
   Continuous improvement                                              None                         Minimum                          Emerging                      Frequently                Routinely performed
Governance
                                                                                                                                                              Managed across the          Integrated across & outside
   Business strategic planning                                        Ad hoc                  Basic plan - functional         Some inter-org planning              enterprise                        the org
                                                                                                                                                              Managed across the          Integrated across & outside
   IT strategic planning                                              Ad hoc                 Functional tactical plan   Focused plan; some inter-org               enterprise                        the org
                                                              Central/decentral; CIO       Central/decentral, some co- Central/dec; some federation;        Federated; CIO reports to      Federated; CIO reports to
   Organization structure                                        reports to CFO               location; CIO to CFO             CIO to COO                        COO or CEO                            CEO
                                                               Cost center; erratic                                         Cost center; some                                               Investment center; profit
   Budgetary control                                                spending               Cost center; functional org.         investments                    Investment center                      center
                                                               Cost based; erratic                                                                         Cost effectiveness; process    Bus value; extended to bus
   IT investment management                                         spending               Cost base; ops/maint. Focus      Traditional; process enabler              driver                        partners

   Steering committee                                           Not formal / regular         Periodic communication          Regular clear communic.       Formal; effective committees             34
                                                                                                                                                                                                 Partnership
   Prioritization process                                            Reactive                Occasional responsive             Mostly responsive              Value add; responsive          Value added partner
                                                                      Level 1                        Level 2                         Level 3                        Level 4                      Level 5
                                                                                                                                                                                                        35
                                                                                                                                                                                            Optimized process/
                                                      Weight      Initial Process           Committed Process                Established Process            Improved Process                BEST PRACTICE
Partnership
                                                                 Perceived as cost of                                                                                                          IT co-adapts with the
   Business perception of IT value                                    business               IT emerging as an asset               IT as an asset             IT is seen as a driver                 business

   Role of IT in strategic business planning                   No seat at business table        Bus process enabler         Business process enabler          Bus strategy enabler            IT co-adapts with bus
                                                                IT takes risk with little   IT takes most risk with little                                    Risk acceptance and
   Shared goals, risk, rewards, penalties                               reward                        reward               Risk tolerant; IT some reward        rewards shared                Risk & rewards shared
   IT program management                                                Ad hoc                  Standards defined               Standards adhered               Standards evolve             Continuous improvement
                                                                                                                              Emerging valued service
   Relationship / Trust style                                     Conflict/minimum            Primarily transactional                provider                Valued service provider            Valued partnership
   Business sponsor / champion                                           None                 Limited at functional org           At the funct. Org              At the HQ level                 At the CEO level
Scope and Architecture
                                                                  Traditional (email,                                       Expanded scope; bus process      Redefined scope (bus
   Traditional                                                       accounting)             Transaction (ESS, DSS)                   enabler                   process driver)                     Advanced
   Enabler / driver                                                      None                          Partial                       Emerging                    Recognized                     Bus strategy driver
                                                                                                                                                           Substantial role with clients
   External                                                              None                          Partial                       Emerging                    and partners                     External scope
   Standards articulation                                           None or ad hoc              Standards defined             Emerging enterprise std.           Enterprise stds               Inter-enterprise stds

   Architectural integration (functional org)                    No formal integration      Early attempts at integration     Integrated key processes            Integrated                        Integrated
                                                                                                                                 Emerging enterprise          Standard enterprise
   Architectural integration (enterprise)                        No formal integration      Early attempts at integration            architecture                architecture                 Enterprise architecture

   Architectural integration (inter-enterprise)                  No formal integration      Early attempts at integration    Emerging with key partners         With key partners                With all partners

   Architectural transparency, agility, flexibility                      None                         Limited                Focused on communication       Emerging across the org          Across the infrastructure
                                                                                                                                                            Substantial attention and
   Manage emerging technology                                       None or ad hoc                    Limited                        Emerging               testing of emerging tech                 Routine
Skills
                                                                                                                                                           Enterprise, partners and IT
   Innovation, entrepreneurship                                      Discouraged             Dependent on funct. Org                Risk tolerant                     mgrs                          The norm
   Cultural locus of power                                          In the business               Functional org                Emerging across org              Across the org             All execs; CIO & partners

   Management style                                              Command & Control          Results consensus based          Consensus; results based          Profit / Value based             Relationship based

   Change readiness                                              Resistant to change         Dependent on funct. Org        Recognized need for change           High, focused                    High, focused
   Career crossover, training                                            None                        Minimum                  Dependent on funct. Org            Across the org                Across the enterprise
   Social, political, interpersonal environment                                                                                Emerging around IT &         Achieved among IT and
   trusting                                                            Minimum              Transactional environment               business                      business                     Across the enterprise

                                                                                                                              Tech/bus focus; retention    Formal program for hiring
                                                                                                                                                                                                      35
                                                                                                                                                                                           Effective program for hiring &
   Hiring and retaining                                              No program                Technology focused                    program                and retain best talents              retain best talents
                                                           36




Discussion Questions
   Planning is a useless endeavor, because
    developments in e-business and e-commerce,
    and in the political, economic, and social
    environments are moving too quickly nowadays.
    Do you agree with this statement?

   “Planning and budgeting processes are
    notorious for their rigidity and irrelevance to
    management action.” How can planning be
    made relevant to the challenges facing an e-
    business enterprise?
                                                      36
                                                        37




Discussion Questions (continued)




   What planning methods would you use to
    develop e-business and e-commerce strategies
    and applications for your own business?

   What are several e-business and e-commerce
    strategies and applications that should be
    developed and implemented by many
    companies today?


                                                   37
                                                              38




Discussion Questions (continued)




   How can a company use change management
    to minimize the resistance and maximize the
    acceptance of changes in business and
    technology?

   “Many companies plan really well, yet few
    translate strategy into action.” Do you think this
    is true?


                                                         38
                                                  39




Discussion Questions (continued)




   What major business changes beyond
    e-business and e-commerce do you think
    most companies should be planning for
    the next ten years?




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