Evolutionary Approach for IS strategy: Decision Making Framework and Efficiency Measurement

Yuri ZelenkovNPO Saturn | Rybinsk State Aviation Technology University

yuri.zelenkov@gmail.com

Conceptions of IS strategy

IT strategy conception1 General management conception2

Practical method

Support of business strategy

Position (matching between IS and external environment)

IT and Business Alignment

Master planof IS function

Plan (predefined course of action)

IT Governance

Shared view of IS role within organization

Perspective (ingrained way of perceiving the world)

Enterprise Architecture

1. Chen, D.Q., Mocker, M., Preston, D.S., Teubner, A.: Information systems strategy: reconceptualization, measurement, and implication. MIS Quarterly. 34(2), 233–259 (2010)2. Mintzberg, H. The strategy concept I: Five Ps for strategy. California Management Review. 30(1), 11–24 (1987)

DEFINITION: IS strategy is the process of identifying potential ways of information systems and technologies usage that the organization should implement to achieve its goals.

Approaches for IS strategy management

Business Strategy

Organization infrastructure

IT Strategy

IT infrastructure

1. IT and Business Alignment3 2. IT Governance4

3. Henderson, J.C., Venkatraman, N.: Strategic alignment: Leveraging information technology for transforming organizations. IBM Systems Journal. 32(1), 472–484 (1993)4. CobiT 4.1, http://www.isaca.org

Approaches for IS strategy management

3. Enterprise Architecture

FuturePresent

Business drivers & goals

Business architecture

Enterprise architecture

Business drivers & goals

Business architecture

Enterprise architecture

IS strategy:set of projects to

build new EA

Business strategy

Research problem formulation• All practical methods suggest that IS strategy has to match the

business strategy. However, organizations in reality rarely follow business strategy even if it formally declared.

• Matching business strategy generally reflects a top-down perspective of IS strategy in organization.

IT strategy conception General management conception

Practical method

Standard response to change in external environment thatformed as result of previous experience

Pattern Decision Making FrameworkEfficiency Measurement

Solution = perspective + pattern

Evolutionary views of firm behavior

Types of innovation5

• Operational• New products• New business models• New management models

5. Hamel, G.: The Future of Management. Harvard Business School Press, Boston (2007)

Strategy as position and plan

Position. Ver. 1

Plan

Goal

Contingencyplan

Emergency plan

Real achievement

Position. Ver. 2(We always wanted to achieve

exactly this goal)

External changes

Strategy as perspective and pattern

Perspective -ingrained way of perceiving

the worldPattern

Incremental learning

Decision making framework

Tw – cost of transforming raw materials into finished products and servicesTm – transaction costs of managing the process of transformation;T int

a – transaction costs of coordination between the departments within the firm;T ext

a – transaction costs of reaching an agreement with external agents.

IS efficiency measurement

Organization as a complex system.

Event ResponseRoutine

(business process)

IS

N - an amount of processes that performed for a period of time t, and each of them has the output value of Fi from set of n possible outcomes F, p(Fi) the proportion of processes that executed with result Fi

ExampleBusiness process

Distribution of process output

Process metric

Conclusions

• Any organization is an open complex system. The main reason of complexity is lack of its information resources to describe its states, laws and behavior.

• Organization uses standard routines to respond to changes in external environment. But routine outcomes always are unpredictable because external conditions are unknown and impossible create long-term plan (strategy) that will be really valid.

• IS at the operational level aims to increase the amount of information about the system and to reduce uncertainty about possible routines outcomes.

• Proposed approach allows to make strategic decisions about the implementation of IS to enhance the operational efficiency of the firm, the formal business strategy of the company is not required.

• Introduced efficiency metric helps quantify measure the performance of decisions implementation.

Future work

• Implemented IS fixes current state of business processes and often hampers a change of operational practices, because the change of the IS itself also requires additional resources.

• Proposed pattern has to be improved by adding the IS agility concept.

• Agility means here ability of an IS support and development team to sense environmental change and respond efficiently to that change.