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Functional Strategy – IS & IT

Geoff Leese November 2006, revised July 2007, September 2008, August

2009

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Introduction

The need for IS and IT strategies Where it fits in Strategic IS/IT questions Symptoms of an ineffective IS/IT

strategy Formulating an IS/IT strategy Key inputs to IS/IT strategy Strategy setting process Managing the strategy

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Business advantages of IT/IS

Instant communication Ability to handle large volumes

of data Integration of data from

different sources Automated analysis and

presentation of results

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The need for an IT strategy An important source of competitive

advantage Linking to customers and suppliers Improving operational efficiency Enabling faster response to environmental

change Makes switching more difficult if competitors

IT systems are incompatible Facilitates monitoring and analysis of Key

performance indicators Enables flexible manufacturing and TQM Improves management control

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Where it fits inBusinessStrategy

DivisionalStrategy

DivisionalStrategy

DivisionalStrategy

ProductionStrategy

ISStrategy

MarketingStrategy

ITStrategy

Manual SystemsStrategy

ManagementStrategy

DataPolicy

CommsPolicy

ArchitecturePolicy

AcquisitionPolicy

OrganisationPolicy

ControlPolicy

etc

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Business,IS and IT strategies• Business strategy

• Describes where the business is heading

• Define what activities will be carried out by the organisation

• Will usually require some changes to existing information systems and / or development of new ones

• Information systems strategy• Describes the information and systems needed to support

the organisation’s activities

• It’s the “what” we need to do; demand part of the demand / supply equation

• Information technology strategy• Describes how the information and system needs will be met

e.g. what projects, what skills, what technologies• It’s the “how” we will do it; supply part of the demand /

supply equation

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Strategic IS/IT questions What information systems do we need? How much are we going to invest in IS / IT? How are we going to organise the IS dept? How are we going to resource the IS dept? How much software are we going to buy in? How much software should we build

ourselves? What technical standards should we employ?

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Symptoms of an ineffective IS/IT strategy

organisational goals may become unattainable due to systems/technology limitations

systems are not integrated, causing delays. duplication of effort, poor management

systems implementation projects are late, over cost or fail to deliver expected benefits

priorities & plans are always changing, causing conflict & poor productivity

inefficient IS/IT resource usage & investment appraisal

operational opportunities may be left unexploited

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Organisational & IS/IT Strategy

Definition of organisational strategy: ‘an integrated set of actions aimed at

increasing the long-term well-being & strength of the organisation’

IS/IT strategy involves three relevant strategies:

organisationalstrategy

organisationalstrategy

IS strategyIS strategy

IT strategyIT strategy

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Inputs & outputs to IS/IT strategy

operationalopportunities

operationalopportunities

organisation’senvironment

organisation’senvironment

external IS/ITenvironment

external IS/ITenvironment

internal IS/ITenvironment

internal IS/ITenvironment

organisationstrategy

organisationstrategy

IS strategyWHAT?

IS strategyWHAT?

IT StrategyHOW?

IT StrategyHOW?

future applications

future applications

currentapplications

currentapplications

strategic IS/IT planningWHERE?

strategic IS/IT planningWHERE?

needs/priorities

servicesarchitecture

IS/IT opportunities

portfolio management

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The Strategies: The IS Strategy 1

IS strategy defines the information architecture and applications portfolio(s) at the organisation & function/department levelsorganisation

divisions

departments

functions

Need to define/integratestrategy level before ISstrategy can be set

Many organisations are simpler than this model - some are more complex.

Complexity produces problems of STRATEGIC ALIGNMENT

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The Strategies: The IS Strategy 2

Purpose: To define & integrate the organisation’s

information resources at organisational, divisional & functional level

establish needs & priorities for IS applications

align with business & IT strategies link with system development &

implementation processes ‘feed forward’ into planning process

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The Strategies: The IT Strategy 1

Major input & linkage = IS strategy at organisational, divisional & functional levels

decide on standards for hardware/systems & communications software - the infrastructure

agree policies for acquisition, deployment & management of IT resources

align with IS strategy & other organisational & functional strategies, particularly HRM

link with systems development & systems implementation processes

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Key Inputs: External Environment

An assessment of the forces acting on the organisation & its operations:

public economic conditions power structures & politics sources of funding Factors of influence: strategic use of IS/IT facilitates

‘downstream’ drift of benefits operational, economic & technological

environments are changing more frequently increased change places greater stress on

IS/IT effectiveness

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Key Inputs: Internal Organisational EnvironmentAn analysis of information & application needsbased on: mission & objectives

must be expressed clearly must be interpreted accurately

operational activities & processes future directions analysing cost & value drivers

strengths/weaknesses/competencies organisational structure & style

organisation structure & deployment management style organisational style & image

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Key Inputs: External IS/IT Environment

An assessment of opportunities/threats afforded by the technology ‘market-place’

technology standards currently available technology trends emerging How IS/IT is being used

by clients by suppliers & customers

Need to balance: organisation & IS/IT present & future needs ‘durability & flexibility’ of new technology ‘cost & risk’ of new technology advantages/benefits vs cost/durability

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Key Inputs: Internal IS/IT Environment

An analysis of the effectiveness of IS/IT in the organisation in terms of:

effectiveness of the IS/IT management process

contribution of IS/IT to the organisation reliability/performance of IS/IT success of IS/IT implementation

processes skills of IS/IT developers & users

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establish strategic direction define objectives/targets must be understood, agreed & supported generate ideas/options for ways/means of

achieving define strategy

turn ideas and targets into policies make plans put selected options into practice

implementation communicate plans implement plans monitor implementation

Three Stages of Strategy- setting Process

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Processes for Managing Strategy

Define mission & objectives,

Assess & selectoptions

Define mission & objectives,

Assess & selectoptions

Strategic planningof optionsselected

Strategic planningof optionsselected

ImplementImplement

informal strategic thinkingvision & opportunity

establish strategic direction

define strategies achieve strategies

feedback feedback

The strategic process may be formal or informal

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Summary

The need for IS and IT strategies Where it fits in Strategic IS/IT questions Symptoms of an ineffective IS/IT

strategy Formulating an IS/IT strategy Key inputs to IS/IT strategy Strategy setting process Managing the strategy

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Further reading

The LUCID IT view Good stuff – including a use of

five force diagram and balanced score

HMRC IT strategy Bennett chapter 12