Aligning Information Systems (IS) and Corporate Strategy

Ken Kozar/Tom MiaskiewiczLeeds School of Business

University of Colorado/Boulder

Some Background• Systems• Information Systems• Information Technology• Operations Management

System

• Interrelated parts that exist for a purpose– Input, Processing, Output

• All around us!– Human body– Weather– A bike

• Can have many subsystems

3

System Diagram Example

• Emergency Room

4

Ambulance

Police

Others

Triage

PATIENT

PATIENT

PATIENT

Supply Room

ORDERSSUPPLIES

Morgue

TERMINATED PATIENT

WELLPATIENT

Society

NOT WELL WardsTreatmentAdmissions

PATIENT PATIENT

PATIENT

Source: Athey and Zmud 1986

Information Systems (IS)

• Information System– Group of components that produce information

for a certain purpose

• Broader than Information Technology (IT)– iPod vs iTunes Music Distribution

5

HardwareSoftwareDataProceduresPeople

INPUTS OUTPUTS

Data Useful Information

Operations Management

• Planning, coordination, controls, and resources needed to produce goods or services from resources/raw materials

6

Operations Management

INPUTS OUTPUTS

Resources ProductsRaw Materials

Source: Adams 2008

Services

IS Managers’ Issues?

• Some Lingering Topics• Why don’t they go away?• COO stands for what?• CIO stands for what?• Can IS become part of the team?• Is IS just technology?

Some studies?

• CSC Index ’95 - #1 issue is “Aligning IS and Corporate Goals”

• Beyond Computing ’95 - #1 Issue is “Integrating IT/Corporate Strategies”

• CIO Magazine 2006 State of CIO - #1 Priority “Align IT and Business Goals”

• Best Way to Lose CIO Job?

Ernst and Young Study• Surveyed CIOs, their bosses and peers (COO)• #1 “To-Do” for all three: Align IS and Corporate

Goals• #1 Best Way to Get CIO Fired? “Failing to

communicate with senior management.”• Others include: “Not fitting in with corporate

culture,” “Not being a team player,” Failing to deliver functionality required by the business”

COMMUNICATE!? About What?

• About business!• About the bottom line and impacts on it• About leveraging technology to attract and

retain customers and reduce the cost of servicing them

• Not about technology per se!

Linking Business to IS

• Business Objectives – Measured through revenues and costs

• Business Tactics – Tasks performed• Systems Objectives – IS Results• Systems Tactics – Technologic Activity

Need:

• Business-Savvy IT Persons Partnering With

• IT-Savvy Business Persons

Putting it All Together - Alignment

Business Objectives

• Focus on Cost or Revenues• Based on vision and mission• Unconstrained Thinking

Classic Costs to Reduce

• Include overtime, waste/spoilage, losing discounts, cash flow loan charges, turnover, absenteeism, fines, space charges, lawsuits, uncollected debts, rework, outsourcing, etc.

Classic Revenues to Increase

• Include new markets, repeat customers, new products/services, product returns, inventory outages, “dunning” improperly, alliances, cross selling, quick funds recovery, etc.

Clues to Business Objectives

• Changes in product line, product quality, product characteristics, markets, price, target customers, market position, market share, company size, ROI, dividends, leadership directions, etc.

Business Tactics

• Means of accomplishing objectives• Performable by organizational members?• Tactics specify how IS is used• Changed tactics could mean: business

process reengineering, changed job descriptions/job entry/compensation /training/union contracts

System Objectives

• Stated in terms of increased capabilities• Reports, screens, web sites, processing,

accessibility, communication could change• Must be clear on times, content, order,

time period, format, circulation, response time, usability

System Tactics

• Preliminary design with no vendor, hardware specifics, or physical details

• System tactics cost money• Are combined into a system strategy or

architecture

Gumption Traps

• Intangible Objectives – do they really exist?

• Quantification – is it measurable? • Goal setting – science or art?• Assuring all constituencies considered• Always do this?

Why try this?

• Links IS to the Organization• Common Language• Measurable Targets – are we done?• Cost/benefit Analysis Possible• Ensures IS is useful and used• Ensures IS and users know their role• Basis for Job Redesign

Can we do this?

• If you think you can or Think you can’t You’re Right!

-Henry Ford