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IT and Network Organization IT and Network Organization
Antoine Antoine HARFOUCHE, PHDHARFOUCHE, PHD
IT and Network Organization IT and Network Organization
Startegic alignment in Network organizations
Session 6:
IT and Network Organization IT and Network Organization
Core Concepts
• Business-IT alignment – is a dynamic state in which a business
organization is able to use IT effectively to achieve business objectives
– improved its financial performance or marketplace competitiveness.
– the ability of IT to produce business value– the harmony between IT and business decision-
makers within the organizations
IT and Network Organization IT and Network Organization
Why the alignment matters?
Operational excellence is central to creating and sustaining strategic advantage and change!
Operational excellence is central to creating and sustaining strategic advantage and change!
IT and Network Organization IT and Network Organization
IS has a key roleon the strategic level
IT and Network Organization IT and Network Organization
Process Executio
n
Process Executio
n
Technologies
Technologies
KnowledgeKnowledge
Organizational Structure
Organizational Structure
HumansHumans
PROCESS PERFORMANCE
PROCESS OUTCOMES
VALUE GENERATEDVALUE GENERATED
IS can also influenceThe operational level
IT and Network Organization IT and Network Organization
Strategic Alignment
IT and Network Organization IT and Network Organization
• Five strategies for dealing with competitive forces, enabled by Network organizations– Low-cost leadership – Product differentiation– Focus on market niche– Strengthen customer and supplier intimacy– Blue Ocean Strategy
8
The strategic dimension of the alignment
IT and Network Organization IT and Network Organization
• Low-cost leadership– Produce products and services at a lower price than
competitors while enhancing quality and level of service
– Examples: Wal-Mart
• Product differentiation– Enable new products or services, greatly change
customer convenience and experience– Examples: Google, Nike, Apple
9
The strategic dimension of the alignment
IT and Network Organization IT and Network Organization
• Focus on market niche– Use information systems to enable a focused strategy
on a single market niche; specialize– Example: Hilton Hotels
• Strengthen customer and supplier intimacy– Use information systems to develop strong ties and
loyalty with customers and suppliers; increase switching costs
– Example: Netflix, Amazon
10
The strategic dimension of the alignment
IT and Network Organization IT and Network Organization
• BOS: Value Innovation
- Objective is to create a completely new industry through fundamental differentiation as opposed to competing in an existing industry by tweaking established models.
- BOS advocates creating new uncontested space through what the authors term “value innovation”. This means increasing value by introducing new benefits and services, while simultaneously reducing costs by eliminating less valuable features or services.
- COSTS + VALUE
-- VALUE INNOVATION --
IT and Network Organization IT and Network Organization
• To achieve value innovation Kim and Mauborgne propose an analytical tool called the Four Actions Framework. Four key questions challenge an industry’s strategic logic and established business model:
- COSTS + VALUE
-- FOUR ACTIONS FRAMEWORK --
ELIMINATE RAISE
WHICH FACTORS CAN YOU ELIMINATE THAT YOUR INDUSTRY HAS LONG COMPETED ON?
WHICH FACTORS SHOULD BE RAISED WELL ABOVE THE INDUSTRY’S STANDARD?
REDUCE CREATE
WHICH FACTORS SHOULD BE REDUCED WELL BELOW THE INDUSTRY STANDARD?
WHICH FACTORS SHOULD BE CREATED THAT THE INDUSTRY HAS NEVER OFFERED?
BOS:
IT and Network Organization IT and Network Organization
EXISTING INDUSTRY
•Fiercely Competitive•Increased commoditization
= Blood in the water
Source: Chan Kim, Renée Mauborgne
The aim of BOS is not to out-perform the
competition in the existing industry, but to create a
new market space or blue ocean, thereby making the
competition irrelevant
IT and Network Organization IT and Network Organization
The technological dimension of the alignment
IT and Network Organization IT and Network Organization
• The ICT’s impact on competitive advantage– Transformation, destruction, threat to some
industries• E.g. travel agency, printed encyclopedia, newspaper
– Competitive forces still at work, but rivalry more intense
– Universal standards allow new rivals, entrants to market
– New opportunities for building brands and loyal customer bases
15
The technological dimension of the alignment
IT and Network Organization IT and Network Organization
– Managers set organizational structure for responding to business challenges
– In addition, managers must act creatively in:
• Creation of new Business models
• Occasionally re-creating the organization
16
The organizational dimension of the alignment
IT and Network Organization IT and Network Organization
The IT strategy dimension of the alignment
• Benefits of personalization• Benefits of co-creation• Benefits of integrating communication
channels in one channel• Benefits of e-communication• Benefits Virtual Communities• Benefits of Disintermediation
IT and Network Organization IT and Network Organization
Example: Business Travel
Source: Biau & Sun
IT and Network Organization IT and Network Organization
Conclusion