Management Information System Chapter 11 GTU MBA

7/31/2019 Management Information System Chapter 11 GTU MBA

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Planning IT Strategy is a uselessexercise, because developments in e-business and e-commerce and in thepolitical, economic, and societalenvironments are moving too quicklynowadays. Do you agree or disagree

with this statement ? Why?

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Chapter

11Developing Business/IT

Strategies


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Learning Objectives

Discuss the role of planning in the businessuse of information technology, using thescenario approach and planning forcompetitive advantage as examples

Discuss the role of planning and businessmodels in the development of business/ITstrategies, architectures, and applications

Identify several change managementsolutions for end user resistance to theimplementation of new IT-based businessstrategies and applications

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Planning Fundamentals

Information technology has created aseismic shift in the way companiesdo business

Just knowing the importance andstructure ofe-business is not enough

You must create and implement anaction plan that allows you to make thetransition from an

old business design to a new e-businessdesi n1-4


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Components of OrganizationalPlanning

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Planning

Strategic Planning Deals with the development of an

organizations mission, goals, strategies,and policies

Begins with strategic visioning questions

Tactical PlanningThe setting of objectives and the

developmentof procedures, rules, schedules, andbudgets

Operational Planning Done on a short-term basis to implement 1-6


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Strategic VisioningQuestions

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The Scenario Approach

Gaining in popularity as a lessformal, but more realistic, strategicplanning methodology

Teams of managers and plannersparticipate in microworld or virtual worldexercises

Business scenarios are created andevaluated

Alternative scenarios are then created

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Trends that Affect StrategicPlanning

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Planning for CompetitiveAdvantage

Strategic business/IT planning Involves evaluating the potential benefits

and risks of using IT-based strategies andtechnologies for competitive advantage

The following models can help generateideas for the strategic use of IT tosupport initiatives

Competitive forces

Competitive strategies

Value chain

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Strategic OpportunitiesMatrix

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SWOT Analysis

SWOT stands for

Strengths: a companys corecompetencies

and resources Weaknesses: areas of substandard

business performance compared to others

Opportunities: potential for new business

markets or innovative breakthroughs thatmight expand current markets

Threats: anything that has the potentialfor business and market losses

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Business Models andPlanning

Business model answers vitalquestions about the fundamentalcomponents of a business

Who are our customers?

What do our customers value?

How much will it cost to deliver thatvalue?

How do we make money in thisbusiness?

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Questions for all BusinessModels

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Customer value Are we offering somethingdistinctive or at a lower costthan our competitors?

Scope To which customers is this value beingoffered?

What range of products/servicesoffered embody this value?

Pricing How do we price the value?


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Revenue source Where do the rupees come from?Who pays for what value and when?

What are the margins in each market,and what drives them?

What drives value in each source?

Connectedactivities What do we have to do to offer thisvalue and when?

How connected are these activities?


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Implementation What structure, systems, people, andenvironment do we need to carry outthese activities?

What is the fit between them?

Sustainability What is it about the firm that makesit difficult for other to imitate it?

How do we keep making money?

How do we sustain our competitiveadvantage?


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Capabilities What are our capabilities andcapabilities gaps?

How do we fill these gaps?Is there something distinctive aboutthese capabilities that lets us offerthe value better than other firms?

Is this capability hard to imitate?What are the sources of thesecapabilities?

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Questions Specific to E-Business Models

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Customer Value What is it about Internet technologiesthat allows us to offer customerssomething distinctive?

Can Internet technologies help usto solve a new set of problems for

customers?

Scope What is the scope of customers thatInternet technologies enable us to

reach?Does the Internet alter the product orservice mix that embodies the firms

products?

Q ti S ifi t E


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Pricing How does the Internet make pricingdifferent?

Revenue source Are revenue sources different withthe Internet?

What is new?

Connectedactivities

How many new activities must beperformed as a result of the Internet?

How much better can Internettechnologies help us performexisting activities?


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Implementation How do Internet technologies affect thestrategy, structure, systems, people,and environment of the firm?

Capabilities What new capabilities do we need?What is the impact of Internettechnologies on existing capabilities?

Sustainability Do Internet technologies makesustainability easier or more difficult?

How can the firm take advantageof it?


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Business Models as PlanningTools

A business model forces rigorouslyand systematic thinking about thevalue and

viability of business initiatives

The strategic planning process is thenused

to develop unique business strategiesthatcapitalize on a business model

The goal is to gain a competitive 1-21


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The Business/IT PlanningProcess

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The Business/IT PlanningProcess

The business/IT planning process hasthree major components

Strategic development

Resource management

Technology architecture

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Information TechnologyArchitecture

The IT architecture is a conceptualdesignthat includes these major

components

Technology platform

Data resources

Application architecture

IT organization

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Balanced Scorecard

The balanced scorecard measures acompanys activities in terms of visionand strategies

The system has four processes

Translating vision into operational goals

Communicating the vision and linking itto individual performance

Business planning

Feedback/learning and strategy adjustment1-25


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Balanced Scorecard

The business perspectives a scorecardmeasures

Financial: reflects financial performance,such as cash flow or ROI

Customer: measures having a directimpact on customers, such as time toprocess phone calls

Business process: reflects theperformance of key business processes,such as time spent prospecting or processcosts

Learning/growth: the companys learning

curve, such as how many hours are spenttraining staff1-26


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Identifying Business/ITStrategies

The most valuable Internetapplications allow companies to

Transcend communication barriers

Establish connections that enhanceproductivity

Stimulate innovative development Improve customer relations

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Strategic Positioning Matrix

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Strategic strategies

Cost and Efficiency Improvements

Use the Internet as a fast, low-cost way tocommunicate and interact with others

Use of e-mail, chat systems, discussiongroups, and company websites

Performance Improvement inEffectiveness

Major improvements in businesseffectivenessrecommended

Increase use of Internet-basedtechnologies,such as intranets and extranets 1-29


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Strategic Strategies

Global Market Penetration

Capitalize on a high degree of customerand competitor connectivity and use of IT

Use e-commerce websites with value-added information services and extensiveonline customer support

Product and Service Transformation

Develop and deploy new Internet-basedproducts and services that strategicallyreposition it in the marketplace

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E-Business StrategyExamples

Market Creator: be among the first tomarketand remain ahead of the competition

by continuously innovating Channel Reconfiguration: use the

Internet

as a new channel to directly accesscustomers, make sales, and fulfillorders

Transaction Intermediary: Use theInternet 1-31


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E-Business StrategyExamples

Infomediary: use the Internet to reduce thesearch cost; offer a unified process forcollecting the information needed to make alarge purchase

Self-Service Innovator: provide acomprehensive suite of services that thecustomers employees can use directly

Supply Chain Innovator: use the Internet tostreamline supply chain interactions

Channel Mastery: use the Internet as a salesand service channel

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Business Application PlanningProcess

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Comparing PlanningApproaches

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E-Business ArchitecturePlanning

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Implementation

Many companies plan changes very well

Few manage to convert a plan into actionThis is true even if senior management

consistently identifies e-business as anarea of great opportunity

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Implementing InformationTechnology

Many businesses have undergonemultiplemajor reorganization since the early1980s

Business process reengineering Installation and upgrades of an ERP system Upgrading legacy systems to be Y2K

compliant

Creating shared service centersJust-in-time manufacturing Sales force automation Contract manufacturing

The introduction of euro currency 1-37


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Impact and Scope ofImplementing IT

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Intranet Enterprise PortalChallenges

Security, security, security

Defining the scope and purpose of theportal

Finding the time and the money

Ensuring consistent data quality

Getting employees to use it

Organizing the data

Finding technical expertise Integrating the pieces

Making it easy to use

Providing all users with access1-39


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Enterprise Resource Planning Challenges

Getting end user buy-in

Scheduling/planning

Integrating legacy systems/data

Getting management buy-in

Multiple/international sites and partners

Changing culture and mind-sets

IT training

Getting, keeping IT staff

Moving to a new platform

Performance/system upgrades

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End User Resistance andInvolvement

Any way of doing things generatessome resistance from the peopleaffected

CRM projects have a history of failure Up to 75 percent of CRM projects fail to

meet their objectives

This is often due to sales forceautomation problems and unaddressedcultural issues

Sales staffs are often resistant to, orfearful 1-41


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Keys to Solving End UserResistance

Keys to solving end user resistanceproblems

Education and training

End-user involvement in organizationalchanges and system development

Requiring involvement and commitment of

top management and all stakeholders Systems that inconvenience or frustrate

users cannot be effective, no matter

how technically elegant or efficient 1-42


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Obstacles to KM Systems

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Change Management

People factors have the highest levelof difficulty and the longest time to

resolveof any dimension of change

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Key Dimensions of ChangeManagement

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Change Management

Implementing a new e-businessapplicationmay involve

Developing an action plan

Assigning managers as change sponsors

Developing employee change teams Encouraging open communications and

feedback about organizational changes

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Change Management

Key tactics recommended by changeexperts

Involve as many people as possible in e-

business planning and applicationdevelopment

Make constant change an expected partof the culture

Tell everyone as much as possible abouteverything, as often as possible, in person

Make liberal use of financial incentives andrecognition

Work within the com an culture, not1-47

A Change Management


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A Change ManagementProcess

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Management Information System Chapter 11 GTU MBA