CIDM Test 1 Slide Material PDF

Preview

Summary

Download CIDM Test 1 Slide Material PDF

Description

The Information Systems Strategy Triangle Chapter 1! Big picture! - This chapter introduces a simple framework the Information Systems Strategy Triangle, which links business strategy with organizational strategy and information strategy.! • Failing to understand this relationship is detrimental to a business.! • Failing to plan for the consequences in all three areas can cost a manager his or her job.! - The chapter describes this model, building on several other popular strategy models and organizational models.! Information systems strategy triangle! - Business, organizational, and information strategies are fundamentally linked, and need to be in balance. (like harmony!)! - Three key points:! # • Successful firms have an overriding business strategy that drives both organizational strategy and IS strategy.! # • IS strategy can itself affect and is affected by changes in a firm’s business and organizational design.! # • Changes in the IS strategy must be accompanied by changes in the organizational strategy and must accommodate the overall business strategy.! - IS strategy always involves consequences within business and organizational strategies.! # • Success can be achieved only by specifically designing all three components of the strategy triangle so they properly complement each other.! The Information Systems Strategy Triangle! - Organizational Strategy! - Business Strategy! - Information Strategy! These need to be balanced.! Alignment! - Alignment is defined as the situation in which a company’s current and emerging business strategy is enabled and supported yet unconstrained by technology.! - Although alignment is good, Higher states toward which companies should strive:! • Synchronization- Technology not only enables current business strategy but also anticipates and shapes future business strategy.! • Convergence- It goes one step further; Business strategy and technology strategy are intertwined and the leadership team members operate almost interchangeably.! Strategic Alignment! - The concept of strategic alignment stresses the harmonization of the goals and implementation plans of IT with the goals and organizational structure of the business.! - Refers specifically to the coordination of an organization's external business and IT goals and its internal business and IT organizational infrastructures.! Business strategy Business strategy, business model, strategic approach! Strategies! - The following is a strategy statement from respected business!

1

- Our Strategy! • is to be a low cost provider! • pursuing global strategy! • is to integrate a set of regional acquisitions! • Provide excellent customer services! • To move from defense to industrial application! - These are tactic, goals, objectives or small pieces of the overall business strategy! What is Strategy?! - Comes form the Greek word STRAREGOS! - It means the art of war and the role of the general in a aware! - The General is responsible for multiple units that must work together to win a war.! - The general adds value to the battle by providing high-level orchestration vision! - A business is modern-day war the causality are more frequently investors pocketbooks rather than human lives! - The challenge to the executive is similar to the challenge of the general. He/she needs to develop a set of complex tactics and activities that lead to a victory.! Strategy! - A good strategy provides clear answers to four key questions! 1. Where do we compete. What competitive markets or arenas we are going! to be active in! 2. What unique value do we bring to win these markets. (Cost, differentiation, services)! 3. What resources and capabilities to utilize to deliver that value - Human capital! - Superior technology - Unique reputation! 4. How do we sustain our ability to provide that unique value! - Are there factors to keep our competitor form being willing to replicate the value we provide! What is Strategy?! - A firm’s business strategy determines...! • Products and services the firm produces! • Industries in which the firm competes! • Competitors, suppliers, and customers of the firm • Long-term goals of the firm! - A Business Strategy is:! • A well-articulated vision of where the business seeks to go and how it expects to get there • It is the form by which a business communicates its goals! - Business strategy is a function of! • Competition (What does the customer want and what does the competition do?) • Positioning (In what way does the firm want to compete?)! • Capabilities (What can the firm do?)! Business strategy frameworks: Mission statements! • Mission statement sums up what is unique about the firm.! • Zappos’ focus is on customer service.! • Amazon is about customer sets.! • L.L.Bean is about the merchandise and treating people the right way.! • Mission statement is supposed to unify the organization.! Business strategy vs. business model! Business strategy! • The coordinated set of actions used to meet the business goals and objectives! Business Model! The logic of the firm, the way it operates and how it creates value for its stakeholders!

2

• The design of how the business will make money (generate revenue) and how customers will get value from its products and services.! • Can be considered as a reflection of the firm’s realized strategy (i.e., the outcome of strategy)! Examples of business models! • Subscription! • Advertising! • Cost plus! • Renting/Licensing! • All-you-can-eat! • Freemium! Strategy & business models! The notion of the business model might appear to be similar to that of strategy.! Let’s further explore these concepts with a real-world example in order to separate and related the concepts of strategy & business model.! Reference:! Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long range planning, 43(2), 195-215! Business Strategy & Business models! - Strategy is often defined as “! • E.g., Ryanair’s strategy at the brink of bankruptcy in early 1990s was • “Become the Southwest of Europe”! - Business models are made of two different sets of elements:! 1. The concrete choices made by management about how the organization must operate! # - Three types of choices: policies, assets and governance structures.! 2. The consequences of these choices.! • Choices are made in every organization, all of which will have consequences.! • The particular set of choices an organization make about policies, assets, and governance –! and their associated consequences – are the organization’s business model! • Why?—because they determine ‘the logic of the firm, the way it operates and how it creates value for its stakeholders’! Ryanair business model representation! Every choice has some consequences: for instance, using secondary airport has a consequence of cutting the costs.! • See slide for Ryanair’s business model representation! In summary: Strategy & business models! • Strategy refers to a firm’s contingent plan as to which business model it will use! • “contingent” means strategies should contain provisions against a range of environmental contingencies, where they take place or not.! - Accordingly, an outside observer will only be able to observe the realized strategy, rather than the entire contingent plan.! • A business model is a reflection of the firm’s realized strategy. • Every organization has a business model! • This is because every organization makes some choices, and these choices have some consequences.! Generic Strategies! - Michael Porter describes how businesses can build a sustainable competitive advantage!

3

- Porter suggest the generic strategies could be define by two key demission the scope of the strategy and source of competitive advantage! - Scope: a firm could target • Broad market! • Narrow focused market! - Sources: the company could be ! • Low cost leader! • A differentiator! - He identified three primary strategies for achieving competitive advantage:! • Cost leadership – lowest-cost producer! • Differentiation – product is unique! • Focus – limited scope! Dynamic Strategies! - Beware of Hypercompetition! • Can lead to a “red ocean” environment! • Cutthroat competition – zero sum game! • Every advantage is eroded—becoming a cost.! • Sustaining an advantage can be a deadly distraction from creating new ones.! • D’Avenis says: Goal of advantage should be disruption, not sustainability! • Initiatives are achieved through series of small steps. Get new advantage before old one erodes.! • Better to adopt a “blue ocean” strategy! • Change the industry; create new segments/products! Dynamic environment strategies! - The Porter model is useful for diagnostics, for understanding how a business seeks to profit in its chosen marketplace, and for prescriptions, or building new opportunities for advantage.! - Yet!! the Porter model was developed at a time when competitive advantage was sustainable because the rate of change in any given industry was relatively slow and manageable.! - Rigid business strategies are unlikely to survive in the highly volatile and turbulent market conditions.! - Newer models have been developed to take into account the increasing turbulence and velocity of the marketplace! - The Porter framework focuses on creating competitive advantage in relatively stable markets! - Hypercompetition framework suggests that the speed and aggressiveness of the moves and countermoves in a highly competitive and turbulent market create an environment in which advantages are rapidly created and eroded.! • Fits turbulent environments! • Enables managers respond instantly and change rapidly • Requires dynamic structures and processes! • Trying to sustain a specific competitive advantage can be a deadly distraction because the environment and the marketplace change rapidly.! Dynamic environment strategies! - Dynamic capabilities! • The ways a firm can integrate, build, and reconfigure internal and external! capabilities, or abilities, to address rapidly changing environments.! - Creative destruction! • Destroy Your Business (DYB) • Grow Your Business (GYB)! - Blue ocean strategy! • Firms create new demand in untapped marketspaces where they have the “water”! to themselves.! • The goal is not to beat the competition but to make it irrelevant.!

4

• E.g., Dell’s direct sales to customers allowed buyers to receive their new computers within four days of ordering them as compared to the red ocean process, which typically required 10 weeks.! How does business strategy relate to IS?! - Long-term survival depends on the organization’s ability to act with agility and quick responsiveness towards market and environmental conditions.! - If an organization’s business strategy cannot cope with these dynamic environmental and marketcontingencies,long-termsurvivalbecomesunrealistic.! - Technology has played an instrumental role in how quickly the business environment changes.! - Information Systems can radically change the nature of competition.! - IS strategy, or the activities of the IT department can have an impact on the! - However, this does not mean that the IS function needs to drive the organization.! - Those in charge of developing business strategy need to be cognizant of the impact IS! strategy can have on an organization, and allow for this when determining business strategy.! - The triangle of business strategy, IS strategy, and organizational strategy all work together.! Organizational strategy How will an organization organize to achieve its goals & implement business strategy?! Organizational strategy! - Organizational strategy includes the organization’s design as well as the choices it makes to define, set up, coordinate, and control its work processes.! - Managerial levers! - This framework rests on the premise that managers have three! - levers they use to affect change within the organization.! - It is more detailed than the business diamond.! - It is more explicitly designed for IS topics in general than the business diamond.! ! Organizational strategy! - Managerial levers (more details in Chapter 3)(Cont’d)! - This framework suggests that the successful execution of a company’s organizational strategy comprises the best combination of organizational, control, and cultural variables.! - Organizational variables include:! - Decision rights, business processes, formal reporting relationships, and informal! - networks! - Control variables include:! - Availability of data, nature and quality of planning, effectiveness of performance measurement and evaluation systems, and incentives to do good work.! - Cultural variables comprise the values of the organization.! Information systems strategy How will an organization plan to use its information resources?! ! Information systems strategy! • IS strategy is the plan an organization uses to provide information services.! • IS allows a company to implement its business strategy.! • “We define what the business needs and then go find the technology to! support that” (JetBlue’s former Vice President)!

5

• IS help determine the company’s capabilities (What can the firm do?)! Social business strategy! • A plan of how the firm will use social IT that is aligned with its organizational strategy and IS strategy.! • Answers the same type of questions of what, how, and who, as do many other business strategies.! • Social businesses infuse social capabilities into their business processes.! • Most of the social business opportunities fall into one of three categories:! • Collaboration—share ideas, information, and expertise! • Engagement—create a deeper feeling of connection to the company, brand, or enterprise! • Innovation—individuals suggest new ideas, comment on other ideas, and vote for their favorite idea, giving managers a new way to generate and! decide on products and services! Quick summary! • Information systems strategy triangle! • It relates business strategy with IS strategy and organizational strategy • It implies the balance that must be maintained in business planning.! • Business strategy- ! • Drives organizational strategy and IS strategy! • Definition: a well-articulated vision of where a business seeks to go and how it expects to get there! • Example: Porter’s generic strategies model; dynamic environment models! • Organizational strategy- ! • The way a business is organized! • Definition: the organization’s design, as well as the choices it makes to define, set up ,! coordinate, and control its work processes! • Example model: managerial levers! • IS strategy- ! • IS strategy always has consequences on business and organizational strategies! • Definition: the plan the organization uses in providing information systems and services! Quick summary! • Strategic relationships! • Organizational strategy and information strategy must complement each other.! • If a decision is made to change one corner of the triangle, it is necessary to evaluate the other two corners to ensure that balance is preserved.! • Changing business strategy without thinking through the effects on the organization and IS strategies will cause the business to struggle until balance is restored. (i.e., re-alignment of three strategies)! • Likewise, changing IS or organization alone will cause an imbalance.! ! In conclusion! - “Alignment” is not a state, but a journey—one that is not always predictable, rational, or tightly planned (Chan, 2002, p.98)! - Strategic alignment requires not only a set of steps and procedures, but also a continuing process.! - In this technology course, much of the rest of the text centers around IS strategy and why general managers need to be cognizant of IS and IT issues.!

6

“I used to think that running an organization was equivalent to conducting a symphony orchestra. But I don't think that's quite it; it's more like jazz. There is more improvisation.” Warren Bennis!

Chapter Two Big Picture! • Information Systems Strategy Triangle (introduced in Chapter 1) links business strategy with organizational strategy and information strategy.! - This chapter 2 explores the alignment of IS strategy with business strategy and focuses on the firm’s external requirements, building on the classic Porter models & resource-based view (RBV).! - Next chapter 3 focuses on a link between IS strategy and organizational strategy that fulfills and enhances internal requirements of the firm.! Evolution of information resources The evolution of the impact IT on organizations (see Figure 2.1 on page 35)! From Eras I through III, the information economy was tied to the thing economy.! • If the things that held the information were scarce, then the information itself was scarce. • When a thing is sold, the seller ceases to own it! • Things wear out: their performance deteriorates with wear and tear! - IS strategy from the 1960s to the 1990s was driven by internal organizational needs.! • Lower existing transaction costs! • Provide support for managers by collecting and distributing information! • Redesign business processes! • IT value was determined via scarcity.! • i.e., until the 1990’s technology did not get truly affordable to the point in which everyone could be! given a computer.! • For instance, look at a computer ad from 1989 (next slide)! $8,499.00 for a single computer in 1989!  What does this indicate?! At that time,! -only the largest of organizations with the deepest of financial resources could provide desktop computers for their employees.! -Senior management received them, however, often they had no idea how to use them.! Build up to Micro Era! 1974 – Xerox PARC developes first computer with a mouse. They don’t commercialize it!! 1974 – Altair PC for hobbyists! 1975 – Bill Gates and Paul Allen Found Microsoft! The Micro Era (1980-1995)! 1977 – Apple introduces a successful microcomputer! The Micro Era (1980-1995)! • PCs threatened the DP manager! • Easier to manage one central mainframe than a PC on every employees desktop!! • Data not Centralized.! • The numbers on my PC are right,!

7

the ones on your PC are wrong!! • Security Risks.! • DP managers put restrictions on PCs! • Users defied them!! • Users wanted the convenience! of word! • processing, CAD, etc...! • Vendors marketed direct to the users instead! • of the DP managers.! • Example: Spreadsheets! Spreadsheet Example! - VisiCalc (1979)! - First Spreadsheet! - For Apple II computer! - Lotus 1-2-3 (1983)! - Mimicked VisiCalc For IBM PC! - Excel (1985)! - Microsoft Surpassed Lotus when Windows took off.! The Micro Era (1980-1995)! - Management realized the importance of bringing order to the chaos! - Coined the term Chief Information Officer (CIO) in the 80s! Beginning of Internet! - 1969 – ARPANET linked scientists! - 1977 – TCP/IP used to link networks to ARPANET ! - 1984 – the term Internet comes into use 1985 – NSF takes over management of Internet Backbone! - 1990 – WWW (Tim Berners-Lee at CERN) 1991 – HTML! - 1993 – Mosaic Browser (Marc Andreessen and Eric Bina)! The Network Era (1995 - ?)! - After chaos of Micro Era, organizations! - converged on Client Server networked architectures! - Client PC allowed user to have direct access to her own computer Server housed organizational data! - Because of Success of Internet technologies...:! - UNIX, HTML, TCP/IP! - ... IT managers used these technologies for internal networks – “intranets”! Netscape! - Founded by Marc Andreessen and Jim Clark! - Browser based on Original Mosaic IPO in 1995! - First day went from $28 -> $75 !! - The company's revenues doubled every quarter in 1995 ! Excitement triggered the dotcom boom.! - Hundreds of companies started, most didn’t survive…! ! Evolution of information resources! - From the 1990’s onward, value of technology is derived from plentitude. (the networked economy)!

8

• The more technology that is available, the more valuable technology becomes. (e.g., email, facebook etc.)! • This is known as network effects.! - The 2010 era has brought another paradigm shift in the use of information with an era of hyperplenitude.! • Unlimited availability of information resources such as the Internet and processing and storage through cloud computing! Information Resources as Strategic Tools How can information resources be strategically used?! • Porter’s fram...