cdu – school of information technology hit342 lecture 3 - slide 1 ebusiness & it management...
TRANSCRIPT
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 1
EBusiness & IT Management
Model of IT Management
BUSINESS RESULTS
EfficiencyEffectivenessCompetitivenessProfitability
Technology & Business Trends
Strategy & Planning
Applications & Data
Operational Disciplines
Resource Control
Organisations & People
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 2
EBusiness & IT Management
Developing an IT Strategy (1)
The importance of strategy.
The elements of a strategy.
Relationship between strategies and plans.
Strategic management.
Types of strategies.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 3
EBusiness & IT Management
Developing an IT Strategy (2)
The strategy statement.
The strategy document outline.
Strategy development process.
The IT strategy statement.
Strategy as a guide to action.
Strategy maintenance process.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 4
EBusiness & IT Management
The importance of strategy.
Managers in an organisation who wish to take advantage of IT and other strategic opportunities must apply a systematic, strategic vision to define the organisational direction.
A strategy is defined as a collection of statements that express or propose a means through which an organisation can fulfil its primary purpose or mission.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 5
EBusiness & IT Management
The importance of strategy.
A strategy must focus and coordinate an organisation’s activity from the top down to achieve its mission.
Such a well-developed strategy ensures consistent direction within the company’s business units, and reduces uncertainty in decision making.
A business unit is the lowest level of the company which contains the set of functions that carry a product through its life span from concept through manufacture, distribution, sales and service.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 6
EBusiness & IT Management
The importance of strategy.
To align IT objectives with corporate objectives, managers must believe that the IT strategy is a strategy for the whole organisation.
Intellectual alignment is achieved when written IT and business objectives are internally and externally consistent and cross-referenced.
IT and business executives who clearly understand each other’s objectives achieve social alignment.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 7
EBusiness & IT Management
The importance of strategy.
The development of a sound strategy requires…
1. Thoughtful understanding of the organisation’s mission.
2. Analysis of the operating environment.
3. Extensive interaction with senior executives and other managers.
4. Detailed definition of how the company’s business units interact.
In addition, strategists must be able to predict possible changes in the organisational structure.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 8
EBusiness & IT Management
The importance of strategy.
Business Environment
Our Mission
B.U.
B.U.
B.U.
B.U.
Where are we going? What are
our future structures?
Interact with managers Define
interactions
Analyse the environment in which the organisation
operates
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 9
EBusiness & IT Management
The elements of a strategy
1. Mission statement
2. Environmental assessment
3. Statement of objectives
4. Expression of strategy
5. Maintenance of processes
6. Performance assessment
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 10
EBusiness & IT Management
The elements of a strategy
1. Mission statement – defines the purpose of the organisation, in terms of what it seeks to accomplish.
2. Environmental assessment – also called environmental scanning – identifies the important trends that may impact the organization and its functional units. These trends can be political, economic, legal, technological and organisational.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 11
EBusiness & IT Management
The elements of a strategy
3. Statement of objectives – what is intended to be achieved in terms of desirable states towards which action is directed.
4. Expression of strategy – the course of action that will lead to the achievement of objectives.
5. Maintenance of processes –review of the environment and identifying change leads to assessment of the course of actions.
6. Performance assessment – evaluation of how well the organisation has achieved its goals and objectives.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 12
EBusiness & IT Management
The elements of a strategy
The EnvironmentNature of the
BusinessGoals and Objectives
Strategy Statement
Strategic Plan
Operating Plan
Strategy Maintenance Performance Assessment
The Relationship between Strategy and Planning Elements
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 13
EBusiness & IT Management Relationship between strategies & plans
Strategies and plans seem to run together, but they are clearly different.
A strategy is a collection of statements that expresses or proposes a means through which an organisation can fulfil its primary purpose or mission.
On the other hand, a plan is a detailed description of how an organisation can accomplish its primary purpose or mission.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 14
EBusiness & IT Management Relationship between strategies & plans
Strategy is not about plans – it is about insights!
The strategic plan describes detailed actions for the next year or two, and less detailed actions beyond two years (often for 3 to 5 years in total). Also called the long-term plan.
The detailed actions for the next year (or two) are usually called the tactical or near-term plan.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 15
EBusiness & IT Management
Strategic management
The processes of strategy development and strategic planning are the essential elements of strategic planning. This reflects a changing attitude to business strategy – businesses now try to create the future (rather than predict it) via the following:
Phase 1Basic financial
planning
Phase 2Forecast-based
planning
Phase 3Focus on external
environment
Phase 4Strategic
management
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 16
EBusiness & IT Management
Strategic management
Strategic management reorganises and deploys resources to attain competitive advantage. It also implements creative, flexible long- and short-range planning systems supporting resource deployment actions.
Because IT has considerable potential for initiating, shaping and supporting future change, IT managers play a vital role in strategy development for organisations.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 17
EBusiness & IT Management
Types of strategies
In most businesses functional units – e.g. manufacturing, marketing or IT – have two types of strategies, functional strategies and stand-alone strategies.
Functional strategies describe the unit’s broad goals and objectives, whereas stand-alone strategies describe an individual, one-time goal or opportunity.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 18
EBusiness & IT Management
Types of strategies
For example, an IT organisation’s functional strategy describes the actions IT must take to support the entire business in the long term.
It also has a stand-alone strategy to upgrade the corporate telecommunication network.
The IT strategy combines these two. The complete strategy for any function within the organisation aggregates its stand-alone strategies with its functional strategy.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 19
EBusiness & IT Management
IT Functional Strategy
The IT Functional Strategy must contain the following basic elements:
1. Support of business objectives
2. Technical support
3. Organisational support
4. Budget and financial matters
5. Personal considerations
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 20
EBusiness & IT Management
Organisation’s Business Strategy
The aggregation of all functional and and business strategies comprises the organisation’s complete business strategy.
Business strategies – those that support core business activity – are developed by the product managers who are responsible for producing revenue and profit.
Other functional Strategies
Product Manager Business
Strategy(ies)
IT Functional Strategy
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 21
EBusiness & IT Management
Organisation’s Business Strategy
This detailed document outlines the business’s strategic goals and objectives, and shows how all the business units within the organisation will contribute to achieving the objectives and mission.
For an organisation to succeed, its overall business strategy must be based upon internal goal congruence – that all the goals are similar.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 22
EBusiness & IT Management
Stand-alone Strategies
In special circumstances a functional unit will want (or need to) develop a specific “stand-alone strategy” to deal with a unique opportunity or threat.
In many cases stand-alone strategies take the form of ad hoc actions in response to emerging opportunities or threat associated with competitive or industrial developments. Once accepted, the stand-alone strategy is incorporated into the strategic plans of all organisational units that it affects.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 23
EBusiness & IT Management
The strategy statement
A strategy statement is primarily a tool for focusing the managers’ attention on strategic aspects of an organisations business. It also provides information to senior managers who must review and approve the strategy, and to those who will use it to guide their actions.
In addition the strategy statement must be available to those responsible for initiating adjustments that account for current input from the business environment, and to those those who measure the organisations performance.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 24
EBusiness & IT Management
The strategy statement
A statement of goals and objectives is insufficient for the stated needs. A strategy statement must include:
1. Information regarding the environment.
2. The basis for selecting the goals and objectives.
3. The assumptions on which the goals and objectives depend.
4. The perceived risks, and available and reasonable options.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 25
EBusiness & IT Management
The strategy document outline
To present the required information coherently, an outline containing the main points of a strategy is usually developed. The strategy must be logical, coherent and clearly indicate the relevance of its parts:
1. Nature of the business
2. Environment
3. Goals and objectives
4. Strategy ingredients
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 26
EBusiness & IT Management
The strategy document outline
The ingredients of a strategy include a course of action, and other supporting factors:
1. Course of action2. Assumptions3. Risks4. Options5. Dependencies6. Resource requirements7. Financial projections8. Alternatives
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 27
EBusiness & IT Management
Strategy development process
Minor change
Incorporate “new” strategy into overall Business Strategy
Undertake Environmental Analysis
• Cost
• Loads
• Technology
• Capability
• Business Conditions
Develop Alternative StrategiesEstablish Selection Process & Criteria for using them.
Select Best Strategy
Further Develop the Selected Strategy
Review
Approval Approv
al
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 28
EBusiness & IT Management
The IT strategy statement
At the very least, the IT Strategy Statement must address the following topics thoroughly. Other topics specific to the business should be address as well:
Business aspects – the strategy must support and reflect the business goals.
Technical issues – the strategy must reveal the practical utilization of advanced technology in support of business objectives and goals.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 29
EBusiness & IT Management
The IT strategy statement
Organisational concerns – consider the organisational consequences of the strategy and how the strategy will support new organisational forms and ways of doing business..
Financial matters – the strategy must satisfy the organisations financial ground rules.
Personnel considerations – must include the action plans for the task of recruiting, training and retaining a team of skilled employees. Remember, advanced technical strategies will attract “strong technical” people.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 30
EBusiness & IT Management
Strategy as a guide to action
IT strategies are developed with the explicit intent of guiding management and providing direction that helps to balance and direct the overall functional effort, while taking advantage of breaks and unusual opportunities when they arise.
IT managers must maintain strategic control – the strategy is the basis for doing this. Strategic control preserves the vitality and viability of the strategy between planning periods, and helps the organisation to maintain its strategic focus.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 31
EBusiness & IT Management
Strategy maintenance process
To be useful over time, a strategy must be maintained – kept up to date. Maintenance recognises that a strategy is constantly subject to change.
Regularly, or when tracking reveals significant change, the entire strategy should be carefully examined and updated. The logical process for doing this is to follow the steps described for developing a strategy (Slide 27).
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 32
EBusiness & IT Management
Conclusion
Strategic management is a continuous and iterative process that allows an organisation to be responsive to its business environment.
It is a process that incorporates understanding of the corporate mission, scanning the environment, interaction with senior executives and other managers, and detailed definition of how the company’s business units interact.
It is important that the major business functions of an organisation be integrated into the strategic management process.
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 33
EBusiness & IT Management
Conclusion – Review Questions
1. What are the key components of a complete statement of strategy?
2. One purpose of a strategy is to provide corporate direction. What other purposes does a strategy serve?
3. What are the differences between functional strategies, stand-alone strategies, and business strategies?
4. What is the relationship between strategies and plans?
CDU – School of Information TechnologyHIT342
Lecture 3 - Slide 34
EBusiness & IT Management
Conclusion – Review Questions
5. What is the difference between a tactical plan and a strategic plan?
6. What are the main elements of a strategy document?
7. How is the environmental statement used?
8. What main topics should the IT Functional Strategy address?
9. What is the significance of the iterative process illustrated on Slide 27 (the Strategic Development Process)?