it strategy best practice - hazelband

IT Strategy Development Best Practice

Agenda

• Introduction

• Stage Level Overview

• Phase Level and Work Products Overview

• Relationship between Competencies and Methodology

• Sockets Introduction

• Strategic Enterprise Architecture

Our approach to IT Strategy

. . . providing insight into IT capabilitiesand their impact on the business

. . . constructing implementable IT architectures

. . . managing the investments to

the agreed strategy and architecture in a dynamic environment

Our IT Strategy approach drives business change by . . .

The IT Strategy Method provides a framework for accessing our Knowledge-base

• This method, and all of the firm’s methods, will be supported by Ascendant — the firmwide repository of methods

• Our Work Breakdown Structure

– Stage

– Phase

– Task

– Step

• Stages and phases are specific to route maps

• Tasks are shared by different methods

• The term “deliverable” is not emphasized in the methods repository due to the contractual implications of the term

• Work Products are the packaged findings that many older methods referred to as “deliverables”

• Forms are the blank templates that assist practitioners in rapidly creating work products

• Analysis Techniques are implied between forms and work products, and are also supported by reference materials

The conceptual framework illustrates the relevant subject matterfor each of the three stages of the approach

• Electronic Commerce

• Network infrastructure

• Desktop infrastructure

• Groupware and workflow

• Internet/Intranet

• Data warehousing

• OLAP, Data Mining

• Client/server

• Platform management

• Supplier & customer EDI

• Strategic analysis and decision making

• Supply Chain Integration

• Lower process costs

• Improved process capabilities

• Competitive response

• Improved customer care

• Targeting

• Product innovation

• Quality Improvement

Technology OfferingsBusiness Issues & Strategies

The Insight stage addresses the dynamic between requirements “pull” and technology opportunity “push”

IT Strategists provide insight by representing the capabilitiesof technology at the corporate strategy roundtable

The Insight stage also identifies the IT value proposition and metrics

Markets

Products

IndustryValue Chain

FinancialStructure

Business Strategy Drivers of ITInvestment Decisions

Decisions and actions about

technology investments must

focus on:

• Alignment with businessstrategy

• Enabling strategyimplementation andvalue creation

• Key strategic areas forgrowth

Resultant ITInvestment Proposition

Hard DollarBusiness Benefits

Low Cost InfrastructureCreation

Established Non-FinancialMetrics and Indicators

Customer

RelationshipManagement

PaymentProcessing

(document management)

DepositProcessing

(transaction/investment/credit servicing)

LendingProcessing

(consumer/commercial.loans/loan collection)

WholesaleBanking

(international)

MortgageProcessing

(retail)

Management(accounting tools/

data access/analytical, decision support)

Branch automation

Customer Information System

Customer Service

Management

VoiceResponse

CertificationTracking

TaxReporting

Customer Reference

System(Card Mgmt.)

Customer Statement and

Relationship Pricing

Depository Services

In clearingServices

Statement Rendering and Mail

Processing

Micro-graphics

LockboxProcessing

Foreign & DomesticPayment Processing

Demand Deposit

Savings/Time

System

ItemReconciliation

AdvancedLoans

(consumer)

On-lineCollections

SystemsLimited

Real Estate- loan setup- payment processing

- delinquency mgmt- customer service- investor reporting& acctng.

- warehouse & commitment control

- escrow mgmt

AccountsPayable

InformationWarehouse

InformationManagement

Asset/Liability

Management

CommercialLoans

FinancialManagement

TreasuryServices

Asset/Liability

Management

InformationWarehouse

business rules

workflow routings

Customer Info. Products

Product Pricing CompetitorInfo.

Organization charts

Governance policies and procedures

Application ProgrammingLanguages/API

Applications/Solutions

Network/Communications

Database ManagementSystems

Presentation

Processor

Operating System

The Architecture stage establishes the fundamental design commitments that form the basis for the actual engineering of solutions across the enterprise

The Architectural Stages moves from concept to implementation level

• The Architecture stage represents the enterprise integration requirements, and translate those into engineering grade blueprints that accelerate implementation

• As the architecture phases progress, design commitments in each of the four quadrants are described in increasing levels of granularity and specificity

The Investment Stage makes the strategy happen

• The Investment Stage builds on the work completed in the previous stages and manages the strategy as it evolves:

– Project portfolio

– Investment case

– Risk management

– Benefits realisation

– Governance

– Change program

• It ensures IT initiatives are integrated with other business initiatives through the transformation agenda

ProgramOffice

ExecutiveManagement

Project 1

Project 2

Project 3

Project n

The Investment Stage is also where the Program Office is created

The Program Office acts as the “hub” for the individual projects and their

activities and provides coordination and support to the projects to ensure

the success of, not only the individual projects, but of the overall

program.

Each of the stages of the conceptual framework are also broken down on an activity basis into the phases of the method

Insight Stage

What is the business strategy?

How does IT support the current strategy?

How can current IT support process improvements?

INSIGHT:What IT investment opportunities will enable new processes and strategic opportunities?

STAGE PHASE QUESTIONS POSED

• IT enablement of Strategy hinges on Process — IT enables the Processes — Processes operationalize the Strategy

Architecture Stage

• The architecture development process begins with the conceptual business systems architecture, but results in client specific implementable architectures

What are the enterprise interoperability requirements?

How does interoperability weigh against functionality requirements?

How will interoperability requirements be met?

How will the organization feasibly migrate from the current state?


Investment Stage

• “No plan survives first contact with the enemy” — We must manage our IT investments to the established strategy and architecture in a dynamic environment

How does the rest of the organization view the IT enabled changes?

How will the issues in one project impact other projects and the overall change program?

How should IT investment be managed in volatile business and technical environment?

Is the IT Strategy still valid at major checkpoints?


Putting it all together

Parameters:

• No IT organization can support a business strategy without hearing it

• Minimum threshold for making business strategy explicit

• Objectives of the organization

• Means of achieving them

• Metrics of success

Deliverable:

• Actionable Strategy Statement

Our Tools and Inputs:

• Enterprise Organization Model

• Value Chain Analysis

• Porter’s “Five Forces” Model

• SWOT

• Cycle Time

• Era Analysis

• Core Processes

• KPIs

• CSFs

• Culture Assessment

• Seven “S”

• Systems Dynamics

• Balanced Scorecard

• VBM, Valuebuilder

Understand Strategy and Positioning

Parameters:

• Document current state

• Identify performance improvement opportunities

• Evaluate ability to support and enable change

Deliverable:

• Current IT Assessment

Suggested Tools and Inputs :

• IT spend by industry benchmarks

• Applications profiles and inventory

• Activity analysis

• IT PI maturity framework

• Strategic Alignment Model

Understand Current IT Environment

Parameters:

Deliverable

• Strategic Options

Suggested Tools and Inputs:

• Scenario Envisioning

• The Insight Diagnostic

• Process Benchmarks

• Best Practices

• Industry Specific Technology Applications

• Strategic Process Framework/Capability Matrix

• Product Architecture and Infrastructure Architecture Convergence Analysis

• Technology Horizon/Forecasts

• Business Rules

• Process Treatments

Develop Process Insight

Understandin

g of Business

Strategy

Understandin

g of Business

Strategy

Enablement

Knowledge

Base

Enablement

Knowledge

Base

+ = INSIGHT into Process

Opportunities

INSIGHT into Process

Opportunities

Parameters:

• Covers the full scope of the enterprise as defined for the engagement

• Maps application and automation boundaries to the client’s business systems

• Represents client specific processing needs

Deliverable:

• Conceptual Architectural


• Industry Standard Process Models

• Various Process modeling techniques

• Business Systems Architecture

• Affinity Analysis

• Product Specific functional mappings

• Business Priorities

• Current or Product Coverage

Construct Conceptual Architecture

Parameters:

• Examples of “Cornerstone” design commitments

• ERP vs. Best of Breed

• Middleware Architecture

• Legacy Renewal

• Component Architecture

Deliverable:

• Policies and Principles

• Design Commitments


• Scenario Envisioning

• Implementation Cost Estimation Techniques

• Enterprise Application Selection

• Skills/Availability Assessment

• Current IT Assessment

• Sourcing

Commit to Strategic Solutions

Parameters:

• Maps physical, product specific designs to the client specific enterprise interoperability requirements

–Data

–Application

–Technology

–Organization

Deliverable:

• Implementation Architecture

• Transition Strategy


• Implementation Planning

• Product specific architectures

• Sourcing

Construct Implementation Architectures

Parameters:

• Deliverable documents the strategy

• Provides basis for gaining and maintaining commitment to investment

• Includes:

–Project Portfolio

– Investment case

–Responsibilities

Deliverable:

• Systems Investment Prospectus


• Transition Strategy

• Portfolio planning

• Transformation agenda

• Project charter

• Strategic grid

• ROI, DCF, NPV

• Real options

• Value analysis

• Risk management

• Benefits realisation

• Performance measures

• Balanced scorecard

Publish Systems Investment Prospectus

Parameters:

• Puts in place the change management program that launches the strategy

• Addresses the change issues inherent in any major IT investment

• Managing the people changes ensures the technical benefits and increasing wider people benefits

Deliverable

• Change Management Program


• Change Vision

• Culture Change

• Communications Planning

• Performance Measures

• Cascading Levels of Commitment

• Organisational design

• Leadership

• Coaching and training

Establish a Change Management Program

Parameters:

• Program performance must be measured to ensure goals are achieved

• The program office is a clearinghouse for project interdependence issues

• No plan is perfect; a change program must be managed in order to keep it aligned with the established goals, strategy, and architecture

• The program recognises that the strategy evoives over time and requires active management

Deliverable:

• Program Management Office

Suggested Tools and Inputs :

• Consistent project management methodology

• Goal directed project management

• Cross-functional staffing and participation

• Risk management

• Issues resolution and escalation process

• Benefits realisation

• Balanced scorecard

Establish and Operate Program Office

The Competencies in the Context of Methodology

COMPETENCIES

METHODOLOGY

How the IT Strategy methodology and competencies are interrelated

• In conducting an IT Strategy, according to the methodology, the work plan likely calls for the project to start in the stage called “Insight”.

• Within the “Insight” stage, the first phase is “Understand Strategy and Positioning”.

• The “Understand Strategy and Positioning” phase, requires a practitioner to demonstrate several competencies


Parameters:

• No IT organization can support a business strategy without hearing it

• Minimum threshold for making business strategy explicit

• Objectives of the organization

• Means of achieving them

• Metrics of success


• Enterprise Organization Model

• Porter’s “Five Forces” Model

• SWOT

• Cycle Time

• Era Analysis

• Core Processes

• KPIs

• CSFs

• Culture Assessment

• Seven “S”

• Systems Dynamics

• Balanced Scorecard

• VBM

During the phase “Understand Strategy and Positioning” core competencies would be employed

• A practitioner would use Scenario Planning competencies, such as Porter’s Five Forces during the phase to understand business strategy options

• A practitioner would use Value Analysis competencies, such as the Value Chain during this phase to understand how value is created


The competencies of Scenario Planning and Value Analysis are shown as related

to the “Insight” component of the Methodology

ITS must ensure integration with other ITS core competencies andconsistency with broader SC & IT competencies

CEO

CxO

CIO

Design

Build

Operate

Ind

us

try

O&CS

ITS

SCC&OS

TS

ITM (PI)

What other competencies are needed?

Method

Example IT Themes

Electronic Commerce

Customer Relationship Management

Supply Chain Management

Internet/intranet

ERP IT Achitectureh

Industry Specific IT Strategy

Generic Service Offerings

Insight Architecture Investment

.

.

. .

.

.

.

.

.

.

.

. . .

.

.

. .

• To support this distinction, the method has been designed to leverage “packets” of market-proposition-specific content and knowledge bases

Hot Issues

• We know what the “HOT” issues are, and they all are addressed with IT Strategy approaches and techniques:

– Electronic Commerce/ E-Business

– Customer Relationship Management

– Supply Chain Management

– Industry Specific IT Strategy

– Mergers and Acquisitions: Integrating Legacy Technology Asset Bases

• Insight

– How can issue X advance my current business strategy?

– How can issue X technology allow me to expand my strategic options?

– Can my current IT resources pull off implementing issue X technology?

• Architecture

– How does issue X drive or utilize enterprise-wide information sharing?

– What impact will issue X have on my enterprise IT architecture?

– How should I implement issue X technologies?

• Investment

– How do I mobilize support for an issue X initiative?

– How do I learn from my mistakes and keep the issue X initiative on track?

Sockets Approach

• Without the sockets approach, we will end up with an unmanageable portfolio of methods and a limited ability to leverage our knowledge base

• The Alternative

– The Electronic Commerce/ E-Business Method

– The Customer Relationship Management IT Planning Method

– The Supply Chain Management IT Planning Method

– Industry Specific IT Strategy

• Consumer Industrial Products Method

• Telecommunications Method

– The method for Integrating Legacy Technology Asset Bases in mergers and Acquisitions

Sockets Approach

• The threshold of forms and work products necessary to construct a viable market-proposition-specific knowledge base — a socket — is relatively low

• Insight

– Marketing Grade presentation of the issues

– Assessment checklist

– Identified list of issues and opportunities

• Architecture

– Standard Process Models

– Standard BSA

– Architectural Scenario Options, i.e. Market Intelligent Framework for CRM

– Solution Architectures Prototypes

• Investment

– Typical value proposition

– Implementation issues

SEA is the blueprint for building an EWS that optimizes businessperformance

SEA performs four critical functions:

• Helps senior executives truly understand the implications of an EWS

• Fosters communication channels between the executive office and the EWS team

• Highlights and prioritizes where integration and commonality of business processes and information are most valuable

• Creates an ongoing framework for decision-making through the EWS project

Organisational

capabilities

Strategy

Technology

Processes

A three-phased approach to SEA ensures understanding of the strategic context and translates it to operational implications

Plan SEA

Project

Understand Strategic Context

and Direction

Scope the project and plan for success

Gain an understanding of the company’s strategy, current capabilities and objectives for the EWS program to highlight risks and potential areas of incongruence

Translate Strategic Direction into Operational

Implications

Develop a blueprint for how the organization and information technology will best support the business strategy and minimize cost and risk

Plan SEAProject

Understand Strategic Context Translate Strategic Directioninto Its Operational Implications

Develop and refine high-level business case

Optimize the strategic enterprise architecture

FORMALAPPROVAL

CHECKPOINT

Demonstrate EWS capabilities and impacts to executives

Understand strategy

and operational

opportunities

Understand businesscase for EWS

Understand the capabilitiesof the enterprise

Plan SEA

project

Identify and resolvecongruency issues

Financial services

Ordermanagement

Productionplanning

Customer

Ordermanagement

Productionplanning

Productionplanning

U.S.

DistribuEurope

SalesAsia

Marketing

Regions

Pro

ces

se

s

Product

s

Develop Organisational

Blueprint

Develop Preliminary

Application Architecture

Develop Enterprise

Process Model

Develop

Commonality Blueprint

FORMALAPPROVAL

CHECKPOINT

FORMALAPPROVAL

CHECKPOINT

and Direction

The SEA Approach

Strategic Enterprise Architecture is Advantech’s

approach to defining, aligning and optimising the power of EWS to achieve

strategic advantage

it strategy best practice - hazelband

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