Consistency between Business Strategy and IT

maandag 5 november 2012

Master class CIO

Consistency between Business Strategy and IT

Author: Harry Bouwman
Date: November 5th, 2012

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slide 2

Outline
Presentation and discussion

I. From strategy to business models
• Networked society
II. IT driver and enabler: what is the consequence for IT
management
• Some theory
• Service focus
III. Design of service(s) platforms and business models
Business models and internal IT: B/EA

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slide 3

Some assumptions on network economy

• Networked economy as a service economy
• From auxiliary services to product as support to services
• Upstream service value creation
• Servitization
• Service bundling, service unbundling
• Service experience

• Values
• Ethics and core values, corporate governance
• Sustainable society: leasing business model for products


slide 4

Some assumptions on network economy

• Interdependencies across industry sectors, across firms
and organizations, and internally

• Micro-eco-systems
• Resource dependencies: control on arm length
• Keystone firms or dominators
• Mutli-level Business Models


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slide 5

Consistency or gaps:
from strategy to architecture

Business Business
Business strategy
model Architecture

Strategy design: SWOT (Selznick, 1957) STOF Business Architecture
Strategic Planning School (Ansoff, 1965) (Bouwman et al, 2008) Enterprise Architecture
Strategic positioning (Porter, 1980) CANVAS Business Processes
Competitive Advantage (Osterwalder & Pigneur, 2020) Process tooling
Resource Based View (Barney) CSOFT
Resource dependency (power) (Heikilla et al., 2010)
(Pfeffer & Salancik, 1978) BM component
(IBM, 2005)

Eco-systems
Platforms

BM tooling


slide 6

I. From strategy to business models


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Why study business models?
(Pateli and Giaglis, 2004, Osterwalder and Pigneur, 2002; Chesbrough, 2011)

• Understanding BM elements and their relationships in a
specific business domain
• Communicating and sharing this understanding to the outside
world
• Using them as a foundation for change
• Measuring the performance of an organization: KPi’s
• Simulating and learning
• Experimenting with and assessing new business models
• Changing and improving the current way of doing business

5-11-2012

Business Model approaches
• Business Model Canvas (Dubosson-Torbay et al, 2002;
Osterwalder et al 2010)
• STOF (Bouwman et al, 2008)
• C-Soft (Heikkila, 2008)
• Four-Box Business Model (Johnson, 2010)
• Business Model Schematics (Weil & Vitale, 2001)
• Entrepreneur's business model (Morris et al, 2005)
• E3-value (Gordijn & Akkermans, 2001)
• Component Business models (IBM, 2005)
• BEAM; business eco-systems analysis and modeling (Tiam
et al, 2008)
• .and many others

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Business ecosystem
(Moore, 1993)

Network of organizations, including suppliers, lead producers,
competitors, and other stakeholders

Emerge around a core technology (i.e. platform)

Engaged in cooperative activities

Develop complementary around the core technology

Co-evolve capabilities and roles over time

Lead by a central company towards shared vision

Central company may change over time

Google ecosystem

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Main roles in business ecosystem
(Iansiti & Levien, 2002; 2004)
Keystones

• Create value by providing the core platform

• Share the value of platform with other members

• Critical for survival and stability of business ecosystem

• Enhance the overall health of business ecosystem

Main roles in business ecosystem
(Iansiti & Levien, 2002; 2004)

Dominators

Extract most of the value from business ecosystem and left
less for others

Tend to eliminate other members and take over the business
ecosystem

Reduce the diversity, eliminate competition, hinder innovation

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slide 13

Discussion
• Due to network economy interdependencies between
organizations are that strong that developing a strategy for
a firm can only make sense if these interdependencies are
taken into account


slide 14

II. IT driver and enabler:
what is the consequence for IT
management?


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slide 15

Trends according to Gartner

• Gartner 10 trends 2013: drivers or enablers?
• Mobile device battles
• Mob Apps & HTML 5
• Personal cloud
• IoT
• Hybrid IT & Cloud computing
• Strategic Big Data
• Actionable analysis
• Mainstream in-memory computing
• Integrated Eco-systems
• Enterprise App Stores


slide 16

Consequences for IT (internal)
• What is your prime concern?
• IT as driver or as an enabler
• Enabler; Edward Jones Case: consistency of Strategy and IT

• Driver:
Making money with IT
Business case: social media, cloud, ubiquitous computing:
sensors and mobile, NFC,

• Enabler:
How to integrate social media in IT operations?
Private, public, hybrid cloud; BYOD, .


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slide 17

Consequences for IT (internal)
• BITA: Aligning business and IT within organization

• Your organization: incumbent versus start up; public versus
private owned company; government versus business

• Agility or Architectures: or both?


slide 18

Some theory


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Strategic Alignment Model (SAM)
(Henderson & Venkatraman 1993)

• SAM advocate alignment (Strategic
Fit and Functional Integration)
between and within four domains:
• Business domain
• IT domain
• Organization Infr. & processes
• IS Infr. & processes

• Based on SAM, 4 alignment
perspectives are possible:
1. Strategy Execution
2. Technology Potential
3. IT as Competitive Potential
4. Service level

• Since SAM, several alternative SAM- Venkatraman et al. (1993)
based models are introduced.

Information Management Model
(Maes 2000)
• Extend SAM model with a new row (Structure)
and a new column (Information and
Communication)

• New row, because business-IT relationship is not
only a question of strategic, but also structural
and operational correspondences
• (ARCHITECTURES: BA/EA, IA and IT-infra).

• New column, because business-IT relationship is
much more complex involving cultural, political,
financial and semantic aspects.

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Business Architecture
(Versteeg and Bouwman 2006)

Business Architecture
• Architectural approach to bridge business with IT
• Business strategy gets better formulated and understood
and is a pre-structuring device for the development of
subsequent architectures.
• Product/service development, operations, customer
relation and interaction
> Information Architecture
• IT-functions (functional modeling)
• Data, objects (data modeling)
> Process Architecture
• Information Arch. are related to business processes
leading to IT-units
> Application Architecture
• Business domain acquire services form ICT-suppliers.

slide 22

Enterprise architecture


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slide 23

Discussion
Organizations have to understand both the role of IT as a
driver and as enabler, and this has to be expressed as part of
a strategic vision

For large information intensive organizations as well as high
tech corporations and organizations there has to be a clear
relation between strategy, business and enterprise
architecture


slide 24

III. Design of service(s) (paltforms) and
business models


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slide 25

Focus on services
Highest added value comes
from services
•Service innovation
•New Service Design
•Servitization
•Service bundling, service
unbundling
•Upstream service value
creation
•Productization of services
•Service platforms


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STOF-model
Double role IT

5-11-2012

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STOF focus

• Strategy implementation and operationalization
• Multi-actor, networked enterprises
• Technology driven and enabled
• Service/product as unit of analysis
• Design oriented: critical design issues
• Tooling: design handbook, business modeling,
and decision support tools

05/11/2012

slide 28

Customer Service provider

Platforms <lookup>
<invoke>
<register>
<advertise>
<monitor>
Service platform
A

Service Service
x y


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slide 29

Heavy weight and light weight
approaches to service design,
engineering and business modeling


User experience Platforms and ecosystems:
Business models and modelling
Design Cycle Method Kernel theories Method, Tooling Kernel theories
Idea Focus group, Domestication Descriptive STOF/CANVAS/CSOFT model
Participatory Observation Lazy User Case study With support theories in service marketing,
Adoption and Business model design service engineering, platform theories,
acceptance models BM Quick Scan information economics, strategy analysis,
organizational theory, stakeholder analysis
Concept Conjoint Fit theories, context Business model stress Risk and uncertainty
analysis aware behavior, testing Agile software development
WTP Agile BM application (micro) Eco-systems,
Lab. Experiment Social network analysis Platform theory,
(qualitative) Open-closed models,
BM-DSS Social Network Theory
Financial modeling: pricing;
WTP
Implementa- Field experiments HCI, WTP, TTF Technical artifact Service life cycle and platform engineering;
tion IG and SQ Business MODEL Tooling: UML diagrams
VIP model
BM and EA/BA Collective action
BM –DSS Critical mass theory
NVP, Real Options Governance
Commercial- Evaluation, Use and Adoption, acceptance Business Model roadmaps
ization Impact: and use research Ecosystem analysis
Market observation Social and digital Social network analysis
(SEM, LCA) exclusion (quantitative)
Log data analysis Continuance BM-KPI

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BM and an agile approach
BM Visualization as first phase of scrum approach

Cases TomTom, Yes2Web, Dialogues House (ABN-AMRO)

05/11/2012

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BM and EA platforms
Citizens/Consumers

Business services
= Platform for citizens/consumers
healthy living

Information systems services
= Platform for business services

Technology services
= Platform for information
systems services

05/11/2012

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Networked BM: STOF-VIP

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05/11/2012

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slide 35

Discussion
Time to market of heavy weight approaches is too long, while
the level of detail is more attractive and does lead to
implementations that work


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Closing remarks, Questions
Shift in focus from
Strategy to BM: single firm, marketing strategy (CANVAS)
• Mainly brainstorm tool for individual firms
• Network economy
Via
BITA and Architecture thinking
To
Consistency of strategy, BM and B/EA
Service design and BM (STOF)
BM tooling: ICT enabled, networked enterprise
STOF and beyond
• Value and Information exchange, processes
alignment

05/11/2012

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Consistency between Business Strategy and IT

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