Strategy Planning and Formulation Framework for IT Consulting Company - ABC

1. Strategy Planning and Implementation
Framework
For and by
ABC Unit

2. Strategy Formulation Framework
• IFE
Input • EFE
Stage • CPM
• IE Matrix
• SWOT Matrix
Matching • SPACE Matrix
Stage • BCG Matrix
• Grand Strategy Matrix
Decision • QSPM
Stage

3. Internal Factors Evaluation - IFE
Strengths Weight Rating Score
1 Major player in local market 0.02 4 0.08
2 Strong relationship with government and private sector 0.02 4 0.08
3 JCCS presence/reach across Kingdom 0.02 4 0.08
4 Partnership with major players 0.02 3 0.06
5 JCCS success stories will help in getting projects 0.01 4 0.04
6 Services projects bundled with hardware sales 0.1 4 0.4
7 Existing customer base can generate repeated sales 0.02 3 0.06
8 Technical expertise pool 0.1 4 0.4
9 Management Expertise 0.2 4 0.8
10 Financial Resources 0.02 4 0.08
Weaknesses
1 Disconnected & dispersed technical employees 0.1 1 0.1
2 Poor marketing plan 0.1 2 0.2
3 Poor strategy and target responsibility 0.1 1 0.1
4 Bad reputation in services 0.05 2 0.1
5 No knowledge management 0.03 2 0.06
6 Technical infrastructure not ready 0.01 2 0.02
7 Org. structure not suitable for Functional excellence 0.03 2 0.06
8 Delays and gap in inter-department communication 0.05 1 0.05
Scale used:
4 = Current Response is Superior 2.77
3 = Current Response is Above Average
2 = Current Response is Average
1 = Current Response is Poor max Score = 4.0

4. External Factors Evaluation - EFE
Opportunities Weight Rating Score
1 IT Service Market expected to be US$ 1350mn in 2012 0.2 2 0.4
2 Companies are unable to generate insight from data 0.05 3 0.15
3 Increasing trend in business aligned IT/IS 0.05 3 0.15
4 Companies are looking to reduce cost by outsourcing 0.2 4 0.8
5 Customers IT staff is under staff or lacks skills 0.1 4 0.4
6 International vendors need local partner 0.05 3 0.15
Threats
1 Increased competition 0.1 2 0.2
2 Difficulty in finding and retaining skill staff 0.05 3 0.15
3 Global financial crises 0.05 3 0.15
4 Mergers and Acquisitions of vendors 0.05 2 0.1
5 Vendors coming in service industry 0.05 2 0.1
6 International service companies presence in KSA 0.05 2 0.1
2.85
Scale used:
4 = Current Response is Superior
3 = Current Response is Above Average
2 = Current Response is Average
1 = Current Response is Poor max score=4.0

5. Competitive Profile Matrix - CPM
ABC Outsourcing
Products and Services Weight
Rating
Weighted
Rating
Weighted
Score Score
Software Development 0.100 2 0.20 3 0.30
Database Consulting 0.175 4 0.70 1 0.18
Infrastructure Management services 0.100 3 0.30 2 0.20
Business Intelligence Services 0.100 2 0.20 2 0.20
Customer Relationship Management 0.100 2 0.20 1 0.10
Marketing Strategy 0.125 1 0.13 2 0.40
Marketing Share 0.025 1 0.03 4 0.10
Technical Resources 0.100 4 0.40 3 0.30
Financial Benefits 0.100 4 0.40 2 0.05
Strategic partnership 0.025 4 0.10 3 0.08
Umrah application service provider 0.025 3 0.08 0 0.00
Product and service portfolio 0.025 4 0.10 2 0.05
TOTAL 1.000 2.83 1.95

6. Strategy Formulation Framework
• IFE
Input • EFE
Stage • CPM
• IE Matrix
• SWOT Matrix
Matching • SPACE Matrix
Stage • BCG Matrix
• Grand Strategy Matrix
Decision • QSPM
Stage

7. Internal External Evaluation Matrix
Internal FE Score (2.77)
Strong Average Weak
3.0 – 4.0 2.0 – 2.99 1.0 – 1.99
I II III
High 3.0 - 4.0
External
IV V VI
FE Score Low 2.0 – 2.99
(2.85) VII VIII IX
Medium 1.0 - 1.99
Generic Goal: Hold and Maintain
Strategies: Market Penetration
Product Development
Integration (Horizontal, Forward, backward)

8. SWOT Matrix
Strength – S Weakness – W
Major player in local market Disconnected & dispersed technical employees
Strong relationship with government and private sector Poor marketing plan
JCCS presence/reach across Kingdom Poor strategy and target responsibility
Partnership with major players Bad reputation in services
JCCS success stories will help in getting projects No knowledge management
Services projects bundled with hardware sales Technical infrastructure not ready
Existing customer base can generate repeated sales Org. structure not suitable for Functional excellence
Technical expertise pool Delays and gap in inter-department communication
Management Expertise
Financial Resources
Opportunities – O SO Strategies OW Strategies
Market Penetration and Market Product & Service Development
Development
IT Service Market expected to be US$ 1350mn in 2012 using market opportunities
Companies are unable to generate insight from data Offer new services to existing
Increasing trend in business aligned IT/IS customers Build and develop teams
Companies are looking to reduce cost by outsourcing
Customers IT staff is under staff or lacks skills Strategic alliance with service providers Improve and standardize
International vendors need local partner Sales promotion processes in new projects
Threats - T TS Strategies
TW Strategies
Horizontal Integration &
Increased competition
Outsource Projects Service improvement and
Difficulty in finding and retaining skill staff
Global financial crises horizontal integration
Mergers and Acquisitions of vendors Improve Subcontract and CR
Vendors coming in service industry management process
International service companies presence in KSA

9. BCG Matrix
Relative Market Share Position
High Medium Low
1.0 .50 0.0
High
Stars Question Marks
+20 Prod
Industry Sales Growth Rate
D
Prod
C
Prod B
Prod
E
Medium Prod
0 A
Low
Cash Cows Dogs
-20

10. SPACE Matrix – (Strategic Position and Action)
Space Matrix Rating Score Rating Score
Financial Strength (6 best, 1 worst) Environmental Stability (-1 best, -6 worst)
1. Working Capital 5 1. Economic Changes -2
2. Leverage 6 2. Government Control -2
3. Cash Flow 5 3. Risk Premium -3
4. Payable to Customers 6 4. Price Elasticity -3
5. Debt to Asset 5 5. Inflation -2
27 5.4 6. Competition -2
-14 -2.3
Competitive Advantage (-1 best, -6 worst) Industry Strength (6 best, 1 worst)
1. Customer Loyalty -3 1. Growth Potential 5
2. Market Share -3 2. Profit Potential 4
3. Quality of Service -3 3. Consumer Trust 5
4. Number of products -2 4. Investment Reliability 5
5. Technical Expertise -1 5. Resource Utilization 4
-12 -2.4 23 4.6
CA and IS 2.2
FS and ES 3.07

11. SPACE Matrix
FS
Conservative Aggressive
+6
+5
+4
+3 IS & CA 2.2
FS & ES 3.07
+2
+1
CA IS
-6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6
-2
-3
-4
-5
Defensive Competitive
-6
ES

12. Grand Strategy Matrix
RAPID MARKET GROWTH
Quadrant II Quadrant I
1. Market development 1. Market development
2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Forward integration
5. Divestiture 5. Backward integration
6. Liquidation 6. Horizontal integration
7. Concentric diversification
WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV POSITION
1. Retrenchment 1. Concentric diversification
2. Concentric diversification 2. Horizontal diversification
3. Horizontal diversification 3. Conglomerate diversification
4. Conglomerate diversification 4. Joint ventures
5. Liquidation
SLOW MARKET GROWTH

13. QSPM – Quantitative Strategic Profiling Matrix
Build and Promote Outsource IT
ABC Units and Limit ABC team and Services projects to
Weight assign projects projects partners
Key Internal Factors AS TAS AS TAS AS TAS
Strengths
Major player in local market 0.02 3 0.06 3 0.06 3 0.06
Strong relationship with government and private sector 0.02 4 0.08 4 0.08 4 0.08
JCCS presence/reach across Kingdom 0.02 4 0.08 4 0.08 4 0.08
Partnership with major players 0.02 3 0.06 3 0.06 3 0.06
JCCS success stories will help in getting projects 0.01 3 0.03 3 0.03 3 0.03
Services projects bundled with hardware sales 0.10 3 0.30 3 0.30 3 0.30
Existing customer base can generate repeated sales 0.02 3 0.06 3 0.06 3 0.06
Technical expertise pool 0.10 3 0.30 3 0.30 3 0.30
Management Expertise 0.20 3 0.60 3 0.60 3 0.60
Financial Resources 0.02 4 0.08 4 0.08 4 0.08
Weaknesses 0.00 0.00 0.00
Disconnected & dispersed technical employees 0.10 4 0.40 2 0.20 0 0.00
Poor marketing plan 0.10 4 0.40 1 0.10 0 0.00
Poor strategy and target responsibility 0.10 4 0.40 1 0.10 0 0.00
Bad reputation in services 0.05 4 0.20 1 0.05 0 0.00
No knowledge management 0.03 4 0.12 1 0.03 0 0.00
Technical infrastructure not ready 0.01 4 0.04 1 0.01 0 0.00
Org. structure not suitable for Functional excellence 0.03 4 0.12 1 0.03 0 0.00
Delays and gap in inter-department communication 0.05 4 0.20 1 0.05 0 0.00
SUBTOTAL 1.00 3.53 2.22 1.65
Key External Factors
Opportunities
IT Service Market expected to be US$ 1350mn in 2012 0.20 3 0.60 1 0.20 3 0.60
Companies are unable to generate insight from data 0.05 3 0.15 1 0.05 3 0.15
Increasing trend in business aligned IT/IS 0.05 3 0.15 1 0.05 3 0.15
Companies are looking to reduce cost by outsourcing 0.20 3 0.60 1 0.20 3 0.60
Customers IT staff is under staff or lacks skills 0.10 3 0.30 1 0.10 3 0.30
International vendors need local partner 0.05 3 0.15 1 0.05 3 0.15
Threats
Increased competition 0.10 2 0.20 1 0.10 3 0.30
Difficulty in finding and retaining skill staff 0.05 2 0.10 1 0.05 4 0.20
Global financial crises 0.05 4 0.20 2 0.10 3 0.15
Mergers and Acquisitions of vendors 0.05 2 0.10 3 0.15 4 0.20
Vendors coming in service industry 0.05 2 0.10 2 0.10 3 0.15
International service companies presence in KSA 0.05 2 0.10 2 0.10 3 0.15
SUBTOTAL 1.00 2.75 1.25 3.10
SUM TOTAL ATTRACTIVENESS SCORE 2.00 6.28 3.47 4.75

14. Balances Scorecard
for
Strategy Execution
Framework that translate strategy into operational
objectives and drive performance

15. ABC Top Issues
 Low Internal awareness and Buy-In
 All ABC projects are being out-sourced
 Outsourced employees are working in their on islands
 Goals and Responsibility
 No one is responsible for winning ABC projects
 No marketing plan for ABC
 No clear Goals/responsible
 No clear Road map
 Communication delays and gaps with head office
The vision must be followed by the venture. It is not enough to stare up the steps - we must step
up the stairs. (Vance Havne)

16. Strategic Action List
•Time bound revenue goals and responsibilities
•Performance goals
Goals and
Responsibility •Promote and Develop ABC
•JCCS management should be informed about ABC Vision and Services and their part in ABC Success
Communication
•All outsourced technical staff should be informed
•Marketing Team (all regions) should be aware of ABC services
•Specialized virtual team for ABC marketing should be nominated
Marketing •Time bound Target – reward for ABC marketing should be set
Initiatives
•Marketing Mix Strategy
•Build virtual team of DBAs, Developers, Analyst …
•Develop and motivate team members
•Make Email groups , make Internal websites
Prepare Virtual
Team •Share knowledge and arrange training sessions
•Document standard procedures
•Prepare Virtual NOC
•Prepare True DR Site
Prepare
Infrastructure •Prepare multiple ISP Solution
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17. Marketing Mix
•Software Development •Personal Selling
•Database Consulting •Sales Promotion
•Onsite/remote •Gap Analysis
•Infrastructure Mgmt • Health/Security check
•BI Consulting • Free DB Management
•Pilot Project
Product Promotion
Place Price
•ABC channels will be • Initially market
JCCS Marketing Team penetration pricing
•All region •Try to Lock Customers
•JCCS Support Team at •Value Based Pricing
client
•Push Strategies
7 Ps – People, Processes, Physical Environment
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18. Scorecard and Cause-effect Terms
And Realize
the Vision
Financial
To Drive Financial
Results Success...
Customer
Benefits Needed to Deliver Unique
Sets of Benefits to Customers...
Internal
To Build the Strategic Capabilities..
Capabilities
Knowledge, Skills, Systems, and Tools Equip our People...
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19. Building Blocks
Financial Perspective 1. The economic model of
Return on key levers driving financial
Revenue
Investment
Productivity performance
Strategy Strategy
Sources of Growth Sources of
Productivity
Customer Perspective 2. The value proposition of
Value Proposition target customers
Relation-
Price Quality Time Function Image
ship
Internal Process Perspective
3. The value chain of core
“Build the “Make the “Deliver the “Service
business processes
Brand” Sale” Product” Exceptionally”
Learning & Growth Perspective 4. The critical enablers of
Staff Climate for
performance improvement,
Technology
Competencies + Infrastructure + Action change and learning
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20. Balanced Scorecard Six Step Development Process
Step 3
Step 1 Step 5
Draft a
Develop a Strategy Map Select Strategic
Project Plan With Linkages Initiatives
And Themes
Step 2
Step 4 Step 6
Build a
Determine Plan for
Strategic
Measures and implementation
Architecture
Targets of the SFO
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21. Summary
• Evaluation shows that ABC initiative have good potential
• Internal awareness and marketing of ABC
• Clear goals with responsibilities
• Virtual restructuring and readiness
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