Chapter 11 developiong business&it strategiesMIS- MBA-1st Trimester- MBS

1. Chapter 11
Developing
Business/IT Strategies

2. Planning Fundamentals
• Information technology has created a seismic
shift in the way companies do business
– Just knowing the importance and structure of
e-business is not enough
– You must create and implement an action plan
that allows you to make the transition from an
old business design to a new e-business design

3. Components of an organizational planning process
Analyze the
Organization’s
Environment
Forecast Internal
and External
Developments
Evaluate
Accomplishments
and Resources
Team Building,
Modeling,
Consensus
Articulate the
Organization’s
Plan
Develop
Strategies
Policies
Tactics
Develop
Implementation
Methods
And Controls
Establish
Vision
Mission
Goals
Objectives
Feedback

4. Planning
• Strategic Planning
– Deals with the development of an organization’s
mission, goals, strategies, and policies
– Begins with strategic visioning questions
• Tactical Planning
– The setting of objectives and the development
of procedures, rules, schedules, and budgets
• Operational Planning
– Done on a short-term basis to implement and
control day-to-day operations

5. Strategic Visioning Questions
Strategic Business Visioning
Understanding
the customer
• Who are our customers?
• How are our customers’ priorities shifting? Who should be our
target customers?
• How will an e-business help reach out target customer segments?
Customer
value
• How can we add value for the customer with e-business services?
• How can we become the customer’s first choice?
Competition
• Who are our real competitors? What is our toughest competitor’s
business model?
• What are they doing in e-business and e-commerce? Are out
competitors potential partners, suppliers, or customers in e-
business venture?
Value chain
• How would we design a value chain if we were just starting an e-
business?
• Who would be our supply chain partners? What roles should we
play: e-commerce website, B2C portal, B2B marketplace, or
partner in an e-commerce alliance?

6. Organizational planning
methodologies
• The scenario approach
• Planning for competitive advantage

7. The Scenario Approach
• Generally a less formal, but more realistic,
strategic planning methodology
– Teams of managers and planners participate in
microworld or virtual world exercises
– Microworld is a simulation exercise that is a
microcosm of the real world
– Business scenarios are safely created, experienced
and evaluated
– Alternative scenarios are then created

8. The Scenario Approach
• Alternative scenarios are created by
– Teams or
– Business simulation software based of various factors

9. Planning for Competitive Advantage
• Strategic business/IT planning
– Involves evaluating the potential benefits
and risks of using IT-based strategies and
technologies for competitive advantage
• The following models can help generate ideas
for the strategic use of IT to support initiatives
– Competitive forces
– Competitive strategies
– Value chain

10. Strategy Company Strategic Use of IT Business Benefits
Cost Leadership •Dell Computer
•Priceline.com
•eBay.com
•Online Build to order
•Online seller Bidding
•Online Auction
•Lowest –cost producer
•Buyer-set pricing
•Auction-set pricing
Differentiation •AVNET Marshall
•Moen Inc
•Consolidated
Freightways
•Cust/Supp eCommerce
•Online Customer design
•Online Shipment tracking
•Increase in market share
Innovation •Chrales Schwab
•Fedex
•Amazon
•Online discount stock
trading
•Package tracking & Flight
Mgmt
•Online full-service
customer system
•Increase in global market
•Market leadership
•Market leadership
Growth •CitiGroup
•Walmart
•Toys ‘R’ Us
•Global intranet
•Merchandise ordering by
satellite network
•POS inventory tracking
•Increase in global market
•Market leadership
•Market leadership
Alliance •Walmart/P&G
•Cisco Systems
•Staples Inc and
partners
•Automated inventory
replenishment
•Virtual manufacturing
Alliance
•Online one-stop
shopping with partners
•Reduced inventory cost/
increased sales
•Agile market leadership
•Increase in market share

11. Administrative Coordination and support services
Collaborative Workflow Intranet
Human Resource Management
Employee Benefits Intranet
Technology Development
Product Development Extranet with Partners
Procurement of Resources
eCommerce web portals for suppliers
Inbound
Logistics
Automated JIT
Warehousing
Operations
Computer
Aided Flexible
Manufacturing
Outbound
Logistics
Online POS
Online
Order
Processing
Marketing &
Sales
Targeted
Marketing
Mass
Customization
With CRM
Service
Online customer
support
Customer
Relationship
Management
SupportProcessPrimaryProcess
Competitive
Advantage
Value Chain of a Firm

12. Strategic Opportunities Matrix
Strategic
Business
Potential
High
High Risk
High Payoff
Opportunities
High Success
High Payoff
Opportunities
Low
High Risk
Low Payoff
Opportunities
Safe but
Low Payoff
Opportunities
Low High
Firm’s Ability to Deliver with IT

13. SWOT Analysis
• SWOT stands for
– Strengths: a company’s core competencies
and resources
– Weaknesses: areas of substandard business
performance compared to others
– Opportunities: potential for new business markets
or innovative breakthroughs that might expand
current markets
– Threats: anything that has the potential for
business and market losses

14. SWOT analysis by HR Consulting Firm
Strengths Weaknesses Opportunities Threats
Market
reputation
Shortage of trained
consultants at the
operating level
Well-established
market niche
Large consultancies
operating at a minor
market level
Partner-level
expertise in
HRM
Lack of ability to
manage
multidisciplinary
assignments
New market
opportunities for
consulting in areas
other than HRM
Many small
consultancies looking
to invade the
marketplace

15. Business Models and Planning
• Business model is a conceptual framework that expresses
the underlying economic logic and system
that prove how a business can deliver value to
customers at an appropriate cost and make money
• Business model answers vital questions about the
fundamental components of a business
– Who are our customers?
– What do our customers value?
– How much will it cost to deliver that value?
– How do we make money in this business?

16. Questions for all Business Models
Customer value Are we offering something distinctive or at a lower
cost than our competitors?
Scope To which customers is this value being offered?
What range of products/services offered embody
this value?
Pricing How do we price the value?
Revenue source Where do the dollars come from? Who pays for
what value and when? What are the margins in
each market, and what drives them?
What drives value in each source?
Connected
activities
What do we have to do to offer this value and
when?
How connected are these activities?

17. Questions for all Business Models
Implementation What structure, systems, people, and environment
do we need to carry out these activities?
What is the fit between them?
Sustainability What is it about the firm that makes
it difficult for other to imitate it?
How do we keep making money?
How do we sustain our competitive advantage?
Capabilities What are our capabilities and capabilities gaps?
How do we fill these gaps?
Is there something distinctive about these
capabilities that lets us offer the value better than
other firms?
Is this capability hard to imitate?
What are the sources of these capabilities?

18. Questions Specific to E-Business Models
Customer
Value
What is it about Internet technologies that allows us to
offer customers something distinctive?
Can Internet technologies help us to solve a new set of
problems for customers?
Scope
What is the scope of customers that Internet
technologies enable us to reach?
Does the Internet alter the product or service mix that
embodies the firm’s products?
Pricing How does the Internet make pricing different?
Revenue
source
Are revenue sources different with the Internet?
What is new?

19. Questions Specific to E-Business Models
Connected
activities
How many new activities must be performed as a
result of the Internet?
How much better can Internet technologies help us
perform existing activities?
Implementation
How do Internet technologies affect the strategy,
structure, systems, people, and environment of the
firm?
Sustainability
Do Internet technologies make sustainability easier
or more difficult?
How can the firm take advantage of it?
Capabilities
What new capabilities do we need?
What is the impact of Internet technologies on
existing capabilities?

20. Impact and Scope of Implementing IT
• A business initiative is an organization's way of setting a priority
• It is usually a description of the direction the organization wants
to take and how that will improve the organization

21. Intranet Enterprise Portal Challenges
– Security, security, security
– Defining the scope and purpose of the portal
– Finding the time and the money
– Ensuring consistent data quality
– Getting employees to use it
– Organizing the data
– Finding technical expertise
– Integrating the pieces
– Making it easy to use
– Providing all users with access

22. Enterprise Resource Planning Challenges
– Getting end user buy-in
– Scheduling/planning
– Integrating legacy systems/data
– Getting management buy-in
– Multiple/international sites and partners
– Changing culture and mind-sets
– IT training
– Getting, keeping IT staff
– Moving to a new platform
– Performance/system upgrades

23. End User Resistance and Involvement
• Any way of doing things generates some resistance
from the people affected
• CRM projects have a history of failure
– Up to 75 percent of CRM projects fail to
meet their objectives
– This is often due to sales force automation problems
and unaddressed cultural issues
– Sales staffs are often resistant to, or fearful
of, using CRM systems

24. Keys to Solving End User Resistance
• End-user involvement in organizational changes and
system development
– Such involvement helps ensure that end users assume
ownership of a system & that its design meets their needs
• Requiring involvement and commitment of top
management and all stakeholders
– Systems that create inconvenience or frustrate users
cannot be effective, no matter how technically elegant or
efficient
• Education and training

25. Change Management
• Implementing a new e-business application may
involve
– Developing an action plan
– Assigning managers as change sponsors
• Sponsors sanction initiatives through influential
communications
• Heavy involved not just signing their names on the project
charter
• Effective sponsors cannot disappear or remain in the
background.
– Developing employee change teams
– Encouraging open communications and
feedback about organizational changes

26. Change Management
• Key tactics recommended by change experts
– Involve as many people as possible in e-business
planning and application development
– Make constant change an expected part of the culture
– Tell everyone as much as possible about everything, as
often as possible, in person
– Make liberal use of financial incentives and recognition
– Work within the company culture, not around it

27. Change Management
People factors have the highest level of difficulty and the longest
time to resolve of any dimension of change management
Reasons why employees resist change
• Loss of job
• Bad communication strategy
• Shock and fear of unknown
• Loss of control
• Lack of competence
• Lack of reward or improvement
• Loss of existing support

28. Key Dimensions of Change
Management

29. A Change Management Process