8 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5
Establishing business strategy
with information technology
Maaikel Klein Klouwenberg, William J.D. Koot and J. Alphons M. van Schaik
It is important to choose not only the correct strategy but also the right set of applications and the
right infrastructure
Why the emphasis on IT?
Motives for setting up an architecture and an
infrastructure
It has already been explained in many articles that
information technology (IT) undergoes a development
inside every organization, from a means to improve the
efficiency and effectiveness of the organization to a means to
influence the strategic position of the company, when
applied more intensively. The way in which management
controls IT has changed simultaneously[1,2] (Figure 1).
In the first stages of automation, efficiency is the primary
goal and the attention of management is mainly focused on
technology. In this stage, the automation professional is an
“extra-terrestrial” expert, who decides what is best for the
organization. In later stages, the effective functioning of the
organization becomes as important a goal as efficiency. The
management then becomes conscious of the fact that, next
to technology, the design and structure of the organization is
a decisive factor. User participation, information planning
and the appointment of steering committees are
manifestations of this. These organizations more and more
recognize the need for a methodical approach to IT
planning, as a result of disruptions in management, fusion
or reorganization, cost increase, or new usage possibilities.
To an increasing extent, organizations which have more
experience with automation realize that IT cannot only
improve the efficiency and effectiveness, but also that it is of
decisive importance to the company’s success. IT usage
planning then acquires a strategic quality in these
organizations[3]. IT functions as a catalyst in all this. These
organizations set up a business architecture and an IT
architecture, based on an objective, qualitative and
quantitative investigation into the current use of
information technology[4].
What can the strategic contribution of IT comprise?
A good strategy cannot easily be copied by competitors,
because of the organizational, financial, social and technical
Information Management & Computer Security, Vol. 3 No. 5, 1995, pp. 8-20
© MCB University Press Limited, 0968-5227
cost and the trial period involved in attaining the strategy:
or, as Toffler[5] states: “There is no one to copy anymore”.
Every organization has its own profile, environment and
aims. Strategy indicates how the organizational structure
should be designed and what the use of IT should be and
should, therefore, be sufficiently concrete and specific. A
specific strategy leads to a unique interpretation of the
architecture and the infrastructure.
A good strategy focuses less and less on the product or the
service itself and more and more on the rendering of
services, reputation and so forth. This is especially
applicable to products which have become a “commodity”;
they are produced by many suppliers and their quality is
usually high enough. This is why strategies in the same
branch differ to a high degree. For example, a great
difference arises when the bottom of the market is the focus;
for example, East European cars such as Skoda and Lada,
or, on the other hand, the top of the market, for example, the
German top cars, Mercedes and BMW. Quality control,
tailor-made products and product innovation are applied in
a very different way. This leads to very different information
needs and to a unique use of IT within the same car branch.
Quality control, tailor-made products and innovation are of
vital importance, for example, to Mercedes. The use of IT
should strongly support these business processes in
particular, and constantly offer the management of this car
manufacturer the appropriate steering information.
Realization of architecture and infrastructure
In practice the realization of strategy, architecture and
infrastructure is an iterative process[6]. The opportunities
of technology can, for instance, create restrictions, so that
basic assumptions must be adjusted. Besides, the process is
often laborious, full of doubts and obscurities. This is
mainly caused by the fact that, in strategy planning, choices
are under discussion with respect to the market approach,
the way of functioning, priorities and so forth. These steps
The authors acknowledge the contributions of their colleagues:
M.V. Batelaan, A. Kranenkonk, A.H.J.B. Scholgerrits, H.G.
Westandorp, P. Woudstra and J.T.M. van der Zee, without
whom this work would not have been completed.
 ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 9

Figure 1. Nolan growth curve and the focus of management
Resources
IT era
Data
processing
era
Efficiency Effectiveness Strategy
are described in a linear way, for the sake of clarity (see
Figure 2).
The development of an architecture starts with the business
strategy. On the basis of this the organization structure and
organization processes will be designed in the “business
architecture” (see below) and the “IT architecture” derived
from this. The “IT infrastructure” is the technical filling-in
of the IT architecture. “Implementation” deals with the
introduction of the business architecture and IT
architecture.
Business strategy
The business strategy should offer sufficient clues in order
to work on the strategic use of IT in a concrete way.
Existing strategic plans are often too vague and subject to
multiple interpretations. This section explains which
abstract and particularly concrete parts the business
strategy should consist of, and how a company can move
from abstract ideas to concrete clues.
Business vision
What is a business vision?
A business vision is a management vision of the way in
which the organization should function in order to survive
and in order to be competitive in the years to come. Some
even go as far as saying: “An organization without a
business vision is a control-instrument”[7]. The realization
of a business vision is a creative and often laborious
process. Yet, a business vision is vital for a good strategy
Management formulation, because it functions as a co-ordinating
emphasis directive framework.
Business
strategy The essence of the business vision is in reaching an
agreement on five common principles:
Business (1) How do we compete and with what image?
support
(2) How do we earn our money?
(3) How do we organize it all?
Technology (4) How do we reach a value added for our
stakeholders?
Time (5) How do we turn this organization into a sought
after employer?
A good business vision should be “inspiring enough to
cause people to consider that it is worthwhile to give it
their time and energy”[8]. A business vision should be a
challenge: not vague, but specifically focused on the
organization. Some criteria for a good business vision are
that it should:
● indicate direction and priorities;
● define measurable aims;
● give challenging objectives;
● give a clear time horizon.
A good illustration of such a business vision is the example
of a chemical producer with “from now on no more
accidents”. This business vision contains ingredients for
an adequate business strategy. It gives direction by
pointing out safety (accidents); it is quantified (number of
accidents); it is challenging (no accidents) and it has a clear
time horizon (from now on).
A large bank (here given the fictitious name “Combank”),
focused on the commercial market, has as its business
vision: “To be the leading bank in the wholesale market in
1995”. It contains the requisite elements (direction,
quantification, challenge, timing). Combank then
translated this vision into specific business objectives.
These objectives, in turn, were solidified in action items, or
“do-wells”. Finally, Combank determined the design
criteria for the business and IT organizations which would
most enable achievement of these action items.

Establishing a business vision

Figure 2. Architecture development process Senior management is sometimes inclined to keep itself
apart from the development of a business vision. The
Building interim
organization platforms development of a business vision should not, however, be
delegated too much or contracted out. It is, after all, the
Develop Building Design Design Design and
vision of management itself[9]. For this reason the business
business business I/T I/T develop vision should be established in an interactive way with the
strategy architecture architecture infrastructure systems
management; for example, by organizing workshops with
senior management and clients in order to evoke an active
Building interim I/T picture and debates. These debates can include figures
platforms
from branch analysis, scenario-analyses and simulations,
10 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5
or the results of value chain analyses of the industrial
column[10]. In practice, business visions are only realized
by means of creation, inspiration, even frustration and
perspiration. Experience in establishing a business vision
is therefore essential.
In practice, the establishment of a business strategy up to
the design criteria is a painful process, with many
iterations and individual considerations. “Managing” this
process requires knowledge of and experience in strategic
planning processes.
The main part of this process takes place in terms of
debates, seminars and workshops. Quantitative and
qualitative elements can be used as a source for the
business vision:
● opinions and visions of the management itself;
● quantitative and qualitative analysis of the branch,
competitors, the value chain and the market;
● results of “opportunity” workshops where ideas for
the use of IT have been assembled;
● opinions and ideas of clients (on the product quality,
service, etc.).
These are examples of well articulated business visions. A
business vision does not, however, define in which way all
this can be realized. Choices must be made. Therefore a
business vision should be translated into “business
objectives”.
Business objectives
The “passion” of the senior management is often necessary
in order to realize a business vision because many difficult
choices must be made. In this line, various ways can be
considered in which the business vision “To be the leading
bank for the wholesale market in 1995” can be pursued, for
example by:
● offering standard services against the lowest price;
● offering tailor-made services;
● improving the image;
● improving the commercial qualities of employees.
In this way, a business objective can be defined as the
policy choice, in view of the way in which the business
vision will be realized. The choices concern the well-known
“Ps”: product, price, promotion and place[11] and also
strategic factors such as competition, clients, suppliers and
replacement products[12]. Several fundamental questions
play a role here. For example if it concerns choices such as:
● market share versus profitability;
● short- or long-term orientation;
● growth or consolidation.
In our example, Combank, the business objectives are
formulated as follows:
● introduce new products in a timely fashion;
● know the client’s needs;
● cost effectiveness regardless of volume.
This fictitious bank is located in the wholesale market. In
this market one could have chosen to offer a large set of
products against a low price, so that every client can
choose from the standard products. Because of the low
price, tailor-made services are not possible. Clients who
desire tailor-made services can not be served by such a
bank.
Our example, Combank, however, chooses no mass
products and no low prices, but flexibility and tailor-made
service for these wholesale clients who desire this. Also,
Combank chooses the wholesale market segment (bank for
companies) and not the private segment. Of course, a
careful consideration by the senior management preceded
this. Personal visions, estimations of market developments
and other considerations play an important role.
The objectives indicate a global direction for the
organizations, but they still give the specific establishment
of IT and the arrangement of the organization little on
which to hold. Therefore the objectives should be solidified
even more.
“Do-wells”
The business vision and the objectives do not sufficiently
explain which aspects of the rendering of services should
be reinforced, or in what the company should be
specifically proficient. The business objectives should be
solidified even more in the form of “do-wells”.
The business objectives can be addressed in several ways,
for example by means of:
● better trained commercial employees;
● flexible business hours, dependent on the pressure
of work;
● little overhead;
● profitable products portfolio.
Our example, Combank, chose – among others – the
following do-wells:
● seven-day, 24-hour availability;
● to be able to provide new, client-oriented, standard
products which can be tailor-made per client very
quickly;
● know the client’s needs before he does.
Do-wells can be of an economical, technological and an
organizational nature, as well as of a social nature. Do-
wells are chosen specific items, of which a company must
be capable (capabilities), in order to realize the objectives. A
“do-well” should be specified in terms of the following five
aspects:
 ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY
(1) Message: the clearer the message, the more
powerful a do-well will be.
(2) Testability: the possibility to determine to what
extent the objectives have been realized.
(3) IT consequences: the consequences a do-well has for
the information technology.
(4) Organizational consequences: consequences for the
staff, organization of business functions, etc.
(5) Horizon: the period in which the do-well should be
realized.
The company has now translated the business vision (“To
be the leading bank in the wholesale market in 1995”) into
a number of concrete items of which it should be capable
(“know the clients and his needs, etc.). The existing
organization and IT will have to be modelled on this basis.
Design criteria
Do-wells specify the chosen capabilities which should be
developed. They should be translated into the organization
of business functions and IT. So, the design criteria are the
do-well essentials, on the basis of which the organization
and the IT are modelled. Design criteria are, in fact, a set of
organizational and IT demands which should be realized
by the architecture and which are derived from the
business vision and the organizational redesign. By
simulation of business processes and the advanced use of
applications, the management can form a picture of the
consequences and advantages of the different design
criteria. In this way, in, for example, Combank, a prototype
of the “account manager system” can be shown.
In the Combank example the following design criteria have
been chosen:
● Account manager: an account manager is
responsible for the client.
● Client information: an account manager should be
able to obtain all the information about a client from
one workstation.
Design criteria seem to be very simple remarks: “A client
should have a contact point within the bank and therefore
we appoint an account manager.” In practice this means a
total transformation. Like many large organizations, our
bank was product-oriented. Each product had its own
division (loans, deposits, lease, national payments, foreign
payments, securities, etc.). The sale of products also went
via these divisions. The appointment of an account
manager actually means a complete reorganization,
because one person becomes not only the contact person
but is also commercially responsible for all products. The
account manager should be informed about all the
products and opportunities. Up to now, he/she was only
informed about the products sold by his/her own division.
In short – in terms of capabilities, knowledge and
organization – a total re-orientation. It will be obvious that
such a reorganization must be guided by the senior
11
management and that its effective involvement and ability
to change will be thoroughly put to the test.
Business architecture
In the last section it has been demonstrated that strategy
has important organizational and technological
consequences. In the example, Combank, it has been
indicated that the organization was transformed from a
product-oriented to a client-oriented organization. Just
indicating this change in the business strategy is, of
course, insufficient to make the organization function in
this way. Besides, such a change has important
consequences for the supporting data systems. Where, in
the old situation, data systems existed per division (with
their own client file), the data systems in the new situation
should be linked to each other in such a way that one
picture arises of all contracts and transactions of a client.
This means – among other things – that a seemingly
simple problem must be solved: one client view for the
whole organization.
In the section at issue, the translation of the strategy into
an architecture and infrastructure is described. The first
step, after developing the business strategy, is to determine
the business processes in the business architecture. The
operating procedure to be followed is described in a linear
way. In practice, in working out the business architecture,
new insights and problems often arise which lead to a
refinement of the business strategy. In this way, a process
acquires a more cyclic nature.
In the past few years, much has already been written and
spoken about the fact that automation gives rise to not only
technical, but also organizational consequences and
changes. In the case of organizations applying information
technology in order to improve efficiency and effectiveness
(beginning of the Nolan-phases, Figure 1), the organi-
zational changes are often restricted to:
● the description of the administrative procedures;
● the adaptation of job description;
● rearranging of departments.
Actually, an automation of the existing organization takes
place, with some necessary changes. However, the effects of
the improved use of IT can only be expected when the
company processes have also been effectively structured
and when the responsibilities (of, for example, the account
manager and the supporting specialist departments) are
well defined!
In practice, this has consequences for the organization
structure. In the business architecture, attention is
therefore paid to the redesign (blueprint) of the
organization and the way in which the organization should
function in the future.
12 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5
The business architecture is divided into three closely
related blueprints (see Figure 3):
(1) Business function blueprint: this blueprint describes
the dividing of company processes into
responsibility fields and where they are put into
practice (centralized-decentralized).
(2) Data access blueprint: in order to implement the
company positions, all information is necessary.
That is why the information needs are described.
(3) Application access blueprint: in order to approach
the information, applications are necessary. In the
application access blueprint the necessary
applications are described.
Business function blueprint
The various activities of the organization are separated
into several dozen business functions on an operational,
management and strategic level. Examples of business
functions are: initiating payment, withdrawing money,
acquisition, approving a proposal, marketing and
promotions, and company planning. The essence of the
business function blueprint is that the senior management
makes choices for the design of processes and
responsibilities which support the strategy. Therefore an
intensive exchange of thoughts with the senior
management, supported by, for example, company process
simulations, is necessary so that the right choices can be
made.
The strategic design criterion “account management”
requires that we recognize which business functions
account management is going to include. The basis of
Figure 3. Strategy, architecture and infrastructure
Business function
blueprint
Business
architecture
Data access Application
blueprint access blueprint
Data storage Application
blueprint process blueprint
IT
architecture
Technology Communication
blueprint blueprint
Management controls
Business capabilities
IT
IT services
infrastructure
IT components
account management is that as much responsibility as
possible is given – through a process of decentralization –
to the account manager and that he can estimate which
products interest the client. In principle, the account
manager will carry out the commercial conversations,
supported, if necessary, by specialists; for example, in
dealing with stocks and shares and leasing. It will,
moreover, be desirable to let a number of functions be
carried out on a lower level, for the sake of efficiency. This,
however, should not lead to a “client-unfriendly”
arrangement of assignments (customers are too often
referred to someone else). Simulations of business
processes and the corresponding applications are often
useful, in order to let the senior management make the
right choices for the optimum organization of the company.
Figure 4 shows a number of business functions of the
bank. On the left, business functions, practised at a central
level, can be seen; on the right, those functions at the most
decentralized level. The “account management” in the
middle column consists of six business functions, from
“sales planning”, “acquisition”, “selecting a product”, up to
“approving payment transactions and proposals”. These
business functions form a complete whole.
The arrangement of a number of business functions into
“account management” for example, is called “logical
locations”. All the logical locations together, on the central-
decentralized axis, form the business functions blueprint.
In defining the logical locations, the following
considerations play a role:
● The combination of business functions carried out
by the manned transaction point, differs from the
functions of the account manager in place and in
opening time.
● The mobility of a travelling shop differs from a shop
on the corner of the street.
● The centralization/decentralization differs from the
head office and the district office managements.
In practice the blueprint appears to give the senior
management an excellent cause for discussion, because
certain choices concerning the arrangement of business
functions are made comprehensible. It also induces the
adjustment of design criteria. The eventual design criteria
should determine the essential choices concerning logical
locations, as a result of the business strategy.
A first look at the blueprint often results in the question
“Where can I see the ‘Amsterdam office’ or ‘Brussels
office’?” These are concrete locations, which consist of a
number of logical locations. Figure 4 explains which
logical locations a large or small office includes, by putting
frames around a number of logical locations.
The concept of the logical locations gives an opportunity –
in co-operation with the (senior) management – to model
 ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 13

Figure 4. Business functions blueprint: arranged as logical locations. Logical locations arranged as concrete locations
HQ Regional Branch office Automated service Beyond the branch

Central management Local management Manned transaction

centre centre point ATM Customer

Company planning Sales planning Deposit money Deposit money Initiate transaction
Human resource Operational Withdraw money Withdraw money Initiate payment
management management Initiate transaction Customer enquiry
External reporting Initiate payment
Customer enquiry
Marketing and product Local support Retailer/
development unit Account point of sale
management
Define market segment Open account Initiate payment
Marketing and Initiate payment Sales planning Approve payment
promotions Acquisition
Product development Select products
Submit proposal
Approve transaction
Credit/risk Product Approve payment
committee specialization Approve proposal
Approve proposal Determine client needs
Assess client risk Specify proposal
Collateral valuation
Monitor proposal product

Support
centre

Process transaction
Process payment
Confirm client

Centralized Decentralized

Key
Large office Small office

the organization in a comprehensible way. Also, the
business architecture is independent of the accidentally
concrete and geographical situation, because of the
arrangement into logical locations. Moreover, it offers an
opportunity to design new combinations as a concrete
location. It can be imagined that our bank designs a
concrete location “kiosk”, where the logical locations,
point-of-sales terminal and automated teller machine, are
combined and placed near large supermarkets. This gives
the supermarket customers the opportunity to pay for their
shopping by using the point-of-sales terminal (chipcards),
and also the opportunity of withdrawing money.
On the basis of the realization of the business functions
blueprint, it can be determined which information and
applications are necessary.
Data access blueprint
IT supports a business strategy by giving the right
information. Therefore it is necessary to determine which
information is necessary and where.
In the data access blueprint it is determined, in the case of
every logical location per business function, which
information is necessary in order to practise the business
function in accordance with the strategy. It does not
concern all the details of this information, but the
information needs in outline, also called “data groups”.
Examples of data groups are: personnel, product, client,
payment, order and invoice.
The design criterion “client view” should reveal itself in a
data access blueprint. An account manager will not only be
interested in general client data, but also in balance,
transaction and contract information of all products.
By making an inventory of the information needs per
business function, the traditional matrix business
functions/data groups arises. This matrix indicates which
business functions use which data groups[13]. In practice,
the distinction is made between the creation of
information, the updating of information or just the
interpreting. In order to make this last distinction, it is
necessary to know the assignments and responsibilities of
14 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5
the business functions. The recording (creating) of
complaints could, for instance, be the responsibility of the
account manager, but also of the product specialist or the
back office. Here the organization should again make a
choice.
The inventory of the information needs is preferably made
by means of workshops. In every workshop several users
participate, who are well-acquainted with a number of
business functions. The activities of each business
function are discussed and viewed in the light of strategic
objectives. In this way, a lively interaction and a clear
picture of the real information needs arise. Moreover, this
“bottom up” method will benefit the acceptance.
Application access blueprint
In the last blueprint, the information needs have been
determined. In order to provide this information,
applications are necessary. Applications are only means to
get the right information in the right place. In the
application access blueprint it is determined which
applications will be used by which logical locations.
The design criterion in this case requires that all
information must be accessible to the account manager. It
is established in the application access blueprint which
applications at the different logical locations will be used as
suppliers of information (as has been defined in the
application access blueprint). In our example, systems will
be present which not only provide general client
information, but also contract information, transaction
information and balance information. Account
management is, of course, more than using information.
An account manager will initiate new contracts and must
be supported in this (the outline of sales scenarios, product
information and contract system). Apart from this,
appointments with clients are made and sales planning
should be set up. In practice, this gives rise to many
important questions, such as:
● When are we dealing with an actual client?
● Which clients is the account manager allowed to see
(all clients, or merely those of his branch office, or
only his own clients)?
● Which relations of a client are actually registered?
● Which subsidiary enterprises are involved?
● Who is the director/owner? (What is the actual
position of the director/owner?)
The collection of necessary applications (the application
portfolio) is entirely determined by the information needs
as they have been defined. The aim of the demarcation is to
arrive at strategically relevant, realizable and manageable
applications. It concerns the balance between not too large
and complex systems, in such a way that not too many
interfaces between applications arise. The traditional
matrix business functions/data groups, on which the
application access blueprint is based functions as an aid in
this.
Each application should be described in broad outline.
Such descriptions form the starting point for the
subsequent realization of applications[14].
Up to now three blueprints have been described:
(1) business function;
(2) data access;
(3) application access.
These three together are the business architecture. During
the realization, the senior management has chosen a
business process structure and responsibility in
accordance with the business strategy. The consequences
of this, in terms of the necessary information and the
necessary applications, have been discussed and
established. This architecture is called business
architecture, because it can still be regarded as separate
from the technical means which are to be introduced.
The following items have not yet been described:
● where the data are stored;
● where the data are processed;
● which hardware and data communication are
necessary.
IT Architecture
The distinction between business architecture and IT
architecture is of major importance. In many organizations
the architecture is mainly determined by technical and
economical considerations. The organizational aspects are
therefore mainly realized by means of the technical
opportunities (technology push) and not on the basis of
strategic and/or organizational considerations. Within the
scope of the business needs, the business architecture
offers the possibility to choose the best IT solutions. In this
way, the IT architecture fulfils a “bridge” function between,
on the one hand, business demands on information supply
and, on the other, technological opportunities.
In the business architecture, the way in which the
organization should function in the future is indicated,
along with which information needs are important in this.
The business architecture describes this in a more
functional sense. The IT architecture translates the more
functional description into technical solutions. The
difference between business architecture and IT
architecture is, in fact comparable with the distinction
between functional and technical design, which has been
used by system development methodologies for years.
The business architecture is dominated by managerial and
organizational questions (what). The answers to these
 ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY 15

questions are translated, in the IT architecture, into Figure 5. IT architecture

automation directions (how) and eventually in the choice of
specific makes and types of technical means: the IT HQ Regional Branch office
infrastructure (with what).
Support centre

In this part, the four blueprints are discussed which

Product specialization
together form the IT architecture: Data storage

(1) Data storage blueprint: this indicates the storage Client Data storage Account management
Contract
place of various files and databases. Contract loan
Contract deposit Product Data storage
(2) Application processing blueprint: this denotes the Transaction-order
Payment-order
Proposal
Collateral
place of processing of various applications. Invoice Transaction-order Sales plan
Customer statement Complaints
(3) Technology blueprint: this indicates the
requirements and types of technology.
Application
(4) Communication blueprint: this denotes the data processing

flows among locations. Current account

Application
processing
system
The four different blueprints are mutually related and they Processing loans Application
should match each other closely. In fact, first of all, the Processing deposit
Processing payment
Collateral valuation
Contracting system
processing
place of storage is determined for each file and the place of T/X trading system Credit scoring
Securities system Transaction system Customer profile
processing for each application. By doing so, the outlines Balance inquiry Product information Customer profitability
for communication and technology arise. The question Sales planning
system
where/what is a matter of cost and technical opportunities, Negotiation planning
on the basis of the business strategy and the business Mainframe

architecture.
Mini

The choice for a place of data storage, for example, will

directly have consequences for the communication.
Moreover, this immediately influences the required
technology and place of processing. In short, the blueprints
may be described separately, but they may not be regarded
separately. In this stage, given the business architecture, it
is important to choose the best possible technical solutions.
This requires discussions between the designers of the
business architecture and IT technologists. Subjects of
discussion might be in how far solutions such as
“distributed databases” or “co-operative processing”,
“imaging “, “non-stop computing” can realize the business
architecture and what the financial and technical
consequences are of this. The technologists should take
into account aspects such as, among others, hardware
management, accessibility of systems, user-friendliness
and safeguarding. It will often be necessary to collect a
number of quantitative data about the size of the data
groups, the extent of the applications and the intensity of
the communication. It is essential that the best solution is
chosen, given the business architecture and the state of
technology. The technologists should describe the
technical feasibility and the manageability of the chosen
solutions.
In Figure 5 the four different IT blueprints are shown in
one blueprint in a simplified form.
Data storage blueprint
In general, data should be stored as near as possible to the
place of usage and the “creator”. Most data, however, are
PCs
Central Distributed
applied at different places, which means that the choice
must be made where to store the data. Other criteria are the
intensity and the nature of the data application. In this way
the data group “client” is applied at different logical
locations, such as the processing centre, product specialist,
account manager, etc.
At Combank, through the discussion with IT
technologists, central storage in the processing centre of
the relation data has been chosen (see Figure 5). Contracts,
transaction orders, payment orders, invoice and customer
statements are also stored in the processing centre. A
central storage of data is only natural when different
logical locations make use of them. Of course, this central
storage of information is available at the other logical
locations mentioned. The central storage however, has
consequences for the response times. Additional measures
should therefore be taken. In the Combank example, the
response time problem has been overcome by making use
of intelligent terminals, so that only the information which
meets the selection criteria has to be sent (co-operative
processing). Central storage of data has, of course,
advantages in terms of control and safeguarding, but
16 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5
disadvantages as well. The “sales plan” which an account
manager makes, for example, is personal and should not be
used by other officials. Therefore, central storage is not
necessary. That is why this information in our example is
stored in a decentralized way.
The present opportunities of technology also play an
important role in all this. Think, for instance, of the use of
distributed databases for which the technology is not
generally applicable.
Application processing blueprint
Of each application it must be determined where the
software “runs”, or where the data are processed by the
system. It should be decided, together with the
technologists, whether the processing should take place at
one location, or at different places at the same time (co-
operative processing). The system “product information”,
for example, is used at the logical locations “marketing and
product development”, “product specialization” and in
“account management”. The emphasis of the usage is on
“product specialization”. Furthermore, the product data
are stored there, so that it has been decided to “run” the
application there (Figure 5). In consideration of this,
arguments such as costs, response times, technical
opportunities and organizational requirements play a role.
Communication blueprint
Communication patterns arise as a result of the preceding
blueprints. Product data, for example, are stored and
processed at the logical location “product specialization”,
but also used by “account management”. This implies a
logical means of communication between the logical
locations mentioned. On the basis of the assessment of the
nature and the extent of the communication (for example:
real-time, voice/images, pressure on the communication
“traffic”) it can be indicated which type of data
communication is suitable (leaselines, datanet 1, fibre
optics). The eventual choice is made at the technical
infrastructure.
Technology blueprint
In this blueprint the choice for the technical means is
established in outline. These are the types of technical
means for the storage, processing and presentation of data
computers for batch processing, non-stop computing,
simple/intelligent terminals, etc. On the basis of the nature
and extent of the usage, certain technical solutions are
proposed; for example, mini-computers for “product
specialization” and PCs for “account management”, and
the choice of intelligent terminals to reduce the response
time of central systems.
The IT architecture describes in outline the choices for
data storage, processing, technology and communication.
The basis of this is, on the one hand, the business
architecture in which the use of data and systems is
established, and on the other, the technical opportunities.
In the realization of the IT architecture, consultation and
discussion take place. It is possible to design the “ideal”
architecture in which the entire data storage and
processing take place where the user is located. Such an
architecture also has potential disadvantages
(controllability, costs), which should be taken into
consideration in the discussion with the technologists. At
Combank, mini-computers have been chosen at a regional
level. It might have been cheaper not to have put in mini-
computers, but to have carried out the entire processing in a
centralized way. This consideration was made by going back
to the business strategy. “Knowing the client’s needs” requires
flexibility in the long term. For example, new products will
have to be developed. Although the solution of mini-
computers may be more expensive, it was chosen in view of
the flexibility. In this discussion, it is important that the
consequences of all the technical choices for the business
architecture are discussed. A too conservative IT architecture
undermines the business architecture. For instance, the
German car manufacturer will have to invest in the data
processing capacity for the quality control function and for
research and development.
IT infrastructure
The IT infrastructure is described as the setting-up and
management of the whole hardware, software and data
communication supply, in such a way that the business
architecture and IT architecture can be implemented
successfully. This means that in the realization of the IT
infrastructure, in addition to management consultants,
information experts must also be involved.
In this phase, dependent on the completion of the IT
architecture, a further technical elaboration is made of the
infrastructure, on the basis of the business strategy and the
business architecture. This elaboration is expressed in brands
and types of hardware and support software, IT service,
specific (new) technological products and telecommunication
supplies. At the end of this phase, choices have been made for
all the necessary components for the development and
functioning of the applications.
The IT infrastructure distinguishes itself from the IT
architecture in that concrete services and products are
specified. At first it was sufficient to indicate that there was a
need for mini-computers and workstations. In this phase it is
determined which specific requirements the systems should
meet, in terms of speed, distributed databases and the
corresponding machines, local/long-distance communication
opportunities, co-operative processing and user interfaces.
Also, specific brands and types of products are determined.
In the description of the IT infrastructure, the following
already-defined basic assumptions are often revised:
● The originally defined do-wells and design criteria.
Again and again one has to question whether the
 ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY
intended realization of the infrastructure is in
accordance with the do-wells and design criteria. If,
for example, a 7 day, 24 hour availability is
assumed, this may, at certain places within the
infrastructure, lead to the need for computer
systems which are in working order during 24
hours a day and which have a failure-sensitivity
approaching nil. Input of OLTP (online transaction
processing) computers may be necessary. This
situation may arise in the use of point-of-sales
terminals, automated teller machines and electronic
banking. It should be decided what the
requirements are for the lifetime of data (account
information) and the response time of transactions.
The period in which transactions should be
processed is also a relevant aspect (updating
account data) for the realization of the
infrastructure.
● Blueprints of the IT architecture. The blueprints
defined in the previous phases, together with the
corresponding quantitative data and the
technological basic choices made, determine the
requirements for the hardware. They are
thoroughly worked out in the IT infrastructure.
What does the IT infrastructure comprise?
The IT infrastructure its not only a matter of hardware,
but a complete integration of the information technology
supply. Within this scope, the following components are
recognized in the IT infrastructure:
(1) IT components. The components are formed by the
various hardware components, consisting of
computers, displays, personal computers, printers,
data communication connections and disk units.
The software for the steering of all these
components is included. In the choice of hardware
components other factors prevail, such as
compatibility (to what extent can computer systems
of different makes and models actually exchange
data), data communication possibilities, speed of
processing, the price/output-relation and the ease of
operation.
(2) IT services. IT services are services which execute
specific assignments for applications. In the past,
application programmers had to set up and develop
their file organization on their own. Nowadays, the
database management systems take over a large
part of these activities. The same applies to the
network management: the software involved takes
care of the accurate operation and control of the
data communication facilities and offers many
facilities for management. Consequently, the
application programmers need less time to spend
on this. It is striking that several specializations of
employees occur, the so-called database
administrators and network managers. The value
17
added network services also belong to this. These
services not only take care of the transport of data,
but also offer a surplus value in the form of data
presentation (storage and conversion facilities
(GEISCO and INS)).
In the Combank example, these are, among other
things, SWIFT for the international transaction
transfer and BEANET for the point-of-sales
terminals. At this level, there should be certainty
about the needs and the opportunities of co-
operative processing, from which consequences
arise regarding the demands for the compatibility
of the IT components.
Other examples of IT services are:
● expert systems for the assessment of credit
applications;
● image systems for document processing;
● client-server concepts for bank offices (local
networks and database servers);
● the opportunities of end-user computing, where
the speed of program development and user-
friendliness are important (think of the do-well:
“timely introduction of new products”).
(3) IT company facilities. By combining IT components
and IT services in a certain way, it becomes possible
to develop applications. In addition to this, the
possibility arises to develop new products and
services and to offer these to a third party. In this
case one must think of EDI-applications in
particular. EDI (electronic data interchange)
applications arise by combining, for example, a
Videotex system and an application for the
processing of bank giro orders and for giving
balance information. Note that, although it may
have been decided that the creation of EDI facilities
is desirable, in this phase the technological
possibilities are examined. This means, however,
that it should be subsequently determined, at the
level of management, which parties are relevant for
electronic communication. Consultation with these
parties should follow. Defining win-win situations is
a part of this.
(4) IT control instruments. The previous components,
services and facilities cannot be put in, in a
sufficiently effective and efficient way, if attention is
not paid to control instruments as well. These
instruments consist of: procedures, methods,
techniques and tools for system development
(CASE tools), and the quality and experience of the
automation personnel. The usage of tools
sometimes offers the possibility to develop new
systems very quickly and at the same time, to deal
with the already available data in an efficient
way[15]. If EDI facilities are offered to the outside
18 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5
world, a client help desk, with the corresponding IT
control instruments, should be set up as well, not
only to support clients with their problems, but also
to get an insight into the clients’ desires and needs
and to keep following these.
The IT infrastructure will function better if the products
and services are connected and attuned better. The
company will profit more, and more directly by this, the
more one is capable of putting in the IT infrastructure, as
best one can in the primary business processes. The IT
infrastructure should not only support the most obvious
business processes, it is exactly the support of
strategically important business processes which can lead
to the greatest success. Therefore it is important to select
the components and services in such a way that there is
sufficient material for a fast and effective creation of new
company facilities.
Factors in the IT infrastructure
In developing the IT infrastructure, other factors play a
role as well. These factors are, among other things:
(1) User-friendliness. An example of user-friendliness is
the requirement that for every use at every place of
work, the same meaning should apply to function-
tests. This can also go in the direction of graphic
presentations of data, the use of a mouse and the use
of pull-up and down menus for the entering of data
coding. User-friendliness requires computer
capacity and may have consequences for the filling-
in of blueprints.
(2) Cost control. Cost control depends on the question
as to whether intelligent terminals are being used,
or not, at the workstation, on the installation of
applications and the data storage at the
workstation. The costs of hardware,
communication and control should be weighed
against each other.
(3) Hardware policy. If different computer suppliers are
employed, it should be questioned whether it is
sufficient to deal with just one specific supplier,
because of the desired functionality and the choices
made in the IT architecture. Products of different
suppliers, however, cannot always be linked.
(4) Accessibility of systems. If one desires to develop
EDI applications in particular, some important
questions should be answered:
● Are (inter)national standards sufficiently used?
● Does there exist a need for these, given the
relationships with suppliers and consumer?
● Which viewpoint does the company take
(according to the do-wells)?
If the Combank decides to develop EDI applications,
such as electronic payment and electronic banking,
this means that the IT infrastructure should be
“open” in its design. “Open” means that the
threshold, to make it possible for others to connect
to the infrastructure, should not be too high or even
insurmountable. In this case, the criteria are:
● the costs;
● connecting as much as possible to the
international standardization developments;
and
● the use of products which are freely available on
the market.
(5) Safeguarding. When information becomes more
and more valuable, it becomes necessary to describe
the requirements for the logical and concrete access
to, and the use of, applications. In financial
transactions extremely large amounts of money are
sometimes involved. The publicity of an attempt at
electronic burglary alone may influence the image
of a bank.
All the factors mentioned influence the parts of the IT
infrastructure, and these are decisive in the IT policy.
Why should attention be paid to IT infrastructure (now)?
The question arises whether it is relevant to pay attention
to IT infrastructure. The system specialists could, on the
contrary, just get to work and start to implement all the
technical supplies. The answer to the question is a
straightforward yes, because a large gap between the
interested parties (or the company) and the (internal and
external) suppliers of automation services already exists.
After all, the suppliers publish more about the
opportunities and desirability of EDI than senior
managers of companies propagate the advantages of the
usage of EDI. The technology should be approached from
the strategic perspective of the company and not just the
other way around.
At Combank an account manager must usually be able to
obtain all the information about a client from one display.
This means that the account manager, when asking for
client data, should be able to see which services and
products of the bank are used by the client. It is not
unlikely that the account manager will wish to see legal
documents present as security for loans (image/document
processing). Next he may ask for credit information of a
specific client and may also want to compare these data
with data of other, similar, clients. All this may seem
simple, but it requires a lot from the data storage
structure, the database system, the inquiry language, the
user interface and possibly the data communication
facilities. The system should not only offer the possibility
of a top-down approach to data, but it should also be
possible to make cross-sections (through product groups),
while the system checks the user’s position. The linking
of documents and data asks for specific demands on the
enquiry system.
 ESTABLISHING BUSINESS STRATEGY WITH INFORMATION TECHNOLOGY
To sum up, the importance of establishing the IT
infrastructure is that the IT architecture is defined, in a
concrete sense, in the shape of:
● descriptions of the necessary computer systems:
from mainframes to personal computers and
workstations;
● descriptions of the local and central database
management systems to be used: relational,
distributed, data directory/dictionary;
● descriptions of the program packets to be used:
word processing, electronic mail, spreadsheets,
desk-top publishing;
● enquiry languages to be used: CASE tools, object-
oriented languages, executive applications, image
systems, expert systems;
● descriptions of telematics products and services,
among which are also client server concepts,
videotex systems, local/long-distance networks,
voice mail systems, EDI message processors, direct
dialling from the workstation.
The total end result of the IT infrastructure also indicates
that the IT architecture is judged in terms of:
● technological feasibility, where attention is paid to
what might be feasible, in the short and in the long
term;
● complexity, e.g. which products and services
exclude each other (possibly in the short term);
● controllability, e.g. knowledge and experience of the
employees;
● economic feasibility, e.g. cost of acquisition and
development and the operating costs.
Implementation
In the business architecture, the IT architecture and the IT
infrastructure, the essential organizational and
technological choices have been made which are necessary
for designing an organizational and IT implementation
plan. In the IT architecture, a description has been made
for each of the systems to be developed, comparable to the
“definition study” in a system development project.
Because of this, system development projects can often
make a goal-oriented start with, for example, a functional
design.
From architecture and infrastructure to implementation
The architecture and infrastructure described the desired
use of information technology in the desired organization
(idealized design[16]). An organization should decide, on its
own, to what extent and at which pace the desired situation
should be realized. Even if the level of ambition is low, the
architecture and the infrastructure have the great
advantage that all efforts and investments in the field of IT
and organization can be steered in that direction.
19
Traditional cost benefit analyses per system are often not
applicable. It is much more a matter of the strategic
advantage which an organization gains by an effective use
of a coherent whole of applications (business capabilities).
In many cases, the realization of the desired situation is
ambitious, because in the realization more than one system
is chosen. Alternative implementation scenarios should be
presented to the senior management. These scenarios
should obviously be deduced from the business strategy. In
this way, the decision making can remain focused on the
strategic advantages which are to be gained, whereas the
required investments can also be considered in that light.
If the business strategy has appeared to be sufficiently
ambitious, less ambitious scenarios are often chosen in
practice. The construction and implementation of the
different organization changes and applications might,
however, take many years. The action plan, to transform
the architecture into an actual implementation can, in our
opinion, never be a five-year plan which can replace all
applications and existing operating procedures, because
within such a period of time, alterations always occur
inside and outside the organization. In practice, many
information plans will be encountered, which have failed
because of such long-term implementation procedures.
It would therefore be wise to define so-called “interim
platforms”. These interim platforms take care of a limited
part of the desired strategy within a foreseeable period of
time (one to two years on average), taking into account the
envisaged end result, as has been defined in the architecture
and the infrastructure. Almost every organization has to
deal with a number of obstacles which complicate the
realization. The action plan for the realization of an interim
platform will not only have to describe the functionality of
new applications, it should also indicate the necessary
maintenance and conversion of the existing application.
Furthermore, the action plan should be articulate about the
management procedures to be developed, the required skills
of employees (in quality and quantity), the necessary
temporary infrastructure, the financial consequences and
the advantages, as well as the approach, in order to prepare
the users adequately.
Conclusion
The architecture design method described in this article
and the way in which this is realized, deviates in a number
of important items from the traditional information
planning methods. As has been indicated, not every
organization has the same objective for the use of IT (see
Figure 6).
Organizations which are at the beginning of the use of IT
often focus on efficiency. They can do without a formal
information planning method. The periodic drawing up of
priorities and action plans per system is often sufficient. In
20 INFORMATION MANAGEMENT & COMPUTER SECURITY 3,5

Figure 6. Differences in the use of IT Experience shows that over time, not only the use of IT
changes, but also the appropriate information planning
method.
I/T era Business
strategy
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Maaikel Klein Klouwenberg and William J.D. Koot are both managers at KPMG Nolan, Norton & Co., Utrecht, The
Netherlands. J. Alphons M. van Schaik is a Consultant at Edgar, Dunn Management Consultants in London, UK.