KNOWLEDGE AREA 5:BUSINESS STRATEGY

Neha Chopra (12609200) Arpit Goyal (12609159)

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What is strategy
Strategy is : knowing where you are, knowing where you could choose to be, and knowing how you intend to get there.

It states how business should be conduct to achieve the desired goals. Without a strategy, management has no roadmap to guide them.
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Importance of strategy in information system

The benefits of IT-related investments are not financial but strategic. If an organization gets the access to a piece of management information that was previously unavailable it might drive the organization towards success.

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Consequences of lack of strategy.

Competitors, suppliers and customers may gain avoidable and undesirable advantages.
Duplication of effort, inaccuracy, delays and poor management information because of a lack of proper systems integration. Technologies will become a constraint to the business because of a failure to maintain compatibility where it is needed
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IT and IS Strategies

IT
IS
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define how system needs will be met and the information technology that will be required to acquire, develop and operate existing and future applications

what information systems the business needs for the foreseeable future based on proper analysis of the business, its environment and the general business strategy .
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Development of IS strategies
External environment WHY we must act?
External inputs Internal inputs What must be done?

Strategy formulation and implementation is driven by why, targeted by what and constrained by how
If all these factors can be taken into account, then the

resulting plans for systems implementation should be both viable and appropriate.
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The Strategy process

Current situation where are we now?

Opportunity spotting where we could be?

Decision time where we want to be?

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Information system strategy in context

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STRATEGY PROCESS & IMPLEMENTATION

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Current situation: Where are we now?

SWOT Analysis-can be used to summarize the internal and external factors that might affect strategic intentions.

Business Process Model-provide a framework for analyzing cost and efficiency and the prospects for improving both with new information systems.
Assessment of current information technology will reveal shortfalls (or surpluses) that demand management action. Knowledge area 5 6/1/2013 10

Opportunity spotting: Where we could be?

Scenario planning will be a useful approach that allows discussion to work through different scenarios and begin to understand some of the implications and potential benefits
Business Process Model to see what the consequence might be for organizational structures and for external business partners.

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Decision time: where we want to be?

Decision will be based on a systematic review of business objectives.

Critical success factor analysis is a technique that will lead to a more specific understanding of information needs and areas of business where improved systems will deliver the most benefit.

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Establishing the IS/IT strategic planning process

The planning process must deliver valuable intermediate results throughout the process, not just at the end. It is therefore a matter of: what is involved How it is to be achieved What the expected product are to be.

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How to get started with strategic planning

The organization must setup a special IS/IT planning function to carry out the task, located within the IT department, which then owns the strategy

Employ consultants to bring in the necessary skills to facilitate the process.

Set up a task force or steering group to do the job, preferably led by an experienced and respected business manager.

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Problems faced during implementation of strategy

Top management commitment to implementing the plan cannot be obtained. The planning exercise takes too long for management to sustain interest - it is also very expensive and takes up too much of the management's time. The resulting plan fails to spell out resourcing and financial implications.
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Assessment of priorities
What is most important to do? What is capable of being done? What is likely to get success?
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Strategic analysis tools

Strategic drivers: Tools to identify the strategic forces that are . bearing upon our business. Value analysis: The way in which value is delivered in our industry, and in our business. Business modelling: how the business works and, if at all possible, the extent and the quality of the information that it is working with. Portfolio management: This gives a simple but very effective overview of the benefits that will be delivered to the business, with risks and timescales. Implementation: finally tools to assist in the planning of implementation.

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SWOT (Strategic drivers: Where are we now? Where could we be?)

The analysis of strengths, weaknesses, opportunities and threats is the straightforward deployed techniques for strategic analysis. It deals well with the internal issues and the external issues. The opportunities and threats is the most useful to start with because understanding the external situation gives a context for internal assessment, although it is common to start with strengths and weaknesses.

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Critical success factor analysis

Five key sources of Critical Success Factors The industry. Competitive strategy and industry position. Environmental factors. Temporal factors. Managerial position

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Value chain analysis

Value chain analysis helps to analyse the role of information in a business and in the industry within which it works.

Helps reveal the relationships between organisations and in the business itself, identifying information that is needed, where it might come from, and also how information systems might affect the competitive positioning of one organisation and another.

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The value chain

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Internal value chain

The internal value chain shows how the various activities and functions in a business unit contribute to the customer's requirements, and how costs are incurred in so doing.

The model identifies two different types of business activity primary and support - and provides a framework for organizing the detail within them

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Primary activities
Inbound logistics Operations Outbound logistics Sales and marketing: making customers and consumers aware of the product or service and how they can obtain it; promoting Services Information intensive: activities such as forecasting, capacity planning, scheduling, pricing and costing must be linked throughout the chain.
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Michael Porters Five Competitive Forces

Threat of new entrants

Suppliers bargaining power

Rivalry among existing competitors

Customers bargaining power

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Business modelling
We need a basis upon which to decide about:

Business processes and those who should be involved in them Business information and those who should be responsible for it System interdependencies, and required changes to organizational responsibilities

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Typical Business Areas

Marketplace Products / Services Procured inputs Corporate resources Corporate performance Corporate processes

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Deals with

MARKETPLACE

Specifies needs with

supports

PRODUCT / SERVICE

produces

SUPPORT PROCESSES

buys

PROCURED INPUT

specifies

VALUE ADDED PROCESSES

Assessed by PERFORMANCE

Assessed by

services
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CORPORATE RESOURCE
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services
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Boston box
This 2x2 matrix allows us to explore the differences between current and future potential. It originated in the Boston Consulting Group.
The four quadrants in the box are based on two criteria: What is the growth potential and potential cash requirement to market the product? What is the current market share and how much cash is the product generating?
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Wild cat : A product that is new, untried, but full of future potential.

Rising star: A product that has been launched, is winning market share successfully but still requires investment to sustain the momentum.

Cash cow: A product that is working well in an established market and is generating cash well.
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Dog: a product past its best, that might most usefully be retired

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Types of system required during different stages of PLC ( Product life cycle)
Information needs are different for different stages of product life cycle Emergence Growth Maturity Decline

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Managerial issues in strategic management

Strategic alignment: setting well aligned information systems strategies in place. Analysis tools: Choosing and successfully applying appropriate tools for analyzing, formulating and refining information system strategies.

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Contd
Balance: Maintaining a balance between the internal and external strategic drivers that bear upon the organization and determine the actual requirement of strategic management.

Ownership and responsibility: Placing ownership and responsibility for information systems strategies, clearly articulating appropriate targets that indicate the success or failure of those strategies.

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