Transcript Organisational Strategy and IS

Information Systems and
Organisations
Lecture 4:
Organisational Strategy and IS
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Organisational Strategy and IS Lecture 4 - 4.2
Scope and Coverage
This topic will cover:
• Strategy and IS/IT Strategy
• Ensuring alignment of technology with strategy
• Organisational and stakeholder perspectives
• Note – we use the terms IS and IT synonymously in this lecture
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Organisational Strategy and IS Lecture 4 - 4.3
Learning Outcomes
By the end of this topic students will be able to:
• Describe and discuss organisational strategy and
IS/IT strategy
• Consider how IS/IT strategy may be aligned with
organisational strategy
• Appreciate the importance of different
organisational and stakeholder perspectives
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Organisational Strategy and IS Lecture 4 - 4.4
Contents
•
•
•
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Organisational strategy
Aligning IS/IT to organisational strategy
Measuring success in strategy execution
Strategy execution and the Balanced Scorecard
• Emphasis – Technology and Organisations
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Organisational Strategy and IS Lecture 4 - 4.5
Strategy – Definition
What is Strategy ?
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Organisational Strategy and IS Lecture 4 - 4.6
Business Strategy
• Business strategy (organisational strategy) is the
way in which an organisation employs its resources
(people, assets and financial resources)
• ......starting from the premise that it has a purpose
• Definitions of strategy can be circular, and people
(academics) argue about words ... but
• We can think of an organisations strategy simple as
‘what it does’ to create value
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Organisational Strategy and IS Lecture 4 - 4.7
VMOST – Strategy Context
• Vision – how we want things to be in the future
• Mission – broadly, what are we going to do to get
there
• Objectives – specific aims/targets 1 to 2 years out
• Strategy – how will we use our resources
• Tactics – doing it
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Organisational Strategy and IS Lecture 4 - 4.8
Competitive Strategies
• Michael Porter considers there to be 2 basic
business strategies which are:
- Cost Leadership (having the most cost effective products
and/or services)
- Differentiation (having products/services that are unique
or are perceived to be unique)
• Further - these can be:
- Broadly applied (across a whole market)
- Narrowly applied - Focused (concentrating upon specific
market niches)
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Organisational Strategy and IS Lecture 4 - 4.9
Value Disciplines 1
• The 3 disciplines are in conflict so, it is impossible
to do all three with equal success in practice; so
competing organisations usually aim to excel in 1 or
2 of them, and attempt to reach an ‘industry
benchmark’ performance in the 3rd
- Customer Intimacy
- Product Leadership
- Operational Excellence
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Organisational Strategy and IS Lecture 4 - 4.10
Value Disciplines 2
• Customer Intimacy
- Knowing and understanding the customer and their
buying habits
- Understanding customers business and selling products
and services that meet and anticipate their needs.
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Organisational Strategy and IS Lecture 4 - 4.11
Value Disciplines 3
• Product Leadership
- Concentrating upon innovation and brand development.
Operating in dynamic and developing markets. Having
new and innovative products and services
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Organisational Strategy and IS Lecture 4 - 4.12
Value Disciplines 4
• Operational Excellence
- Concentrating upon efficiency of internal operations and
supply chain
- Striping out cost wherever possible and maintaining
quality whilst offering competitive prices
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Organisational Strategy and IS Lecture 4 - 4.13
Strategy and CSFs
Objectives
1. Where do we want our organisation to go?
J Rockart
– 1970’s
Strategy
2. How are we going to get there?
Critical Success Factors
4. How will we know if
How
areachieved
we goingit?to
we
have
3. What must be right?
Key Performance Indicators
measure if we are getting
there?
5. So what information is critical
to our success?What information do
Critical Information Set
we need?
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Organisational Strategy and IS Lecture 4 - 4.14
Critical Success Factors Model
OBJECTIVES
What are we aiming to
do in business terms
A business target – for example expressed in
terms of growth, market position, reputation,
profitability, shareholder value etc.
STRATEGY
How do we intend to
meet our objectives
A method of competing, for example based
upon cost, differentiation, focus etc
CRITICAL
SUCCESS
FACTORS
What must be right if we
are to execute our
strategy
We must be able to say that we have
achieved all of our CSF s.. Examples,
customer satisfaction, cost leadership
KEY
PERFORMANCE
INDICATORS
How will we know that
our CSF s are being
achieved
A performance measure
CRITICAL
INFORMATION
SET
What information is
needed to provide our
KPI s
Internal
Needed to compute
External
the KPI s
Source; Rockart, 1979
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Organisational Strategy and IS Lecture 4 - 4.15
CSF s Example
O
To be number one in market share by volume
S
Cost leadership in the market
CSFs
1.
2.
KPIs
1.
2.
CIS
Lowest priced product in the market
Gain market share
Average price ranking against competitors
Cumulative market share
Internal
Product sales by volume and value
External
Total market sales by volume and value
Source; Rockart, 1979
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Organisational Strategy and IS Lecture 4 - 4.16
Alignment of IS/IT with Strategy
• Produce the right information
• Align investments to ensure that the correct IS/IT is
implemented
• Use the people resources of the organisation to
take advantage of IS/IT to further the strategic goals
• (Donald Marchand – Strategic Information
Alignment)
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Strategic Information Alignment
Add Value
(SIA)
Customers willing to pay for value
Organisational Strategy and IS Lecture 4 - 4.17
7
added using information
6
5
4
3
2
Minimise
Risks
1
7
6
5
4
3
Information used to help control
business risk
2
1
1
1
2
3
4
5
2
3
6
7
Reduce
Costs
Information used to enable
decisions that reduce costs
or to increase efficiencies in
processes
4
5
Source;
Adapted from
Donald Marchand, (2000)
‘Competing with Information’
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Information used to
6 help produce
innovative products,
7 services and
delivery methods
Create New Reality (innovation)
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Organisational Strategy and IS Lecture 4 - 4.18
SIA Example - Commodity
Add Value
Future strategic alignment
7
6
Current strategic alignment
5
4
3
2
Minimise
Risks
1
7
6
5
4
3
2
1
1
1
2
3
4
5
6
7
Reduce
Costs
2
3
4
5
6
7
Create New Reality (innovate)
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Organisational Strategy and IS Lecture 4 - 4.19
Competitive Forces
Can IT/IS be used
To help create
barriers
to entry?
Threat of
New Entrants
Can IT/IS be used
to reduce the
bargaining power
of suppliers?
Bargaining
Power of
Suppliers
Can IT/IS be used
to create better or
changed products
of services?
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Competition
In
Market
Threat of
Substitute
Products or
Services
Can IT/IS be used
Help do things
better and more
cost effectively
than competitors?
Bargaining
Power of
Customers
Can IT/IS be used
to help ‘lock’ in
Customers to our
value proposition?
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Organisational Strategy and IS Lecture 4 - 4.20
Strategy as an Emergent Process
• A deliberate strategy may be overcome by events
and be unrealised
• An organisation may find itself executing an
‘emergent’ strategy that derives from events
• Technological change can be a source of both
deliberate strategies and emergent ones that evolve
because of technological possibilities
• Realised strategy comes from combination of these
influences
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Organisational Strategy and IS Lecture 4 - 4.21
Making Strategy Relevance
• Since organisations are not machines it is important
to take a balanced view of strategy execution
• The organisation needs more than short-term goals
(e.g. short term financial success) these need to be
balanced by longer term aims
• This leads to the idea of a balanced scorecard
(Kaplan and Norton) incorporating internal, external
and stakeholder perspectives
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Balanced Scorecard
Financial Perspective
How do
Customers see us ?
Goals
How do we look to
Shareholders ?
Measures
Customer
Financial Perspective
Perspective
Internal Business
Financial Perspective
Perspective
Goals
Goals
Measures
Innovation and Learning
Financial Perspective
Perspective
How can we continually
improve and create value ?
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Organisational Strategy and IS Lecture 4 - 4.22
Goals
Measures
What must we
excel at ?
Measures
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Organisational Strategy and IS Lecture 4 - 4.23
Strategy - Metaphors
• Strategy as a formal planning process exhibits a
mechanist/structuralist approach
• The relevance of such an approach in a rapidly
changing world is frequently challenged
• Organicism and contextualism seem best suited to
the reality of many modern organisations where
emergent strategies are often important
• ....but a plan is still needed to act as a basis for
resource allocation
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Organisational Strategy and IS Lecture 4 - 4.24
References
• Boddy, D., Boonstra ,A., Kennedy, G. (2008) Managing
Information Systems : strategy and organisation 3rd ed. FT
Pearson. ISBN-13: 978-0273 -71681-5XXX
• http://hvass.nu/s2/artikler/teori/Misc/porter.pdf
• www.valuebasedmanagement.net/methods_valuedisciplines.html
• http://www.businessballs.com/balanced_scorecard.htm
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Organisational Strategy and IS Lecture 4 - 4.25
Lecture 4 - Organisational Strategy and IS
Any Questions?
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