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After completing this unit, you should be able to: Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples; discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications; identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications.
Chapter 11 Developing Business/IT Strategies Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Learning Objectives Discuss the role of planning in the business use of information technology, using the scenario approach and planning for competitive advantage as examples Discuss the role of planning and business models in the development of business/IT strategies, architectures, and applications Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Learning Objectives Identify several change management solutions for end user resistance to the implementation of new IT-based business strategies and applications Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Why Study Planning Fundamentals? • Information technology has created a seismic shift in the way companies business Just knowing the importance and structure of e-business is not enough You need to create and implement an action plan that allows you to make the transition from an old business design to a new e-business design Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Case #1: ROI in Business/IT Planning The Rowe Companies’ ROI Process • Use simple ROI calculations to help prioritize IT projects for planning purposes • Also use economic value added (EVA) analysis which takes into consideration the cost of capital for a project, risk factors associated with the project, and a targeted value return percentage Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Case #1: ROI in Business/IT Planning The Rowe Companies’ ROI Process • Return on opportunity (ROO) is also used because it combines more than a dozen factors to assess the rate of change in the business environment, the rate of change in business processes and IT infrastructure, the competitive environment, and the value of intangible assets Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Case #1: ROI in Business/IT Planning Merrill Lynch ROI Process: • Risk-and-payback analysis required for every costly technology initiative • Single standard six-page template used that poses yes-or-no questions to evaluate project success factors coupled with a five-page financial report Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Case #1: ROI in Business/IT Planning What are the benefits and limitations of Rowe Companies’ ROI methods for IT project planning? What is the business value of the ROI methodology required for project planning by Merrill Lynch? Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - Case #1: ROI in Business/IT Planning Do you agree with the IT investment decision being made by the Rowe Companies in response to changing economic conditions? Why or why not? How can a company identify, measure, and compare the business/IT innovation as well as the profitability of IT projects in their planning process? Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - IT as a Revenue-Producing Asset Copyrightâ2006,TheMcGrawưHillCompanies,Inc.Allrightsreserved 11 - 10 Change Management Tactics ã 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, preferably in person • Make liberal use of financial incentives and recognition • Work within the company culture, not around it Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 45 Change Management Process Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 46 Case #3: Business/IT Planning Strategies Corning Inc.’s Strategy: • We want IT people to be talking with the business team about what we are doing to increase the value of the business and focus on projects that either make positive change in the business or help take costs out or improve asset performance Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 47 Case #3: Business/IT Planning Strategies Benefit: • This strategic thinking pays off in budgeting meetings because you’re not discussing the value of the project to the organization They have already internalized why it’s important Projects are less likely to be cut in an economic downturn Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 48 Case #3: Business/IT Planning Strategies Putting Business Processes First: • Listen to what operational people are saying • Only then are opportunities defined followed by business benefits • Finally define mechanisms to determine whether goals were met Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 49 Case #3: Business/IT Planning Strategies Do you agree with how CIO Richard Fishburn has defended Corning’s IT department from an economic downturn? Why or why not? Why is aligning IT projects with business objectives a good business/IT strategy in challenging economic times? And in good times? Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 50 Case #3: Business/IT Planning Strategies Does Corning’s business/IT planning process for its new supply chain system prove the value of aligning IT with business goals? Why or why not? Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 51 Case #4: Change Mgmt Challenges Cincinnati Bell’s Convergence: • The company reorganized itself by starting with the needs of particular groups of customers and then worked backward to see what the company should look like • COO disbanded product and service units and established divisions serving businesses and residential customers Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 52 Case #4: Change Mgmt Challenges Challenges: • Heads of business units were stripped of their titles and dropped levels • Customer service reps had to learn to handle calls about any or all services and cross-sell • Employees feared they would lose their jobs • Computer systems had to be adapted to new approach Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 53 Case #4: Change Mgmt Challenges Was the reorganization of Cincinnati Bell as revealed in this case a good business strategy? Why or why not? Were the change management methods revealed in this case adequate for the changes being made? Why or why not? What further changes should be made in IT systems to better support Cincinnati Bell’s business convergence? Defend your proposals Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 54 Summary • Managing information technology requires planning for changes in business goals, processes, structures, and technologies • Planning is a vital organization process that uses methods like the scenario approach and planning for competitive advantage to evaluate an organization’s internal and external environments; forecast new developments; establish an organization’s vision, mission, goals, and objectives; develop strategies, tactics, and policies to implement its goals; and articulate plans for the organization to act upon Copyrightâ2006,TheMcGrawưHillCompanies,Inc.Allrightsreserved 11 - 55 Summary ã A good planning process helps organizations learn about themselves and promotes organizational change and renewal • Strategic business/IT planning involves aligning investment in information technology with a company’s business vision and strategic goals such as reengineering business processes or gaining competitive advantages Copyrightâ2006,TheMcGrawưHillCompanies,Inc.Allrightsreserved 11 - 56 Summary ã Implementation activities include managing the introduction and implementation of changes in business processes, organizational structures, job assignments, and work relationships resulting from business/IT strategies and applications such as e-business initiatives, reengineering projects, supply chain alliances, and the introduction of new technologies Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 57 Summary • Companies use change management tactics such as user involvement in business/IT planning and development to reduce end user resistance and maximize acceptance of business changes by all stakeholders Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 58 Chapter 11 End of Chapter Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 59 ... of information technology • Strengths – core competencies • Weaknesses – substandard business performance • Opportunities – potential for new markets or innovative breakthroughs • Threats – potential... business strategies that support a company’s business vision • Resource Management – developing strategic plans for managing or out-sourcing a company’s IT resources • Technology Architecture – making... Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 24 Business/IT Planning Process Copyright © 2006, The McGrawHill Companies, Inc. All rights reserved 11 - 25 Business/IT Planning Process Components • Strategy Development – developing