Term/Case study
Chapter 4
IS/IT Strategic Analysis: Achieving Alignment with Business Operations and Strategy
Outline
Understanding the Current Situation
The Business Operating Model: Processes, Activities and Key Entities
Organizational Environment
Examining the Existing IS/IT Environment
Information and Systems to Meet Current Business Objectives: the Use of Balanced Scorecards and Critical Success Factors
Process Analysis
Redesigning Processes
Evaluating the Gap between Existing and Required IS/IT Environments
Understanding the Current Situation
External Business Environment
Where to compete (see Chapter 2)
Internal Business Environment
The business strategy
Existing business processes, activities, systems and the main information entities
The organizational environment
Interpreting the Business Strategy
Define IS needs arising directly from the implementation of the current strategy
Interpret and analyze the strategy from both business and IT viewpoints
Where to Compete (Chapter 2)
Industry
Location (think globally)
Raw Materials
Suppliers
Customers
Cost
Physical vs. Virtual
Laws/Regulations
Breakthrough or New Products
Core Components of Business Strategy
Mission
Values
Vision
Objectives
Strategies
Critical Success Factors (CSFs) and Key Performance Indicators (KPIs)
Business Area Plans
IS Needs Generated From
Business Strategy
The mission, vision, objectives and key performance indicators (KPIs
Strategic
The business area plans usually have short-term IS/IT requirements
The CSFs, often used in conjunction with a ‘Balanced Scorecard’
The Business Operating Model
Processes
The sets of interlinked activities or roles that deliver specific outputs to identified customers inside or outside the organization
Activities
The elements of the business processes that the organization undertakes to produce, promote and distribute its products or services, to develop, support and administer its infrastructure and to measure performance
Key Entities
Those ‘things’ that are of fundamental importance to the business processes and for which there will be associated information
Processes, Activities and Key Entities
A valuable aid to understanding what is happening in the organization and visualizing the business processes and information flows, independent of organizational structures
A vehicle for explaining and illustrating them to both IT and business audiences in a way that is easy to comprehend
A means of reviewing the merits or otherwise of the organizational structure
A basis for highlighting critical issues
A mechanism for mapping current applications against the processes they support
Types of IS models used in IS strategic analysis
High-level process maps of all key processes and their relationships
Process flow models or process dependency charts
Hierarchical activity models or functional decomposition diagrams
Entity relationship
Data or information flow diagrams (DFDs
Activity/Entity matrices
Standardization vs. Flexibility
Understanding the Business Model
Standardization
Integration
Diversification
Replication
Coordination
Unification
Organizational Environment
The external environment
The dominant coalition
Formal organizational arrangements and procedures
Employees and other tangible assets
Social structure
Technology employed
The key organizational processes
Examining the Existing IS/IT Environment
External IS/IT Environment
Internal IS/IT Environment
Current Application Portfolio Evaluation
IS/IT Unit – its Assets, Resources and Processes
Methods and Training Provisions for IT Professionals and Business Personnel
Assessing the Business Perception of IS/IT
Deliverables from an Application Portfolio Assessment (More in Ch 8)
Categorization in terms of application portfolio segments – strategic, high potential, key operational and support (or an alternative classification) and how IT resources are used, in relation to the business importance of applications
Assessment of coverage and contribution of applications to business processes and activities, and identification of any gaps or major opportunities to increase business value from them
The extent to which the systems integrate or interoperate and opportunities to improve the integrity and quality of information
Assessment of the applications' effectiveness and robustness and the unrealized potential in their current use
Assessments of the business impact/risks of failure of applications and their strengths and weaknesses assessed against the business CSFs
Duplication of applications or multiple versions of same or similar software – opportunities to reduce maintenance and licensing costs
Differences between current portfolio and required information and systems architecture
Information to enable estimates of potential improvement projects and enable prioritization of enhancements to current systems.
IS/IT Unit – its Assets, Resources and Processes (More in Ch 9 & 11)
The IS/IT unit, its size, structure and relationship with the business at organizational, functional, departmental and individual levels and how it is managed
The role of the CIO and the organizational level into which the IS/IT unit reports at corporate level and in individual businesses
The IS/IT governance structure, including decision-making processes and any steering group structures in place
The physical IT assets of the organization in terms of hardware, software, communications capability and any other technology employed
The organization for the provision of IT resources and services and managing the suppliers of technology and technology services and the nature of the contracts with them
People resources (including recruitment), especially the competences and skills of IS/IT staff and managers, any contracted staff and users in different business areas
How business cases and budgets for IS/IT investments and expenditure are prepared and by whom, and how they are authorized
Balance Scorecard (BSC) & Critical Success Factors (CSFs)
Critical Success Factors (CSFs)
A few key areas where ‘things must go right’ for the business to succeed
To be of value, a CSF should be easily and directly related back to the objectives of the business unit.
The nature of CSFs and KPIs reflects a particular executive's management style
When used ineptly, the approach can cause frustration, even despondency, and may turn management against the strategy process
CSFs in BSC
The Dashboard
Next Step - Process Analysis
Identifying Processes
Business Process Map Example
Redesigning Processes
Analyze how work is done independent of organization structure
Identify the ideal way to carry out the work
Develop and implement an improved means of performing the work
Improve the interfaces and linkages with other business processes
Provides a basis for measurement and continuous improvement
Approaches to Process Redesign
Systematic approach
Maps out and attempts to understand an existing process
Works through the activities and tasks involved systematically to create improvements in the delivery of the outputs and achieve the performance level required
Clean sheet approach
A fundamental rethink of the way that the product or service is delivered
The old process is scrapped and a new process is designed from scratch
Combination
Process Importance/Performance
Identify the Gaps
The gap identifies the requirements for change
Business processes in need of elimination, simplification, streamlining or redesign
New, extended or rationalized information resources
Changes in IT services, suppliers, resources and competences to create the IS/IT capability required for the future