Graded Assignment. Please read the provided document and answers the questions give below

Chapter2.pdf

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Information Technology for Managers George W. Reynolds

Strayer University

Chapter 2

Strategic Planning

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Learning Objectives

• What is an effective strategic planning process, who

needs to participate in it, and what are the

deliverables of such a process?

• How is IT planning tied to overall strategic planning,

so that business objectives and IT activities are well

aligned?

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Need for Managers to Understand the

Relationship Between Strategic Planning

and IT

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Understanding the Relationship Between

Strategic Planning and IT

• Improves alignment between business and IT

– Alignment - IT organization and its resources are

focused on actions that support the key objectives

defined in the strategic plan of the business

• Implies that the IT and business managers have a

shared vision

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Understanding the Relationship Between

Strategic Planning and IT (continued 1)

– Shared vision helps an IT organization in:

• Hiring the right people with the right skills and

capabilities

• Choosing the right technologies and vendors to

explore and develop

• Installing the right systems

• Focusing on those projects that facilitate the

organization to move toward achieving its vision and

mission

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Strategic Planning

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Strategic Planning

• Helps managers to:

– Identify desired outcomes and formulate feasible

plans

– Achieve their objectives by using available resources

and capabilities

• Annual process

• Approaches

– Issues-based

– Organic

– Goals-based

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Figure 2.1 - Goals-Based Strategic

Planning Process

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Analyze Situation

• Assessing strengths and weaknesses across all

the levels and business units of a firm

• Preparing a historical perspective

• Gathering data about internal processes and

operations

• Analyzing the collected data

• Examining the industry in which the organization

competes

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Analyze Situation (continued 1)

• Collecting and analyzing facts about its key

customers, competitors, and suppliers

• Aiming to:

– Identify strategically important issues that the

organization must address

– Reveal the firm’s competitive position against its

rivals

• Michael Porter’s Five Forces Model: Used for

assessing the nature of industry competition

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Figure 2.2 - Porter’s Five Forces Model

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Analyze Situation (continued 2)

• Competitive financial analysis helps in determining

how key financial parameters match up against the

competitors

• Strengths, Weaknesses, Opportunities, Threats

(SWOT) matrix

– Illustrates that an effective strategy derives from:

• Maximizing a firm’s strengths and opportunities

• Minimizing its weaknesses and threats

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Set Direction

• Vision/mission statement

– Communicates an organization’s overarching

aspirations

– Guides organization through changing objectives,

goals, and strategies

– Components

• Mission statement

• Vision of a desirable future

• Set of core values

– Inspires and requires employees to stretch to reach

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Set Direction (continued 1)

• Objectives: Statement of a compelling business

need that an organization must meet to achieve its

vision and mission

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Set Direction (continued 2)

• Goal: Specific result that must be achieved to

reach an objective

– Associated with a single objective

– Tracks progress in meeting an organization's

objective

– Big Hairy Audacious Goals (BHAGs)

– Need to be SMART (specific, measurable,

achievable, relevant, time constrained)

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Strategies

• Allow an organization to achieve its vision, mission,

objectives, and goals

• Require managers to consider:

– Long-term impact of each strategy on revenue and

profit

– Degree of risk involved

– Amount and types of resources that will be required

– Potential competitive reaction

– Results of the SWOT analysis

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Strategic Plan

• Defines objectives, establishes SMART goals, and

sets strategies

– Objectives, goals, and strategies are communicated

to business units and functional units

• Depends on the autonomy granted at lower levels

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Figure 2.3 - Strategic Planning Pyramid

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Setting the IT Organizational Strategy

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Strategic Plan of an IT Organization

• Required to identify technologies, vendors,

competencies, people, systems, and projects

• Needed to aid in investments that support the

objectives, goals, and strategies

• Depends on the way the rest of the organization

perceives it

– Perception can be as a cost center/service provider,

a business partner/ business peer, or as a game

changer

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Figure 2.4 - Drivers that Set IT

Organizational Strategy and Determine IT

Investments

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Identifying IT Projects and Initiatives

• Require interacting with various business

managers and observing other IT organizations

and competitors

• Need to support corporate objectives and goals

• Classify various potential projects by type

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Table 2.5 - Project Classification Example

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Prioritizing IT Projects and Initiatives

• Process of setting priorities and determining the

resulting budget, staffing, and timing needs

– Defines which projects will be initiated and when

they will be executed

• Involves reviewing and evaluating from different

perspectives

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Figure 2.5 - Projects Must Relate to Goals

and Objectives

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Effective Strategic Planning: Chevron

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Effective Strategic Planning: Chevron

• Outline of a goals-based strategic planning process

developed for Chevron

• Involves:

– Situational analysis

– Set direction

– Define strategies

– Deploy plan

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Situation Analysis

• Strengths

– Financial strength

– Presence in all phases of the energy industry

– Broad geographic presence

– High reserves ratio

– Leading position in the United States

• Weaknesses

– Entanglement in environmental disaster in Ecuador

– Strain on sales of refined products

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Situation Analysis (continued 1)

• Opportunities

– Planned investments for future development

– Strategic acquisitions and agreements

• Threats

– Rising production costs and capital expenditures

– Regulation of greenhouse gas emissions

– Changing economic, regulatory, and political

environments

– Commodity prices risks

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Set Direction

• Objectives

– Increase revenue and profits

– Estimate investments for future to increase

production and revenue, to support objectives

• Goals

– Reduce time lag between initial exploration and start

of production

– Execute project start-ups with more than $1 billion

Chevron investment

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Set Direction (continued 1)

– Add to portfolio through exploration and targeted

acquisitions

– Maintain or improve the success rate of exploration

wells

– Sustain to be a leader in personal safety, measured

by injuries requiring time away from work

• Goal of zero-incidents

• Achieving world-class performance in all measures of

safety

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Define Strategies

• Create shareholder value and achieve sustained

financial returns from operations

• Invest in people to strengthen organization

capability and develop a talented global workforce

• Execute with excellence through application of

operational excellence and capital stewardship

systems and disciplined cost management

• Grow profitably by using competitive advantages

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Define Strategies

• Attain world-class performance in operational

excellence with a goal of zero safety and operating

incidents

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Chevron Strategic Plan

• Communicated to all business units worldwide

• Each unit is encouraged to perform its own

strategic planning process that can lead to

accomplishment of corporate goals

• Focuses on technologies that aids in finding,

developing, and producing crude oil and natural

gas

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Chevron Strategic Plan (continued 1)

• Identifying projects and initiatives

– Loulie Ehrlich was appointed CIO and President of

the Chevron Information Technology Company

– Focus on accelerating insights, automating

operations, and connecting people

– Hire IT professionals with bachelor’s or master’s

degree in various fields

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Chevron Strategic Plan (continued 2)

– Information Technology Company supports

businesses by developing and supporting

information technologies

– Uses distributed sensors, high-speed

communications, and data analysis techniques to

monitor and fine-tune remote drilling operations

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Chevron Strategic Plan (continued 3)

• Prioritizing projects and initiatives

– To identify new oil deposits, the company uses

sound waves to create images of the earth, deep

below the ocean floor

– Collaborates with oil service companies and top IT

companies to obtain state-of-the-art solutions

– Established eight global “mission control” centers to

improve the performance of forty of the company’s

biggest energy projects

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Chevron Strategic Plan (continued 4)

– Focus on leak detection by using modeling

technology in most of the company’s pipeline

– IT operates through a network that connects more

than 50,000 desktops around the world

• Enables collaboration and communication

– Digital imaging helps better manage an oil field once

it is producing oil

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Chevron Strategic Plan (continued 5)

– IT organization is responsible for:

• Network operations and security

• Purchasing and deploying hardware

• Setting global technology standards and strategy

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Summary

• Strategic planning

– Helps managers identify desired outcomes and

formulate feasible plans to achieve objectives

– Requires analysis of internal and external

environment

• Set direction involves defining the mission, vision,

values, objectives, and goals of the organization

• Define strategies involves describing the way an

organization will achieve its mission, vision,

objectives, and goals

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Summary (continued 1)

• Organization’s objectives, goals, strategies, and

measures (OGSM)

– Must be deployed to its various business units and

functional units so that everyone knows what is

expected and how to achieve it

• IT strategy will set direction for the technologies,

vendors, competencies, people, systems, and

projects

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