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Course Learning Outcomes for Unit I

Upon completion of this unit, students should be able to:

1. Explain how the value of IT can be determined for an organization. 2. Discuss the three components of the IT value proposition. 3. Identify the five principles for developing and delivering value in every organization. 4. Explain why it is necessary to strengthen the relationship between business strategy and IT strategy. 5. Determine the four critical factors that must be in place for IT strategy development to be successful. 6. Summarize the five types of initiatives involved in implementation of a strategic IT program. 7. Discuss methods organizations can use to more dynamically link IT strategy with business strategy.

Unit Lesson

Business and Information Technology (IT) Strategy

Many organizations find it crucial to align their business and information technology (IT) strategies. Why? The IT strategy will help an organization deliver its information technology throughout the entire organization, from daily operations to vendors, suppliers, employees, and even customers. This ensures that support and delivery of the organization’s mission, goals, and strategies are aligned with the manner in which the organization plans to conduct business in the future. Since the early 1990s, organizations have begun to recognize that IT is an integral component in an organization’s operation. This interest has spurred and shaped everyday business needs from that of being an operational function to a critical strategic organizational tool or resource. Beginning in the year 2000, the interest in IT alignment strategies has included the incorporation of eBusiness.

An IT strategy takes the changes that occur within an organization, both internal and external, and combines these with potential opportunities to help guide the organization into implementing additional changes. This is done by measuring the gap between the existing IT capabilities and the future IT position.

Technological and organizational strengths and weaknesses are considered in this measurement, and the IT strategy maps the directions to pursue which will, in turn, close the gap and achieve a balance between the opportunities and the risks the organization is willing to take on. However, there are some pitfalls associated with IT strategy, including:

 IT strategy should be solely derived from a thorough review of organizational strategies and plans.

 IT strategy should be dominated by a focus on defining needed application systems.

 IT strategy is better if it is developed using a rigorous methodology.

UNIT I STUDY GUIDE

The Value and Importance of IT

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UNIT x STUDY GUIDE

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IT Value

IT value is part of the overall business value, which is everything that is of value to the health and well-being of an organization. This includes employees, customers, suppliers, alliances and partnerships, assets, et cetera. IT value focuses on business processes, organizational structure, and IT strategy. There are four fundamental challenges in determining an organization’s IT value, including:

 Being able to define what the IT value is by realizing what it is required to do.

 Determining the organization’s structure.

 Determining how the organization’s IT value will be measured.

 Determining how this value will be communicated.

In determining the organization’s IT value, a many-layered concept must be applied. The value of IT for an organization depends on the following:

 What value will be delivered?

 Where will value be delivered?

 Who will deliver value?

 When will value be delivered?

 How will value be delivered?

Senior Management and Stakeholders

In order for an organization to be successful, it must have the power to gain a competitive advantage, but also improve its business processes. IT value needs the leadership and management from key stakeholders to ensure the business value is delivered as intended. These key stakeholders are composed of senior executives, board of directors, business unit managers, business users, IT managers, project managers, systems analysts, programmers, architects, contractors, external supplier employees, consultants, salespeople, public officials, and policy makers. The challenge with these key stakeholders is to align their agendas, expectations, and perceptions of IT within the organization’s investments and value.

Strategic Themes

An organization must have a way to measure how it has performed in the past and how it should perform in the future. This measurement is called a “balanced scorecard” (Perry, 2011). At the center of the balanced scorecard are strategic themes which provide structure, support, and boundaries as well as define the overall

(Metis Strategy, 2012)

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UNIT x STUDY GUIDE

Title strategy for an organization. The more themes an organization uses the more complex the scorecard becomes.

As illustrated in Figure 1, the house-like structure represents a balanced scorecard of strategic elements. The foundation, or core of the organization, is comprised of the people who work, manage, and provide leadership. This foundation must be solid to support the rest of the structure. The floors of the house are represented by the balanced scorecard perspectives:

• Organizational capacity • Internal processes • Customers and stakeholders • Finances

Supporting the walls and roof are the strategic themes an organization can employ:

• Operational excellence • Sustainability • Product innovation • Strategic partnering

These themes support the mission and vision statements (the roof) of an organization but provide a connection to the foundation of the organization.

Figure 1: Strategic Themes are the Pillars that Support the Mission & Vision (Perry, 2011)

Go to http://www.metisstrategy.com and search for “Michael Blake interview” and click on the name to listen to an interview with Michael Blake, Chief Information Officer of Hyatt Hotels Corporation as he discusses the following topics:

 Growth of IT within his organization

 Creating a group of partners that allows Hyatt to align with leading edge product offerings

 Shifting skills as a result of forming the group of partners with a greater emphasis on business analysis and vendor management

References

Blake, M. (2012, June 18). Forum on World Class IT podcast series. Retrieved from: http://www.metisstrategy.com/interview/michael-blake/

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UNIT x STUDY GUIDE

Title Metis Strategy. (2012). Developing and translating high-level strategy into value-generating initiatives.

Retrieved from: http://www.metisstrategy.com/corporate-divisional-it-strategy-development/

Perry, G.S. (2011). Strategic themes – How they are used and why. Retrieved from: http://www.balancedscorecard.org/portals/0/pdf/Strategic_Themes_How_Are_They_Used_and_Why. pdf

Harmon, P. (February 2011). How do processes create value? BPTrends. Retrieved from http://www.bptrends.com/publicationfiles/02-01-11-ART- How%20do%20Processes%20Create%20Value-Harmon-Final.pdf

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