Description
about the forces that shape strategies around IT. It talks about strategy audits, impact of strategy on IT and allignment.
Group 13
1
Forces That Shape Strategies
? Aim
of a business model - drive growth and creates value
? Alignment
of strategy with the environment ? Required resources & capabilities
? Strategy
defines:
? Revenue
& growth potential ? A focused attention & resources on the goals.
? Capabilities
define – cost model ? Revenue model + cost model = profits + efficient return on asset
2
Components of a Business Model
Shared purpose & Goals Opportunities Risk
Customer loyalty
Positioning
Profits
Strategy & Value
Leadership
Infrastructure
Partners
Culture
Processes
3
Strategic Positions
?
Market/Channel Choice of customers to serve Channels to reach customers Needs to be served Product
Value Network
Role of organization in network of suppliers & partners
Boundary
Markets, products & segments that will NOT be entered
Choice of products & services to offer
Features Price to be charged
4
5
Strategy Audits
Customer Audit
Most important
Competitor Audit
Understand customer needs
Rivals, new entrants, substitutes
M. Porter Five Forces Industry Analysis
Establish Market & Product Positioning
Make the choices and trade-offs
Identify suppliers & partners - resources, capabilities & activities required
Business Context Analysis -
Strategy Shifts – Evolution & Revolution
6
Assessing IT Impact & Alignment
? Strategic
Grid
? Developed
by Warren McFarlan ? Analysis of organizations’ portfolio of IT projects
? Strategic
Alignment Model
? Developed
by John Hendersen & N Venkatraman ? Ongoing alignment of IT and business strategy and operations
7
Alternative: Strategic Grid
?
? ? ? ?
Developed by Warren McFarlan Comparing current vs. potential impact of IS
Support –
?
IS has low relevance; just supports existing processes IS is important to future strategies IS important to current operations, but no developments that will change the business IS strategy is critical to development of business strategy
8
Turnaround –
?
Factory –
?
?
Strategic –
?
McFarlan’s Grid
Impact of applications in the current industry competitive environment LOW High Potential Role HIGH Impact of applications in the future industry competitive environment LOW
Existing IT is less important but future developments are critical to the company’s success
HIGH
Strategic Role
Existing and future IT developments are crucial to company success
Support Role
IT has little relevance to existing or future company success
Key Operational Role
Current IT is important, but future developments in IT are unlikely to improve competitive advantage
9
Strategic Alignment Model
?
? 1. 2.
Goal: Achieve alignment between the business and IT Four alignment perspectives Strategy execution
?
Business strategy drives IT infrastructure Business strategy is still driver, but not constrained by current organizational design
Technology transformation
?
10
Strategic Alignment Model
External Business strategy IT strategy
Strategic fit
Internal
Organizational infrastructure and processes
IT infrastructure and processes
Functional integration
11
Opportunities and Risks
?
The Search for Opportunities
? ?
?
? ?
Can IT change the basis of competition? Can IT change the nature of relationships and the balance of power among buyers and suppliers? Can IT build or reduce barriers to entry? Can IT increase or decrease switching costs? Can IT add value to existing products and services or create new ones Can emerging technologies disrupt current business models? Are we too early or too late to exploit an IT opportunity? Does IT lower entry barriers? Does IT trigger regulatory action
?
Strategic Risks
? ? ? ?
12
Opportunities provided by IT
? IT
?
can be used to change the basis of competition
Can be used not only to automate routine information intensive operations, but also to inform and transform ? Helps reengineer value activities thus increasing efficiency and productivity ? Leads to creation of differentiated product, attracting new market participants and generating new revenue streams
?
IT can be used to change the nature of relationships and the balance of power in Buyer- Seller relationships
IT can be used to streamline operations between components of the supply chain ? This enables reduction in cost and cycle time for all the members of the online market ? IT led to significant shift power from suppliers to channel providers and buyers
?
?
IT used to Build or Reduce barriers to Entry
Entry Barrier: By offering products/services at a Price and level of Quality that competitor cannot match. ? The magnitude of investment to build and operate created significant barriers to entry. ? The second order barrier is created by exploiting the value of info. generated by the technology and value of loyal community of suppliers, customers and partners.
?
?
IT used to Raise or Lower, Switching costs
On internet cost of a connection is low and technology in nor propriety, so the cost of switching is very low ? However providing unique value propositions for customers can hook customers to a company ? Once investors invest time and effort to set up online transaction relationships, switching cost increases a lot
?
?
IT used to add value to Existing Products and Services or Create new ones
?
IT can transform a product from analog to digital form
Emerging Technologies disrupt current business models
Analyzing Disruptive Technologies
Performance/Price Ratio
Series1 Series2
T1
T2
Time
T2
? Technology
evolves faster than the evolutionary path ? Technology enables new products, services, pricing or business models that change the basis of competition ? Technology coincides with regulatory changes or significant customer dissatisfaction ? For competition, Disruptive technology is a source of opportunity
Are we too early or too late to exploit an IT opportunity?
?
Timing of adopting technology crucial ? Too early – New technology may not live up to promise ? Too late – Market closes, no time to establish position
Important factor - organisation’s ability to respond quickly and effectively Illustration: IBM Case – Time take for investment to create value: Mainframe vs. PC
?
?
20
Does IT lower entry barriers?
?
? ?
Earlier – Investment for exploiting advancements in technology high in situations where hardware and software needs are extensive Now – Widespread availability of Internet and other low – cost nonproprietary technologies Hence, IT lowers entry barriers Illustration: Charles Schwab Case – Effect of arrival of online broking services.
21
?
Does IT trigger regulatory actions?
?
Huge success of IT adoption – Cries of unfair competition Illustration: Investigations into Microsoft’s use of MS Windows platform to restrict competition
Recent development: Collaborative governance as opposed to government regulation Illustration: The Global Healthcare Exchange Case
22
?
?
?
Thank You
23
doc_275389467.pptx
about the forces that shape strategies around IT. It talks about strategy audits, impact of strategy on IT and allignment.
Group 13
1
Forces That Shape Strategies
? Aim
of a business model - drive growth and creates value
? Alignment
of strategy with the environment ? Required resources & capabilities
? Strategy
defines:
? Revenue
& growth potential ? A focused attention & resources on the goals.
? Capabilities
define – cost model ? Revenue model + cost model = profits + efficient return on asset
2
Components of a Business Model
Shared purpose & Goals Opportunities Risk
Customer loyalty
Positioning
Profits
Strategy & Value
Leadership
Infrastructure
Partners
Culture
Processes
3
Strategic Positions
?
Market/Channel Choice of customers to serve Channels to reach customers Needs to be served Product
Value Network
Role of organization in network of suppliers & partners
Boundary
Markets, products & segments that will NOT be entered
Choice of products & services to offer
Features Price to be charged
4
5
Strategy Audits
Customer Audit
Most important
Competitor Audit
Understand customer needs
Rivals, new entrants, substitutes
M. Porter Five Forces Industry Analysis
Establish Market & Product Positioning
Make the choices and trade-offs
Identify suppliers & partners - resources, capabilities & activities required
Business Context Analysis -
Strategy Shifts – Evolution & Revolution
6
Assessing IT Impact & Alignment
? Strategic
Grid
? Developed
by Warren McFarlan ? Analysis of organizations’ portfolio of IT projects
? Strategic
Alignment Model
? Developed
by John Hendersen & N Venkatraman ? Ongoing alignment of IT and business strategy and operations
7
Alternative: Strategic Grid
?
? ? ? ?
Developed by Warren McFarlan Comparing current vs. potential impact of IS
Support –
?
IS has low relevance; just supports existing processes IS is important to future strategies IS important to current operations, but no developments that will change the business IS strategy is critical to development of business strategy
8
Turnaround –
?
Factory –
?
?
Strategic –
?
McFarlan’s Grid
Impact of applications in the current industry competitive environment LOW High Potential Role HIGH Impact of applications in the future industry competitive environment LOW
Existing IT is less important but future developments are critical to the company’s success
HIGH
Strategic Role
Existing and future IT developments are crucial to company success
Support Role
IT has little relevance to existing or future company success
Key Operational Role
Current IT is important, but future developments in IT are unlikely to improve competitive advantage
9
Strategic Alignment Model
?
? 1. 2.
Goal: Achieve alignment between the business and IT Four alignment perspectives Strategy execution
?
Business strategy drives IT infrastructure Business strategy is still driver, but not constrained by current organizational design
Technology transformation
?
10
Strategic Alignment Model
External Business strategy IT strategy
Strategic fit
Internal
Organizational infrastructure and processes
IT infrastructure and processes
Functional integration
11
Opportunities and Risks
?
The Search for Opportunities
? ?
?
? ?
Can IT change the basis of competition? Can IT change the nature of relationships and the balance of power among buyers and suppliers? Can IT build or reduce barriers to entry? Can IT increase or decrease switching costs? Can IT add value to existing products and services or create new ones Can emerging technologies disrupt current business models? Are we too early or too late to exploit an IT opportunity? Does IT lower entry barriers? Does IT trigger regulatory action
?
Strategic Risks
? ? ? ?
12
Opportunities provided by IT
? IT
?
can be used to change the basis of competition
Can be used not only to automate routine information intensive operations, but also to inform and transform ? Helps reengineer value activities thus increasing efficiency and productivity ? Leads to creation of differentiated product, attracting new market participants and generating new revenue streams
?
IT can be used to change the nature of relationships and the balance of power in Buyer- Seller relationships
IT can be used to streamline operations between components of the supply chain ? This enables reduction in cost and cycle time for all the members of the online market ? IT led to significant shift power from suppliers to channel providers and buyers
?
?
IT used to Build or Reduce barriers to Entry
Entry Barrier: By offering products/services at a Price and level of Quality that competitor cannot match. ? The magnitude of investment to build and operate created significant barriers to entry. ? The second order barrier is created by exploiting the value of info. generated by the technology and value of loyal community of suppliers, customers and partners.
?
?
IT used to Raise or Lower, Switching costs
On internet cost of a connection is low and technology in nor propriety, so the cost of switching is very low ? However providing unique value propositions for customers can hook customers to a company ? Once investors invest time and effort to set up online transaction relationships, switching cost increases a lot
?
?
IT used to add value to Existing Products and Services or Create new ones
?
IT can transform a product from analog to digital form
Emerging Technologies disrupt current business models
Analyzing Disruptive Technologies
Performance/Price Ratio
Series1 Series2
T1
T2
Time
T2
? Technology
evolves faster than the evolutionary path ? Technology enables new products, services, pricing or business models that change the basis of competition ? Technology coincides with regulatory changes or significant customer dissatisfaction ? For competition, Disruptive technology is a source of opportunity
Are we too early or too late to exploit an IT opportunity?
?
Timing of adopting technology crucial ? Too early – New technology may not live up to promise ? Too late – Market closes, no time to establish position
Important factor - organisation’s ability to respond quickly and effectively Illustration: IBM Case – Time take for investment to create value: Mainframe vs. PC
?
?
20
Does IT lower entry barriers?
?
? ?
Earlier – Investment for exploiting advancements in technology high in situations where hardware and software needs are extensive Now – Widespread availability of Internet and other low – cost nonproprietary technologies Hence, IT lowers entry barriers Illustration: Charles Schwab Case – Effect of arrival of online broking services.
21
?
Does IT trigger regulatory actions?
?
Huge success of IT adoption – Cries of unfair competition Illustration: Investigations into Microsoft’s use of MS Windows platform to restrict competition
Recent development: Collaborative governance as opposed to government regulation Illustration: The Global Healthcare Exchange Case
22
?
?
?
Thank You
23
doc_275389467.pptx