Description
Strategies in game theory may be random (mixed) or deterministic (pure). Pure strategies can be thought of as a special case of mixed strategies, in which only probabilities 0 or 1 are assigned to actions.
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Do organizations have IT Strategies?
A Study on how organizations describe their IT Strategies.
Executive Summary
Title: Author: Tutor: Problem: Do organizations have IT Strategies? A Study on how organizations describe their IT Strategies. Stephen Rupia Lyabandi Anders Hederstierna The research problem of this study is lack of insight on how organizations describe their IT strategies in relation to other strategies. IT strategy continues to be a major challenge for Information Technology intensive organizations and managers. Over the last two decades, the way researchers on information systems have viewed and analyzed IT strategy in organizational systems has not significantly been modified. Recent studies show that one of the main problems is that the concept of IT strategy has been around for nearly two decades and although many organizations have been using it, the meaning and reference of the idea remains elusive. Those who have attempted to define it have not reached an agreement. The purpose of this study is to define the problem and explore whether organizations have IT strategies, and how these are describe in relation to other strategies. This research study also investigates how these organizations incorporate IT components into their strategies. Alternatively, this research study is aimed to find out whether “IT strategy” is stand-alone concept. Therefore, the purpose of this research study can be described by the following questions: ? Is IT “strategy” a stand-alone concept? ? Do organizations describe IT strategies as a component in other strategies? In seeking to examine how organizations describe their IT strategies, three interviews were held with IT Managers at Volvo, Boverket and UIQ in Sweden, focusing on each organization’s central IT/IS department. A qualitative approach based on case studies was considered appropriate in given the small amount of prior empirical research in the broad area of IT strategy, and sensitive nature of the data needed. Furthermore, the focus of the study was on types of IT strategies patterns each organization is engaged in and how they differed or resembled across-organizations. In order to understand the thought processes underlying
Purpose:
Method:
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these patterns, it was essential to incorporate the perspectives from several IT managers. At the same time, in order to achieve some understanding of the possible differences, I needed to examine them through a multiple of cases. Conclusions: The result from this particular research setting shows that there is no IT strategy, which stands on its own feet. IT strategy exists as a part of an overall business strategy. Another possibility is that IT strategy is used in organizations as low components in other strategies, for example, in product, marketing or management Information systems strategies. Even though, this research study found that there is similarity, on how these organizations described their IT components, this research study found that there are dissimilar methods of describing the IT strategy. This has been tested firstly by studying the theory and then via empirical research at Boverket, Volvo IT and UIQ in Sweden. In this particular research setting, the study concludes that these organizations are describing their IT strategies in a number of ways, mostly depending on the nature of their business domains. Key words: IT strategy, Strategies, IT components
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ACKNOWLEDGEMENT A long journey, with many twists and turns, has now ended. This has been a journey of hard work, but also challenges with long and instructive, brainstorm discussions and interested interviews. With this thesis written, I am now ready to leave the sheltered life of University studies and step out into the tough and ruthless labor market. This thesis is the final component of Nine months University studies. The master’s thesis is equivalent to 10 weeks of full time studies at School of Management, Blekinge Institute of Technology. Considerably more time than 10 weeks has been spent on this thesis, since it has been under progress under the time of January 2005 to June 2005. I would like to thank my supervisor Anders Hederstierna for the time he has spent on giving me valuable comments, and also for providing unprecedented support and guidance throughout this long project. I had many constructive and pleasant meetings, from which I have learnt a lot. I’m grateful to the interviewees in the studied organizations. Especially, I would like to thank Mr. Ulf Nilsson President of Volvo IT , Mr. Stefan Norrman Assistant General Manager of Boverket and Mr. Magnus Carlsson Information Systems Manager of UIQ, I really appreciate for the time and effort they spent to answer my questions honestly and frankly. Without their cooperation and participation, I would not have been able to accomplish my project, not only but also get the “real world” view of my problem domain. Furthermore, I would like to thank John Adicka for his fast responses to my question and willingness to help me in reviewing and proof read my thesis, I really appreciate John! Finally, I would like to thank my family and relatives for all supports during my study in Sweden. I also wish to thank everyone who have contributed to me in accomplish my studies on one way or another. I am proud to present this thesis and hope you will have pleasant time reading it! Ronneby, Sweden, June 2005
Stephen Lyabandi
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Table of Contents
Page
List of Figures………………………………………………………………………………..…..7 List of Tables…………………………………………………………………………..…………7 List of Charts………………………………………………………………………………….….7 Chapter One
1. INTRODUCTION ……………………………………………….........………..8
Background of Study ………………………………………………………. ……….......8 Purpose of the Study………………………………………………………….……….…9 Research Questions…………………………………………………………….………..9 Research Problem………………………………………………………………….….…9 Delimitations…………………………………………………………………………....…9 Key word Definitions……………………………………………………………………..9 Outline……………………………………………………………………………………11 Chapter Two
2. Theoretical Framework………………………………………………....…..12
Background of the strategy………………………………………………………….….12 Core Competence……………………………………………………………………….13 Perspectives of Strategy in Business Administration………………………………..13 Strategy and IT…………………………………………………………………………..14 The themes of IT Strategy……………………………………………………………...14 2.5.1 Overview of the IT Strategy…………………………………………………………….15 2.5.2 Purpose of IT Strategy………………………………………………………………….16 IT and Organization………………………………………………………. …………....16 Linking Marketing with Information Technology………………….…………………..18 Information Technology in Supply Chain Management (SCM)…………………….19 Infrastructure for IT in SCM………………………………………………….…………20 Perspectives of Strategy in Implementation …………………………………………20 Enterprise Systems……………………………………………………………..........…21 Enterprise Resource Planning……………………………………………………..21 Enterprise Application .Integration……………………………………………...…22 Benefits…………………………………………………………………………………...22 External Pressures………………………………………………………. …………….24 inadequacy of Current Research………………………………………………………26 Problematization …………………………............................................................…26
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Chapter Three
3. Methodology…..…………………………………………………………….…28
3.1. Method……………………………………………………………….................................…28 3.1.1. Selecting Organization’s Features………………………………………………………..28 3.1.2. The Choice of Interviewees………………………………………………….…………….28 3.2. Research Design………………………………………………………………………..…….29 3.3. Research Approach…………………………………………………………………………..29 3.3.1. Research Approach in this Thesis………………………………………………………..29 3.4. Data Collection………………………………………………………………………………..29 3.5. Quality of this Research……………………………………………………………………..30 3.5.1 Validity and Reliability…………………………………………………………………........30 3.6. Data Analysis………………………………………………………………………………….30 3.7. Challenges in Designed Methodology………………………………………………..…….30 3.8. Literature Review……………………………………………………………………………..31 3.9. Empirical Studies……………………………………………………………………………..31 3.10. Background of Organizations……………………………………………………………...31 3.10.1. Boverket……………………………………………………………………………………31 3.10.2. Volvo IT…………………………………………………………………………………….32 3.10.3. UIQ………………………………………………………………………………………….32 Chapter Four
4. Results and Analysis……………………………………………….……….34
Do Volvo IT, UIQ and Boverket have IT Strategies?………………………………...34 How do Volvo IT, Boverket and UIQ describe their IT strategies in comparison with other strategies…………….…………………………….……………………………...34 Analysis ………………………………………………………………………………….34 Stand Alone IT Strategy ……...………………………………………………………..35 Are IT Components incorporated into the Marketing Strategy?…………………...36 Analysis…………………………………………………………………………………..36 Are IT Components incorporated into the Product Strategy?……………………..37 Analysis ………………………………………………………………………………….37 Are IT Components incorporated into the MIS Strategy?…………….………….…38 Goals of MIS Strategy…………………………………………………………………..38 Components of MIS Strategy…………………………………………………………..38 Do MIS strategy components belong to different levels?………………………….39 Analysis ……………………………………………….…………………………..........40 Describing the IT Components in relation to the overall business strategy………41 Significance of IT components in IT strategy………………………………………...42 Analysis………………………………………………………………………………….42 Contexts of IT Components within Volvo, Boverket and UIQ……………………...43 How far ahead is future prospect of IT components…………………………..…..44 Analysis …………………………………………………………………………………44 Implications of the research …………………………………. ………………….…..45
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Chapter Five 5. Findings………………………………………………………………………………………46 5.1 Conclusion…………………………………………………………………………………...46 Chapter Six 6. Discussion & Research Implications……………………………………………………...48 Chapter Seven 7. Limitations of the Study and Suggestions for the Future Research…………………….49 References…………………………………………………………………………………. …..50 Appendix A: Interview Questions……………………………………………………………...58 Appendix B: Structure of Interviews ………………………………………………………….59 LIST OF FIGURES Figure 1.1: Theories of Strategy and IT……………………………………………………….8 Figure 2.2: Purpose of an IT Strategy………………………………………………………...16 Figure 2.3: How IT strategy relates to SCM………………………………………………….20 Figure 2.4: Future trend of ERP systems…………………………………………………….25 LIST OF TABLES Table 4.3: Indicates overview of IT components in UIQ…………………………………...45 Table 4.4 Applications operated and supported by Volvo IT Strategy…………………....35 LIST OF CHARTS Chart 4.1: Depicts on how Volvo IT describes IT components…………………………...42 Chart 4.2: Illustrates levels of MIS components in Volvo IT……………………………….41
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1. INTRODUCTION
The main framework of this research study begins with reviewing the theory of strategy, IT and IT strategy. Within IT strategy, there are two additional concepts, stand alone “IT strategy” and IT components both of which are integrated in IT strategy. The figure 1.1 below attempts to depict how these concepts are viewed from the author’s perspective.
Strategy
Stand-alone IT Strategy
IT
IT Strategy
IT Components
Figure 1.1 Theories of Strategy and IT.
This research study explore these concepts of IT strategies and IT components in three organizations. Drawing on extensive interviews with IT Managers from Volvo IT, Boverket and UIQ and archive data, this paper will demonstrate the challenges of how organizations describe their IT strategies by delving deeply in to the experiences of three organizations. To maintain an effective functioning IT organization and prospering business, companies must create effective strategies that correctly align IT resources with the needs of the business. The business & IT strategy must then be enforced, and support the natural relationship between IT goals, objectives and tactics at all management levels. This will ensure that the real needs of the business are met by the right IT projects and in a timely manner. Furthermore, this will promote enterprise wide visibility and understanding of all business goals. 1.1. Background of the Study
The starting point for this thesis is to explore the relationship between IT strategy and other strategies in more depth. Once it was decided to carry out this topic, I had brainstorming discussion and frequent meetings with fellow students, friends and University advisers, various viewpoints became concerning, the inadequate state of current research in IT strategy and whether organizations have IT strategies and how these are described in relation to other strategies. Because of current importance, the topic was considered interesting to explore in further depth.
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1.2. Purpose of the Study The purpose of this study is to define the problem and explore whether organizations have IT strategies, and how these are describe in relation to other strategies. This research study also investigates how these organizations incorporate IT components into their strategies. Alternatively, this research study is aimed to find out whether “IT strategy” is stand-alone concept. Therefore, the purpose of this research study can be described by the following questions: • Is IT “strategy” a stand-alone concept? • Do organizations describe IT strategies as a component in other strategies? 1.3. Research Questions The main research questions in this study is to investigate whether organizations have IT strategies, by studying how organizations describe their IT strategies in comparison with other strategies. Therefore, this study intends to understand and explore the following questions: 1. Do organizations have IT strategies? 2. Are they describe in different ways? 3. Do organizations incorporate IT components into their strategies? 1.4. Research Problem The research problem of this study is lack of insight on how organizations describe their IT strategies in relation to other strategies. IT strategy continues to be a major challenge for Information Technology intensive organizations and managers. Over the last two decades, the way researchers on information systems have viewed and analyzed IT strategy in organizational systems has not significantly been modified. Recent studies show that one of the main problems is that the concept of IT strategy has been around for nearly two decades and although many organizations have been using it, the meaning and reference of the idea remains elusive. Those who have attempted to define it have not reached an agreement. 1.5. Delimitations
Due to the wide scope of this research study, the main source of data was collected from primary sources, such as Internet, magazines, literature and internal corporate publications. It is also clear that primary sources of data such as interviews can be biased in some occasional cases, as top-level management would not disclose unfavorable information. Lack of resources and time are also contributing factors, which makes it more feasible to depend on secondary data. 1.6. Key words & Definitions
The following list contains a number of concepts often used in this thesis. There is a need to clearly define concepts to avoid misinterpretations during the reading. Some definitions are more or less generally accepted, while others are derived from specific notions . Enterprise systems In this thesis, an enterprise system is referring to as an enterprise-wide information system that supports the processes of an organization. According to Davenport, the
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following could be said about the concept: An enterprise system enables a company to integrate the data used throughout its entire organization (Davenport, T.H. 1998). Even though Davenport refers to ERP systems in his definition, the concept of an enterprise system in this thesis also includes EAI. ERP and EAI are two different IT strategies to implement an enterprise system. Systems Environment The concept of systems environment includes both existing and future information systems as well as their mutual relations and conditions. An information system can exist in the form of a standard operating procedure, a planning procedure, a quality control method, or in computer-based form. Thus, an information system does not need a computerbased solution to satisfy its role (Svärdström, J. 2003). Symbian OS is an operating system (OS) targeted at mobile phones that offers a high-level of integration with communication and personal information management (PIM) functionality. Symbian OS combines middleware with wireless communications through an integrated mailbox and the integration of Java and PIM functionality (agenda and contacts). The Symbian OS is open for third-party development by independent software vendors, enterprise IT departments, network operators and Symbian OS licensees. 1 UIQ is a flexible and customizable user interface for data-enabled mobile phones, based on the Symbian OS platform. UIQ includes support for the latest and emerging wireless standards and comes with a set of essential and well-integrated applications. UIQ enables rapid device integration and offers mobile phone manufacturers a foundation for building attractive and cost efficient mobile phones. UIQ licensees gave extensive rights to customize the user interface to fit into their product portfolio and branding strategy. Abbreviations SAP Systems Analyses and Program development. SAP is a German company providing ERP software packages, e.g. SAP R/3. “R” stands for real-time data processing. PDM Product Data Management CAD Computer aided Design CAE Computer aided Engineering EDI Electronic data interchange
1
www.webopedia.com/TERMS/S/Symbian.html
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1.7.
Outline
Chapter 1 Introduction describes the background of study, purpose of research, research problem, delimitation and definitions. Chapter 2 Theoretical Framework is a presentation of literature reviewed about strategy, IT, and IT strategy. Chapter 3 Methodology is a description of the way this project has been carried out. Chapter 4 Results and Analysis is a presentation of the material derived from the case studies. In this chapter, there is also analysis, which contains an interpretation of results. Chapter 5 Findings & Conclusion is the author’s findings and opinions as to whether there is an IT strategy and how it is described in relation to other strategies in Volvo, Boverket and UIQ. Therefore, the reasoning is derived from the analytical generalization. Chapter 6 Discussion and Implication of Research treats the justification of the thesis. The chapter considers this course of action research, points to possible weaknesses and suggests alternative procedures. Furthermore, in this Chapter 6, there will be research implications, which will act as an Explanation of the new knowledge, this thesis produces that is not already known, why is it worth knowing and the major implications are as result. In the final chapter, 7 Limitations and Suggestions for the Future Research are presented.
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2. Theoretical Framework
In this chapter, this research study presents fundamental and essential terms and concepts used in the study based on the following notions: • Strategy • IT • IT strategy The Relationship between all these concepts is initially described in this chapter. This will be followed by discussion of inadequacy of current research in IT strategy and problematization . 2.1. Background of the Strategy
There are many theories on strategy in existence, Due to the scope of this paper; this research study decided to looks at the relationship between IT strategy and others strategies Studying strategy is not a new phenomenon. In the 1960’s the terms strategy were commonly used in companies. The purpose of the strategy was then described how the company should reach the set goals with resources available. In1969, Anthony divided organizations planning and strategy implementation into three levels-strategic, tactical and operational. There are specific decision-areas connected to each level. On strategic level, companies should set longterm goals and sub-goals that needed to be reached for the goals to be obtained. The strategic planning is therefore often long-term, a period of three years or more. The tactical level has the objective to implement the chosen strategies and to coordinate the organizations different units into the same direction. On tactical level the planning made in a shorter perspective of one to three years and is conducted more or less systematically (Ax et. 2002). According to Porter (1996), strategy is creation of a unique and valuable position, involving a different set of activities. If there were only ideal position, there would be no need for strategy. Companies would face simple imperative- win the race to discover and preempt it. The essence of strategic positioning is to choose activities that are different from rivals. If the same set of activities were best to produce all varieties, meet all needs, and access all customers, companies could easily shift among them and operational effectiveness would determine performance. In correlation with fit and effectiveness, strategy is creating fit among company’s activities. The success of a strategy depends on doing many things well not just a few. If there is no fit among the activities, there is no distinctive strategy and little to sustain in the strategic deployment process. Management then reverts to the simpler task of overseeing independent functions. When this occurs, operational effectiveness determines the relative performance of the organization (Porter, Michael 1996). The concept of fit among units is one of the oldest ideas in strategy. Gradually however, it has been supplanted with new concepts of core competencies, critical resources and key success factors. In fact fit is far more critical to the success of the IT systems than is realized. Strategic fit among the various systems components and the business processes they support are fundamental not very competitive advantage but to the suitability of that advantage. Fit among a company’s activities creates pressures and incentives to improve operational effectiveness. Fit
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means that poor performance in one activity will degrade the performance in others, so that weaknesses are exposed drawing management’s attention. Conversely, with increasing fit, improvements of one activity will pay dividends in other areas (Porter, Michael 1996). 2.2. Core Competence
According to Prahaland and Hamel (1990), another important view of strategy stresses is the core competences of organizations. The theory states that management’s task is to create an organization “capable of infusing product with irresistible functionality, or better yet, create products customers need but have not imagined ” Prahaland and Hamel (p.22) Management must combine corporate-wide technologies and productions skills into competencies for competition. Core competencies are the collective learning in the organization about how to integrate multiple technologies and coordinate diverse production capabilities. Identifications of a core competence involve three tests: • It should provide access to a wide variety of different markets • It should make a significant contribution to the product, especially the benefits the customer perceives. • It should be difficult to imitate. Prahalad and Hamel, (1990), went further and argued that the best a company can hope for is to be a world leader in five or six competencies. Core competence can take years to build, and companies that fail to invest in them are not likely to enter an emerging market. Management needs to develop a corporate strategy for organizing and deploying core competencies. This strategic architecture then acts as road map in identifying which core competencies to build and their required technologies. One option is to outsource all of the activities that are not core (Quinn and Hilmer, 1994). Under this approach, management concentrates on just the firm’s core competences, and leaves all other activities to others. 2.3. Perspectives of Strategy in Business Administration
When decided on the strategy, the vision and business idea needs to be taken into consideration; the business idea describes what area company should focus on now and the future and how the company should develop in relations to its vision (Ax et. 2002). The vision describes the long-term direction that the company desires to head for (Johnson and Scholes 2002) Strategies are plans for how companies should act in the future (Anthony and Govindarajan 2001). A company’s goals are set in strategic planning where the long-term goals are wide and independent of time. The tactical and operational planning processes then breaks the long-term goals down into more specific goals that should be obtain within a shorter period. The goals should be possible to measure so that the company can follow-up the used measures to see the company’s position on the market (Svensson and Svensson 1995). A company’s strategies may then be seen as description of a plan containing information of how a business idea can be obtained (Ax et. 2002). This is the classic way of looking at strategy in business administration perspectives.
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2.4.
Strategy and IT
In context of strategy formulation for IT, a rational framework is advocated for managers based upon an assumed relationship between the implementation of IT and competitive advantage (Earl, 1989. Morton, 1988. Porter and Millar, 1984. McFarlan, 1984).The normative approach adopted by many writers on IT strategy assumes that managers have at their disposal a rational framework for strategy formulation to enhance IT project performance leading to competitive advantage (Kantrow, 1980. Booz-Allen and Hamilton, 1981. Adler et al, 1992). One problem of constructing an ideal-typical presentation of a strategic framework is the extent to which it matches reality. Although such ideal-typical constructions of social phenomena do not exist in pure form, they are nonetheless presented in the IT literature as offering a conceptual advantage to those concerned with strategy formulation. In contemporary business organizations, managers are urged to maximize the potential of IT by developing strategies to gain competitive advantage, improve productivity and performance, facilitate new ways of managing and organizing and develop new business (Peppard, 1993). 2.4.1. The Themes of IT Strategy The IT strategy contains three (3) major themes, which form the foundation of the IT strategy as well as the tactical processes that will be deployed in support of these strategies (Michael, Earl 1995). These themes are: • Business improvements are enabled by Information Technology that is integrated not disintegrated. This integration must be horizontal versus vertical. Horizontal systems remove islands of information and build bridges between the business units. In this integrated systems, multiple data sources are made transparent to the end users as well as the applications that utilize them. • Information Technology requirements are always growing, changing, and being extended. The information Technology is no longer static, but dynamic adapting to the changing business requirements. • Information Technology is about abstractions. If only hardware, software and data were the only foundations of systems, then information Technology would not be able to keep pace with the business requirements. Instead, business processes, objects and services are the foundation of the system, which then drive the business processes in their adaptation of the changing market forces.
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2.4.2. Overview of IT Strategy According to Earl (1989), IT strategy is concerned with ‘how’ Information System strategies will be implemented. IT strategy is described as activity based, supply orientated and technology focused. It is also about the delivery of workable IT solutions to business problems. The technology-strategy connection Kantrow (1980) is appropriate here since IT strategies are ‘best seen as the technology framework or architecture’, “which drives shapes and controls the IT infrastructure” (Earl, 1989, p.95). IT strategy is not simply about the vision, which senior managers adopt for their long-range IS planning, but instead the practical application of IT to the business. Four elements of IT architecture are given by Earl, which include computing, communications, data and applications. Computing refers to the information processing hardware and its associated operating system software. Communications refer to telecommunications networks and their associated mechanisms for interlinking and internetworking. Data relates to the data assets of the organization and requirements of use access, control and storage. Finally, applications encapsulate the main application systems of the organization, their functions and relationships, as well as the development methods. The four elements of the IT architecture are interdependent. This means that each element influences and is influenced by the other elements. Ultimately, the IT architecture is designed to create an infrastructure, which is more powerful than the sum of its parts. For example, the topology of a communications network is influenced by applications needs, data transmission requirements and information processing geography as well as by its own capabilities. Earl (1989, p.95) contends that the technology framework can contain four levels of guidance. The four levels each architecture element may be called frames’. The set of frame makes up the framework. The four levels consist of the following categories: Parameters - which are the major design parameters of each architecture element. They represent the essential needs, constraints and preferences that over time each element should attempt to satisfy. Schemas- logical, and perhaps physical, models of what are required of each architectural element and how they should work. Sometimes called models or blueprints they may either be the visual, logical state of the frame as it exists now or an agreed, detailed model of what is pursued. Policies- concrete, practical statements of how each technological element is to be delivered. Included are technological policies, guidelines, procedures and standards. Plans- firm plans and goals for each element. These may include project plans or performance goals- plus time –phased actions that will move the framework to the next state of evolution. (ibid) According to Earl (1989), the progression from the first frame (parameters) to the fourth (plans) indicates ‘increasing degree of business and technological certainty’ The ability of firms to tackle each element in the framework is dependant upon the ‘business or technological imperative’ Moreover, each element should be tackled individually at first even though they are seen as interdependent.
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2.4.3. Purpose of the IT strategy The purpose of the IT strategy is to enable the business strategy, set the direction of the initiatives driven from the business requirements and help the organization to create a competitive edge through the use of IT. The IT strategy is the strategy a company pursues in terms of • Functionalities of its information systems (application portfolio) • Information systems architecture & infrastructure and • IT organization and processes (http://www.gtsuae.com/itstrategy.htm) The graphic below provides author’s view on purpose of an IT Strategy. External factors
Business Strategy Enables Drives IT Strategy s Technology trends
Figure 2.2 Purpose of an IT strategy
2.5.
IT and Organization
Here this research study reviewed some studies of the interaction of IT and firms organization. IT has effects on the organization that adopts are disproportionate to its share of the organization’s costs. A firms business processes, internal organization, and relationships with outside parties are signi?cantly determined by the economics of information and communications (Migrom and Roberty; 1990 and Raner 1993). For instance, lower-cost access to data and communications can exacerbate the information processing bottleneck at the tops of hierarchies and therefore, increase the value of delegation , non machine decision making (Brynjolfsson and Mendelson 1993). It can also have direct and indirect effects on the value of skilled labor, job design, and incentive systems. In particular, Bresnahan, Brynjolfsson, and Hitt analyze data on IT, organizational practices, and productivity from over 300 large ?rms and conclude that:
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“IT use is also correlated with a pattern of work organization involving more decentralized decision making and greater use of teams. Increases in ?rms’ IT capital stock are associated with the greatest increases in output in ?rms that also have high levels of human capital or decentralized work organization, or both. However, ?rms that implement only one complement without the others are often less productive than ?rms which implement none at all” (Bresnahan, Brynjolfsson, and Hitt 2000 p.184). In other words, there is evidence of a complementarity between the use of IT and certain changes in work organization. Of course, the falling quality-adjusted price of IT raises the return to investments not only in IT but also in its complements. A signi?cant literature, mostly outside of economics, has explored various aspects of the interaction between IT and organization, business processes, and even corporate culture. (See, for example, Applegate, Cash, and Mills 1988; Barras 1990; Bresnahan and Greenstein 1997; Brynjolfsson and Hitt 1997; Brynjolfsson, Renshaw, and Van Alstyne 1997; Davenport and Short 1990; David 1990; Ito 1996, Malone and Rockart 1991; Milgrom and Roberts 1990; Autor, Levy, and Murnane 2000; Orlikowksi 1992; Scott Morton 1991; and Woerner 2001; Brynjolfsson and Hitt 2000) Provide a review of the literature. Although the organizational complements are valuable and, in some cases, even essential to the success of IT innovations, implementing organizational changes is costly and risky, yielding both successes and failures (See, for example, Kemerer and Sosa 1991). Both the case evidence and the econometric results suggest that the costs of these organizational complements to IT investments typically exceed the direct ?nancial costs of the IT investments themselves (Ito 1996; Bresnahan and Greenstein 1997; Bresnahan 1999). Importantly, although many of these organizational practices may be readily visible to competitors and are copiously documented in articles by business school professors and consultants, they are notoriously difficult to imitate successfully (Brynjolfsson, Renshaw, and Van Alstyne 1997).This reflects complementarities and large effects of seemingly minor characteristics. Intel, for example, has adopted a “copy exactly” philosophy for any chip fabrication plant built after the ?rst plant in each generation. Wholesale replication of even seemingly insigni?cant details has proved more reliable than trying to understand which characteristics really matter. Going from the plant level to the ?rm level only complicates the imitator’s task. The difficulty in implementing organizational complements can explain the apparent quasi-rents earned by ?rm that have been fortunate or skillful enough to have them in place. In some cases these quasi-rents, when measured in a production function framework, may show up as higher coefficients on other inputs to production. For instance, Brynjolfsson, Hitt, and Frank Lichtenberg (1995), among others, ?nd that heavy use of IT is correlated with signi?cant higher levels and growth rates of measured productivity. These rents may arise because non-adopters have not tried, or have tried and failed to implement complementary workplace or product innovations. Brynjolfsson and Hitt interpret their productivity results as pointing to the existence of large but unmeasured inputs to production that are correlated with measured IT. Related literature ?nds that certain work practices and human resource policies are correlated with higher levels of productivity and thus constitute another type of typically unmeasured “input” to production (Ichniowski, Shaw, and Prennushi 1997). Because effective work organization can be costly to develop and implement but yields a stream of cash ?ows over time, it is natural to think of it as a kind of asset. This asset has
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variously been called “organizational capital,” “e-capital,” and “structural capital,” depending on the context (Brynjolfsson and Yang 1999; R. Hall 2000a; Lev 2001). 2.6. Linking Marketing with Information Technology
This section develop critical review of a framework of dynamic customer relationship (CRM), the linking marketing with Information Technology is explained here. According to Bose, R. (2002), CRM is an integration of technologies and business processes used to satisfy the needs of a customer during any given interaction. More specifically, CRM involves acquisition, analysis and use of knowledge about customer in order to sell more goods or services and to do it more efficiently. It is important to note that the terms “customer” may have a very broad definition that includes vendors, channel partners or virtually any group or individual that requires information from the organization. In terms of IT terms, CRM means an enterprise wide integration of technologies working together such as data warehouse, Web site, intranet/extranet, phone support system, accounting, sales, marketing and production. Effective customer relationship management (CRM) has become a strategic imperative for companies in virtually every business sector. Companies are moving closer to their customers, expending more effort in finding new ways to create value for their customers, and transforming the customer relationship into one solution finding and partnering rather than one of selling and order taking (El Sawy and Bowles, 1997). Organizations will be more successful if they concentrate on obtaining and maintaining a share of each customer rather than a share of the entire market (Peppers and Rogers, 1995). It has been illustrated in practice that retaining an exist customer is more profitable than acquiring a new one (Reichheld and Sasser, 1990). As for the key factor in a long-term relationship, marketing researchers have studied the effects of mutual information sharing exchange (Duncan and Moriarty, 1998), and communication effectiveness on building trust and commitment among relationship participants (Sharman and Patterson, 1999). Each relationship exchange incurs transactional and /or non-transactional data. Transactional data typically include sales amount, transaction time, place, and buyers while non-transactional data may include inquiries or feedback in the form of complaints or suggestions. Both transactional data non-transactional data must be organized into an integrated customer data profile because such information is what makes customer interaction powerful (Well et al, 1999). Such integration is a foundation of simplifying customer support activities and reducing transaction costs so that the organization may not only differentiate its products but also offer lower prices (Goodhue et, 1992; Rangswamy, 1993; El Sawy and Bowles, 1997). However, CRM strategy means different things to different people (Winer, 2001). In the marketing area, much discussion has been devoted to relationship marketing strategy but a critical problem is that although a number of authors have contrasted relationship marketing with direct, database, loyalty, retention and transaction marketing, such discussions fail to clarify substantive issues (O’Malley and Tynan, 2000). For example, relationship marketing strategy has clarified customer lock-in (Barnes, 1994; Turnbull & and Wilson, 1989 and Wold, 1990; Tracy and Wiersema, 1993, and close relationships Barnes, 1994, 1995). However, the first three approaches are criticized in that all are lacking recognition of “mutuality and special
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status” (Rowe & Barnes, 1998, p.284) and therefore, are unlikely to result in close, personal, long-term relationships. For the information technology domain, as key enabler of CRM, there has been an active discussions on the implementation of relationship management packages (Jutla et al., 2001), customer information systems, (Mentzas, 1997; Wells et al.1999), customer database (El Sawy & Bowles, 1997), decision support application (Kohli et al., 2001). Still, many companies have difficulty in implementing an effective CRM program because they allow software vendors to drive their approach to customer management, or retrofit a customer strategy to match the CRM technology they have purchased (Rigby et al, 2002). Namely, most of them mistake CRM technology for a marketing strategy, forming a barrier in implementing a successful CRM project (Woodcok and Starkey, 2001). 2.7. Information Technology in Supply Chain Management (SCM)
Considering the importance of IT in achieving effective SCM, an attempt has been made in this section to review the literature on IT in SCM. The main objective here is to explain the major issues surrounding the application of IT in SCM. In figure 2.3 at the end of this section, this research study will illustrates how IT strategy is related to SCM. Recently the concepts of supply chain design and management have become a popular operations paradigm. This has intensified with the development of information and communication technologies (ICT) that include electronic data interchange (EDI), the Internet and World Wide Web (WWW) to overcome the ever-increasing complexity of the systems driving buyer-supplier relationships. The complexity of SCM has also forced companies to go for online communication systems. For example, the Internet increases the richness of communications through greater interactivity between the firm and customer (Watson et al., 1998). Graham and Hardaker (2000), highlight the role of the Internet in building commercially viable supply chains in order to meet the challenges of virtual enterprises. Supply chain management emphasizes the overall and long-term benefit of all parties on the chain through co-operation and information sharing. This signifies the importance of communication and application of IT in SCM. This is largely cause by variability of ordering (Yu et, 2001). Information sharing between members of a supply chain using EDI technology should be increased to reduce uncertainty, enhance shipment performance of suppliers and greatly improve the performance of supply chain systems (Srinivasan et al., 1994).
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Companies need to invest large amounts of money for redesigning internal organizational and technical processes, changing traditional, fundamental product distribution channels, customer service procedure, and training staff to achieve IT-enabled supply chain (Motwani et al., 2000). The following are some of problems often cited in literature both by the researchers and by practitioners when developing an IT-integrated SCM: • Lack of integration between IT and business model • Lack of proper strategic planning • Poor IT infrastructure • Insufficient application of IT in virtual enterprise • Inadequate implementation knowledge of IT in SCM In this research study, IT strategy is related to supply chain management in the following respect. Goal SCM IT strategy SCM
IT Solution
Figure 2.3 How IT strategy relates to SCM
IT Implementation
2.8. Infrastructure for IT in SCM Infrastructure for IT in SCM consists of Internet connectivity, hardware and software including application systems integration. Nevertheless, training and education cell for IT is important to fully utilize the IT available for SCM. There are different IT platforms and systems available to enable the application of IT in SCM (Haeckel, 1998). Walsh and Koumpis (1999), presented a decomposable, ‘‘autonomous agents’’ approach was adopted to specify information supply chain “agents’’ (e.g. suppliers, buyers, distributors, etc), including their structural relationships, interaction ‘‘protocols’’ and co-ordination policies. 2.9. Perspectives of Strategy in Implementation
According to Lucas (2005), implementation is part of the processes of designs a systems and is a component of change. New information systems change existing information processing procedures and often change the organization itself. Implementation refers to the design team’s strategy and actions for seeing that a system is successful and contributes to the organization. This definition stresses the long-term nature of implementation, it is part of a process that begins with initial idea for systems and changes it will bring. Implementation terminates when the system is successfully integrated with operations of the organization. Most of
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implementations are concerned with behavior phenomena, because people are expected to change their work activities. Implementation becomes more important and difficult as systems design become more radical. If a firm undertakes a large systems project, it wants to make major changes in tasks to reduce costs and improve productivity in organization. In correlation with strategy, an implementation strategy needs to take to into account process issues in designing information systems as well as the factors that appear influence success. Systems design can also be view as a planned change in the activities in the organization (Lucas. 2005) 2.10. Enterprise Systems This short introduction is a quick summary of enterprise systems. The two enterprise systems studied namely ERP and EAI will be detailed after this introduction. IT strategy will be defined here as how to make use of information technology. Implementing an enterprise system is a way to make use of the information technology; ERP and EAI are different strategies to implement an enterprise system. 2.11. Enterprise Resource Planning (ERP) ERP is an IT system that supports the business processes in the organization. The support of the processes refers to the development of the system to work above the functional entities to enable emphasis of the business processes (Al-Mashari, M. 2001).The link between ERP and business process re-engineering (BPR) is strong; in principle, an ERP implementation requires the restructure of processes (Koch, C. 2001). An ERP implementation will drive the organization towards a process-oriented business (Beretta, S. 2002). The ERP vendors supply a standardized software package developed to support different branches of industry. The design of the system aligns with the specific best practices assumed to apply to the type of industry in question. Best practices are a combination of vendor marketing of what they think is best and educational institutions that contribute to industry by developing professional models and theories (Swan, J., Newell, S. and Robertson, M. 1999). Hence, it is the vendors, not the buyers, who decide in what way the organizations processes are to be supported. When a company decides on implementing ERP, it will benefit the most from the advantages principally by adjusting to the standardization of processes embedded in the system (Chen, I.J. 2001). Despite the package solution and installation results in, there is within certain limits ways of conforming the system to better suit the organization by configuring the system (Davenport, T.H. 1998). An ERP also consists of modules. Given the needs and demands identified, the company may customize the system by deciding which modules to implement (Davenport, T.H. 1998). The concept of combining modules may create an alternative solution to organizations. BOB is short for best of breed and signifies, as the name implies, that only the best parts available are chosen. The principle is the same as with one single ERP, but in this case, several different vendors provide the modules. The main reasons for choosing BOB are reducing of the risk that comes with the dependency on one single vendor and preventing decreased flexibility (Light, B., Holland, C.P. & Wills, K. 2001). However, BOB may result in poor compatibility between the modules (Irani, Z., Themistocleous, M. & Love, and P.E.D. 2003).
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2.11.1. Enterprise Application Integration (EAI) EAI offers a way of improving the systems environment in the organisation. EAI is based on keeping the existing legacy information systems and integrate them internally and externally. Basically, the systems may that are adapted to the organisation may be kept, but the communication between systems is improved. EAI resembles ERP in the way that it focuses on the company’s business processes instead of supporting separate functions. Nevertheless, in contrast to ERP, the installation of EAI may not need such an extensive restructure of the organisation. EAI enables integration between already existing systems and by that it may be appropriate for companies whose information systems are well built to support the processes (Johannesson, P, & Perjons, P. 2001). To render integration possible without replacing old systems, integration tools and technologies must be brought to the business these integration tools are called middleware and can be seen as functions that pass information between organisational applications. Middleware hides the structure of the underlying operating system and network and hence makes integration easier (Linthicum, D. 1999) companies on the verge of implementing EAI need to take time to find out which technologies will constitute their integration package. EAI theory suggests, as the name implies, that existing systems may be integrated.This is based on the same principle as with legacy information systems, i.e. that the organisation shall constitute the foundation for the system design. As companies integrate systems, the existing systems are kept in use, and alongside all usability and knowledge stay with them(Light, B. 2003). 2.12. Benefits There are many benefits of both ERP and EAI. The benefits are dividing into five categories, namely, operational, managerial, technical, strategic and organizational.
Operational
The most important benefit of ERP is that all modules of the system easily communicate with each other. As an effect, the flow of information through the organisation will become very efficient. However to make use of this benefit a complete implementation is required, i.e. all business units’ old information systems need to be replaced by the new system modules (Pearlson, K.E. 2001). There are several ways in which ERP enhances the performance. Although the most significant improvements are supposed to occur some time after the implementation, instant benefits are inventory reduction, improved productivity and reduced financial close cycle (Chen, I.J. 2001). Through integration of applications (EAI), external and internal value chain planning is improved. The IT infrastructure is flexible since minimum changes to systems code are needed (Themistocleous, M. 2004). The improvement of business processes and organisational restructuring reduces operational costs and increases productivity. Managing and maintaining the IT infrastructure also becomes less costly.
Managerial
Due to the integrated nature of business units, an ERP system provides a clear overview of the organization. The ability of to look at the business from a broader perspective, with suppliers, alliances and customers as a whole, makes it easier to manage an extended company (Chen,
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I.J. 2001). ERP enhances decision-making by providing accurate and timely information across the whole organization (Poston, R. and Grabski, S. 2001). Therefore, to the structuring of more organized processes, an implementation of EAI provides more understanding of processes. The data quality enhanced which among other things improve the decision-making process (Themistocleous, M. 2004). Overall, EAI incorporates functionality from several different systems and thus achieves a flexible and more manageable IT infrastructure (Themistocleous, M. & Irani, Z. 2003).
Technical
Through single vendor, ERP all applications and platforms are common and therefore the organization will be able to obtain multiple synergies. In addition, the vendor provides system upgrades, which result in lower demands on internal IT capacity (Light, B. 2001). In most cases EAI integration is based on non-invasive technologies, i.e. the changes to existing applications are minor (Themistocleous, M. & Irani, Z. 2003). In principle EAI brings much the same technical benefits to the organization as do ERP. Both solutions are provided by vendors, which provide upgrades and support as well. However, unlike ERP, application integration allows the reuse of system (Themistocleous, M. 2004).
Strategic
Enhancing the company’s competitiveness is the primary reason for implementing an ERP.The strategic benefits include improved response to customer demands, efficient communication through information sharing and universal access to real-time data (Chen, I.J. 2001) . EAI automates and simplifies electronic transactions, and may therefore be a suitable tool in conducting e-business. Several advantages are related to e-business and e-commerce. Increased access to markets, more sales channels and automated transactions, which in turn result in improved performance and customer satisfaction, are some of the benefits (Themistocleous, M. & Irani, Z. 2002). Due to the constant refinements in supporting the functions, legacy information systems may be valuable as a competitive tool. Tailor-made legacy information systems are often connected to the critical business processes in organisations (Light, B. 2003).
Organizational
Installing an ERP system is often driven by the need of standardizing business processes. Managers that want to clean up the untamed structure of the organization may do so by conforming the processes to a software package (Pearlson, K.E. 2001).The ERP allows the streamlining of management structures. By making them flatter and more flexible, the implementation may results in more democratic organizations (Davenport, T.H. (1998). Recent studies show increased activity of mergers and acquisitions.The applications in different companies tend to be incompatible and integration is a necessity ( Ersala, N., Yen, D.C. & Rajkumar, T.M. 2003).The benefits created by e-business come when companies integrate their applications across the whole value chain (Themistocleous, M. & Irani, Z. 2002).
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2.13. External Pressures Pressures from the outside push the organization to move in certain directions. The search for competitive advantages and the influence from trading partners are two major external pressures (Themistocleous, M. 2004).
Competitive Strategy
Enterprise integration considered to be of great strategic value as a competitive advantage. Both ERP and EAI are strategies to overcome integration problems in organizations. However, the two enterprise systems differ concerning the strategy of obtaining a competitive advantage. In the past companies would develop information systems according to the way business were done. However, with ERP, the strategy is reversed; the business processes must often be modified to fit the system (Davenport, T.H. 1998). Nevertheless, companies should not make decisions about a system based only on technical criteria. According to Davenport, organizations benefit the most from ERP by viewing the system in strategic and organizational terms; those companies that stressed the enterprise, not the system, gained the greatest benefits (ibid.p.125). Whether or not organizations will be able to gain a competitive advantage from a publicly available information system is a question often being discussed. While ERP vendors target an increasing number of midsize and small companies, the competitive benefit seems to depend on who can achieve a better fit between the business processes and the ERP system (Chen, I.J. 2001). Due to the problems with legacy information systems, ERP was developed to solve many issues. ERP are developed in accordance with best practice of processes in the industry. That is, what the ERP developer thinks is best. Researchers at educational or professional institutes also contribute to the notion of what best practices are for the moment (Abrahamson, E. 1991). Few companies succeed to implement ERP systems without modification. The views about what constitutes best practice often differ between vendors and users. Best practices may be best practices but organizations have a cultural behavior that might be less than best and requires a thorough BPR to be aligned with best practices bundled in an ERP system. Findings show that there is little support for the notion of a fixed best practice. What is considered to be best is rather depends upon the current situation (Swan, J., Newell, S. & Robertson, M. 1999). Due to the possibility of making fine adjustments over time, legacy information systems may prove valuable in supporting the competitive strategies. In fact, legacy information systems are often connected to the critical business processes in organizations (Light, B. 2003). According to Linthicum, (1999), the business value of EAI is obvious. He argues that the continuous development of software in the organizations has created business-critical systems that serve one specific purpose and one specific set of users. The systems have become custom-built stovepipes in the way that their utilization is limited to individual functions. EAI enables the sharing of the data among these stovepipes without making sweeping changes to the applications or data structures. Hence, the specialized legacy information systems, which may
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support distinctive competitive strategies, gave the opportunity to survive through EAI (Linthicum, D. 1999).
Trading Partners ERP
Among organizations, there is a need for improvements in supply chain management. Business process re-engineering and just-in-time techniques have been, and still are, measures in the area. However, the trend today leans towards increased collaboration and multi-enterprise supply chain optimization (Themistocleous, M. & Irani, Z. & Love, P.E.D. 2003). While some business processes are well supported by ERP modules, others are not. Areas that are less data intensive, e.g. supply chain planning and customer management are not as well provided for, However, developers have started to elaborate tools to link front office, i.e. sales, marketing and customer service, with back office, e.g. logistics and financials. These tools are supply chain optimization (SCO) and customer relationship management (CRM). Figure 2.4 shows the future the future development according to Chen, I.J. (2001).
Figure 2.4 Future trends of ERP systems
Advanced planning systems (APS), also referred to as SCO, work as an aid in providing optimal solutions to the management of supply chains. Since APS do not generate their own data, they may use the data provided by ERP through integrating with the system. In this way, organizations having implemented an ERP may further benefit from the system by adopting APS. It is worth mentioning however, that the integration of APS or SCO with ERP requires additional changes to business processes and higher level of mutual trust among trading partners (Chen, I.J. 2001). Having realized the need for customer service, ERP vendors have started to taking over and forming alliances with companies in the CRM market. Hence, organizations are offering the possibility to implement CRM systems either as bolt or through the procurement of an ERP/CRM package. As in the case of APS, the installation of CRM requires significant changes due to the extensive impact on business processes (Chen, I.J. 2001). Due to the variety of definitions among authors concerning e-commerce and e-business, a clarification needs to be made. In this master thesis, e-commerce refers to electronic business-to-consumer applications, whereas e-business refers to the business-to-business applications. Thus, the term e-business is a part of inter-organizational relations, e.g. supply chain management (SCM). The definitions mentioned above, agree with terms discussed by both Linthicum and Themistocleous et al.
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2.14. Inadequacy of Current Research This research is different from other research in the following respect; No empirical research has explored whether “IT strategy” is a stand-alone concept. Most of the previous researches studied in the area of IT and competitive advantage. These researches have measured how IT leads to sustained competitive advantage (Mata et, 1995; Hidding, 2001). In affiliation to purpose of this research study, there is inadequate of current research on how organizations describe their IT strategies. This made me question; Do organizations have IT strategies. 2.15. Problematization According to Dale and Marsden, (1990), most organizations IT never reaches its full potential. The chief reason is lack of connection between business skills of company management and technology skills of data processing department. Without an IT strategic plan, which quantitatively links the business needs of an organization with practical and justifiable technology based solutions, the development individual systems will always be flawed. The IT strategy planning process has been a top concern of senior leadership over a wide range of industries for several decades. The annual computer science corporation survey of IT management issues consistency shows that IT strategy development is a major senior leadership challenge. This reveals critical issues of information systems management (2001). Yet the IT strategy development process remains largely a mystery despite this high interest for several following reasons: • Business strategies often are not clear or are violated • IT opportunities often are poorly understood • The organization may be unable to resolve the different priorities set among different parts of organization. Weill and Broadbent (1998) examined this issue in leveraging the new infrastructure, how market leaders capitalize on Information technology, they noted that effective IT strategy development requires that an organizations leadership understand and integrate several factors strategically and tactically: • The organization’s strategies and market position • The organization’s environment • The IT strategy Understanding and integrating these three continuously evolving and complex areas is exceptionally difficult. Perhaps this is why IT strategy development may always be a difficult management challenge. A number of authors have studied why IT strategies fails, Glasser, J (2004), contends that these types of failures occur because the link between the organization’s overall strategy and its IT strategy is poor. For example, the IT group may be conducting world-class implementations, but these implementations do not advance the overall strategy. In effect, resources are misdirected. People are working very hard and effectively, but toward the wrong thing. Beveridge, (2004) claimed that most IT directors find it difficult to describe their IT strategies, they are likely to provide very clear-cut answers such as ‘open systems’ or Unix in the data
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center and windows on the desktop. For sure, these bald statements may well have some supporting documentation, probably in the form of a glitzy PowerPoint presentation, or a hackneyed preamble to the annual IT budget bid but they are unlikely to be underpinned by a tangible management model. Beveridge contends that as long as companies IT strategies remains at an abstract and superficial level, companies will always struggle to manage it effectively. Companies won’t be able to describe their IT strategies properly to their staff, or to their business partners, because their abstract definition does not necessary correlate directly with their particular context. Consequently, companies cannot share the vision or subscribe to its success because they do not recognize their IT strategy in real, practical terms.
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3.
Methodology
The methodology chapter illustrates my practical approach and justifies the details such as collection of data, interviews made and analysis of collected the data’s . 3.1. Method In seeking to examine how organizations describe their IT strategies, three interviews were held with IT managers at Volvo, Boverket and UIQ in Sweden, focusing on each organization’s central IT/IS department. A qualitative approach based on case studies was considered appropriate in given the small amount of prior empirical research in the broad area of IT strategy, and sensitive nature of the data needed. (Benbasat et al., 1987;Yin, 1984). Furthermore, the focus of the study was on types of IT strategies patterns each organization is engaged in and how they differed or resembled across-organizations. In order to understand the thought processes underlying these patterns, it was essential to incorporate the perspectives from several IT managers. At the same time, in order to achieve some understanding of the possible differences, I needed to examine them through a multiple of cases. 3.1.1. Selecting Organization’s Features In order to select suitable organizations for case purpose, this research study looked at the following criteria: • Organizations with interest in information technology strategy or information systems strategy, so that it may be expected that both concepts and practice of IT strategy are reasonably familiar. • A branch of industry or commerce where information technology plays a substantial role • Independent organization or business unit with complete or near complete control over its own IT strategy. In this particular case I managed to found the following three organizations: Volvo IT, UIQ and Boverket 3.1.2. The Choice of Interviewees The choice of interviewees was vital for the research process (Malterud K. Urval 1998).The choice of interviewees was based on the idea of getting an IT strategy view from IT managers. It is of necessary value for IT strategists to receive a general view of the activities and the organization and not just management level point of views. I wanted interviewees whose contribution reflects the overall understanding and attitude of the organization in the IT or strategies domain. Therefore, interviewee was chosen from IT or IS department. My contacted with the organizations suggested interviewees and after much consideration, three individuals were chosen. The important point here is that the interviewees had been working for at least a couple of years at the IT or Information system field and those they represented IT or IS. Therefore, I managed to interview Assistant IT manager of Boverket, President of Volvo IT and Information System manager of UIQ. At the beginning of the interview, I described the purpose of thesis and structure of the questions. All questions intended to reflect IT-strategy and other strategies only and not the whole organization. Many of the issues concerning alternative IT and strategies were hot subjects in the organizations and some answers wished to be unspecified. Therefore, the decision was made not to record the answers on tape. In that way, more honest and true opinions may have been received from each interviewee.
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3.2. Research Design Exploratory research is suitable when there are very few or no earlier studies to which the study can refer to information about issues or problem (Jill and Roger Hussey, 1997). The research design of this thesis is exploratory, the aim of this study is to increase the understanding of the concept of IT strategy. 3.3. Research Approach There are two kind of research approaches, deductive and inductive (Jill and Roger Hussey 1997). • Deductive research is a study in which a conceptual and theoretical structure is developed and then tested by empirical observation. Thus, particular instances are deduced from general inferences. For this reason, deductive method is referring to as moving from the general to particular. For example a researcher may have read about theories of motivation and wish to test them in his/her own workplace. Therefore, the goal of deductive research is to validate the theory studied. • Inductive is a study in which theory is developing from the observation of empirical reality; thus, general inferences are inducing from particular instances, which is the reverse of the deductive method. Since it involves moving from individual observation to statements of general patterns or laws, it is referred to as moving from the specific to general. For example, you may have observed from factory records in your company that productions levels go down after two hours of the shift and you concluded that production levels vary with length of time worked. For that reason, inductive research is opposite to deductive studies. The goal is to find new theories with support from empirical studies.
3.3.1 Research approach in this Thesis
The research approach in this thesis is to find new theories, which support from empirical studies. Therefore, the research approach in this thesis is inductive. 3.4. Data Collection I used qualitative data obtained through interviews with IT managers in three organizations, the reason for choosing qualitative was that IT strategy is a social construct (Lantz, A. 2003). The IT managers who I interviewed were responsible for the delivery of IT product and services to various business units. The interviews were carried out during the period March and April 2005.
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3.5. Quality of this Research
3.5.1 Validity and Reliability
How can one ensure that a study is dependable and that it keeps to the highest levels of quality so as to be able to rely on it? There are number of ways to ensure quality in a thesis through validity and reliability, which deal with how the work is planed, how the analysis was conducted and how the conclusions were made. It should be possible to ask questions regarding the logic behind conclusions, which should be as detailed as possible in order to clearly explain the reasoning behind the result (Merriam, Sharan 1998). As explained earlier, the empirical data was collected by face-to-face interviews. Before conducting interviews, research study advisor reviewed interview questions and expressions that did not make sense were removed before hand. 3.6. Data Analysis Being based on only three cases, the results of this research study may seem somewhat particularistic. However, this research study attempts to produce more general explanations through ‘analytic generalization’ (Yin, 1984), where ‘the generalization is of theoretical concepts and patterns’ (Orlikowski, 1993). Before I collected the data, I had already considered how to analyze data. Data collection and analysis are closely interconnected. Therefore, I discarded irrelevant data before analysis. In the analysis of data, this research study looked for commonalities and differences from data collections. 3.7. Challenges in Designed Methodology Due to the research approach methodology of this study ,I thought it would be wise to discuss a little bit about challenges I faced through out the process of collecting data. Therefore, I will discuss different challenges that I had to overcome along the way of my journey between the ‘real world’ and the ‘theoretical world’. According to Seal (1999), quality is an important fact in qualitative research, but Seal contends that this is not something that can be encapsulated by the terms ‘validity’ and ‘reliability’. This research study tried to maintain the quality by providing trustworthiness throughout the project. However, this has not always been an easy task. Therefore, this paper presents some challenges that I had to overcome.
Creating the literature framework
It has been a challenge to clarify all the terms used in this research study when it comes to handling IT strategy concept. The problem was that the concept of IT strategy is applied in different contexts and different meaning by different authors.
Balance between academic and empirical demands
Another challenge that this research study came across was to contribute both to the theoretical framework that lies within the problem area and to contributed to the understand how organizations describe their IT strategies in relation to other strategies. Sometimes I managed to acquire cooperation from interviewees; they seemed to understanding the demands that were set up from the academia.
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3.8. Literature Review Extensive literature studies concerning the topic chosen must be carried out before writing a master thesis. The empirical work was proceeded by a literature review to get a general view of subject and insight of earlier researchers within the problem area since my problem domain resolves around a subject that is under a evolution. I aimed to find articles from the scientific frontier. Through scientific literature, articles and dissertation have research within the subject has been penetrated. The databases that this research study used were Harvard Business Review, Academic Search Elite, Emerald library, Science Direct, Wiley Inter Science. Articles also obtained from different scientific journals as the Electronic Journal of Information Systems, MIT Sloan Management review, Evaluation, European Management Journal, International Journal of Information Management, International Journal for Project Management and Journal of Information Technology. In this literature study, the initial search was wide, but gradually it was narrowed and limited to specific literature within the problem area. I narrowed the search to specific words, those words were linking between IT strategy and other strategies. I also searched for frequently referred articles found in the reference list in my already possessed literature. 3.9. Empirical Studies The primary source of information in this paper is the exploration of three case studies in broad issues of IT strategies. The project used a qualitative methodology.Three semi-structured interviews were carried out. 3.10. Background of Organizations 3.10.1 Boverket Boverket-The National board of housing, building and planning is the Swedish governmental agency for planning, management of land and water resources, urban development, building and housing. It started in 1991 when some experts from a handful realized that something had to be done about housing statistics since the supply was rather poor and was not organized at all. The purpose of the initiative was to collected and publish policy-relevant housing statistics on a yearly basis and to present them at the housing ministers meetings each autumn.
The mission
The board plays an important role in the work of achieving the housing policy goals stipulated by the Government and parliament. In order for everyone to be able to live in good housing accommodation at reasonable cost, national subsidies are provided. The general interest subsidies regarding housing construction for rented accommodation and tenant owners still associations. In addition to this, the government of Sweden provides on-off subsidies. One-off subsidies are often limited in duration and, for instance are allotted to stimulate the construction of more rented accommodation.
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The board produces regulations, general advice, and information material about the subsidies. In addition, the board distributes the subsidies to the country administrative boards, decides appeals against decisions made and evaluates the effects of the subsidies for the benefit of the government. Boverket is also responsible for the computer system that manages all applications and payments. 3.10.2. Volvo IT The Volvo Group was founded in 1927 and has 76, 000 employees in 25 countries. Volvo Group is one of the Worlds leading manufacturers of trucks, buses and Construction equipment, drive systems for marine and Industrial applications, aerospace components and services. The Group also provides complete solutions for financing and service. Volvo Group consists of eight business areas - Volvo Trucks, Mack, Renault Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services. Volvo IT was established in 1996 and became in 1998 a wholly owned subsidiary of the Volvo group. It supports 80 companies, including Volvo Group companies (Renault and Volvo Truck and Mack Truck). Volvo IT is present in Europe, North America South America and Asia. Volvo IT provides IT solutions and services for the entire industrial process, from product development to manufacture, sales, aftermarket and administration, including IT operations and IT infrastructure. The range of Services includes Product Life-cycle Management (PLM) and SAP solutions. 3.10.3. UIQ One of branch of UIQ Technology is based in southern Sweden and has over 80 employees. UIQ Technology is a fully-owned subsidiary of Symbian Ltd. Symbian is a software licensing company that develops and licenses Symbian OS, the open standard operating system for advanced, data-enabled mobile phones. Symbian owned by Ericsson, Panasonic, Nokia, Sony Ericsson, Samsung and Siemens. UIQ is strategy is based on the integration of different companies strategic, UIQ technology originated from a development lab at Ericsson Mobile Communications. UIQ Technology develops and licenses world-class user interface platforms for advanced mobile phones. The platform, UIQ, runs on Symbian OS and is licensed by the world's leading mobile phone manufactures. The product roadmap of UIQ Technology includes new configurations suitable for future mobile phones and support for future releases of Symbian OS. UIQ Technology designs and develops graphical user interface frameworks and standard applications for use in advanced mobile phones. A software development environment that can be used by third-party developers to create their own applications is also providing. In addition, UIQ Technology supports the creation of mobile phones through professional consultancy services. UIQ Technology drives a global partnership of industry players to ensure availability of applications, content and services for future phones based on UIQ.
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Core business
UIQ technology develops and licenses user interface platforms to the world’s leading mobile phone manufacturers.
Products
The product, UIQ is a user friendly and customizable user interface platform for pen-based and one-handed mobile phones based on Symbian OS. Symbian OS is the global open industry standard operating systems for advanced mobile phones. Symbia OS is the licensed to the world’s leading handset manufactures. UIQ Technology has licensed UIQ to leading mobile phone manufactures including Motorola, Sony Ericsson, BenQ and Arima. Publicly announced on UIQ include the BenQ P30 and P31, Motorola A920, A925 and 1000, Sonny Ericsson P800, P900, P910 and Arima U300.
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4. Results and Analysis In this section, the study presents the results from interviews, which will be followed by a simplified analysis of this data. 4.1. Do Volvo IT, UIQ and Boverket have IT strategies? In this question, the interviewees were asked to state whether they have IT strategies. According to the interview with the President of Volvo IT Ulf Nilsson, “Volvo group has an IT strategy, Volvo IT strategy handles operation; support development of all types of IT systems, regardless of platforms” During the interview with Magnus Carlsson the UIQ’s Information Systems manager, he put it: “IT strategy in UIQ has “not yet been finalized”. In contrast with Stefan Norrman, Assistant IT manager said: “IT strategy was formulated in 2000”, afterward Boverket renamed to IT platform. 4.1.1. How do Volvo IT, Boverket and UIQ describe their IT strategies in comparison with other strategies? While Nilsson put it: “to some extent the IT strategy in Volvo IT is described in different ways from marketing and product strategies, the differences are: IT strategy provides IT solutions and services for the entire industrial process, from product development to manufacturing, sales, aftermarket and administration, including IT operations and IT infrastructure. Furthermore, IT strategy in Volvo IT supports the entire business areas such as Mark trucks, Renault Trucks, Volvo Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services.” In the interview with Boverket, Norrman said: “Boverket describes IT platform without follow pattern ”. 4.1.2. Analysis This research study found out that Volvo IT is a core processing of IT strategy in entire Volvo groups. The IT strategy in Volvo IT has been extensively used in solving complex industrial issues using advance IT solutions. The IT strategy at Volvo IT also covers knowledge in the areas of systems development, methods, architecture and integration. In addition, the IT strategy in Volvo IT assists their clients with everything from analyses and research to assuming responsibility for the entire process. Moreover, at Volvo IT, the IT strategy is described differently from marketing and product strategy to some extent. In the interview with Volvo IT, Nilsson said that the differences are; IT strategy in Volvo IT provides IT solution and services for entire industrial processes, from product development to manufacturing, sales, after-market and administration, including IT
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operations and IT infrastructure. Furthermore, the IT strategy in Volvo IT supports all of their business areas. The table below illustrates examples of difference applications operated and supported by Volvo IT strategy. Production Development PDM (Product Data Management) CAD (Computer Aided Design) CEA (Computer Aided Engineering Sales Customer and dealer orders eBusiness Parts logistics Source: (www.volvoit.com) The situation of IT strategy in Boverket is dissimilar. The difference is that IT strategy was formulated in 2000 and thereafter renamed to IT platform, the reason behind the altered name was internal policy. 4.1.3. Stand Alone IT Strategy Although, at UIQ IT strategy has “not yet been finalized”, there is a possibility that UIQ has stand-alone IT strategy. In this sense, stand-alone IT strategy can be considered as unplanned actions to deal with currently emerging opportunities or threats. Once the firm has accepted this strategy, it will be incorporated into the strategic plans of all the organizational units that it affects. An example of a situation that might give rise to a stand alone IT strategy would be the announcement of a new technology product by a vendor. In this sense stand-alone IT strategy would be developed to capitalize on the new opportunity. If accepted by the firm, this would be followed by appropriate planning. Stand-alone IT strategies generally cease to exist as the subjects they deal with mature and become more specifically recognized in the strategic plans of the firms or its constituents parts. As a result, the empirical and anecdotal evidence of this research study have demonstrated that Boverket and Volvo have IT strategies but they are not stand-alone IT strategy concept. Manufacturing Order handling and logistics Plants control Plant maintenance Quality assurance Administration Financial systems Data warehousing Human resources After-Market Claim handling Service handling Parts handling
Table 4.4 Applications operated and supported by Volvo IT strategy
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4.2. Are IT components incorporated into the Marketing strategy? This question was aimed to investigate if IT components are incorporated into the marketing strategy According to the interview with Volvo IT, Nilsson said “IT components are incorporated into the marketing strategy throughout selling trucks; Volvo designs trucks together with customers’ preferences. For instance, after receiving different specifications from customers and then Volvo IT forward these specifications to a factory for purpose of producing the trucks” At UIQ Carlsson responses to this question and put it: “Marketing works closely with customers, partner’s developers and media from all over the world. The marketing department consists of partner management, developer community management and marketing communications” Carlsson went further and pointed out that: “IT components are incorporated into the marketing strategy as a component to support IT infrastructure in all department including marketing strategy department” 4.2.1. Analysis According to Stark (1990), computer systems have not yet taken over the human specialist in marketing. However, they are increasingly being used to support decision-making. Often this is done by sifting through the great volumes of market data available from scanner out put. Without the help of a computer, it is virtually impossible to analyze all information now available. Marketing decision-supporting systems are used to fix prices, establish where distributors would be most effective, understand the effect of different forms of adverting, and foresee problems arising from competitor’s strategies. The situation in Volvo IT can be interpreted like this: Volvo IT now supply their dealers with upto date information on special promotions, prices, conditions, discounts, options, colors and technical and financial information. As a result, dealers can sit down with potential buyers to find out what the buyer requires and then produce a personalized financing plan. The systems can help customer’s understand the details of different loans and provide preliminary acceptance indications by loan institutions. Dealers can see current stocks on screen rather than waiting for information systems to improve the car, thus Volvo IT-dealers relationship, giving dealers better control over their business and manufacture feedback on customer behavior. At Volvo IT, IT components are incorporated into the marketing strategy in terms of applications. Consequently, these support after–market process which is then implemented from a global perspective. A good example of this includes systems facilitate training and delivery of spare parts, using a modern web technology. In contrast, the Information systems department at UIQ incorporates portable computers in the marketing department in order to facilitate daily operations. These IT components can be used when market people work outside office at exhibitions or when marketing people communicate with clients.
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In the case of UIQ, this research study indicates that Information systems incorporates IT components in the marketing strategy in order to make sure that the marketing department works effectively and efficiently. 4.3. Are IT components incorporated into the Product Strategy? This question was aimed at investigating if IT components are incorporated into the product strategy According to interview with Volvo IT,Nilsson said: ” IT components are incorporated into the product strategy in order to boost up efficiency and add value in Volvo cars engines. IT components are also used as a product for the purpose of communicate with trucks, not only that but also, to measure fuel consumption”. Information Systems manager of the UIQ explained that: “IT components are incorporated into the product strategy in order to maintain and support user interface platform, systems applications and integrated applications”. Norrman puts it this way: “Boverket incorporates IT components into the service strategy 4.3.1. Analysis According to the interview with Volvo IT, product development involves high demands on IT support for design and construction of both products and manufacturing systems. IT places high demands on effective communication between different work groups, as well as on the efficient management of electronic documents. IT components support product development including Computer Aided Design and Computer Aided Engineering, as well as product life cycle management and communication with partners and suppliers. In addition, Volvo IT uses EDI (Electronic Data Interchange) as a product in order to increase efficiency within the transmission of text messages between Volvo Car and Volvo suppliers and between Volvo cars internal companies. Volvo also used EDI in order to cut costs. These include the cost of stationery and postage. At Volvo IT, IT components are incorporated into satellite communication between drivers or their vehicles and fleet administrators, who receive continuous update on vehicle location. Administrators can transmit text message to drivers and set up schedules, simplifying fleet management. Another IT component which Volvo IT incorporated into the product strategy is called Trillium Software System, that product assists Volvo to provide a better understanding of customer buying habits to maximize cross-sell, up-sell and support opportunities. With the Trillium Software System, Volvo IT is able to help their clients to identify its best customers in order to market to them in the ways they choose, resulting in improved customer service and retention.
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Furthermore, software components are incorporated into trucks in order to facilitate communication within trucks, and to measure fuel consumption. Volvo IT also incorporates IT components in a variety of functionality to support their customers’ software applications. UIQ incorporates IT components into the product strategy to create mobile user interface phones. For example, C++ and Java languages are incorporated into the product strategy in order to create applications and services for designed mobile phones user interface. The user interface is the software that the end user interacts with, providing full use of mobile phone and application suites. Technically, the user interface runs on Symbian OS, the open operating systems for advanced, data-enabled mobile phones. 4.4. Are IT components incorporated into the Management Information Systems Strategy ? This question was aimed at investigating if IT components are incorporated into the MIS strategy According to the interview with Volvo IT, Nilsson said: “IT components are incorporated into the MIS strategy in order to support sales and customers relationship management” In this question, I did not get enough information from UIQ and Boverket. 4.4.1. Goals of the MIS Strategy In this part of interview, the interviewees were asked to describe the goals of the Management Information Systems in their organizations. At Volvo IT, Nilsson quoted as saying, “the MIS goals are to segment within various components” At UIQ Carlsson said “the goals of the MIS strategy are to support the company’s business, add cost effective services and solutions in a professional way; To do this Information System need to have right people with right skills”. At Boverket the goals of the MIS strategy “are to issue the correct amount of loan to its clients according to organization’s rules and conditions .” 4.4.2. Components of the MIS Strategy At UIQ components of the MIS strategy consists of processes, competence, infrastructure and service. In an interview with Volvo IT, Nilsson said “components of the MIS strategy should support entities such as Mark trucks, Renault Trucks, Volvo Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services. These entities can be categorized in four criteria, unique, mixed unique/common, common and common & commercial” At Boverket components of the MIS strategy consists of IT and organizational
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4.4.3. Do MIS strategy components belong to different levels? At Volvo IT, IT components belong to different levels At UIQ, Carlsson said “Yes, some are high some are low,” Whilst at Boverket Norrman said “these components belong to different levels” 4.4.4. Analysis At Volvo, the idea behind customer relationship management is to create a highly personalized relationship with each customer leading to greater customer satisfaction and stronger, more profitable business relationship with him/her. Moreover, at Volvo, IT components are incorporated into the MIS strategy intended for supporting their requirements. By incorporating IT components into the MIS strategy, Volvo IT has been able to provide the following values: • Improved customer relations • Reduced costs for acquiring a customer • Enhanced revenue The goal defines the desired future position of organization. They are selected on the basis of a well defined mission. Some models of the strategic planning process separate goals from objectives. In that case, goals are broad and timeless statements of results that organization considers will achieve the mission. Objectives would then ‘flesh out’ these goals with qualitative as well as quantitative terms since they are specific and tangible measures of the goals to achieve the mission (Wendy, Robson. 1997). Regarding the goals of the MIS strategy, Volvo IT has been using segmentation as an essential tool to aggregate customers into groups with similar characteristic such as demographic, geographic or behavior traits and market them as a group. Consequently, each member in the same of segment has similar needs and wants. This research study interpreted this method as a cost-effective way to target the groups of customers. As Berger and Bechwati (2000) explain , the “core of relationship marketing is the development and maintenance of long-term relationships with customer, rather than simply a series of discrete transactions”. At UIQ, the goals of the MIS consists of planning future investments in business, the management ought to spend the money in such a way as to get the highest possible return from it, i.e. to make the investment as cost-effective as possible. In order to achieve these goals, UIQ requires skilled employees, This might be the ability to program in Java, C++, draw data flow diagram and create user interface. In addition, UIQ requires the right people who have MIS knowledge to help UIQ to realize the maximum benefit from its investment in equipment, personnel, and business processes. This process may include planning and developing new
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computer systems or devising ways to apply existing systems resources to additional operations. Moreover, at UIQ the goals of the MIS strategy that can be interpreted in terms of behavior, attitudes, and personal characteristics these are important and may be crucial in serviceoriented roles. For example, IS staff having empathy with users in delivering many IS services, particular in those with a high degree of user contact. By using several IT components efficiently to process applications payment, Boverket is able to process correct amount of loan to its clients according to the laid down rules and conditions. The goals of the MIS strategies in these organizations are settled in order to enable the business or services to meet the needs of customers in a cost effective manner or an operational excellence. Together, the goals of the MIS strategies depend on internal & external communication information systems as well as various IT components that can or will support the business plan. UIQ describe components of the MIS strategy as methodologies for systems design, systems development and project management and service management, for example, define good practices for some of these processes. Less well defined are the processes that deliver the value from IS/IT investments and applications. These include formulating strategies, management decision-making process for investments in IS/IT, managing organizational and business changes required to deliver value and the responsibilities and accountabilities for realizing specific benefits. At UIQ processes are interpreted as a tool to coordinate the expertise of the functional areas to meet the common goal of satisfying the customers. Furthermore, processes are viewed by UIQ a method of emphasis on how work is done. In terms of infrastructure, UIQ describes infrastructure as a tool to provide the shared foundation of ability for building and using business applications.
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In the interview with Volvo IT, Nilsson, he draws a chart, which indicates where the MIS components belong. The chart below is based on Nilsson outlook of the MIS strategy components in Volvo IT. Business strategy
Human Resource
Financial
Information Technology
Chart 4.2 Illustrates levels of MIS components in Volvo IT
Based on feedback from all interviews, the components of the MIS strategy belong to different levels; however, this research study did not get enough information from interviewees to explain in details and justified these levels. 4.5. Describing the IT Components in relation to the overall business strategy In this question, the interviewees were asked to state how IT components are described in their organizations in relation to the business strategy. Based on the interview with Volvo IT, Nilsson said “Volvo IT describes IT components as fifty percent of applications such as new development, enhancement and maintenance, while the other half belongs to infrastructure and operations, window server, clients, communication and networks for their companies IT strategy” Nilsson continues and said “IT components at Volvo IT are described in reference to the whole Volvo groups” According to the interview with Carlsson, UIQ describes IT components based on the following contexts: “Physical: consists of infrastructure and hardware, Function: contains services Logical: includes processes, competence and knowledge “ At Boverket, IT components are described in the following way: “Physical consists of printers, telephones, video conference, and scanner In terms of function IT components include 120 computer programs and computer system that manage the applications and payments In terms of infrastructure: “IT components consists of internet and intranet”
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4.5.1. Significance of IT components in IT strategy According to the interview with Volvo IT, “IT components are very significant, for instance” IT strategy is always working to rationalize cost, not only that but also Volvo has developed new solutions in order to trim down cost” Feedback from UIQ indicates, “IT components are regarded as of medium in significance” In contrast with Boverket, Norrman said: ”IT components are crucial, without these components Boverket cannot function. Therefore, Boverket is 100% dependent on them” 4.5.2. Analysis At Volvo IT, this research study found out that IT components are described in relation to applications, which consist of 50 %, while infrastructure and operations include 50 %. Within applications there are sub IT components such as, clients, network and communication, inside infrastructure and operations are there also sub IT components such as, new development enhancement and maintenance. The chart below is the interpretation on how Volvo describes their IT components
IT Components in Volvo
Infrastructure & Operations 50 % consists of maintenance, new development, enhancement, and window server
Communication Window Server
Clients Network
New Development Enhancement Maintainance Window Server Communication Clients Network
Maintainance Enhancement
New Development
Applications 50 % consists of clients, Network and Communication
Chart 4.1 Depicts on how Volvo IT describes their IT components
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According to feedback from UIQ, IT components are described in following contents:
In terms of processes
UIQ technology focuses on usability throughout the entire process. Easiness to navigate user interface provides a consistent user experience across applications. Using the UIQ range of products creates a consistent user experience across devices.
In terms of knowledge
UIQ describes IT components in terms of Knowing the job, ability to understand what the role demands of the person. For example knowledge of what is involved in constructing an IS strategy or building relationships with vendors. Knowledge of something’s means that information plus expertise.
In terms of Infrastructure
UIQ describes IT components in terms of all hardware, software and network, including routine processing systems. The infrastructure of UIQ is designed to operate its current systems and undertake new initiatives. At Boverket, the Internet component increases the accessibility, storage and distribution of information and knowledge. The components of the internet at Boverket are comprised of World Wide Web, email, telnet and FTP. At Boverket describes intranet as a network on TCP/IP protocols. Components of intranet in Boverket consist of: • The WAN component (Wide Area Network) • The LAN component (Local Area Network) • The intranet service management component • The server and application software components In all the studied organizations, IT infrastructures are designed to make information flow across internal organizations such as links to customers, vendors and public infrastructure, including the internet. Each organization determines how its infrastructures are configured. The results from all interviews indicated that there are similar ways in describing IT components, particularly with respect to IT infrastructure. Regarding significance of IT components in the MIS strategy, this research study brings to a close that IT components are very crucial in all organizations. The study sees that IT components are significance to trim down cost. This is in line with statement from Volvo IT, in the interview with Nilsson when he pointed out “ The IT strategy is always working to rationalize cost” 4.6. Contexts of IT Components within Volvo, Boverket and UIQ The question is: In which contexts do Volvo, Boverket and UIQ present their IT components? According to Norrman , “Boverket presents IT components in the following contexts Increase efficiency in administration and the processing of large amount of data”
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In an interview with Volvo IT , Nilsson said: “Volvo IT presents IT components in the following context: In terms of generating IT support for all the processes in the company and integrating these systems for efficient flow of information, In terms of producing solutions that facilitate global coordination, In terms of creating solutions that make it possible for colleagues to communicate and access information at any time and any place” In an interview with UIQ, Carlsson said “UIQ presents IT components in terms of Symbian OS, processor, hardware and base band,” 4.6.1. How far ahead is future prospect of IT components? According to the interview with UIQ, IT components are planned for five years, while feedback from and Boverket indicated it is done for four years. 4.6.2. Analysis Volvo IT presents IT components in terms of offering customer’s solutions for all areas of industrial process. This includes solutions for product development, manufacturing and aftermarket, as well as sales and administration. Volvo IT streamlines data management so that customers can be able to concentrate on their core business. Furthermore, Volvo IT presents IT components as tools to create IT support for all processes at Volvo group customers and integrate these systems for efficient flow of information. In addition, Volvo IT presents IT components in terms of creating solutions that make it possible for colleagues to communicate and access information at any time and any place. According to the interview with Nilsson, Volvo IT currently is in the midst of global evolution. This autumn, Volvo IT will start to work on creating a global organization within infrastructure & operations and this is to be achieved through collaborating globally and allowing resources from different parts of company to interest in deliveries. However, some things cannot be global. Nilsson said: “The Important past of our operations will continue to be local. They can include certain special solutions for local plants or local support functions, because, even if our customers are becoming increasing global, we want also to be able to support the ones do that not run global operation”. UIQ presents IT components as tools to create applications frameworks and services in both C+ + and Java. In connection with Symbian OS, UIQ presents IT components based on the open Symbian, Symbian is capable of giving developers an access to a lot of functionality available in a wide range of mobile phones from a diverse set of manufactures in different target markets. The use of Symbian also ensures a larger commonality of APIs between even the manufactures of mobile phones, allowing developers to use much of their code base to reach even more end users. Diagram below presents overview of IT components in UIQ.
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UIQ
Symbian OS
Source www.uiq.com
Table 4.3 Indicates overview of IT components in UIQ
Boverket presents its IT components as office tools to facilitate the process of applications payment for their clients. Regarding the future prospect of IT components, feedback from all organizations shows that they have well planned the future prospect for their IT components.
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IT components future prospect planning within these organizations are also supported by setting goals for the period ranging between three to five years. For that reason, that there is a link with theory of strategy, Thus, this study mentioned previous that “The strategic planning is often long-term, a periods of three years or more” (Ax et al., 2002). 4.8. Implications of the research In the introduction section of this paper, I mentioned that an alternative to this research study was aimed at finding out whether “IT strategy” is a stand-alone concept or how these organizations incorporate IT components into other strategies. As a result, the empirical and anecdotal evidence of this research study have demonstrated that there is no stand-alone IT strategy. Instead, IT strategy exists as part of an overall business strategies. Another possibility is that, IT strategy is used in organizations as low components into business strategies, for example in product, marketing or management Information systems strategies. Regarding IT components, this research study found out that UIQ, Boverket and Volvo IT incorporate IT components into their strategies for the following purposes: • In order to enhance efficiency in Information systems • In order to increase the efficiency in the transmission of message • To support product development • To support user interface design • To provide better customer services • To improve business efficiency 5. • Findings This research study found out that there are several similarities across the three organizations being researched in terms of describing the IT components, the MIS components and the goals of MIS. The finding from this study indicates that IT components are very significance in terms of support overall business strategies The results suggest that there is no stand-alone IT strategy. However, one interesting finding is that IT components are the major objects used in strategies as low components to support Information systems across three organizations being researched. Empirical evidence indicates that IT managers at Volvo IT and Boverket occasionally found it complicated to differentiate between IT and IT strategic concepts. From the author’s point of view, this may be because these two concepts are sometimes intertwined and IT components are integrated into normal management conversation.
• •
•
5.1. Conclusion This thesis studied how organizations describe their IT strategies. The three framed questions were:
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? Do organizations have IT strategies? ? Are they described in different ways? ? Do organizations incorporate IT components into their strategies? By describing and testing the three hypotheses in Boverket, Volvo IT and UIQ. The evidence suggests that there is lack of agreement in literature as to how organizations should describe their IT strategies in relation to other strategies. Moreover, this research study discovered that there is an extensive contradiction on how organizations should describe their IT strategies in general perspective. With respect to the research methods, I conclude, in line with Earl (1993) Walsham and Waema (1994) and others, that the analysis of IT strategy should not be based on the results of only few interviews with IT managers, nor should it be based on the postal survey alone. This study revealed that it requires significant effort to obtain general view on how IT strategies are described in organizations, due to the complexity and often-implicit meaning of the concept of IT strategy. This study has revealed that there is lack of agreement in literature as to how organizations should describe their IT strategies in relation to other strategies. Moreover, this research discovered that there is an extensive contradiction on how organizations should describe their IT strategies in general perspective. The result from this particular research setting shows that there is no IT strategy, which stands on its own feet. IT strategy exists as a part of an overall business strategy. Another possibility is that IT strategy is used in organizations as low components within other strategies, for example in product, marketing or management Information systems strategies. On the one hand, this research study found that there are similarities on how these organizations described IT components. On the other hand, this research study found that there are dissimilar methods of describing the IT strategy. This has been tested firstly by studying the theory and then via empirical research at Boverket, Volvo IT and UIQ. In this particular research setting, the study concludes that these organizations are describing their IT strategies in a number of ways, mostly depending on the nature of their business domains. Based on empirical evidence from this research study, the management process of developing an IT strategy must cover a wide range of aspects including applications, infrastructure, the IT function, IT governance, and major IT issues that arise. Unfortunately, determining how to respond to this issue is not easy. IT strategy development has been a major management challenge for many years, and it is likely to remain a challenge for the foreseeable future. In summary, academic literature on IT strategy suggests a rational and deliberate process. This research attempts to investigate and explore how organizations describe their IT strategies in relation to other strategies and investigate whether “IT strategy” a stand-alone concept. The findings in this research study may prove useful to companies and may guide future researchers’ interested in this domain.
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6. Discussion & Research Implications The purpose of this study was to define the problem and explore whether organizations have IT strategies and how these are described in comparison with other strategies. This research study also investigates how these organizations incorporate IT components into their strategies. Alternatively, this research study was aimed to finding out whether “IT strategy” is a stand-alone concept. Therefore, the purpose of this research study was described by the following questions: • Is “IT strategy” a stand-alone concept? • Do organizations describe IT strategies as components in other strategies? In order to achieve these goals, three interviews were conducted to gather the required data from Volvo IT, UIQ and Boverket. The results were then compared and contrasted to the same issues across the three organizations being researched. However, in these three case studies the interesting question might not be if, but rather how the purpose was fulfilled. Are there things that should have been done differently? Could things have been made more explicit? To begin with, the interviews might have produced a better result if they were conducted at a later stage in the process. Due to time limit of this program, the interviews were carried out before the procedural structure of the thesis was fully elaborated. By performing the interviews in a later stage in the process, would have made it easier to address some of the questions that came up during the information gathering stage of the process. Therefore, it was difficult to prepare the theory of science in detail, which should preferably have been given more emphasis. However, it was clear that for the research to be conclusive, the data collection would have to be qualitative. The process of developing and describing IT strategies in relation to other strategies in the organizations is a much-conceptualized process that is tricky to quantify.
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7. Limitations of the Study and Suggestions for the Future Research Time constraints prevented this research study from investigating whether Boverket, UIQ and Volvo IT use enterprise systems in implementing their IT strategies. This would be done by an evaluation and comparison of ERP and EAI. In order to make IT strategy concept clear I would suggest that organizations should included in their IT strategies the following elements: • Plan or “roadmap” that will define the sequence of things to be done in order to accomplish the objectives. • Policies, standards and architectures Put all these elements together, and then organizations can have the IT strategies that: • Can understood and followed by both IT and business people • Can adapt a change is required • Can best meet the needs of the business. There is still a need for organizations to describe their IT strategies in articulated terms of external domain-market place and internal domain –how information systems infrastructure should be configured and managed. Limitation of this research is the relatively small number of interviews. The key criterion for choosing respondents was to target interviewees whose contribution reflects the overall understanding and attitude of the organization through the domains of IT and business strategies. This approach resulted in a limited number of available respondents that could participate in the study. Nevertheless, each interviewee was a key decision maker within his/her organization, thus allowing rich insights into the organizations. Since this study could not access an in-depth interview with UIQ IT Manager (apart from email feedback) for that reason, the study received insufficient information to enable the author to compare the same issues in other organizations. Securing the opportunity to interview the IT Manager of UIQ, would have significantly influenced the conclusion. Nevertheless, deeper investigation was conducted using secondary data sources such as the UIQ website. Regardless of these limitations, this research study has revealed new insight into how IT strategy views itself and its position within the organizations observed.
THAT’S IT! I HAVE DONE WHAT I COULD…..
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Appendix A
Interview Questions
1 Do you have IT strategy in your organization? 2 How does IT Incorporates in Marketing Strategy? 3. How does IT Incorporates in Product Strategy? 4. How does IT Incorporates in Management Information Systems? 5. How do you describe IT components? 6. How significant are these IT components? 7. What are the Goals of Management Information Systems, in terms of effective management and Unit Level? 8. What are the Components of MIS Strategy? 9. Do these components belong to different levels? 11. In which context do you present IT Components? 12. How do you describe IT strategy in comparison with other strategies? 13. How IT components describe in relation to overall business strategy? 14. How far ahead is future prospect of your IT components (i.e. short, medium or long term)?
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Appendix B
Structure of Interviews
Three interviews were conducted in Sweden between March and April 2005. The field data were gathered according to table 1, 2 and 3 depict below: Table 1 1st Interview with Boverket Name: Position: Business Unit Location : Table 2 2nd Feedback from UIQ Note: Author’s didn’t get access to conducted interview face by face with Information Systems Manager, instead of that the interviewee preferred to reply my interview questions by e-mail. Name: Position: Business Unit Location : Table 3 3rd Interview with Volvo IT Name: Ulf Nilsson Position: President of IT Volvo (CEO) Business Unit Volvo IT Location : Gothenburg-Sweden Note: There was no technical equipment used during collection of the data except, pen and paper to make notes of the interviewees. Magnus Carlsson Information Systems Manager Information Systems Ronneby-Sweden Stefan Norrman Assistant IT Manager IT Development Karlskrona, Sweden
doc_236176473.doc
Strategies in game theory may be random (mixed) or deterministic (pure). Pure strategies can be thought of as a special case of mixed strategies, in which only probabilities 0 or 1 are assigned to actions.
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Do organizations have IT Strategies?
A Study on how organizations describe their IT Strategies.
Executive Summary
Title: Author: Tutor: Problem: Do organizations have IT Strategies? A Study on how organizations describe their IT Strategies. Stephen Rupia Lyabandi Anders Hederstierna The research problem of this study is lack of insight on how organizations describe their IT strategies in relation to other strategies. IT strategy continues to be a major challenge for Information Technology intensive organizations and managers. Over the last two decades, the way researchers on information systems have viewed and analyzed IT strategy in organizational systems has not significantly been modified. Recent studies show that one of the main problems is that the concept of IT strategy has been around for nearly two decades and although many organizations have been using it, the meaning and reference of the idea remains elusive. Those who have attempted to define it have not reached an agreement. The purpose of this study is to define the problem and explore whether organizations have IT strategies, and how these are describe in relation to other strategies. This research study also investigates how these organizations incorporate IT components into their strategies. Alternatively, this research study is aimed to find out whether “IT strategy” is stand-alone concept. Therefore, the purpose of this research study can be described by the following questions: ? Is IT “strategy” a stand-alone concept? ? Do organizations describe IT strategies as a component in other strategies? In seeking to examine how organizations describe their IT strategies, three interviews were held with IT Managers at Volvo, Boverket and UIQ in Sweden, focusing on each organization’s central IT/IS department. A qualitative approach based on case studies was considered appropriate in given the small amount of prior empirical research in the broad area of IT strategy, and sensitive nature of the data needed. Furthermore, the focus of the study was on types of IT strategies patterns each organization is engaged in and how they differed or resembled across-organizations. In order to understand the thought processes underlying
Purpose:
Method:
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these patterns, it was essential to incorporate the perspectives from several IT managers. At the same time, in order to achieve some understanding of the possible differences, I needed to examine them through a multiple of cases. Conclusions: The result from this particular research setting shows that there is no IT strategy, which stands on its own feet. IT strategy exists as a part of an overall business strategy. Another possibility is that IT strategy is used in organizations as low components in other strategies, for example, in product, marketing or management Information systems strategies. Even though, this research study found that there is similarity, on how these organizations described their IT components, this research study found that there are dissimilar methods of describing the IT strategy. This has been tested firstly by studying the theory and then via empirical research at Boverket, Volvo IT and UIQ in Sweden. In this particular research setting, the study concludes that these organizations are describing their IT strategies in a number of ways, mostly depending on the nature of their business domains. Key words: IT strategy, Strategies, IT components
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ACKNOWLEDGEMENT A long journey, with many twists and turns, has now ended. This has been a journey of hard work, but also challenges with long and instructive, brainstorm discussions and interested interviews. With this thesis written, I am now ready to leave the sheltered life of University studies and step out into the tough and ruthless labor market. This thesis is the final component of Nine months University studies. The master’s thesis is equivalent to 10 weeks of full time studies at School of Management, Blekinge Institute of Technology. Considerably more time than 10 weeks has been spent on this thesis, since it has been under progress under the time of January 2005 to June 2005. I would like to thank my supervisor Anders Hederstierna for the time he has spent on giving me valuable comments, and also for providing unprecedented support and guidance throughout this long project. I had many constructive and pleasant meetings, from which I have learnt a lot. I’m grateful to the interviewees in the studied organizations. Especially, I would like to thank Mr. Ulf Nilsson President of Volvo IT , Mr. Stefan Norrman Assistant General Manager of Boverket and Mr. Magnus Carlsson Information Systems Manager of UIQ, I really appreciate for the time and effort they spent to answer my questions honestly and frankly. Without their cooperation and participation, I would not have been able to accomplish my project, not only but also get the “real world” view of my problem domain. Furthermore, I would like to thank John Adicka for his fast responses to my question and willingness to help me in reviewing and proof read my thesis, I really appreciate John! Finally, I would like to thank my family and relatives for all supports during my study in Sweden. I also wish to thank everyone who have contributed to me in accomplish my studies on one way or another. I am proud to present this thesis and hope you will have pleasant time reading it! Ronneby, Sweden, June 2005
Stephen Lyabandi
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Table of Contents
Page
List of Figures………………………………………………………………………………..…..7 List of Tables…………………………………………………………………………..…………7 List of Charts………………………………………………………………………………….….7 Chapter One
1. INTRODUCTION ……………………………………………….........………..8
Background of Study ………………………………………………………. ……….......8 Purpose of the Study………………………………………………………….……….…9 Research Questions…………………………………………………………….………..9 Research Problem………………………………………………………………….….…9 Delimitations…………………………………………………………………………....…9 Key word Definitions……………………………………………………………………..9 Outline……………………………………………………………………………………11 Chapter Two
2. Theoretical Framework………………………………………………....…..12
Background of the strategy………………………………………………………….….12 Core Competence……………………………………………………………………….13 Perspectives of Strategy in Business Administration………………………………..13 Strategy and IT…………………………………………………………………………..14 The themes of IT Strategy……………………………………………………………...14 2.5.1 Overview of the IT Strategy…………………………………………………………….15 2.5.2 Purpose of IT Strategy………………………………………………………………….16 IT and Organization………………………………………………………. …………....16 Linking Marketing with Information Technology………………….…………………..18 Information Technology in Supply Chain Management (SCM)…………………….19 Infrastructure for IT in SCM………………………………………………….…………20 Perspectives of Strategy in Implementation …………………………………………20 Enterprise Systems……………………………………………………………..........…21 Enterprise Resource Planning……………………………………………………..21 Enterprise Application .Integration……………………………………………...…22 Benefits…………………………………………………………………………………...22 External Pressures………………………………………………………. …………….24 inadequacy of Current Research………………………………………………………26 Problematization …………………………............................................................…26
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Chapter Three
3. Methodology…..…………………………………………………………….…28
3.1. Method……………………………………………………………….................................…28 3.1.1. Selecting Organization’s Features………………………………………………………..28 3.1.2. The Choice of Interviewees………………………………………………….…………….28 3.2. Research Design………………………………………………………………………..…….29 3.3. Research Approach…………………………………………………………………………..29 3.3.1. Research Approach in this Thesis………………………………………………………..29 3.4. Data Collection………………………………………………………………………………..29 3.5. Quality of this Research……………………………………………………………………..30 3.5.1 Validity and Reliability…………………………………………………………………........30 3.6. Data Analysis………………………………………………………………………………….30 3.7. Challenges in Designed Methodology………………………………………………..…….30 3.8. Literature Review……………………………………………………………………………..31 3.9. Empirical Studies……………………………………………………………………………..31 3.10. Background of Organizations……………………………………………………………...31 3.10.1. Boverket……………………………………………………………………………………31 3.10.2. Volvo IT…………………………………………………………………………………….32 3.10.3. UIQ………………………………………………………………………………………….32 Chapter Four
4. Results and Analysis……………………………………………….……….34
Do Volvo IT, UIQ and Boverket have IT Strategies?………………………………...34 How do Volvo IT, Boverket and UIQ describe their IT strategies in comparison with other strategies…………….…………………………….……………………………...34 Analysis ………………………………………………………………………………….34 Stand Alone IT Strategy ……...………………………………………………………..35 Are IT Components incorporated into the Marketing Strategy?…………………...36 Analysis…………………………………………………………………………………..36 Are IT Components incorporated into the Product Strategy?……………………..37 Analysis ………………………………………………………………………………….37 Are IT Components incorporated into the MIS Strategy?…………….………….…38 Goals of MIS Strategy…………………………………………………………………..38 Components of MIS Strategy…………………………………………………………..38 Do MIS strategy components belong to different levels?………………………….39 Analysis ……………………………………………….…………………………..........40 Describing the IT Components in relation to the overall business strategy………41 Significance of IT components in IT strategy………………………………………...42 Analysis………………………………………………………………………………….42 Contexts of IT Components within Volvo, Boverket and UIQ……………………...43 How far ahead is future prospect of IT components…………………………..…..44 Analysis …………………………………………………………………………………44 Implications of the research …………………………………. ………………….…..45
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Chapter Five 5. Findings………………………………………………………………………………………46 5.1 Conclusion…………………………………………………………………………………...46 Chapter Six 6. Discussion & Research Implications……………………………………………………...48 Chapter Seven 7. Limitations of the Study and Suggestions for the Future Research…………………….49 References…………………………………………………………………………………. …..50 Appendix A: Interview Questions……………………………………………………………...58 Appendix B: Structure of Interviews ………………………………………………………….59 LIST OF FIGURES Figure 1.1: Theories of Strategy and IT……………………………………………………….8 Figure 2.2: Purpose of an IT Strategy………………………………………………………...16 Figure 2.3: How IT strategy relates to SCM………………………………………………….20 Figure 2.4: Future trend of ERP systems…………………………………………………….25 LIST OF TABLES Table 4.3: Indicates overview of IT components in UIQ…………………………………...45 Table 4.4 Applications operated and supported by Volvo IT Strategy…………………....35 LIST OF CHARTS Chart 4.1: Depicts on how Volvo IT describes IT components…………………………...42 Chart 4.2: Illustrates levels of MIS components in Volvo IT……………………………….41
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1. INTRODUCTION
The main framework of this research study begins with reviewing the theory of strategy, IT and IT strategy. Within IT strategy, there are two additional concepts, stand alone “IT strategy” and IT components both of which are integrated in IT strategy. The figure 1.1 below attempts to depict how these concepts are viewed from the author’s perspective.
Strategy
Stand-alone IT Strategy
IT
IT Strategy
IT Components
Figure 1.1 Theories of Strategy and IT.
This research study explore these concepts of IT strategies and IT components in three organizations. Drawing on extensive interviews with IT Managers from Volvo IT, Boverket and UIQ and archive data, this paper will demonstrate the challenges of how organizations describe their IT strategies by delving deeply in to the experiences of three organizations. To maintain an effective functioning IT organization and prospering business, companies must create effective strategies that correctly align IT resources with the needs of the business. The business & IT strategy must then be enforced, and support the natural relationship between IT goals, objectives and tactics at all management levels. This will ensure that the real needs of the business are met by the right IT projects and in a timely manner. Furthermore, this will promote enterprise wide visibility and understanding of all business goals. 1.1. Background of the Study
The starting point for this thesis is to explore the relationship between IT strategy and other strategies in more depth. Once it was decided to carry out this topic, I had brainstorming discussion and frequent meetings with fellow students, friends and University advisers, various viewpoints became concerning, the inadequate state of current research in IT strategy and whether organizations have IT strategies and how these are described in relation to other strategies. Because of current importance, the topic was considered interesting to explore in further depth.
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1.2. Purpose of the Study The purpose of this study is to define the problem and explore whether organizations have IT strategies, and how these are describe in relation to other strategies. This research study also investigates how these organizations incorporate IT components into their strategies. Alternatively, this research study is aimed to find out whether “IT strategy” is stand-alone concept. Therefore, the purpose of this research study can be described by the following questions: • Is IT “strategy” a stand-alone concept? • Do organizations describe IT strategies as a component in other strategies? 1.3. Research Questions The main research questions in this study is to investigate whether organizations have IT strategies, by studying how organizations describe their IT strategies in comparison with other strategies. Therefore, this study intends to understand and explore the following questions: 1. Do organizations have IT strategies? 2. Are they describe in different ways? 3. Do organizations incorporate IT components into their strategies? 1.4. Research Problem The research problem of this study is lack of insight on how organizations describe their IT strategies in relation to other strategies. IT strategy continues to be a major challenge for Information Technology intensive organizations and managers. Over the last two decades, the way researchers on information systems have viewed and analyzed IT strategy in organizational systems has not significantly been modified. Recent studies show that one of the main problems is that the concept of IT strategy has been around for nearly two decades and although many organizations have been using it, the meaning and reference of the idea remains elusive. Those who have attempted to define it have not reached an agreement. 1.5. Delimitations
Due to the wide scope of this research study, the main source of data was collected from primary sources, such as Internet, magazines, literature and internal corporate publications. It is also clear that primary sources of data such as interviews can be biased in some occasional cases, as top-level management would not disclose unfavorable information. Lack of resources and time are also contributing factors, which makes it more feasible to depend on secondary data. 1.6. Key words & Definitions
The following list contains a number of concepts often used in this thesis. There is a need to clearly define concepts to avoid misinterpretations during the reading. Some definitions are more or less generally accepted, while others are derived from specific notions . Enterprise systems In this thesis, an enterprise system is referring to as an enterprise-wide information system that supports the processes of an organization. According to Davenport, the
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following could be said about the concept: An enterprise system enables a company to integrate the data used throughout its entire organization (Davenport, T.H. 1998). Even though Davenport refers to ERP systems in his definition, the concept of an enterprise system in this thesis also includes EAI. ERP and EAI are two different IT strategies to implement an enterprise system. Systems Environment The concept of systems environment includes both existing and future information systems as well as their mutual relations and conditions. An information system can exist in the form of a standard operating procedure, a planning procedure, a quality control method, or in computer-based form. Thus, an information system does not need a computerbased solution to satisfy its role (Svärdström, J. 2003). Symbian OS is an operating system (OS) targeted at mobile phones that offers a high-level of integration with communication and personal information management (PIM) functionality. Symbian OS combines middleware with wireless communications through an integrated mailbox and the integration of Java and PIM functionality (agenda and contacts). The Symbian OS is open for third-party development by independent software vendors, enterprise IT departments, network operators and Symbian OS licensees. 1 UIQ is a flexible and customizable user interface for data-enabled mobile phones, based on the Symbian OS platform. UIQ includes support for the latest and emerging wireless standards and comes with a set of essential and well-integrated applications. UIQ enables rapid device integration and offers mobile phone manufacturers a foundation for building attractive and cost efficient mobile phones. UIQ licensees gave extensive rights to customize the user interface to fit into their product portfolio and branding strategy. Abbreviations SAP Systems Analyses and Program development. SAP is a German company providing ERP software packages, e.g. SAP R/3. “R” stands for real-time data processing. PDM Product Data Management CAD Computer aided Design CAE Computer aided Engineering EDI Electronic data interchange
1
www.webopedia.com/TERMS/S/Symbian.html
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1.7.
Outline
Chapter 1 Introduction describes the background of study, purpose of research, research problem, delimitation and definitions. Chapter 2 Theoretical Framework is a presentation of literature reviewed about strategy, IT, and IT strategy. Chapter 3 Methodology is a description of the way this project has been carried out. Chapter 4 Results and Analysis is a presentation of the material derived from the case studies. In this chapter, there is also analysis, which contains an interpretation of results. Chapter 5 Findings & Conclusion is the author’s findings and opinions as to whether there is an IT strategy and how it is described in relation to other strategies in Volvo, Boverket and UIQ. Therefore, the reasoning is derived from the analytical generalization. Chapter 6 Discussion and Implication of Research treats the justification of the thesis. The chapter considers this course of action research, points to possible weaknesses and suggests alternative procedures. Furthermore, in this Chapter 6, there will be research implications, which will act as an Explanation of the new knowledge, this thesis produces that is not already known, why is it worth knowing and the major implications are as result. In the final chapter, 7 Limitations and Suggestions for the Future Research are presented.
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2. Theoretical Framework
In this chapter, this research study presents fundamental and essential terms and concepts used in the study based on the following notions: • Strategy • IT • IT strategy The Relationship between all these concepts is initially described in this chapter. This will be followed by discussion of inadequacy of current research in IT strategy and problematization . 2.1. Background of the Strategy
There are many theories on strategy in existence, Due to the scope of this paper; this research study decided to looks at the relationship between IT strategy and others strategies Studying strategy is not a new phenomenon. In the 1960’s the terms strategy were commonly used in companies. The purpose of the strategy was then described how the company should reach the set goals with resources available. In1969, Anthony divided organizations planning and strategy implementation into three levels-strategic, tactical and operational. There are specific decision-areas connected to each level. On strategic level, companies should set longterm goals and sub-goals that needed to be reached for the goals to be obtained. The strategic planning is therefore often long-term, a period of three years or more. The tactical level has the objective to implement the chosen strategies and to coordinate the organizations different units into the same direction. On tactical level the planning made in a shorter perspective of one to three years and is conducted more or less systematically (Ax et. 2002). According to Porter (1996), strategy is creation of a unique and valuable position, involving a different set of activities. If there were only ideal position, there would be no need for strategy. Companies would face simple imperative- win the race to discover and preempt it. The essence of strategic positioning is to choose activities that are different from rivals. If the same set of activities were best to produce all varieties, meet all needs, and access all customers, companies could easily shift among them and operational effectiveness would determine performance. In correlation with fit and effectiveness, strategy is creating fit among company’s activities. The success of a strategy depends on doing many things well not just a few. If there is no fit among the activities, there is no distinctive strategy and little to sustain in the strategic deployment process. Management then reverts to the simpler task of overseeing independent functions. When this occurs, operational effectiveness determines the relative performance of the organization (Porter, Michael 1996). The concept of fit among units is one of the oldest ideas in strategy. Gradually however, it has been supplanted with new concepts of core competencies, critical resources and key success factors. In fact fit is far more critical to the success of the IT systems than is realized. Strategic fit among the various systems components and the business processes they support are fundamental not very competitive advantage but to the suitability of that advantage. Fit among a company’s activities creates pressures and incentives to improve operational effectiveness. Fit
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means that poor performance in one activity will degrade the performance in others, so that weaknesses are exposed drawing management’s attention. Conversely, with increasing fit, improvements of one activity will pay dividends in other areas (Porter, Michael 1996). 2.2. Core Competence
According to Prahaland and Hamel (1990), another important view of strategy stresses is the core competences of organizations. The theory states that management’s task is to create an organization “capable of infusing product with irresistible functionality, or better yet, create products customers need but have not imagined ” Prahaland and Hamel (p.22) Management must combine corporate-wide technologies and productions skills into competencies for competition. Core competencies are the collective learning in the organization about how to integrate multiple technologies and coordinate diverse production capabilities. Identifications of a core competence involve three tests: • It should provide access to a wide variety of different markets • It should make a significant contribution to the product, especially the benefits the customer perceives. • It should be difficult to imitate. Prahalad and Hamel, (1990), went further and argued that the best a company can hope for is to be a world leader in five or six competencies. Core competence can take years to build, and companies that fail to invest in them are not likely to enter an emerging market. Management needs to develop a corporate strategy for organizing and deploying core competencies. This strategic architecture then acts as road map in identifying which core competencies to build and their required technologies. One option is to outsource all of the activities that are not core (Quinn and Hilmer, 1994). Under this approach, management concentrates on just the firm’s core competences, and leaves all other activities to others. 2.3. Perspectives of Strategy in Business Administration
When decided on the strategy, the vision and business idea needs to be taken into consideration; the business idea describes what area company should focus on now and the future and how the company should develop in relations to its vision (Ax et. 2002). The vision describes the long-term direction that the company desires to head for (Johnson and Scholes 2002) Strategies are plans for how companies should act in the future (Anthony and Govindarajan 2001). A company’s goals are set in strategic planning where the long-term goals are wide and independent of time. The tactical and operational planning processes then breaks the long-term goals down into more specific goals that should be obtain within a shorter period. The goals should be possible to measure so that the company can follow-up the used measures to see the company’s position on the market (Svensson and Svensson 1995). A company’s strategies may then be seen as description of a plan containing information of how a business idea can be obtained (Ax et. 2002). This is the classic way of looking at strategy in business administration perspectives.
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2.4.
Strategy and IT
In context of strategy formulation for IT, a rational framework is advocated for managers based upon an assumed relationship between the implementation of IT and competitive advantage (Earl, 1989. Morton, 1988. Porter and Millar, 1984. McFarlan, 1984).The normative approach adopted by many writers on IT strategy assumes that managers have at their disposal a rational framework for strategy formulation to enhance IT project performance leading to competitive advantage (Kantrow, 1980. Booz-Allen and Hamilton, 1981. Adler et al, 1992). One problem of constructing an ideal-typical presentation of a strategic framework is the extent to which it matches reality. Although such ideal-typical constructions of social phenomena do not exist in pure form, they are nonetheless presented in the IT literature as offering a conceptual advantage to those concerned with strategy formulation. In contemporary business organizations, managers are urged to maximize the potential of IT by developing strategies to gain competitive advantage, improve productivity and performance, facilitate new ways of managing and organizing and develop new business (Peppard, 1993). 2.4.1. The Themes of IT Strategy The IT strategy contains three (3) major themes, which form the foundation of the IT strategy as well as the tactical processes that will be deployed in support of these strategies (Michael, Earl 1995). These themes are: • Business improvements are enabled by Information Technology that is integrated not disintegrated. This integration must be horizontal versus vertical. Horizontal systems remove islands of information and build bridges between the business units. In this integrated systems, multiple data sources are made transparent to the end users as well as the applications that utilize them. • Information Technology requirements are always growing, changing, and being extended. The information Technology is no longer static, but dynamic adapting to the changing business requirements. • Information Technology is about abstractions. If only hardware, software and data were the only foundations of systems, then information Technology would not be able to keep pace with the business requirements. Instead, business processes, objects and services are the foundation of the system, which then drive the business processes in their adaptation of the changing market forces.
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2.4.2. Overview of IT Strategy According to Earl (1989), IT strategy is concerned with ‘how’ Information System strategies will be implemented. IT strategy is described as activity based, supply orientated and technology focused. It is also about the delivery of workable IT solutions to business problems. The technology-strategy connection Kantrow (1980) is appropriate here since IT strategies are ‘best seen as the technology framework or architecture’, “which drives shapes and controls the IT infrastructure” (Earl, 1989, p.95). IT strategy is not simply about the vision, which senior managers adopt for their long-range IS planning, but instead the practical application of IT to the business. Four elements of IT architecture are given by Earl, which include computing, communications, data and applications. Computing refers to the information processing hardware and its associated operating system software. Communications refer to telecommunications networks and their associated mechanisms for interlinking and internetworking. Data relates to the data assets of the organization and requirements of use access, control and storage. Finally, applications encapsulate the main application systems of the organization, their functions and relationships, as well as the development methods. The four elements of the IT architecture are interdependent. This means that each element influences and is influenced by the other elements. Ultimately, the IT architecture is designed to create an infrastructure, which is more powerful than the sum of its parts. For example, the topology of a communications network is influenced by applications needs, data transmission requirements and information processing geography as well as by its own capabilities. Earl (1989, p.95) contends that the technology framework can contain four levels of guidance. The four levels each architecture element may be called frames’. The set of frame makes up the framework. The four levels consist of the following categories: Parameters - which are the major design parameters of each architecture element. They represent the essential needs, constraints and preferences that over time each element should attempt to satisfy. Schemas- logical, and perhaps physical, models of what are required of each architectural element and how they should work. Sometimes called models or blueprints they may either be the visual, logical state of the frame as it exists now or an agreed, detailed model of what is pursued. Policies- concrete, practical statements of how each technological element is to be delivered. Included are technological policies, guidelines, procedures and standards. Plans- firm plans and goals for each element. These may include project plans or performance goals- plus time –phased actions that will move the framework to the next state of evolution. (ibid) According to Earl (1989), the progression from the first frame (parameters) to the fourth (plans) indicates ‘increasing degree of business and technological certainty’ The ability of firms to tackle each element in the framework is dependant upon the ‘business or technological imperative’ Moreover, each element should be tackled individually at first even though they are seen as interdependent.
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2.4.3. Purpose of the IT strategy The purpose of the IT strategy is to enable the business strategy, set the direction of the initiatives driven from the business requirements and help the organization to create a competitive edge through the use of IT. The IT strategy is the strategy a company pursues in terms of • Functionalities of its information systems (application portfolio) • Information systems architecture & infrastructure and • IT organization and processes (http://www.gtsuae.com/itstrategy.htm) The graphic below provides author’s view on purpose of an IT Strategy. External factors
Business Strategy Enables Drives IT Strategy s Technology trends
Figure 2.2 Purpose of an IT strategy
2.5.
IT and Organization
Here this research study reviewed some studies of the interaction of IT and firms organization. IT has effects on the organization that adopts are disproportionate to its share of the organization’s costs. A firms business processes, internal organization, and relationships with outside parties are signi?cantly determined by the economics of information and communications (Migrom and Roberty; 1990 and Raner 1993). For instance, lower-cost access to data and communications can exacerbate the information processing bottleneck at the tops of hierarchies and therefore, increase the value of delegation , non machine decision making (Brynjolfsson and Mendelson 1993). It can also have direct and indirect effects on the value of skilled labor, job design, and incentive systems. In particular, Bresnahan, Brynjolfsson, and Hitt analyze data on IT, organizational practices, and productivity from over 300 large ?rms and conclude that:
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“IT use is also correlated with a pattern of work organization involving more decentralized decision making and greater use of teams. Increases in ?rms’ IT capital stock are associated with the greatest increases in output in ?rms that also have high levels of human capital or decentralized work organization, or both. However, ?rms that implement only one complement without the others are often less productive than ?rms which implement none at all” (Bresnahan, Brynjolfsson, and Hitt 2000 p.184). In other words, there is evidence of a complementarity between the use of IT and certain changes in work organization. Of course, the falling quality-adjusted price of IT raises the return to investments not only in IT but also in its complements. A signi?cant literature, mostly outside of economics, has explored various aspects of the interaction between IT and organization, business processes, and even corporate culture. (See, for example, Applegate, Cash, and Mills 1988; Barras 1990; Bresnahan and Greenstein 1997; Brynjolfsson and Hitt 1997; Brynjolfsson, Renshaw, and Van Alstyne 1997; Davenport and Short 1990; David 1990; Ito 1996, Malone and Rockart 1991; Milgrom and Roberts 1990; Autor, Levy, and Murnane 2000; Orlikowksi 1992; Scott Morton 1991; and Woerner 2001; Brynjolfsson and Hitt 2000) Provide a review of the literature. Although the organizational complements are valuable and, in some cases, even essential to the success of IT innovations, implementing organizational changes is costly and risky, yielding both successes and failures (See, for example, Kemerer and Sosa 1991). Both the case evidence and the econometric results suggest that the costs of these organizational complements to IT investments typically exceed the direct ?nancial costs of the IT investments themselves (Ito 1996; Bresnahan and Greenstein 1997; Bresnahan 1999). Importantly, although many of these organizational practices may be readily visible to competitors and are copiously documented in articles by business school professors and consultants, they are notoriously difficult to imitate successfully (Brynjolfsson, Renshaw, and Van Alstyne 1997).This reflects complementarities and large effects of seemingly minor characteristics. Intel, for example, has adopted a “copy exactly” philosophy for any chip fabrication plant built after the ?rst plant in each generation. Wholesale replication of even seemingly insigni?cant details has proved more reliable than trying to understand which characteristics really matter. Going from the plant level to the ?rm level only complicates the imitator’s task. The difficulty in implementing organizational complements can explain the apparent quasi-rents earned by ?rm that have been fortunate or skillful enough to have them in place. In some cases these quasi-rents, when measured in a production function framework, may show up as higher coefficients on other inputs to production. For instance, Brynjolfsson, Hitt, and Frank Lichtenberg (1995), among others, ?nd that heavy use of IT is correlated with signi?cant higher levels and growth rates of measured productivity. These rents may arise because non-adopters have not tried, or have tried and failed to implement complementary workplace or product innovations. Brynjolfsson and Hitt interpret their productivity results as pointing to the existence of large but unmeasured inputs to production that are correlated with measured IT. Related literature ?nds that certain work practices and human resource policies are correlated with higher levels of productivity and thus constitute another type of typically unmeasured “input” to production (Ichniowski, Shaw, and Prennushi 1997). Because effective work organization can be costly to develop and implement but yields a stream of cash ?ows over time, it is natural to think of it as a kind of asset. This asset has
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variously been called “organizational capital,” “e-capital,” and “structural capital,” depending on the context (Brynjolfsson and Yang 1999; R. Hall 2000a; Lev 2001). 2.6. Linking Marketing with Information Technology
This section develop critical review of a framework of dynamic customer relationship (CRM), the linking marketing with Information Technology is explained here. According to Bose, R. (2002), CRM is an integration of technologies and business processes used to satisfy the needs of a customer during any given interaction. More specifically, CRM involves acquisition, analysis and use of knowledge about customer in order to sell more goods or services and to do it more efficiently. It is important to note that the terms “customer” may have a very broad definition that includes vendors, channel partners or virtually any group or individual that requires information from the organization. In terms of IT terms, CRM means an enterprise wide integration of technologies working together such as data warehouse, Web site, intranet/extranet, phone support system, accounting, sales, marketing and production. Effective customer relationship management (CRM) has become a strategic imperative for companies in virtually every business sector. Companies are moving closer to their customers, expending more effort in finding new ways to create value for their customers, and transforming the customer relationship into one solution finding and partnering rather than one of selling and order taking (El Sawy and Bowles, 1997). Organizations will be more successful if they concentrate on obtaining and maintaining a share of each customer rather than a share of the entire market (Peppers and Rogers, 1995). It has been illustrated in practice that retaining an exist customer is more profitable than acquiring a new one (Reichheld and Sasser, 1990). As for the key factor in a long-term relationship, marketing researchers have studied the effects of mutual information sharing exchange (Duncan and Moriarty, 1998), and communication effectiveness on building trust and commitment among relationship participants (Sharman and Patterson, 1999). Each relationship exchange incurs transactional and /or non-transactional data. Transactional data typically include sales amount, transaction time, place, and buyers while non-transactional data may include inquiries or feedback in the form of complaints or suggestions. Both transactional data non-transactional data must be organized into an integrated customer data profile because such information is what makes customer interaction powerful (Well et al, 1999). Such integration is a foundation of simplifying customer support activities and reducing transaction costs so that the organization may not only differentiate its products but also offer lower prices (Goodhue et, 1992; Rangswamy, 1993; El Sawy and Bowles, 1997). However, CRM strategy means different things to different people (Winer, 2001). In the marketing area, much discussion has been devoted to relationship marketing strategy but a critical problem is that although a number of authors have contrasted relationship marketing with direct, database, loyalty, retention and transaction marketing, such discussions fail to clarify substantive issues (O’Malley and Tynan, 2000). For example, relationship marketing strategy has clarified customer lock-in (Barnes, 1994; Turnbull & and Wilson, 1989 and Wold, 1990; Tracy and Wiersema, 1993, and close relationships Barnes, 1994, 1995). However, the first three approaches are criticized in that all are lacking recognition of “mutuality and special
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status” (Rowe & Barnes, 1998, p.284) and therefore, are unlikely to result in close, personal, long-term relationships. For the information technology domain, as key enabler of CRM, there has been an active discussions on the implementation of relationship management packages (Jutla et al., 2001), customer information systems, (Mentzas, 1997; Wells et al.1999), customer database (El Sawy & Bowles, 1997), decision support application (Kohli et al., 2001). Still, many companies have difficulty in implementing an effective CRM program because they allow software vendors to drive their approach to customer management, or retrofit a customer strategy to match the CRM technology they have purchased (Rigby et al, 2002). Namely, most of them mistake CRM technology for a marketing strategy, forming a barrier in implementing a successful CRM project (Woodcok and Starkey, 2001). 2.7. Information Technology in Supply Chain Management (SCM)
Considering the importance of IT in achieving effective SCM, an attempt has been made in this section to review the literature on IT in SCM. The main objective here is to explain the major issues surrounding the application of IT in SCM. In figure 2.3 at the end of this section, this research study will illustrates how IT strategy is related to SCM. Recently the concepts of supply chain design and management have become a popular operations paradigm. This has intensified with the development of information and communication technologies (ICT) that include electronic data interchange (EDI), the Internet and World Wide Web (WWW) to overcome the ever-increasing complexity of the systems driving buyer-supplier relationships. The complexity of SCM has also forced companies to go for online communication systems. For example, the Internet increases the richness of communications through greater interactivity between the firm and customer (Watson et al., 1998). Graham and Hardaker (2000), highlight the role of the Internet in building commercially viable supply chains in order to meet the challenges of virtual enterprises. Supply chain management emphasizes the overall and long-term benefit of all parties on the chain through co-operation and information sharing. This signifies the importance of communication and application of IT in SCM. This is largely cause by variability of ordering (Yu et, 2001). Information sharing between members of a supply chain using EDI technology should be increased to reduce uncertainty, enhance shipment performance of suppliers and greatly improve the performance of supply chain systems (Srinivasan et al., 1994).
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Companies need to invest large amounts of money for redesigning internal organizational and technical processes, changing traditional, fundamental product distribution channels, customer service procedure, and training staff to achieve IT-enabled supply chain (Motwani et al., 2000). The following are some of problems often cited in literature both by the researchers and by practitioners when developing an IT-integrated SCM: • Lack of integration between IT and business model • Lack of proper strategic planning • Poor IT infrastructure • Insufficient application of IT in virtual enterprise • Inadequate implementation knowledge of IT in SCM In this research study, IT strategy is related to supply chain management in the following respect. Goal SCM IT strategy SCM
IT Solution
Figure 2.3 How IT strategy relates to SCM
IT Implementation
2.8. Infrastructure for IT in SCM Infrastructure for IT in SCM consists of Internet connectivity, hardware and software including application systems integration. Nevertheless, training and education cell for IT is important to fully utilize the IT available for SCM. There are different IT platforms and systems available to enable the application of IT in SCM (Haeckel, 1998). Walsh and Koumpis (1999), presented a decomposable, ‘‘autonomous agents’’ approach was adopted to specify information supply chain “agents’’ (e.g. suppliers, buyers, distributors, etc), including their structural relationships, interaction ‘‘protocols’’ and co-ordination policies. 2.9. Perspectives of Strategy in Implementation
According to Lucas (2005), implementation is part of the processes of designs a systems and is a component of change. New information systems change existing information processing procedures and often change the organization itself. Implementation refers to the design team’s strategy and actions for seeing that a system is successful and contributes to the organization. This definition stresses the long-term nature of implementation, it is part of a process that begins with initial idea for systems and changes it will bring. Implementation terminates when the system is successfully integrated with operations of the organization. Most of
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implementations are concerned with behavior phenomena, because people are expected to change their work activities. Implementation becomes more important and difficult as systems design become more radical. If a firm undertakes a large systems project, it wants to make major changes in tasks to reduce costs and improve productivity in organization. In correlation with strategy, an implementation strategy needs to take to into account process issues in designing information systems as well as the factors that appear influence success. Systems design can also be view as a planned change in the activities in the organization (Lucas. 2005) 2.10. Enterprise Systems This short introduction is a quick summary of enterprise systems. The two enterprise systems studied namely ERP and EAI will be detailed after this introduction. IT strategy will be defined here as how to make use of information technology. Implementing an enterprise system is a way to make use of the information technology; ERP and EAI are different strategies to implement an enterprise system. 2.11. Enterprise Resource Planning (ERP) ERP is an IT system that supports the business processes in the organization. The support of the processes refers to the development of the system to work above the functional entities to enable emphasis of the business processes (Al-Mashari, M. 2001).The link between ERP and business process re-engineering (BPR) is strong; in principle, an ERP implementation requires the restructure of processes (Koch, C. 2001). An ERP implementation will drive the organization towards a process-oriented business (Beretta, S. 2002). The ERP vendors supply a standardized software package developed to support different branches of industry. The design of the system aligns with the specific best practices assumed to apply to the type of industry in question. Best practices are a combination of vendor marketing of what they think is best and educational institutions that contribute to industry by developing professional models and theories (Swan, J., Newell, S. and Robertson, M. 1999). Hence, it is the vendors, not the buyers, who decide in what way the organizations processes are to be supported. When a company decides on implementing ERP, it will benefit the most from the advantages principally by adjusting to the standardization of processes embedded in the system (Chen, I.J. 2001). Despite the package solution and installation results in, there is within certain limits ways of conforming the system to better suit the organization by configuring the system (Davenport, T.H. 1998). An ERP also consists of modules. Given the needs and demands identified, the company may customize the system by deciding which modules to implement (Davenport, T.H. 1998). The concept of combining modules may create an alternative solution to organizations. BOB is short for best of breed and signifies, as the name implies, that only the best parts available are chosen. The principle is the same as with one single ERP, but in this case, several different vendors provide the modules. The main reasons for choosing BOB are reducing of the risk that comes with the dependency on one single vendor and preventing decreased flexibility (Light, B., Holland, C.P. & Wills, K. 2001). However, BOB may result in poor compatibility between the modules (Irani, Z., Themistocleous, M. & Love, and P.E.D. 2003).
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2.11.1. Enterprise Application Integration (EAI) EAI offers a way of improving the systems environment in the organisation. EAI is based on keeping the existing legacy information systems and integrate them internally and externally. Basically, the systems may that are adapted to the organisation may be kept, but the communication between systems is improved. EAI resembles ERP in the way that it focuses on the company’s business processes instead of supporting separate functions. Nevertheless, in contrast to ERP, the installation of EAI may not need such an extensive restructure of the organisation. EAI enables integration between already existing systems and by that it may be appropriate for companies whose information systems are well built to support the processes (Johannesson, P, & Perjons, P. 2001). To render integration possible without replacing old systems, integration tools and technologies must be brought to the business these integration tools are called middleware and can be seen as functions that pass information between organisational applications. Middleware hides the structure of the underlying operating system and network and hence makes integration easier (Linthicum, D. 1999) companies on the verge of implementing EAI need to take time to find out which technologies will constitute their integration package. EAI theory suggests, as the name implies, that existing systems may be integrated.This is based on the same principle as with legacy information systems, i.e. that the organisation shall constitute the foundation for the system design. As companies integrate systems, the existing systems are kept in use, and alongside all usability and knowledge stay with them(Light, B. 2003). 2.12. Benefits There are many benefits of both ERP and EAI. The benefits are dividing into five categories, namely, operational, managerial, technical, strategic and organizational.
Operational
The most important benefit of ERP is that all modules of the system easily communicate with each other. As an effect, the flow of information through the organisation will become very efficient. However to make use of this benefit a complete implementation is required, i.e. all business units’ old information systems need to be replaced by the new system modules (Pearlson, K.E. 2001). There are several ways in which ERP enhances the performance. Although the most significant improvements are supposed to occur some time after the implementation, instant benefits are inventory reduction, improved productivity and reduced financial close cycle (Chen, I.J. 2001). Through integration of applications (EAI), external and internal value chain planning is improved. The IT infrastructure is flexible since minimum changes to systems code are needed (Themistocleous, M. 2004). The improvement of business processes and organisational restructuring reduces operational costs and increases productivity. Managing and maintaining the IT infrastructure also becomes less costly.
Managerial
Due to the integrated nature of business units, an ERP system provides a clear overview of the organization. The ability of to look at the business from a broader perspective, with suppliers, alliances and customers as a whole, makes it easier to manage an extended company (Chen,
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I.J. 2001). ERP enhances decision-making by providing accurate and timely information across the whole organization (Poston, R. and Grabski, S. 2001). Therefore, to the structuring of more organized processes, an implementation of EAI provides more understanding of processes. The data quality enhanced which among other things improve the decision-making process (Themistocleous, M. 2004). Overall, EAI incorporates functionality from several different systems and thus achieves a flexible and more manageable IT infrastructure (Themistocleous, M. & Irani, Z. 2003).
Technical
Through single vendor, ERP all applications and platforms are common and therefore the organization will be able to obtain multiple synergies. In addition, the vendor provides system upgrades, which result in lower demands on internal IT capacity (Light, B. 2001). In most cases EAI integration is based on non-invasive technologies, i.e. the changes to existing applications are minor (Themistocleous, M. & Irani, Z. 2003). In principle EAI brings much the same technical benefits to the organization as do ERP. Both solutions are provided by vendors, which provide upgrades and support as well. However, unlike ERP, application integration allows the reuse of system (Themistocleous, M. 2004).
Strategic
Enhancing the company’s competitiveness is the primary reason for implementing an ERP.The strategic benefits include improved response to customer demands, efficient communication through information sharing and universal access to real-time data (Chen, I.J. 2001) . EAI automates and simplifies electronic transactions, and may therefore be a suitable tool in conducting e-business. Several advantages are related to e-business and e-commerce. Increased access to markets, more sales channels and automated transactions, which in turn result in improved performance and customer satisfaction, are some of the benefits (Themistocleous, M. & Irani, Z. 2002). Due to the constant refinements in supporting the functions, legacy information systems may be valuable as a competitive tool. Tailor-made legacy information systems are often connected to the critical business processes in organisations (Light, B. 2003).
Organizational
Installing an ERP system is often driven by the need of standardizing business processes. Managers that want to clean up the untamed structure of the organization may do so by conforming the processes to a software package (Pearlson, K.E. 2001).The ERP allows the streamlining of management structures. By making them flatter and more flexible, the implementation may results in more democratic organizations (Davenport, T.H. (1998). Recent studies show increased activity of mergers and acquisitions.The applications in different companies tend to be incompatible and integration is a necessity ( Ersala, N., Yen, D.C. & Rajkumar, T.M. 2003).The benefits created by e-business come when companies integrate their applications across the whole value chain (Themistocleous, M. & Irani, Z. 2002).
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2.13. External Pressures Pressures from the outside push the organization to move in certain directions. The search for competitive advantages and the influence from trading partners are two major external pressures (Themistocleous, M. 2004).
Competitive Strategy
Enterprise integration considered to be of great strategic value as a competitive advantage. Both ERP and EAI are strategies to overcome integration problems in organizations. However, the two enterprise systems differ concerning the strategy of obtaining a competitive advantage. In the past companies would develop information systems according to the way business were done. However, with ERP, the strategy is reversed; the business processes must often be modified to fit the system (Davenport, T.H. 1998). Nevertheless, companies should not make decisions about a system based only on technical criteria. According to Davenport, organizations benefit the most from ERP by viewing the system in strategic and organizational terms; those companies that stressed the enterprise, not the system, gained the greatest benefits (ibid.p.125). Whether or not organizations will be able to gain a competitive advantage from a publicly available information system is a question often being discussed. While ERP vendors target an increasing number of midsize and small companies, the competitive benefit seems to depend on who can achieve a better fit between the business processes and the ERP system (Chen, I.J. 2001). Due to the problems with legacy information systems, ERP was developed to solve many issues. ERP are developed in accordance with best practice of processes in the industry. That is, what the ERP developer thinks is best. Researchers at educational or professional institutes also contribute to the notion of what best practices are for the moment (Abrahamson, E. 1991). Few companies succeed to implement ERP systems without modification. The views about what constitutes best practice often differ between vendors and users. Best practices may be best practices but organizations have a cultural behavior that might be less than best and requires a thorough BPR to be aligned with best practices bundled in an ERP system. Findings show that there is little support for the notion of a fixed best practice. What is considered to be best is rather depends upon the current situation (Swan, J., Newell, S. & Robertson, M. 1999). Due to the possibility of making fine adjustments over time, legacy information systems may prove valuable in supporting the competitive strategies. In fact, legacy information systems are often connected to the critical business processes in organizations (Light, B. 2003). According to Linthicum, (1999), the business value of EAI is obvious. He argues that the continuous development of software in the organizations has created business-critical systems that serve one specific purpose and one specific set of users. The systems have become custom-built stovepipes in the way that their utilization is limited to individual functions. EAI enables the sharing of the data among these stovepipes without making sweeping changes to the applications or data structures. Hence, the specialized legacy information systems, which may
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support distinctive competitive strategies, gave the opportunity to survive through EAI (Linthicum, D. 1999).
Trading Partners ERP
Among organizations, there is a need for improvements in supply chain management. Business process re-engineering and just-in-time techniques have been, and still are, measures in the area. However, the trend today leans towards increased collaboration and multi-enterprise supply chain optimization (Themistocleous, M. & Irani, Z. & Love, P.E.D. 2003). While some business processes are well supported by ERP modules, others are not. Areas that are less data intensive, e.g. supply chain planning and customer management are not as well provided for, However, developers have started to elaborate tools to link front office, i.e. sales, marketing and customer service, with back office, e.g. logistics and financials. These tools are supply chain optimization (SCO) and customer relationship management (CRM). Figure 2.4 shows the future the future development according to Chen, I.J. (2001).
Figure 2.4 Future trends of ERP systems
Advanced planning systems (APS), also referred to as SCO, work as an aid in providing optimal solutions to the management of supply chains. Since APS do not generate their own data, they may use the data provided by ERP through integrating with the system. In this way, organizations having implemented an ERP may further benefit from the system by adopting APS. It is worth mentioning however, that the integration of APS or SCO with ERP requires additional changes to business processes and higher level of mutual trust among trading partners (Chen, I.J. 2001). Having realized the need for customer service, ERP vendors have started to taking over and forming alliances with companies in the CRM market. Hence, organizations are offering the possibility to implement CRM systems either as bolt or through the procurement of an ERP/CRM package. As in the case of APS, the installation of CRM requires significant changes due to the extensive impact on business processes (Chen, I.J. 2001). Due to the variety of definitions among authors concerning e-commerce and e-business, a clarification needs to be made. In this master thesis, e-commerce refers to electronic business-to-consumer applications, whereas e-business refers to the business-to-business applications. Thus, the term e-business is a part of inter-organizational relations, e.g. supply chain management (SCM). The definitions mentioned above, agree with terms discussed by both Linthicum and Themistocleous et al.
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2.14. Inadequacy of Current Research This research is different from other research in the following respect; No empirical research has explored whether “IT strategy” is a stand-alone concept. Most of the previous researches studied in the area of IT and competitive advantage. These researches have measured how IT leads to sustained competitive advantage (Mata et, 1995; Hidding, 2001). In affiliation to purpose of this research study, there is inadequate of current research on how organizations describe their IT strategies. This made me question; Do organizations have IT strategies. 2.15. Problematization According to Dale and Marsden, (1990), most organizations IT never reaches its full potential. The chief reason is lack of connection between business skills of company management and technology skills of data processing department. Without an IT strategic plan, which quantitatively links the business needs of an organization with practical and justifiable technology based solutions, the development individual systems will always be flawed. The IT strategy planning process has been a top concern of senior leadership over a wide range of industries for several decades. The annual computer science corporation survey of IT management issues consistency shows that IT strategy development is a major senior leadership challenge. This reveals critical issues of information systems management (2001). Yet the IT strategy development process remains largely a mystery despite this high interest for several following reasons: • Business strategies often are not clear or are violated • IT opportunities often are poorly understood • The organization may be unable to resolve the different priorities set among different parts of organization. Weill and Broadbent (1998) examined this issue in leveraging the new infrastructure, how market leaders capitalize on Information technology, they noted that effective IT strategy development requires that an organizations leadership understand and integrate several factors strategically and tactically: • The organization’s strategies and market position • The organization’s environment • The IT strategy Understanding and integrating these three continuously evolving and complex areas is exceptionally difficult. Perhaps this is why IT strategy development may always be a difficult management challenge. A number of authors have studied why IT strategies fails, Glasser, J (2004), contends that these types of failures occur because the link between the organization’s overall strategy and its IT strategy is poor. For example, the IT group may be conducting world-class implementations, but these implementations do not advance the overall strategy. In effect, resources are misdirected. People are working very hard and effectively, but toward the wrong thing. Beveridge, (2004) claimed that most IT directors find it difficult to describe their IT strategies, they are likely to provide very clear-cut answers such as ‘open systems’ or Unix in the data
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center and windows on the desktop. For sure, these bald statements may well have some supporting documentation, probably in the form of a glitzy PowerPoint presentation, or a hackneyed preamble to the annual IT budget bid but they are unlikely to be underpinned by a tangible management model. Beveridge contends that as long as companies IT strategies remains at an abstract and superficial level, companies will always struggle to manage it effectively. Companies won’t be able to describe their IT strategies properly to their staff, or to their business partners, because their abstract definition does not necessary correlate directly with their particular context. Consequently, companies cannot share the vision or subscribe to its success because they do not recognize their IT strategy in real, practical terms.
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3.
Methodology
The methodology chapter illustrates my practical approach and justifies the details such as collection of data, interviews made and analysis of collected the data’s . 3.1. Method In seeking to examine how organizations describe their IT strategies, three interviews were held with IT managers at Volvo, Boverket and UIQ in Sweden, focusing on each organization’s central IT/IS department. A qualitative approach based on case studies was considered appropriate in given the small amount of prior empirical research in the broad area of IT strategy, and sensitive nature of the data needed. (Benbasat et al., 1987;Yin, 1984). Furthermore, the focus of the study was on types of IT strategies patterns each organization is engaged in and how they differed or resembled across-organizations. In order to understand the thought processes underlying these patterns, it was essential to incorporate the perspectives from several IT managers. At the same time, in order to achieve some understanding of the possible differences, I needed to examine them through a multiple of cases. 3.1.1. Selecting Organization’s Features In order to select suitable organizations for case purpose, this research study looked at the following criteria: • Organizations with interest in information technology strategy or information systems strategy, so that it may be expected that both concepts and practice of IT strategy are reasonably familiar. • A branch of industry or commerce where information technology plays a substantial role • Independent organization or business unit with complete or near complete control over its own IT strategy. In this particular case I managed to found the following three organizations: Volvo IT, UIQ and Boverket 3.1.2. The Choice of Interviewees The choice of interviewees was vital for the research process (Malterud K. Urval 1998).The choice of interviewees was based on the idea of getting an IT strategy view from IT managers. It is of necessary value for IT strategists to receive a general view of the activities and the organization and not just management level point of views. I wanted interviewees whose contribution reflects the overall understanding and attitude of the organization in the IT or strategies domain. Therefore, interviewee was chosen from IT or IS department. My contacted with the organizations suggested interviewees and after much consideration, three individuals were chosen. The important point here is that the interviewees had been working for at least a couple of years at the IT or Information system field and those they represented IT or IS. Therefore, I managed to interview Assistant IT manager of Boverket, President of Volvo IT and Information System manager of UIQ. At the beginning of the interview, I described the purpose of thesis and structure of the questions. All questions intended to reflect IT-strategy and other strategies only and not the whole organization. Many of the issues concerning alternative IT and strategies were hot subjects in the organizations and some answers wished to be unspecified. Therefore, the decision was made not to record the answers on tape. In that way, more honest and true opinions may have been received from each interviewee.
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3.2. Research Design Exploratory research is suitable when there are very few or no earlier studies to which the study can refer to information about issues or problem (Jill and Roger Hussey, 1997). The research design of this thesis is exploratory, the aim of this study is to increase the understanding of the concept of IT strategy. 3.3. Research Approach There are two kind of research approaches, deductive and inductive (Jill and Roger Hussey 1997). • Deductive research is a study in which a conceptual and theoretical structure is developed and then tested by empirical observation. Thus, particular instances are deduced from general inferences. For this reason, deductive method is referring to as moving from the general to particular. For example a researcher may have read about theories of motivation and wish to test them in his/her own workplace. Therefore, the goal of deductive research is to validate the theory studied. • Inductive is a study in which theory is developing from the observation of empirical reality; thus, general inferences are inducing from particular instances, which is the reverse of the deductive method. Since it involves moving from individual observation to statements of general patterns or laws, it is referred to as moving from the specific to general. For example, you may have observed from factory records in your company that productions levels go down after two hours of the shift and you concluded that production levels vary with length of time worked. For that reason, inductive research is opposite to deductive studies. The goal is to find new theories with support from empirical studies.
3.3.1 Research approach in this Thesis
The research approach in this thesis is to find new theories, which support from empirical studies. Therefore, the research approach in this thesis is inductive. 3.4. Data Collection I used qualitative data obtained through interviews with IT managers in three organizations, the reason for choosing qualitative was that IT strategy is a social construct (Lantz, A. 2003). The IT managers who I interviewed were responsible for the delivery of IT product and services to various business units. The interviews were carried out during the period March and April 2005.
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3.5. Quality of this Research
3.5.1 Validity and Reliability
How can one ensure that a study is dependable and that it keeps to the highest levels of quality so as to be able to rely on it? There are number of ways to ensure quality in a thesis through validity and reliability, which deal with how the work is planed, how the analysis was conducted and how the conclusions were made. It should be possible to ask questions regarding the logic behind conclusions, which should be as detailed as possible in order to clearly explain the reasoning behind the result (Merriam, Sharan 1998). As explained earlier, the empirical data was collected by face-to-face interviews. Before conducting interviews, research study advisor reviewed interview questions and expressions that did not make sense were removed before hand. 3.6. Data Analysis Being based on only three cases, the results of this research study may seem somewhat particularistic. However, this research study attempts to produce more general explanations through ‘analytic generalization’ (Yin, 1984), where ‘the generalization is of theoretical concepts and patterns’ (Orlikowski, 1993). Before I collected the data, I had already considered how to analyze data. Data collection and analysis are closely interconnected. Therefore, I discarded irrelevant data before analysis. In the analysis of data, this research study looked for commonalities and differences from data collections. 3.7. Challenges in Designed Methodology Due to the research approach methodology of this study ,I thought it would be wise to discuss a little bit about challenges I faced through out the process of collecting data. Therefore, I will discuss different challenges that I had to overcome along the way of my journey between the ‘real world’ and the ‘theoretical world’. According to Seal (1999), quality is an important fact in qualitative research, but Seal contends that this is not something that can be encapsulated by the terms ‘validity’ and ‘reliability’. This research study tried to maintain the quality by providing trustworthiness throughout the project. However, this has not always been an easy task. Therefore, this paper presents some challenges that I had to overcome.
Creating the literature framework
It has been a challenge to clarify all the terms used in this research study when it comes to handling IT strategy concept. The problem was that the concept of IT strategy is applied in different contexts and different meaning by different authors.
Balance between academic and empirical demands
Another challenge that this research study came across was to contribute both to the theoretical framework that lies within the problem area and to contributed to the understand how organizations describe their IT strategies in relation to other strategies. Sometimes I managed to acquire cooperation from interviewees; they seemed to understanding the demands that were set up from the academia.
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3.8. Literature Review Extensive literature studies concerning the topic chosen must be carried out before writing a master thesis. The empirical work was proceeded by a literature review to get a general view of subject and insight of earlier researchers within the problem area since my problem domain resolves around a subject that is under a evolution. I aimed to find articles from the scientific frontier. Through scientific literature, articles and dissertation have research within the subject has been penetrated. The databases that this research study used were Harvard Business Review, Academic Search Elite, Emerald library, Science Direct, Wiley Inter Science. Articles also obtained from different scientific journals as the Electronic Journal of Information Systems, MIT Sloan Management review, Evaluation, European Management Journal, International Journal of Information Management, International Journal for Project Management and Journal of Information Technology. In this literature study, the initial search was wide, but gradually it was narrowed and limited to specific literature within the problem area. I narrowed the search to specific words, those words were linking between IT strategy and other strategies. I also searched for frequently referred articles found in the reference list in my already possessed literature. 3.9. Empirical Studies The primary source of information in this paper is the exploration of three case studies in broad issues of IT strategies. The project used a qualitative methodology.Three semi-structured interviews were carried out. 3.10. Background of Organizations 3.10.1 Boverket Boverket-The National board of housing, building and planning is the Swedish governmental agency for planning, management of land and water resources, urban development, building and housing. It started in 1991 when some experts from a handful realized that something had to be done about housing statistics since the supply was rather poor and was not organized at all. The purpose of the initiative was to collected and publish policy-relevant housing statistics on a yearly basis and to present them at the housing ministers meetings each autumn.
The mission
The board plays an important role in the work of achieving the housing policy goals stipulated by the Government and parliament. In order for everyone to be able to live in good housing accommodation at reasonable cost, national subsidies are provided. The general interest subsidies regarding housing construction for rented accommodation and tenant owners still associations. In addition to this, the government of Sweden provides on-off subsidies. One-off subsidies are often limited in duration and, for instance are allotted to stimulate the construction of more rented accommodation.
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The board produces regulations, general advice, and information material about the subsidies. In addition, the board distributes the subsidies to the country administrative boards, decides appeals against decisions made and evaluates the effects of the subsidies for the benefit of the government. Boverket is also responsible for the computer system that manages all applications and payments. 3.10.2. Volvo IT The Volvo Group was founded in 1927 and has 76, 000 employees in 25 countries. Volvo Group is one of the Worlds leading manufacturers of trucks, buses and Construction equipment, drive systems for marine and Industrial applications, aerospace components and services. The Group also provides complete solutions for financing and service. Volvo Group consists of eight business areas - Volvo Trucks, Mack, Renault Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services. Volvo IT was established in 1996 and became in 1998 a wholly owned subsidiary of the Volvo group. It supports 80 companies, including Volvo Group companies (Renault and Volvo Truck and Mack Truck). Volvo IT is present in Europe, North America South America and Asia. Volvo IT provides IT solutions and services for the entire industrial process, from product development to manufacture, sales, aftermarket and administration, including IT operations and IT infrastructure. The range of Services includes Product Life-cycle Management (PLM) and SAP solutions. 3.10.3. UIQ One of branch of UIQ Technology is based in southern Sweden and has over 80 employees. UIQ Technology is a fully-owned subsidiary of Symbian Ltd. Symbian is a software licensing company that develops and licenses Symbian OS, the open standard operating system for advanced, data-enabled mobile phones. Symbian owned by Ericsson, Panasonic, Nokia, Sony Ericsson, Samsung and Siemens. UIQ is strategy is based on the integration of different companies strategic, UIQ technology originated from a development lab at Ericsson Mobile Communications. UIQ Technology develops and licenses world-class user interface platforms for advanced mobile phones. The platform, UIQ, runs on Symbian OS and is licensed by the world's leading mobile phone manufactures. The product roadmap of UIQ Technology includes new configurations suitable for future mobile phones and support for future releases of Symbian OS. UIQ Technology designs and develops graphical user interface frameworks and standard applications for use in advanced mobile phones. A software development environment that can be used by third-party developers to create their own applications is also providing. In addition, UIQ Technology supports the creation of mobile phones through professional consultancy services. UIQ Technology drives a global partnership of industry players to ensure availability of applications, content and services for future phones based on UIQ.
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Core business
UIQ technology develops and licenses user interface platforms to the world’s leading mobile phone manufacturers.
Products
The product, UIQ is a user friendly and customizable user interface platform for pen-based and one-handed mobile phones based on Symbian OS. Symbian OS is the global open industry standard operating systems for advanced mobile phones. Symbia OS is the licensed to the world’s leading handset manufactures. UIQ Technology has licensed UIQ to leading mobile phone manufactures including Motorola, Sony Ericsson, BenQ and Arima. Publicly announced on UIQ include the BenQ P30 and P31, Motorola A920, A925 and 1000, Sonny Ericsson P800, P900, P910 and Arima U300.
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4. Results and Analysis In this section, the study presents the results from interviews, which will be followed by a simplified analysis of this data. 4.1. Do Volvo IT, UIQ and Boverket have IT strategies? In this question, the interviewees were asked to state whether they have IT strategies. According to the interview with the President of Volvo IT Ulf Nilsson, “Volvo group has an IT strategy, Volvo IT strategy handles operation; support development of all types of IT systems, regardless of platforms” During the interview with Magnus Carlsson the UIQ’s Information Systems manager, he put it: “IT strategy in UIQ has “not yet been finalized”. In contrast with Stefan Norrman, Assistant IT manager said: “IT strategy was formulated in 2000”, afterward Boverket renamed to IT platform. 4.1.1. How do Volvo IT, Boverket and UIQ describe their IT strategies in comparison with other strategies? While Nilsson put it: “to some extent the IT strategy in Volvo IT is described in different ways from marketing and product strategies, the differences are: IT strategy provides IT solutions and services for the entire industrial process, from product development to manufacturing, sales, aftermarket and administration, including IT operations and IT infrastructure. Furthermore, IT strategy in Volvo IT supports the entire business areas such as Mark trucks, Renault Trucks, Volvo Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services.” In the interview with Boverket, Norrman said: “Boverket describes IT platform without follow pattern ”. 4.1.2. Analysis This research study found out that Volvo IT is a core processing of IT strategy in entire Volvo groups. The IT strategy in Volvo IT has been extensively used in solving complex industrial issues using advance IT solutions. The IT strategy at Volvo IT also covers knowledge in the areas of systems development, methods, architecture and integration. In addition, the IT strategy in Volvo IT assists their clients with everything from analyses and research to assuming responsibility for the entire process. Moreover, at Volvo IT, the IT strategy is described differently from marketing and product strategy to some extent. In the interview with Volvo IT, Nilsson said that the differences are; IT strategy in Volvo IT provides IT solution and services for entire industrial processes, from product development to manufacturing, sales, after-market and administration, including IT
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operations and IT infrastructure. Furthermore, the IT strategy in Volvo IT supports all of their business areas. The table below illustrates examples of difference applications operated and supported by Volvo IT strategy. Production Development PDM (Product Data Management) CAD (Computer Aided Design) CEA (Computer Aided Engineering Sales Customer and dealer orders eBusiness Parts logistics Source: (www.volvoit.com) The situation of IT strategy in Boverket is dissimilar. The difference is that IT strategy was formulated in 2000 and thereafter renamed to IT platform, the reason behind the altered name was internal policy. 4.1.3. Stand Alone IT Strategy Although, at UIQ IT strategy has “not yet been finalized”, there is a possibility that UIQ has stand-alone IT strategy. In this sense, stand-alone IT strategy can be considered as unplanned actions to deal with currently emerging opportunities or threats. Once the firm has accepted this strategy, it will be incorporated into the strategic plans of all the organizational units that it affects. An example of a situation that might give rise to a stand alone IT strategy would be the announcement of a new technology product by a vendor. In this sense stand-alone IT strategy would be developed to capitalize on the new opportunity. If accepted by the firm, this would be followed by appropriate planning. Stand-alone IT strategies generally cease to exist as the subjects they deal with mature and become more specifically recognized in the strategic plans of the firms or its constituents parts. As a result, the empirical and anecdotal evidence of this research study have demonstrated that Boverket and Volvo have IT strategies but they are not stand-alone IT strategy concept. Manufacturing Order handling and logistics Plants control Plant maintenance Quality assurance Administration Financial systems Data warehousing Human resources After-Market Claim handling Service handling Parts handling
Table 4.4 Applications operated and supported by Volvo IT strategy
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4.2. Are IT components incorporated into the Marketing strategy? This question was aimed to investigate if IT components are incorporated into the marketing strategy According to the interview with Volvo IT, Nilsson said “IT components are incorporated into the marketing strategy throughout selling trucks; Volvo designs trucks together with customers’ preferences. For instance, after receiving different specifications from customers and then Volvo IT forward these specifications to a factory for purpose of producing the trucks” At UIQ Carlsson responses to this question and put it: “Marketing works closely with customers, partner’s developers and media from all over the world. The marketing department consists of partner management, developer community management and marketing communications” Carlsson went further and pointed out that: “IT components are incorporated into the marketing strategy as a component to support IT infrastructure in all department including marketing strategy department” 4.2.1. Analysis According to Stark (1990), computer systems have not yet taken over the human specialist in marketing. However, they are increasingly being used to support decision-making. Often this is done by sifting through the great volumes of market data available from scanner out put. Without the help of a computer, it is virtually impossible to analyze all information now available. Marketing decision-supporting systems are used to fix prices, establish where distributors would be most effective, understand the effect of different forms of adverting, and foresee problems arising from competitor’s strategies. The situation in Volvo IT can be interpreted like this: Volvo IT now supply their dealers with upto date information on special promotions, prices, conditions, discounts, options, colors and technical and financial information. As a result, dealers can sit down with potential buyers to find out what the buyer requires and then produce a personalized financing plan. The systems can help customer’s understand the details of different loans and provide preliminary acceptance indications by loan institutions. Dealers can see current stocks on screen rather than waiting for information systems to improve the car, thus Volvo IT-dealers relationship, giving dealers better control over their business and manufacture feedback on customer behavior. At Volvo IT, IT components are incorporated into the marketing strategy in terms of applications. Consequently, these support after–market process which is then implemented from a global perspective. A good example of this includes systems facilitate training and delivery of spare parts, using a modern web technology. In contrast, the Information systems department at UIQ incorporates portable computers in the marketing department in order to facilitate daily operations. These IT components can be used when market people work outside office at exhibitions or when marketing people communicate with clients.
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In the case of UIQ, this research study indicates that Information systems incorporates IT components in the marketing strategy in order to make sure that the marketing department works effectively and efficiently. 4.3. Are IT components incorporated into the Product Strategy? This question was aimed at investigating if IT components are incorporated into the product strategy According to interview with Volvo IT,Nilsson said: ” IT components are incorporated into the product strategy in order to boost up efficiency and add value in Volvo cars engines. IT components are also used as a product for the purpose of communicate with trucks, not only that but also, to measure fuel consumption”. Information Systems manager of the UIQ explained that: “IT components are incorporated into the product strategy in order to maintain and support user interface platform, systems applications and integrated applications”. Norrman puts it this way: “Boverket incorporates IT components into the service strategy 4.3.1. Analysis According to the interview with Volvo IT, product development involves high demands on IT support for design and construction of both products and manufacturing systems. IT places high demands on effective communication between different work groups, as well as on the efficient management of electronic documents. IT components support product development including Computer Aided Design and Computer Aided Engineering, as well as product life cycle management and communication with partners and suppliers. In addition, Volvo IT uses EDI (Electronic Data Interchange) as a product in order to increase efficiency within the transmission of text messages between Volvo Car and Volvo suppliers and between Volvo cars internal companies. Volvo also used EDI in order to cut costs. These include the cost of stationery and postage. At Volvo IT, IT components are incorporated into satellite communication between drivers or their vehicles and fleet administrators, who receive continuous update on vehicle location. Administrators can transmit text message to drivers and set up schedules, simplifying fleet management. Another IT component which Volvo IT incorporated into the product strategy is called Trillium Software System, that product assists Volvo to provide a better understanding of customer buying habits to maximize cross-sell, up-sell and support opportunities. With the Trillium Software System, Volvo IT is able to help their clients to identify its best customers in order to market to them in the ways they choose, resulting in improved customer service and retention.
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Furthermore, software components are incorporated into trucks in order to facilitate communication within trucks, and to measure fuel consumption. Volvo IT also incorporates IT components in a variety of functionality to support their customers’ software applications. UIQ incorporates IT components into the product strategy to create mobile user interface phones. For example, C++ and Java languages are incorporated into the product strategy in order to create applications and services for designed mobile phones user interface. The user interface is the software that the end user interacts with, providing full use of mobile phone and application suites. Technically, the user interface runs on Symbian OS, the open operating systems for advanced, data-enabled mobile phones. 4.4. Are IT components incorporated into the Management Information Systems Strategy ? This question was aimed at investigating if IT components are incorporated into the MIS strategy According to the interview with Volvo IT, Nilsson said: “IT components are incorporated into the MIS strategy in order to support sales and customers relationship management” In this question, I did not get enough information from UIQ and Boverket. 4.4.1. Goals of the MIS Strategy In this part of interview, the interviewees were asked to describe the goals of the Management Information Systems in their organizations. At Volvo IT, Nilsson quoted as saying, “the MIS goals are to segment within various components” At UIQ Carlsson said “the goals of the MIS strategy are to support the company’s business, add cost effective services and solutions in a professional way; To do this Information System need to have right people with right skills”. At Boverket the goals of the MIS strategy “are to issue the correct amount of loan to its clients according to organization’s rules and conditions .” 4.4.2. Components of the MIS Strategy At UIQ components of the MIS strategy consists of processes, competence, infrastructure and service. In an interview with Volvo IT, Nilsson said “components of the MIS strategy should support entities such as Mark trucks, Renault Trucks, Volvo Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services. These entities can be categorized in four criteria, unique, mixed unique/common, common and common & commercial” At Boverket components of the MIS strategy consists of IT and organizational
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4.4.3. Do MIS strategy components belong to different levels? At Volvo IT, IT components belong to different levels At UIQ, Carlsson said “Yes, some are high some are low,” Whilst at Boverket Norrman said “these components belong to different levels” 4.4.4. Analysis At Volvo, the idea behind customer relationship management is to create a highly personalized relationship with each customer leading to greater customer satisfaction and stronger, more profitable business relationship with him/her. Moreover, at Volvo, IT components are incorporated into the MIS strategy intended for supporting their requirements. By incorporating IT components into the MIS strategy, Volvo IT has been able to provide the following values: • Improved customer relations • Reduced costs for acquiring a customer • Enhanced revenue The goal defines the desired future position of organization. They are selected on the basis of a well defined mission. Some models of the strategic planning process separate goals from objectives. In that case, goals are broad and timeless statements of results that organization considers will achieve the mission. Objectives would then ‘flesh out’ these goals with qualitative as well as quantitative terms since they are specific and tangible measures of the goals to achieve the mission (Wendy, Robson. 1997). Regarding the goals of the MIS strategy, Volvo IT has been using segmentation as an essential tool to aggregate customers into groups with similar characteristic such as demographic, geographic or behavior traits and market them as a group. Consequently, each member in the same of segment has similar needs and wants. This research study interpreted this method as a cost-effective way to target the groups of customers. As Berger and Bechwati (2000) explain , the “core of relationship marketing is the development and maintenance of long-term relationships with customer, rather than simply a series of discrete transactions”. At UIQ, the goals of the MIS consists of planning future investments in business, the management ought to spend the money in such a way as to get the highest possible return from it, i.e. to make the investment as cost-effective as possible. In order to achieve these goals, UIQ requires skilled employees, This might be the ability to program in Java, C++, draw data flow diagram and create user interface. In addition, UIQ requires the right people who have MIS knowledge to help UIQ to realize the maximum benefit from its investment in equipment, personnel, and business processes. This process may include planning and developing new
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computer systems or devising ways to apply existing systems resources to additional operations. Moreover, at UIQ the goals of the MIS strategy that can be interpreted in terms of behavior, attitudes, and personal characteristics these are important and may be crucial in serviceoriented roles. For example, IS staff having empathy with users in delivering many IS services, particular in those with a high degree of user contact. By using several IT components efficiently to process applications payment, Boverket is able to process correct amount of loan to its clients according to the laid down rules and conditions. The goals of the MIS strategies in these organizations are settled in order to enable the business or services to meet the needs of customers in a cost effective manner or an operational excellence. Together, the goals of the MIS strategies depend on internal & external communication information systems as well as various IT components that can or will support the business plan. UIQ describe components of the MIS strategy as methodologies for systems design, systems development and project management and service management, for example, define good practices for some of these processes. Less well defined are the processes that deliver the value from IS/IT investments and applications. These include formulating strategies, management decision-making process for investments in IS/IT, managing organizational and business changes required to deliver value and the responsibilities and accountabilities for realizing specific benefits. At UIQ processes are interpreted as a tool to coordinate the expertise of the functional areas to meet the common goal of satisfying the customers. Furthermore, processes are viewed by UIQ a method of emphasis on how work is done. In terms of infrastructure, UIQ describes infrastructure as a tool to provide the shared foundation of ability for building and using business applications.
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In the interview with Volvo IT, Nilsson, he draws a chart, which indicates where the MIS components belong. The chart below is based on Nilsson outlook of the MIS strategy components in Volvo IT. Business strategy
Human Resource
Financial
Information Technology
Chart 4.2 Illustrates levels of MIS components in Volvo IT
Based on feedback from all interviews, the components of the MIS strategy belong to different levels; however, this research study did not get enough information from interviewees to explain in details and justified these levels. 4.5. Describing the IT Components in relation to the overall business strategy In this question, the interviewees were asked to state how IT components are described in their organizations in relation to the business strategy. Based on the interview with Volvo IT, Nilsson said “Volvo IT describes IT components as fifty percent of applications such as new development, enhancement and maintenance, while the other half belongs to infrastructure and operations, window server, clients, communication and networks for their companies IT strategy” Nilsson continues and said “IT components at Volvo IT are described in reference to the whole Volvo groups” According to the interview with Carlsson, UIQ describes IT components based on the following contexts: “Physical: consists of infrastructure and hardware, Function: contains services Logical: includes processes, competence and knowledge “ At Boverket, IT components are described in the following way: “Physical consists of printers, telephones, video conference, and scanner In terms of function IT components include 120 computer programs and computer system that manage the applications and payments In terms of infrastructure: “IT components consists of internet and intranet”
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4.5.1. Significance of IT components in IT strategy According to the interview with Volvo IT, “IT components are very significant, for instance” IT strategy is always working to rationalize cost, not only that but also Volvo has developed new solutions in order to trim down cost” Feedback from UIQ indicates, “IT components are regarded as of medium in significance” In contrast with Boverket, Norrman said: ”IT components are crucial, without these components Boverket cannot function. Therefore, Boverket is 100% dependent on them” 4.5.2. Analysis At Volvo IT, this research study found out that IT components are described in relation to applications, which consist of 50 %, while infrastructure and operations include 50 %. Within applications there are sub IT components such as, clients, network and communication, inside infrastructure and operations are there also sub IT components such as, new development enhancement and maintenance. The chart below is the interpretation on how Volvo describes their IT components
IT Components in Volvo
Infrastructure & Operations 50 % consists of maintenance, new development, enhancement, and window server
Communication Window Server
Clients Network
New Development Enhancement Maintainance Window Server Communication Clients Network
Maintainance Enhancement
New Development
Applications 50 % consists of clients, Network and Communication
Chart 4.1 Depicts on how Volvo IT describes their IT components
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According to feedback from UIQ, IT components are described in following contents:
In terms of processes
UIQ technology focuses on usability throughout the entire process. Easiness to navigate user interface provides a consistent user experience across applications. Using the UIQ range of products creates a consistent user experience across devices.
In terms of knowledge
UIQ describes IT components in terms of Knowing the job, ability to understand what the role demands of the person. For example knowledge of what is involved in constructing an IS strategy or building relationships with vendors. Knowledge of something’s means that information plus expertise.
In terms of Infrastructure
UIQ describes IT components in terms of all hardware, software and network, including routine processing systems. The infrastructure of UIQ is designed to operate its current systems and undertake new initiatives. At Boverket, the Internet component increases the accessibility, storage and distribution of information and knowledge. The components of the internet at Boverket are comprised of World Wide Web, email, telnet and FTP. At Boverket describes intranet as a network on TCP/IP protocols. Components of intranet in Boverket consist of: • The WAN component (Wide Area Network) • The LAN component (Local Area Network) • The intranet service management component • The server and application software components In all the studied organizations, IT infrastructures are designed to make information flow across internal organizations such as links to customers, vendors and public infrastructure, including the internet. Each organization determines how its infrastructures are configured. The results from all interviews indicated that there are similar ways in describing IT components, particularly with respect to IT infrastructure. Regarding significance of IT components in the MIS strategy, this research study brings to a close that IT components are very crucial in all organizations. The study sees that IT components are significance to trim down cost. This is in line with statement from Volvo IT, in the interview with Nilsson when he pointed out “ The IT strategy is always working to rationalize cost” 4.6. Contexts of IT Components within Volvo, Boverket and UIQ The question is: In which contexts do Volvo, Boverket and UIQ present their IT components? According to Norrman , “Boverket presents IT components in the following contexts Increase efficiency in administration and the processing of large amount of data”
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In an interview with Volvo IT , Nilsson said: “Volvo IT presents IT components in the following context: In terms of generating IT support for all the processes in the company and integrating these systems for efficient flow of information, In terms of producing solutions that facilitate global coordination, In terms of creating solutions that make it possible for colleagues to communicate and access information at any time and any place” In an interview with UIQ, Carlsson said “UIQ presents IT components in terms of Symbian OS, processor, hardware and base band,” 4.6.1. How far ahead is future prospect of IT components? According to the interview with UIQ, IT components are planned for five years, while feedback from and Boverket indicated it is done for four years. 4.6.2. Analysis Volvo IT presents IT components in terms of offering customer’s solutions for all areas of industrial process. This includes solutions for product development, manufacturing and aftermarket, as well as sales and administration. Volvo IT streamlines data management so that customers can be able to concentrate on their core business. Furthermore, Volvo IT presents IT components as tools to create IT support for all processes at Volvo group customers and integrate these systems for efficient flow of information. In addition, Volvo IT presents IT components in terms of creating solutions that make it possible for colleagues to communicate and access information at any time and any place. According to the interview with Nilsson, Volvo IT currently is in the midst of global evolution. This autumn, Volvo IT will start to work on creating a global organization within infrastructure & operations and this is to be achieved through collaborating globally and allowing resources from different parts of company to interest in deliveries. However, some things cannot be global. Nilsson said: “The Important past of our operations will continue to be local. They can include certain special solutions for local plants or local support functions, because, even if our customers are becoming increasing global, we want also to be able to support the ones do that not run global operation”. UIQ presents IT components as tools to create applications frameworks and services in both C+ + and Java. In connection with Symbian OS, UIQ presents IT components based on the open Symbian, Symbian is capable of giving developers an access to a lot of functionality available in a wide range of mobile phones from a diverse set of manufactures in different target markets. The use of Symbian also ensures a larger commonality of APIs between even the manufactures of mobile phones, allowing developers to use much of their code base to reach even more end users. Diagram below presents overview of IT components in UIQ.
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UIQ
Symbian OS
Source www.uiq.com
Table 4.3 Indicates overview of IT components in UIQ
Boverket presents its IT components as office tools to facilitate the process of applications payment for their clients. Regarding the future prospect of IT components, feedback from all organizations shows that they have well planned the future prospect for their IT components.
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IT components future prospect planning within these organizations are also supported by setting goals for the period ranging between three to five years. For that reason, that there is a link with theory of strategy, Thus, this study mentioned previous that “The strategic planning is often long-term, a periods of three years or more” (Ax et al., 2002). 4.8. Implications of the research In the introduction section of this paper, I mentioned that an alternative to this research study was aimed at finding out whether “IT strategy” is a stand-alone concept or how these organizations incorporate IT components into other strategies. As a result, the empirical and anecdotal evidence of this research study have demonstrated that there is no stand-alone IT strategy. Instead, IT strategy exists as part of an overall business strategies. Another possibility is that, IT strategy is used in organizations as low components into business strategies, for example in product, marketing or management Information systems strategies. Regarding IT components, this research study found out that UIQ, Boverket and Volvo IT incorporate IT components into their strategies for the following purposes: • In order to enhance efficiency in Information systems • In order to increase the efficiency in the transmission of message • To support product development • To support user interface design • To provide better customer services • To improve business efficiency 5. • Findings This research study found out that there are several similarities across the three organizations being researched in terms of describing the IT components, the MIS components and the goals of MIS. The finding from this study indicates that IT components are very significance in terms of support overall business strategies The results suggest that there is no stand-alone IT strategy. However, one interesting finding is that IT components are the major objects used in strategies as low components to support Information systems across three organizations being researched. Empirical evidence indicates that IT managers at Volvo IT and Boverket occasionally found it complicated to differentiate between IT and IT strategic concepts. From the author’s point of view, this may be because these two concepts are sometimes intertwined and IT components are integrated into normal management conversation.
• •
•
5.1. Conclusion This thesis studied how organizations describe their IT strategies. The three framed questions were:
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? Do organizations have IT strategies? ? Are they described in different ways? ? Do organizations incorporate IT components into their strategies? By describing and testing the three hypotheses in Boverket, Volvo IT and UIQ. The evidence suggests that there is lack of agreement in literature as to how organizations should describe their IT strategies in relation to other strategies. Moreover, this research study discovered that there is an extensive contradiction on how organizations should describe their IT strategies in general perspective. With respect to the research methods, I conclude, in line with Earl (1993) Walsham and Waema (1994) and others, that the analysis of IT strategy should not be based on the results of only few interviews with IT managers, nor should it be based on the postal survey alone. This study revealed that it requires significant effort to obtain general view on how IT strategies are described in organizations, due to the complexity and often-implicit meaning of the concept of IT strategy. This study has revealed that there is lack of agreement in literature as to how organizations should describe their IT strategies in relation to other strategies. Moreover, this research discovered that there is an extensive contradiction on how organizations should describe their IT strategies in general perspective. The result from this particular research setting shows that there is no IT strategy, which stands on its own feet. IT strategy exists as a part of an overall business strategy. Another possibility is that IT strategy is used in organizations as low components within other strategies, for example in product, marketing or management Information systems strategies. On the one hand, this research study found that there are similarities on how these organizations described IT components. On the other hand, this research study found that there are dissimilar methods of describing the IT strategy. This has been tested firstly by studying the theory and then via empirical research at Boverket, Volvo IT and UIQ. In this particular research setting, the study concludes that these organizations are describing their IT strategies in a number of ways, mostly depending on the nature of their business domains. Based on empirical evidence from this research study, the management process of developing an IT strategy must cover a wide range of aspects including applications, infrastructure, the IT function, IT governance, and major IT issues that arise. Unfortunately, determining how to respond to this issue is not easy. IT strategy development has been a major management challenge for many years, and it is likely to remain a challenge for the foreseeable future. In summary, academic literature on IT strategy suggests a rational and deliberate process. This research attempts to investigate and explore how organizations describe their IT strategies in relation to other strategies and investigate whether “IT strategy” a stand-alone concept. The findings in this research study may prove useful to companies and may guide future researchers’ interested in this domain.
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6. Discussion & Research Implications The purpose of this study was to define the problem and explore whether organizations have IT strategies and how these are described in comparison with other strategies. This research study also investigates how these organizations incorporate IT components into their strategies. Alternatively, this research study was aimed to finding out whether “IT strategy” is a stand-alone concept. Therefore, the purpose of this research study was described by the following questions: • Is “IT strategy” a stand-alone concept? • Do organizations describe IT strategies as components in other strategies? In order to achieve these goals, three interviews were conducted to gather the required data from Volvo IT, UIQ and Boverket. The results were then compared and contrasted to the same issues across the three organizations being researched. However, in these three case studies the interesting question might not be if, but rather how the purpose was fulfilled. Are there things that should have been done differently? Could things have been made more explicit? To begin with, the interviews might have produced a better result if they were conducted at a later stage in the process. Due to time limit of this program, the interviews were carried out before the procedural structure of the thesis was fully elaborated. By performing the interviews in a later stage in the process, would have made it easier to address some of the questions that came up during the information gathering stage of the process. Therefore, it was difficult to prepare the theory of science in detail, which should preferably have been given more emphasis. However, it was clear that for the research to be conclusive, the data collection would have to be qualitative. The process of developing and describing IT strategies in relation to other strategies in the organizations is a much-conceptualized process that is tricky to quantify.
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7. Limitations of the Study and Suggestions for the Future Research Time constraints prevented this research study from investigating whether Boverket, UIQ and Volvo IT use enterprise systems in implementing their IT strategies. This would be done by an evaluation and comparison of ERP and EAI. In order to make IT strategy concept clear I would suggest that organizations should included in their IT strategies the following elements: • Plan or “roadmap” that will define the sequence of things to be done in order to accomplish the objectives. • Policies, standards and architectures Put all these elements together, and then organizations can have the IT strategies that: • Can understood and followed by both IT and business people • Can adapt a change is required • Can best meet the needs of the business. There is still a need for organizations to describe their IT strategies in articulated terms of external domain-market place and internal domain –how information systems infrastructure should be configured and managed. Limitation of this research is the relatively small number of interviews. The key criterion for choosing respondents was to target interviewees whose contribution reflects the overall understanding and attitude of the organization through the domains of IT and business strategies. This approach resulted in a limited number of available respondents that could participate in the study. Nevertheless, each interviewee was a key decision maker within his/her organization, thus allowing rich insights into the organizations. Since this study could not access an in-depth interview with UIQ IT Manager (apart from email feedback) for that reason, the study received insufficient information to enable the author to compare the same issues in other organizations. Securing the opportunity to interview the IT Manager of UIQ, would have significantly influenced the conclusion. Nevertheless, deeper investigation was conducted using secondary data sources such as the UIQ website. Regardless of these limitations, this research study has revealed new insight into how IT strategy views itself and its position within the organizations observed.
THAT’S IT! I HAVE DONE WHAT I COULD…..
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Appendix A
Interview Questions
1 Do you have IT strategy in your organization? 2 How does IT Incorporates in Marketing Strategy? 3. How does IT Incorporates in Product Strategy? 4. How does IT Incorporates in Management Information Systems? 5. How do you describe IT components? 6. How significant are these IT components? 7. What are the Goals of Management Information Systems, in terms of effective management and Unit Level? 8. What are the Components of MIS Strategy? 9. Do these components belong to different levels? 11. In which context do you present IT Components? 12. How do you describe IT strategy in comparison with other strategies? 13. How IT components describe in relation to overall business strategy? 14. How far ahead is future prospect of your IT components (i.e. short, medium or long term)?
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Appendix B
Structure of Interviews
Three interviews were conducted in Sweden between March and April 2005. The field data were gathered according to table 1, 2 and 3 depict below: Table 1 1st Interview with Boverket Name: Position: Business Unit Location : Table 2 2nd Feedback from UIQ Note: Author’s didn’t get access to conducted interview face by face with Information Systems Manager, instead of that the interviewee preferred to reply my interview questions by e-mail. Name: Position: Business Unit Location : Table 3 3rd Interview with Volvo IT Name: Ulf Nilsson Position: President of IT Volvo (CEO) Business Unit Volvo IT Location : Gothenburg-Sweden Note: There was no technical equipment used during collection of the data except, pen and paper to make notes of the interviewees. Magnus Carlsson Information Systems Manager Information Systems Ronneby-Sweden Stefan Norrman Assistant IT Manager IT Development Karlskrona, Sweden
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