Systems Project: Business Context and Strategy

• This chapter is about the business context within which systems projects are created.
• Organization strategy determines shape, and its shape determines business processes and its systems.
• Context starts with 'systems planning activity' which determines which projects begin based on enterprise needs.
• Systems planning allows business plans to translate into computer systems that will meet business goals.
• Business goals can relate to profit, growth, or market share; also customer service, safety or staff development.
• Business goals lead to identifying key result areas (KRAs) which specify the need for new systems.
• Information systems management is concerned with developing new systems that contribute to achieving business KRAs.
• Strategy is a pattern which integrates an organization's major goals, policies into a cohesive whole.
• In other words, it pulls together and gives meaning to everything the organization does.

Characteristics of Good Strategy

• Clear overriding goals for all units of the enterprise to give cohesion to tactical choices.
• Preserves freedom of action, supports empowerment, and enhances commitment.
• Sets pace, determines action course, and helps people feel in charge and motivated.
• Concentrates resources where and when they will generate maximum advantage.
• Defines what makes the enterprise superior to opponents and organizes resources to achieve that advantage.
• Balances the changes that occur; is the opposition kept on the run by consistent innovation?
• Requires commitment, not just acceptance, turning a strategy into competitive advantage.
• Seeks to gain advantage, doing the unexpected to gain advantage out of all proportion to the effort expended.

Strategy as...

• Plan: A consciously intended course of action to deal with a situation.
• Pattern: Consistent behavior—intended or not—that leads to formalizing behavior into a strategy.
• Position: How the business positions itself in their own market.
• Perspective: A set of values; the character or culture of the business which dictates common thinking and behavior.

Developing Business Strategy

• Useful to understand strategy to develop new systems.
• Helpful to be clear on how strategies are developed.
• Begin by investigating the situation to collect as much data as possible.
• Can then develop alternative courses of action based on review situation.
• Decisions evaluated in terms of potential outcomes and consequences.
• Then a decision is chosen to be implemented based on the outcomes/consequences.
• Implementation and follow up of the decision or solution is the final step.

Model of Strategic Management

• Analyzing the (Internal & External) Environment: Investigate to develop understanding of business, strengths, weaknesses, competitors and the market.
• Planning the Direction: Determine the future, create a vision for the kind of business, over philosophy to be considered.
• Planning the Strategy: Design means for going in direction, how to achieve goals, alternative approaches can also be pursued.
• Implementing the Strategy: Put the strategy into action, monitoring & controlling the implementation.

Analytical Tools

• SWOT (strengths, weaknesses, opportunities, threats) analysis.
• PESTEL analysis, the Balanced Business Scorecard.
• Boston Consulting Group matrix are some of the more well known and comprehensive strategy analysis techniques.

SWOT Analysis

• Identifies strengths, weaknesses, opportunities and threats to business.
• S & W are internal assessments.
• O & T define external environment.
• Segment A identifies strong activities where opportunities exist, strategy overcomes external threats, and eliminates weak aspects.
• Segment B identifies internal weaknesses where external opportunities exist, needing internal action to eliminate weaknesses so competitors don't capitalize on opportunities.
• Segment C is the worst place, weak internally & face external threats from competitors/environment, may discontinue service/product.
• Segment D has strengths but faces external threats, use strength to deflect the threat.

PESTEL Analysis

• PESTEL analysis or PESTLE analysis looks at:
  • Political: Government attitude toward private/state-owned enterprises, international politics.
  • Economic: Interest and currency exchange rates, consumer expenditure/inflation, disposable income.
  • Socio-cultural: Demographic changes, lifestyle changes, working conditions, education.
  • Technological: New ways of delivering service, obtain/exploit marketing information, communicate.
  • Environmental: Climate change, pollution, sustainability of resources.
  • Legal: Antitrust & monopoly legislation; laws reducing pollution, taxation.

Balanced Business Scorecard

• Supplements traditional financial measurements with criteria that measure performance from customer, business, and learning/growth perspectives.
• Scorecard retains traditional financial measures, but they tell the story of past events.
• Customer perspective looks at how customers view the organization.
  • Measures can include marketshare, profitability, response/delivery times.
• Internal business perspective considers how well the business runs, is it efficient in creating new courses?
• Employee (learning & growth) perspective considers development of employees, learning support mechanisms, and technological support.

Boston Consulting Group (BCG) Analysis

• Tool to evaluate service offerings, models the relationship between a products current and future potential
• Wild Cats are potential good businesses.
  • Low market share with high potential for growth.
• Stars are profitable products that are expected to be successful.
  • Leader products needing growth market investment.
• Cash Cows are the current high income earners.
  • Provides majority of current profit and funding for Wild Cats and Stars.
• Dogs have little to no contribution to profits and are not expected to in the future.
  • Lost market share or are in declining markets.

Michael Porter's Five Forces

• Porter believed: competition is the essence of strategy.
• The competitive world is determined by five forces: existing competitors, new entrants, substitute products/services, suppliers and buyers.
• Rivalry between existing competitors can be intense with many similar sized organizations.
• New entrants pose a threat if the marketplace is desirable and competition weak.
• Substitute products/services threaten competition and can wipe out industries.
• Suppliers cause pressure by reducing supply/increasing prices if few in number & more powerful than enterprises.
• Buyers influence competition by buying in large volumes; major chains put competitive pressure on suppliers.
• Modified Porter's Five force model shows opportunities for information systems.
• Porter identified three generic business strategies to respond to the five competitive forces.
  • Low-cost strategy to be the leader and use IS to reduce overall costs.
  • Distinguish services/products from competition & use IS to add features.
  • Concentrate on market & use IS to identify/support activity.

Generic IS Strategies for Organizations by Gregory Parsons

• Centrally planned: Closely linked business and IS planning, where IS strategy is part of the business strategy.
• Leading edge: Innovative technology that can create organizational gains and paybacks.
• Free market: Users make decisions, and the IS department behaves as a profit center.
• Monopoly: Information is a corporate asset available across the company, with a single supply source.
• Scarce resource: IS is limited by budget and users compete for service using strict cost/benefit criteria.
• Necessary evil: Organizations see IS development as a necessary evil & information is not important.

McKinsey 7-S Model

• Other factors besides strategy make an organization effective.
• Organizational change depends on relationship/interactions between strategy, structure, systems, style, skills, staff, and shared values.
• Organization is structured, systems, and style work is how strategy interacts with organizational culture.
• Strategy improves position against competition, enabling structures and organizations' systems to keep it going.
• Management style shapes strategy and culture, their time shows what is important to them.
• Skills in this instance relates to attributes and capabilities of the organization.
• Staff means dimensions like recruitment, morale, motivation, attitude, commitment.
• Shared values are the guiding values.

Organizational Culture

• Reflects the assumptions about the way work is done.
• Work is encouraged and what is discouraged.
• The part of organizational iceberg is beneath the surface & consists of unwritten rules.
• Team needs to know the spirit of the work, they see the vision, they share it & how they want the project to feel.