Understanding a Company's Strategy - What to Look For.
Understanding a Company's Strategy What to Look For
Why Organisational Behaviour Matters
• Individual members of organisations tend to conform to the organisation's formal and informal rules and the 'company culture' - or else leave;
• The behaviour of an organisation is determined by the relationships within it and by its purpose and by the environment in which it operates.
What is an' Organisation'?
Defining 'Organisation'
The definition selected from Huczynski and Buchanan, for example, brings out three important aspects of organisations:
* The fact that they are social organisations and hence must cater for the individual needs of people within
* The fact that organisations require controls and direction in order to succeed
* The fact that measurement is required in order to assess organisational performance
Determining Features of an Organisation
What is Organisational Culture?
How Organisational Culture Develops
Impact of Organisational Culture 1
• An organisation's culture is either an important contributor or an obstacle to successful strategy execution.
• A deeply rooted culture well matched to strategy is a powerful lever for successful strategy execution.
• A strong culture is a valuable asset when it matches strategy and a serious liability when it doesn't.
• A 'weak' culture may prove to be an organisational opportunity since it can more easily be encouraged to be adaptive.
Traditional Organisational Structure
Alternative 'Flat' Structure
Alternative - Matrix Organisation
IT & Organizational Structures 1
Traditional organization is hierarchical, flat or matrixed.
2 In hierarchical orgs. Middle managers tell subordinates what to do and tell superiors the outcomes. IS supports this hierarchy.
3 In flat structured orgs. Work is more flexible and employee do whatever is needed. IS allows offloading extra work and supports intrafirm communications.
IT & Organizational Structures
4 In matrixed organizations, work is organized in small work groups and integrated regionally and nationally/globally.
5 IS reduce operating expenses by allowing information to be easily shared among different managerial functions.
IT & Organizational Structures 3
6 The "networked organization" is a new form, made possible by IS. Instead of rigid hierarchies, all parts of the company are connected by formal and informal communications.
The Information Systems Strategy Triangle
The Information Systems Strategy Triangle
Traditional Management
MIS Organization
Operations, Tactics, Strategy
Decision Levels
BIS3000 Lecture Two
E-Business
Strategic Relationships and Knowledge Management
E-Commerce and E-Business
* E-commerce, the process of selling a product or service to the customer (whether a retail customer or another business) over the Internet
* E-business, the integration, through the Internet, of all an organisation's processes from its suppliers through to its customers
Stages in the Commercial Use of the Internet
Boddy distinguishes between four levels of Internet use by a business, with increasing integration into core business processes at each level. These levels are:
* Information provision;
* Interaction with customers;
* Transactions; and
* Integration with internal information systems.
Basic Internet Business Models
(B-to-B: targets other businesses
( B-to-C: targets consumers
( B-to-E (employee): companies provide service to employees of other companies.
( B-to-G: companies provide services to local, state and national governments
( C-to-C: Consumers interact with other consumers.
Web-based business mechanisms
( Auctions: Web-based auction site (e-bay).
( Reverse auctions: sellers offer items to meet buyer's requests (priceline.com).
( Net markets: provides a place for buyers and sellers to meet (igetsmart.com).
( Portals: combined offering of information, services and links to other sites (Yahoo!).
( Bricks & clicks: storefront plus Web site (www.next.com).
( ASPs: offer business process functionality over the web to customers that use the site for internal business processes (igetsmart.com).
Reconfiguring Value Chain Systems to Lower Costs -- Software Industry
Reconfiguring Value Chain Systems to Lower Costs -- Software Industry
How Internet Technology Can Revamp Company Value Chains
? Internet technologies allow some value chain activities to be bypassed entirely.
And also
? Simplify supply chain activities and use 'e-procurement' tools.
? Integrate with internal operations - just-in-time inventory, production schedules closely matched to buyer orders, more accurate monitoring of buyer preferences and shifts in demand
? Automate collaborative data sharing with distribution channel partners -online systems reduce transactions costs.
Logical Design for Simple Web Site
Difficulties relying on Internet technology to gain competitive advantage
( All companies are rapidly gaining experience in use and application of Internet technology
- Mostly with use of generic, off-the-shelf software packages readily available to rivals
- Most industry participants gravitate to
use of many of the same Internet
technology applications
(and achieving comparable
operating benefits)
( Achieving sustainable competitive advantage generally requires use of proprietary Internet technology not readily available to rivals
Strategic Mistakes Made by Early Internet Entrepreneurs
( The mistake of ignoring low barriers to entry
- Eager capital providers paved the way
for market overcrowding and fierce rivalry
( The mistake of competing solely on the basis of low price
- Price became the predominant attention-getting competitive variable-price war atmosphere turned into a battle for market share and profits later (when volume built to levels high enough to support fixed costs)
- Low price is not a competitive advantage unless it is accompanied by truly lower costs
Business Models and Strategies for "Pure" Dot-Com Enterprises
Successful dot-com strategies tend to incorporate the following features:
- A distinctive strategy that delivers
unique value to buyers and
makes buying online very appealing
- Deliberate efforts to engineer a value
chain that enables differentiation or
lower costs or better value for the money
- Focusing on a limited number of competencies and performing a specialized number of value chain activities where proprietary Internet applications and capabilities can be developed.
Internet Strategies for Traditional Businesses
( Few, if any, businesses can/should avoid making use of Internet technology for internal cost savings and improve operational effectiveness
( Key issue is how to use the Internet to position the company in the marketplace, i.e. whether:
• Solely as a vehicle for disseminating product information (with traditional distribution channel partners making all sales to end-users)
• Secondary or minor distribution channel
• One of several important channels
• Primary channel
• Company's exclusive distribution
channel
Reasons for Using Internet
as Information or Minor Distribution Channel
( Avoids channel conflict and angering longtime wholesale/retail dealers
- Important where strong support
and goodwill of dealer networks
is essential
( Helps a company gain online experience, achieve incremental sales, and do marketing research to respond more precisely to buyer preferences
Advantages of Using Internet as Primary or Exclusive Channel
( Advantage of bypassing traditional distribution channels entirely: Allows capture of full retail price by the manufacturer (e.g. downloads of music)
( Can assist re-design of entire value chain - i.e. on supply side as well as sell side
Reasons for Knowledge Management
Information and knowledge have become the fields in which businesses compete. Several important factors include:
? Rapid Change
? Globalization
? Difficulty in gaining sustainable Competitive Advantage
( Value of knowledge embedded in products and services
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Advantages of Using Internet as Primary or Exclusive Channel
( Advantage of bypassing traditional distribution channels entirely: Allows capture of full retail price by the manufacturer (e.g. downloads of music)
( Can assist re-design of entire value chain - i.e. on supply side as well as sell side
Reasons for Knowledge Management
Information and knowledge have become the fields in which businesses compete. Several important factors include:
? Rapid Change
? Globalization
? Difficulty in gaining sustainable Competitive Advantage
( Value of knowledge embedded in products and services
Why manage knowledge?
Sharing Best Practice
( KM systems capture best practices to disseminate their experience within the firm.
( Sharing best practice means re-using and exploiting the knowledge gained by a subset of the organization.
( Increasingly important in organisations that depend on applying their expertise - such as accounting, consulting and training firms.
( Problems often arise from employees who may be reluctant to share their knowledge.
Defining Knowledge Management
( KM "the processes necessary to capture, codify, and transfer knowledge across the organization to achieve competitive advantage".
( KM has a two-way relationship with IS:
( IT makes up the infrastructure for KM systems
( KM systems make up the data infrastructure for many new IS applications
Tacit vs. Explicit Knowledge
( Tacit knowledge is personal, context-specific and hard to formalize and communicate
( Explicit knowledge can be easily collected, organized and transferred through digital means.
Examples of explicit and tacit knowledge
Tacit Knowledge
• Knowing how to identify the key issues necessary to solve a problem
• Applying similar experiences from past situations
• Estimating work required based on intuition & experience
• Deciding on an appropriate course of action
Explicit Knowledge
? Procedures listed in a manual
? Books and articles
? Information left over from past projects
? News reports and financial statements
Benefits of online behaviour analysis in a KM environment
( Identifying which types of information are useful to which groups of users
( Showing how information passes through an organisation
( Identifying the information that users are looking for, but aren't finding
( Matching producers and consumers of information
Knowledge management processes
( Knowledge strategy
( Knowledge identification
( Knowledge generation
( Knowledge codification
( Knowledge transfer
( Knowledge evaluation
Four Basic Principles of Knowledge Codification ~
Davenport and Prusak (1998):
. Decide what business goals the codified knowledge will serve (define strategic intent).
2. Identify existing knowledge necessary to achieve strategic intent.
3. Evaluate existing knowledge for usefulness and the ability to be codified.
4. Determine the appropriate medium for codification and distribution.
Knowledge management is a continuous process
Applying Knowledge Management
( KM is not a new concept but one completely changed by IT such as collaborative systems, the Internet and intranets.
( Even so, KM is still an emerging discipline
( Ultimately, an organisation's only sustainable competitive advantage lies how its employees apply knowledge to business problems (but)
( KM is not a magic bullet and cannot solve all business problems.
Online Behaviour Analysis?
BIS3000 Lecture Three
Change Management
Protecting IT Assets
&
Outsourcing IS Services
Change Management -
Revising Management Policies
No computer system will be successfully adopted unless management policies support its adoption.
Management may need to revise:
* Standard operating procedures
* Measurements and rewards
* Resource allocation
Change Management - Motivating User Adoption
* The information strategy aims to convince adopters that change is better
* The political strategy uses organizational power to motivate change
* Differentiate between ready adopters, reluctant adopters, and resistant adopters
Job Enrichment Model (Theory)
• This model (Hackman & Oldham 1980) presents five key job characteristics:
> Skill variety - the extent to which a job makes use of of a range of skills and experience
> Task identity - whether a job involves a relatively complete and whole operation
> Task significance - how much the job matters to others, or to the wider society
> Autonomy - how much freedom a person has in deciding how to do their work
> Feedback - the extent to which a person receives feedback on performance
Job Enrichment Model (Practice)
• This model (Hackman & Oldham 1980) suggests some policies:
> Skill variety - Combine tasks
> Task identity - Form natural work units
> Task significance - Establish client relationships
> Autonomy - Vertical loading
> Feedback - Opening feedback channels
Job Enrichment Model & IS
• Combining tasks
- Use the IS to combine several processes into a single task, so that staff use more skills and complete more of the whole task - refer to BPR lecture.
• Form natural work groups
- Give team responsibility for a significant part of the task, and ensure the information system provides information to the team.
• Establish customer relations
- Use technology to provide staff with more or better information about the customer they are dealing with. Link staff to specific customers, with awareness of customer needs.
• Vertical loading
- As system takes over routine tasks, give staff more responsibility, supported by the information system, for scheduling, planning, client liaison, etc.
• Opening feedback channels
- Use power of system to pass on information from customers. Ensure positive as well as negative messages. Encourage more internal review and evaluation of performance.
Forcefield Analysis (Johnson & Scholes)
A forcefield analysis provides an initial view of change problems that need to be tackled, by identifying forces for and against change. The following questions can be asked:
( What aspects of the current organisation and its culture might aid change in the desired direction, and how might these be reinforced?
( What aspects of the current organisation and its culture would block such change, and how can these be overcome?
( What needs to be introduced or developed to aid change?
Forcefield Analysis - an example
• Resisting Forces
• Pushing Forces
- High-quality service
- Ethos of hard work
- Flexibility
- Devolved services
Change Styles
Change styles are the styles of managing change that might be used by change agents; they include:
> Education and communication: the explanation of the reasons for and means of strategic change.
> Collaboration or participation: the involvement of those who will be affected by strategic change in the identification of strategic issues, the setting of the strategic agenda, the strategic decision making process or the planning of strategic change.
> Intervention: the co-ordination of and authority over processes of change by a change agent who nonetheless delegates elements of that change process.
> Direction: the use of personal managerial authority to establish a clear future strategy and how change will occur.
> Coercion: the imposition of change or the issuing of edicts about change.
Resistance to Change
> The culture of an organisation is likely to affect how members respond to a proposed information system, and the degree of commitment that they show.
> People whose power in the organisation is threatened by a new system will resist it.
> Some existing structures will be more likely than others to encourage people to promote and support a new system.
> These factors together form a significant part of the context into which managers introduce a computer-based information system.
Stakeholders
• An organisation's stakeholders include all individuals and groups who have a relationship with the organisation and who are directly and significantly influenced by the activities of the organisation.
• These stakeholders vary from organisation to organisation but typically include employees, shareholders and customers.
Stakeholder Analysis
• Identify stakeholders, pressure groups, interested parties
• Assess their commitment
• Assess their power to help and hinder change
• Assess their interests, what they think and will do about change
• Manage relations with them - to gain support, or contain opposition
Information as an Asset
Information assets have value:
- Data is expensive to gather and process
- The systems required for effective information retrieval are expensive
- Knowledge management is a factor in competitive advantage
Information Assets ~ need protecting
Legislative Requirements
- intellectual property rights
- safeguarding of organisational records
- data protection and privacy of personal information
Some Common Practice
- information security policy document
- allocation of information security responsibilities
- reporting security incidents
- business continuity management
- source BS7799
Maintain a Policy
The policy should be written and adhered to as a constant
2 The technology itself should be varied and frequently updated.
3 The range of software involved, for example will cover virus-checkers for incoming e-mails, (where the virus checker will need constant updating in respect of newly discovered viruses) through to software that can trace unusual spending patterns and suspect personal details - e.g. track down credit card fraud.
Identifying Threats to the System
A threat is any potential adverse occurrence that can do harm to the application or its data
2 Threats come from internal as well as external sources
3 Categories of threats
- Disruptions, destruction and disaster
- Unauthorized access
Creating Controls
A control is something that mitigates or stops a threat
Controls include (technology)
- Redundancy
- Anti-virus software
- Passwords and encryption
- Firewalls
Risk Assessment Framework
Threat
A threat is a force, organisation or person, which seeks to gain access to, or compromise, information. A threat can be assessed in terms of the probability of an attack.
Vulnerability
A weakness of a system or facility holding information that can be exploited to gain access.
Asset Value
E.g. the impact if information were leaked or disclosed.
Business Risk
The combination of asset value, threat and vulnerability.
Importance of Confidentiality
Confidential information ("B2B") can involve research, design, prototypes and key technologies
2 Privacy ("B2C") concerns the facts a business holds about an individual. Safe storage, non-transfer to others and responsible usage are required by law.
(In any case, a database holding information about customers can also be considered a valuable asset)
DPA 1998 - Principle 7
Appropriate technical and organizational measures shall be taken against unauthorized and unlawful processing
- Technical and Organizational measures
- Encryption
- Digital Signatures
- Access to personal information
Business Continuity Management
According to the Business Continuity Institute 'a realistic objective is to ensure the survival oy your organisation by establishing a culture that will identify and manage those risks that could cause it to suffer':
Inability to maintain customer services
Damage to image, reputation or brand
Failure to protect the company assets
Business control failure
Failure to meet legal requirements
Every business should therefore develop a comprehensive business continuity plan
Involving Outside Experts
What is Outsourcing?
Outsourcing is the strategic use of outside resources to perform activities traditionally handled by internal staff and resources.
2 Outsourcing is a management strategy by which an organization outsources major, non-core functions to specialized, (efficient) service providers.
Strategic Outsourcing
Hire external firm to create (and manage) system ?
Specialist firm may have more skills
May be able to extend your existing resources
BUT
Choose vendor carefully
Prepare contract and payment style carefully
Outsourcing Life Cycle
Why use Outsourcing?
The top two reasons
. Reduce and control operating costs
2. Improve company focus
(i.e. on core competencies or on specialist services)
Some related factors driving IS outsourcing
Highly qualified IT staff are difficult to find and retain
2 By bringing in outside expertise, management can focus less on IS operations and more on the information itself.
3 Outsourcers are specialists, should understand how to manage IS staff more effectively.
4 Outsourcers may have larger IS resources that provide greater capacity on demand.
5 The Internet and the 'ASP' model
Some disadvantages of outsourcing
Abdication of control
2 High switching costs
3 Lack of technological innovation
4 Loss of ownership
Further considerations
To get a balanced view:
Don't focus solely on price
2 Carefully analyse and negotiate the service levels to be provided by the various suppliers
3 Evaluate the possible disadvantages to the organisation and the hidden costs (such as those on the previous slide)
4 Determine if outsourcing relationship produces a net benefit for your company
BIS3000 Lecture Four
Introduction to Strategy
The Information Systems Strategy Triangle
Business Strategy
Porter's Competitive Advantage Strategies
Cost leadership: be the cheapest
2 Differentiation: focus on making your product stand out for non-cost reasons
3 Focus: occupy narrow market niche where the products/services can stand out by virtue of their cost leadership or differentiation.
Strategy
(Johnson & Scholes)
Strategic management
(Johnson & Scholes)
Strategic Fit and Stretch
(Johnson & Scholes)
Strategic management and Position
(Johnson & Scholes)
Thinking Strategically:
The Three Big Strategic Questions
. Where are we now?
2. Where do we want to go?
- Business(es) to be in and market positions to stake out?
- Buyer needs and groups to serve?
- Outcomes to achieve?
3. How do we get there?
What is Strategy?
A company's strategy consists of the set of competitive moves and business approaches that management is employing to run the company
2 Strategy is management's "game plan" to
- Attract and please customers
- Stake out a market position
- Conduct operations
- Compete successfully
- Achieve organizational objectives
The Five Tasks of Strategic Management
Mission Statement and Strategic Visions
Example: Mission and Vision Statements
Characteristics of the Strategic Management Process
Need to do the five tasks never goes away
2 Boundaries among the five tasks are blurry
3 Strategizing is not isolated from other managerial activities
4 The big challenge: To get the best strategy-supportive performance from employees, perfect current strategy, and improve strategy execution
Five Forces Model of Competition
(Thompson & Strickland)
Porter's Five Forces
Industry Competitors: Rivalry is high when it is expensive to leave an industry, the industry's growth rate is declining, or products have lost differentiation.
2 Threat of New Entrants: can be lowered if there are barriers to entry. Sometimes IS can be used to create barriers to entry.
3 Threat of Substitutes: depends on buyers' willingness to substitute and the level of switching costs buyer's face.
4 Bargaining Power of Buyers: can be high if it's easy to switch. Switching costs are increased by giving buyers things they value in exchange - such as lower costs or useful information.
5 Bargaining Power of Suppliers: forces is strongest when there are few firms to choose from, quality of inputs is crucial or the volume of purchases is insignificant to the supplier.
The Five Forces Model and IS
The Five Forces Model provides a way to think about how information resources can create competitive advantage.
2 Using Porter's Model, General Managers can:
- Identify key sources of competition they face
- Identify uses of information resources to enhance their competitive position against competitive threats
- Consider likely changes in competitive threats over time
Considerations
How well is the present strategy working?
2 SWOT analysis
Resource Strengths, Weaknesses, Opportunities and Threats
3 Strategic cost analysis and value chains
4 Assess the competitive position
5 Identify strategic issues
What are the firm's SWOT?
S W O T represents the first letter in
- S trengths
- W eaknesses
- O pportunities
- T hreats
For a company's strategy to be well-conceived, it must be matched to both
- Resource strengths and weaknesses
- Best market opportunities and external threats to its well-being
Role of SWOT Analysis in
Crafting a Better Strategy
Developing a clear understanding of a company's
- Resource strengths
- Resource weaknesses
- Best opportunities
- External threats
Drawing conclusions about how
- Company's strategy can be matched to both its resource capabilities and market opportunities
- Urgent it is for company to correct resource weaknesses and guard against external threats
Core Competencies
Expertise in building networks and systems
2 Speeding new/next-generation products to market
3 Better after-sale service capability
4 Skills in manufacturing a high quality product
5 Innovativeness in developing product features
6 Speed/agility in responding to new market trends
7 System to fill customer orders accurately and swiftly
8 Expertise in integrating multiple technologies to create families of new products
Distinctive Competencies
A company competence is the product of organizational learning and experience and represents real proficiency in performing an internal activity
2 A core competence is a well-performed internal activity that is central (not peripheral or incidental) to a company's competitiveness and profitability
3 A distinctive competence is a competitively valuable activity that a company performs better than its rivals
Strategic Management Principle
Company Value Chain
? A company consists of all the activities and functions it performs in trying to deliver value to its customers.
? A company's value chain shows the linked set of activities, functions, and business processes that it performs in the course of designing, producing, marketing, delivering, and supporting its product / service and thereby creating value for its customers.
? A company's value chain consists of two types of activities
? Primary activities (where most of the value for customers is created)
? Support activities that are undertaken to aid the individuals ands groups engaged in doing the primary activities
Porter's Value Chain Model
Porter's Value Chain Model looks at increasing competitive advantage by reorganizing the activities related to create, support and deliver a firm's product or service.
2 These activities can be divided into two broad categories:
- Primary activities that relate directly to how value is created for a product or service.
- Support activities that make the primary activities possible and that manage the coordinate of different activities.
Value Chain of the Firm
Importance of Value Chain Analysis?
A company's cost competitiveness depends on how well it manages its value chain relative to how well competitors manage their value chains
2 When a company's costs are "out-of-line", the "high- cost" activities can exist in any of three areas in the industry value chain
2.1. Suppliers' activities
2.2. The companies' own internal activities
2.3. Forward channel activities (e.g. distributors)
Gaining Competitive Value
The Value Chain model suggest that competition can come from two sources:
- Lowering the cost to perform an activity and
- Adding value to a product or service so buyers will be willing to pay more.
2 Lowering costs only achieves competitive advantage if the firm possesses information on the competitor's costs
3 Adding value is a strategic advantage if a firm possesses accurate information regarding its customer such as: which products are valued? Where can improvements be made?
Identifying Strategic Issues
Is the present strategy adequate in light of competitive pressures and driving forces?
2 Is the strategy well matched to the industry's future key success factors?
3 Does the company need new or different resource strengths and competitive capabilities?
4 Does present strategy adequately protect against external threats and resource deficiencies?
5 Is firm vulnerable to competitive attack by rivals?
6 Where are strong/weak spots in present strategy?
BIS3000 Lecture Five
BPR / Strategic Alignment
Strategy and Competitive Advantage
(Competitive advantage exists when a firm's strategy gives it an edge in
- Defending against competitive forces and
- Getting and keeping customers
(Convince customers firm's product / service offers superior value
- Offer buyers a good product at a lower price
- Use differentiation to provide a better product that buyers think is worth a premium price
Approaches to Securing
a Cost Advantage
Do a better job than rivals of performing value chain activities efficiently and cost effectively
'Functional' Business Structure
A common view of a firm is as a hierarchy organized around a set of functions
2 Each group has a core competency, which it concentrates on.
3 Functional groups within a firm tend to complete their portion of a process and "throw it over the wall" to the next group in the value chain.
4 This can lower effectiveness, because of the "inward-looking" focus of each functional group.
Organisational Structure through Functional Specialisation
Limits to functionally organized organizations
Functionally organized firms tend to perform sub-optimally for three reasons:
- Individual departments duplicate information maintained elsewhere.
- Communications gaps often exist between functional groups.
- Functional structure tends to become ingrained, inhibiting reorganization.
Managing from a Business Process perspective
Examples of business processes include:
- customer order fulfillment,
- manufacturing planning and execution,
- payroll,
- financial reporting and
- procurement
Simple business process
Processes cross functional lines
Cross-functional nature of business processes
Managing from a Business Process perspective
BPR Cross-Functionality:
Long-Term Effect
In general, the process view encourages managers to concentrate on specific shared objectives and results. 'They begin to manage processes by:
* Identifying the customers of the process;
* Identifying these customers' requirements;
* Clarifying the value that each process adds to the overall goals of the organisation;
* Sharing their perspective with other organisational members until the organisation itself becomes more process-focused' (Pearlson & Saunders, 2003, p.109).
Radical vs. Incremental Change
Two broad categories of process improvement techniques are now in use:
- Total Quality Management through which processes are improved through small steps (i.e. 'business process improvement') and
- Business Process Reengineering, which involves the more radical approach of systematically redesigning a business process.
BPR Methodology?
When an organisation decides to follow a systematic approach, Boddy suggests that managers follow an approach developed in the mid-1990s by Peppard and Rowland and ask four key questions:
. Is it possible to eliminate process steps?
2. Is it possible to simplify process steps?
3. Is it possible to integrate process steps?
4. Is it possible to automate process steps?
Business Process Reengineering (BPR)
Goal is to fundamentally rethink and redesign business processes to achieve radical improvements.
Key aspects of BPR include:
- The need for radical change
- A cross-functional process perspective
- Challenging old assumptions
- Networked (cross-functional) organizing
- Empowerment of individuals involved in the process
- Use of metrics tied directly to business goals
Reengineering failures
Reasons reengineering fails to meet objectives
Lack of senior management support at the right time/places
2 Lack of a coherent communications program
3 Introducing unnecessary complexity in new process design
4 Underestimating the amount of effort (and cost) needed to redesign and implement the new processes
5 Combining reengineering with downsizing
BPR Success Factors 1
In general, the success factors for BPR can be placed in three broad categories:
* Organisation readiness and human resourcing;
* Methodology that is appropriate and systematic; and
* Purpose - specifically the clarity and validity of the BPR exercise.
BPR Success Factors 2
BPR must have clear goals in order to succeed. Specifically, there needs to be:
* A convincing business case for change - with measurable objectives; and
* Alignment between the proposed business processes, the information system that will be developed to support the new processes and a sustained company strategic direction.
This issue of alignment between IS and strategy is a core issue within this module and further consideration is given to it in the next lecture.
Two Meanings of 'Alignment'
Making sure that:
. The IS is a good fit for the business strategy
- (i.e. business strategy leads IS strategy)
2. The different functional elements (i.e. separate departments) are each integrated with each other - including their individual IS - and jointly serving the overall business needs.
Note that some organisations may have developed separate IS strategies for each department
The Information Systems Strategy Triangle
(Pearlson)
Strategic Alignment Process
Customer Orientation
2 Contingency Approaches
3-Balanced Scorecard
Customer Orientation
Lockamy and Smith (1997) advise managers to ensure that:
strategy is driven by customer needs and expectations;
2 processes selected for redesign by IS create value for the customer;
3 IS supports those processes in a way that supports the strategy?
• See Boddy page 87.
Contingency Approach
This is based on the idea that information systems should reflect the organisation characteristics and business type in which they are used. The variables are:
primary tasks of the organisation
- routine or non-routine
2 degree of interdependency between those doing the tasks
- high or low
3 environment of the organisation
- stable or unstable
Alignment Interaction Model
Balanced Scorecard approach
This is a technique for turning corporate vision into strategy and action. The balanced scorecard methodology involves simultaneously taking four different perspectives on the business:
* the Financial Perspective monitors such measures as profitability, revenue growth and shareholder value;
* the Customer Perspective requires measures such as service levels, satisfaction ratings, complaints and the volume of repeat business;
* the Internal Perspective reports on the efficiency of internal processes (workflow) and procedures using measures such as the cycle time to record or fulfill a customer order;
* the Learning and Growth Perspective is the key long-term predictor as it deals with employee issues: indicators here include intellectual assets as well as career and skills development.
Objectives are set within each perspective and these objectives are linked together as causes and effects respectively. In this way every measure selected can ultimately be related to financial results.
Identifying Key Success Factors
• Answers to three questions pinpoint KSFs
- On what basis do customers choose between competing brands of sellers?
- What resources and competitive capabilities does a seller need to have to be competitively successful?
- What does it take for sellers to achieve a sustainable competitive advantage?
• KSFs consist of the 3 - 5 really major determinants of financial and competitive success in an industry
Risk Management
• A systematic approach to IS security management
• Assesses
- Vulnerability & sensitivity of systems & data
- Feasibility and costs of risk controls & measures
- Feasibility and costs considered in terms of social, financial and technical requirements /implications
Risk Management stages
• Risk identification
- Identifying all potential risks to the organisation
• Risk analysis
- Assess the probability, expected frequency, likely severity and cost of each identified risk
• Risk handling
- Select optimum controls & counter measures
• Disaster recovery
- Contingency plan in case of disaster
Sources of potential threats
Risk handling
• Application of controls & counter measures appropriate to the risk according to time, money and other constraints
• Four strategies:
- Risk avoidance: if possible
- Risk retention: if not potentially too harmful
- Risk reduction: the most common strategy
- Risk transfer: e.g. maintenance contracts, insurance