Sesi05 IS and IT Strategic Analysis Future Potential
Zainal A. Hasibuan, PhD
(zhasibua@cs.ui.ac.id)
By: Zainal A. Hasibuan
Faculty of Computer Science
University of Indonesia
Review Ques4ons
• What are the success criteria for IS/IT Strategic Plan?
•
•
•
•
•
Improve performance
Gaining compe44ve advantage
Align IT investment with business strategy
BeIer communica4on
Etc.
• What are the objec4ves of IS/IT Strategy formula4on?
• Iden4fy current and future informa4on needs
• Create flexible and adap4ve IS func4ons
• Determine police and management for informa4on
resources
• Etc.
Review Ques4ons
• What are the outputs of IS/IT Strategic Plan?
– IS/IT management strategy
– Business IS/IT strategy
– IT strategy
• What aspects to analyzed in the internal business
environment?
– The business strategy as the means to achieve business
objec4ves
– The current business process, ac4vi4es, and the main informa4on
en44es
– The organiza4onal environment: structure, asset and skills,
competency, culture, etc.
• What are the components of business model architecture?
– Business process model
– Business data model
Session Objec4ves
• To understand the development of applica4on
porTolio from a strategic perspec4ve
• To understand industry value chain to get
maximum benefit from IS/IT investment
• To iden4fy the business opportuni4es and
threats formulate IS/IT strategy
• To describe a framework to develop the
business informa4on strategy
• To understand the integra4on of informa4on,
system, and technology
Session Agenda
•
•
•
•
•
•
•
•
Applica4on porTolio and strategic perspec4ve
Aligning IS/IT Investment Strategy to the Business
Dimensions of competence
Value chain analysis
Value system analysis
Strategic op4ons generator
Resource life cycle analysis
Comparison of techniques
Application portfolio and strategic perspective
IS/IT Investment Strategy and the Business
Dimensions of Competence
Competitive advantage
through customer intimacy
Competitive
advantage
through
operational
excellence
Level of
competence
required to avoid
competitive
disadvantage
Competitive
advantage
through
product
leadership
Value Chain Analysis
• Defini4on: A collec4on of ac4vi4es that are
performed to design, produce, market, deliver,
and support its product
• Ac4vi4es can be separated into primary and
secondary
• Ac4vi4es add value to sa4sfy customer
requirements
• Ac4vi4es incur costs by consuming resources
• Adopts a business unit perspec4ve,
independent of organiza4onal structures
Internal Value Chain Analysis
Administration and
Infrastructure
General management of the business unit as entity
Human resource
management
Recruit, train, develop, and reward people
Product and techno- Develop the technology of products or services
logy development
and production processes
Procurement
Acquire the necessary inputs to the value adding activities
Inbound
logistics
Operation
Outbound
logistics
Sales and
marketing
Service
Receive,
store, and
disseminate
inputs
Transform
inputs into
products or
services
Distribute
products or
services to
customers
Provide
ways for
customers
to purchase
products or
service
Enhance
value of
products
or services
sold
Margin
=
value
added costs
Internal Value Chain Analysis
Administration and
infrastructure
General management, financial management, accounting,
and legal
Human resource
management
Manpower planning, remunerations, recruitment, and
training
Product and techno- Research and development, product design, and process
logy development
engineering
Procurement
Inbound
logistics
Quality
control,
materials
control,
materials
storage
Supplier mgt., subcontracting, outsourcing, specification
Operation
Manufacture,
packaging,
quality control,
maintenance
Outbound
logistics
Sales and
marketing
Service
Products
storage,
order
handling,
delivery,
invoicing
Customer
management,
promotion,
sales
analysis
Warranty,
maintenance,
education,
training, and
upgrading
Margin
=
value
added costs
External Value Chain Analysis
Materials
Capital
Local
distributors
Agencies
Distributors
Business unit
Markets
Suppliers
Components
Workforce
Competitors
Export
distributors
Value and demand information
Costs and supply information
Strategic Op4ons Generator
Strategic target
Suppliers
Strategic thrust
Differentiation: premium pricing
through better perceived quality
Cost: aggressive pricing through
better performance
Innovation: new product, services, or
processes that transform relationship
Growth: expansion in volume and
flexibility without more overheads
Alliance: agreement or joint ventures
that enhance other strategic thrusts
Competitors
Customers
• Compe4tor – Can we use IS to:
–
–
–
–
–
–
Raise the entry costs of poten4al compe4tors?
Differen4ate or create new products or services?
Reduce our costs or increase their costs?
Control the channels of distribu4on?
Iden4fy or establish new market niches?
Form joint ventures to enter new market?
• Customers – Can we use IS to:
Reduce their costs or increase their revenues?
Increase their switching costs to alterna4ve suppliers?
Increase their knowledge of our products or services?
Improve our services to them or reduce the costs of exis4ng
services?
– Discover more about their needs?
– Iden4fy new poten4al customers?
–
–
–
–
• Suppliers – Can we use IS to:
– Improving our bargaining power over them?
– Reduce our buying costs?
– Reduce their selling costs?
– Be a beIer customer and obtain a beIer
service?
– Iden4fy alterna4ve poten4al supplier?
– Improve the quality of products or services
purchased?
Resource Life Cycle Analysis
• Products are resources from customer perspec4ve
• Four stages of resources management
• Requirements
– Establish quan4ty requirements and specify aIributes
• Acquisi4on
– Select sources of purchase, order resources, authorize and pay for
resources, acquire resources, and test resources against specifica4on
• Stewardship
– Integrate resources with exis4ng inventory, monitor access and use of
resources, upgrade resources if necessary, maintain resources if
necessary
• Re4rement
– Transfer or dispose of resources and account for expenditure on
resources
Comparison of Techniques
Technique
External
linkage
systems
Internal
Product or service Executive
linkage
enhancement or
information
systems
innovation
systems
Critical success
factor analysis
Low
Moderate
Low
High
Process effectiveness
analysis
Low
High
Low
Nil
Value chain analysis
Nil
High
Low
Moderate
Nil
Moderate
Low
Value system analysis High
Strategic options
generator
Moderate Moderate
High
Nil
Resource life cycle
analysis
Low
High
Nil
Low
DETERMINING the BUSINESS
INFORMATION SYSTEMS STRATEGY
(Chapter 6)
The IS/IT Strategic Planning
Environment
Imposed
strategy
Intended
Strategy:
Business, IS, IT
Opportunistic
strategy
Emergence
strategy
Realized
Strategy:
Business, IS, IT
Actual Implementation
Planned Implementation
Unrealized
Strategies:
Business, IS, IT
Intended
Outcomes:
Business, IS, IT
Strategic Planning Model
Competitive
Analysis
Business
Portfolio
Analysis
Resource
Life Cycles
Process and
Activity
Analysis
Mission
Objectives
CFSs
Data Flow
Analysis and
Modeling
Strategic
Key Operational
Value Chain
Analysis
Strategic Option
Generator
Organizational
Modeling
High Potential
Support
Informal/
Opportunistic
Creative thinking
A Framework for Crea4ng the
Applica4ons PorTolio
Assessing the Need for
Immediate Investment (1-2 years)
(short/medium term-analytical)
Interpret business
Objectives and
strategy
Determine CSFs for
The company and its
Competitors etc.
Identify critical
Business processes
And activities
Determine short-term
Focus for investment
Appraisal of IS/IT
as it Relates to the
Business
Understand the industry
Structure and business
Position (SWOT)
Analysis the external
Value chain and information
Flow implications
Analysis the internal
Value chain and organizational
relationship
Analysis the business
Contribution of existing
Systems (SWOT)
> Existing
Required
Potential applications portofolio
Identifying
Potential Future
Investments (1-5years)
Consider potential IT/IS
Impact on product/market etc.
Consider the strategic
Potential of IS/IT and
Its effects on the value
chain
Identify options for
Long term IS/IT
Investment and select
Most beneficial
Understanding The Industry and Business
Posi4on
• Interpre4ng business objec4ves and Strategy
– Permanent objec4ves
– Strategic objec4ves
– Tac4cal objec4ves
• Analyzing the industry (external) value chain and informa4on flow
• Determining CSF
– To assess the rela4ve importance of systems opportuni4es to support business
objec4ve
– To iden4fy the informa4on required to manage and to plan
• Determining the Strategic Poten4al
– Rela4onship among informa4on and systems to the industry value chain
Analyzing the Internal Value Chain and
Organiza4on Rela4onships
• Understood internal primary value chain
• Examined organiza4onal structure to allocate
primary func4ons
• Iden4fy where costs are incurred, where
success depends on management
effec4veness and how and where value is
added
Q/A
• What are the approaches to analyze the
external business environment?
• How these external factors affect the IS/IT
strategy?
• How do methodologies to develop SPIS differ
one to other?
Questions to be Answered from Previous
Session: Analysis of Existing Systems
How well the existing IS/IT support and enhance the
operational performance?
How well the existing IS/IT support management
control?
How well the existing IS/IT fits in the ongoing
development of business?
Points to identify: system deficiency, obsolescence,
ineffective linkages, poor utilization, etc.
The answers to these questions are used for
benchmarking the current condition
(zhasibua@cs.ui.ac.id)
By: Zainal A. Hasibuan
Faculty of Computer Science
University of Indonesia
Review Ques4ons
• What are the success criteria for IS/IT Strategic Plan?
•
•
•
•
•
Improve performance
Gaining compe44ve advantage
Align IT investment with business strategy
BeIer communica4on
Etc.
• What are the objec4ves of IS/IT Strategy formula4on?
• Iden4fy current and future informa4on needs
• Create flexible and adap4ve IS func4ons
• Determine police and management for informa4on
resources
• Etc.
Review Ques4ons
• What are the outputs of IS/IT Strategic Plan?
– IS/IT management strategy
– Business IS/IT strategy
– IT strategy
• What aspects to analyzed in the internal business
environment?
– The business strategy as the means to achieve business
objec4ves
– The current business process, ac4vi4es, and the main informa4on
en44es
– The organiza4onal environment: structure, asset and skills,
competency, culture, etc.
• What are the components of business model architecture?
– Business process model
– Business data model
Session Objec4ves
• To understand the development of applica4on
porTolio from a strategic perspec4ve
• To understand industry value chain to get
maximum benefit from IS/IT investment
• To iden4fy the business opportuni4es and
threats formulate IS/IT strategy
• To describe a framework to develop the
business informa4on strategy
• To understand the integra4on of informa4on,
system, and technology
Session Agenda
•
•
•
•
•
•
•
•
Applica4on porTolio and strategic perspec4ve
Aligning IS/IT Investment Strategy to the Business
Dimensions of competence
Value chain analysis
Value system analysis
Strategic op4ons generator
Resource life cycle analysis
Comparison of techniques
Application portfolio and strategic perspective
IS/IT Investment Strategy and the Business
Dimensions of Competence
Competitive advantage
through customer intimacy
Competitive
advantage
through
operational
excellence
Level of
competence
required to avoid
competitive
disadvantage
Competitive
advantage
through
product
leadership
Value Chain Analysis
• Defini4on: A collec4on of ac4vi4es that are
performed to design, produce, market, deliver,
and support its product
• Ac4vi4es can be separated into primary and
secondary
• Ac4vi4es add value to sa4sfy customer
requirements
• Ac4vi4es incur costs by consuming resources
• Adopts a business unit perspec4ve,
independent of organiza4onal structures
Internal Value Chain Analysis
Administration and
Infrastructure
General management of the business unit as entity
Human resource
management
Recruit, train, develop, and reward people
Product and techno- Develop the technology of products or services
logy development
and production processes
Procurement
Acquire the necessary inputs to the value adding activities
Inbound
logistics
Operation
Outbound
logistics
Sales and
marketing
Service
Receive,
store, and
disseminate
inputs
Transform
inputs into
products or
services
Distribute
products or
services to
customers
Provide
ways for
customers
to purchase
products or
service
Enhance
value of
products
or services
sold
Margin
=
value
added costs
Internal Value Chain Analysis
Administration and
infrastructure
General management, financial management, accounting,
and legal
Human resource
management
Manpower planning, remunerations, recruitment, and
training
Product and techno- Research and development, product design, and process
logy development
engineering
Procurement
Inbound
logistics
Quality
control,
materials
control,
materials
storage
Supplier mgt., subcontracting, outsourcing, specification
Operation
Manufacture,
packaging,
quality control,
maintenance
Outbound
logistics
Sales and
marketing
Service
Products
storage,
order
handling,
delivery,
invoicing
Customer
management,
promotion,
sales
analysis
Warranty,
maintenance,
education,
training, and
upgrading
Margin
=
value
added costs
External Value Chain Analysis
Materials
Capital
Local
distributors
Agencies
Distributors
Business unit
Markets
Suppliers
Components
Workforce
Competitors
Export
distributors
Value and demand information
Costs and supply information
Strategic Op4ons Generator
Strategic target
Suppliers
Strategic thrust
Differentiation: premium pricing
through better perceived quality
Cost: aggressive pricing through
better performance
Innovation: new product, services, or
processes that transform relationship
Growth: expansion in volume and
flexibility without more overheads
Alliance: agreement or joint ventures
that enhance other strategic thrusts
Competitors
Customers
• Compe4tor – Can we use IS to:
–
–
–
–
–
–
Raise the entry costs of poten4al compe4tors?
Differen4ate or create new products or services?
Reduce our costs or increase their costs?
Control the channels of distribu4on?
Iden4fy or establish new market niches?
Form joint ventures to enter new market?
• Customers – Can we use IS to:
Reduce their costs or increase their revenues?
Increase their switching costs to alterna4ve suppliers?
Increase their knowledge of our products or services?
Improve our services to them or reduce the costs of exis4ng
services?
– Discover more about their needs?
– Iden4fy new poten4al customers?
–
–
–
–
• Suppliers – Can we use IS to:
– Improving our bargaining power over them?
– Reduce our buying costs?
– Reduce their selling costs?
– Be a beIer customer and obtain a beIer
service?
– Iden4fy alterna4ve poten4al supplier?
– Improve the quality of products or services
purchased?
Resource Life Cycle Analysis
• Products are resources from customer perspec4ve
• Four stages of resources management
• Requirements
– Establish quan4ty requirements and specify aIributes
• Acquisi4on
– Select sources of purchase, order resources, authorize and pay for
resources, acquire resources, and test resources against specifica4on
• Stewardship
– Integrate resources with exis4ng inventory, monitor access and use of
resources, upgrade resources if necessary, maintain resources if
necessary
• Re4rement
– Transfer or dispose of resources and account for expenditure on
resources
Comparison of Techniques
Technique
External
linkage
systems
Internal
Product or service Executive
linkage
enhancement or
information
systems
innovation
systems
Critical success
factor analysis
Low
Moderate
Low
High
Process effectiveness
analysis
Low
High
Low
Nil
Value chain analysis
Nil
High
Low
Moderate
Nil
Moderate
Low
Value system analysis High
Strategic options
generator
Moderate Moderate
High
Nil
Resource life cycle
analysis
Low
High
Nil
Low
DETERMINING the BUSINESS
INFORMATION SYSTEMS STRATEGY
(Chapter 6)
The IS/IT Strategic Planning
Environment
Imposed
strategy
Intended
Strategy:
Business, IS, IT
Opportunistic
strategy
Emergence
strategy
Realized
Strategy:
Business, IS, IT
Actual Implementation
Planned Implementation
Unrealized
Strategies:
Business, IS, IT
Intended
Outcomes:
Business, IS, IT
Strategic Planning Model
Competitive
Analysis
Business
Portfolio
Analysis
Resource
Life Cycles
Process and
Activity
Analysis
Mission
Objectives
CFSs
Data Flow
Analysis and
Modeling
Strategic
Key Operational
Value Chain
Analysis
Strategic Option
Generator
Organizational
Modeling
High Potential
Support
Informal/
Opportunistic
Creative thinking
A Framework for Crea4ng the
Applica4ons PorTolio
Assessing the Need for
Immediate Investment (1-2 years)
(short/medium term-analytical)
Interpret business
Objectives and
strategy
Determine CSFs for
The company and its
Competitors etc.
Identify critical
Business processes
And activities
Determine short-term
Focus for investment
Appraisal of IS/IT
as it Relates to the
Business
Understand the industry
Structure and business
Position (SWOT)
Analysis the external
Value chain and information
Flow implications
Analysis the internal
Value chain and organizational
relationship
Analysis the business
Contribution of existing
Systems (SWOT)
> Existing
Required
Potential applications portofolio
Identifying
Potential Future
Investments (1-5years)
Consider potential IT/IS
Impact on product/market etc.
Consider the strategic
Potential of IS/IT and
Its effects on the value
chain
Identify options for
Long term IS/IT
Investment and select
Most beneficial
Understanding The Industry and Business
Posi4on
• Interpre4ng business objec4ves and Strategy
– Permanent objec4ves
– Strategic objec4ves
– Tac4cal objec4ves
• Analyzing the industry (external) value chain and informa4on flow
• Determining CSF
– To assess the rela4ve importance of systems opportuni4es to support business
objec4ve
– To iden4fy the informa4on required to manage and to plan
• Determining the Strategic Poten4al
– Rela4onship among informa4on and systems to the industry value chain
Analyzing the Internal Value Chain and
Organiza4on Rela4onships
• Understood internal primary value chain
• Examined organiza4onal structure to allocate
primary func4ons
• Iden4fy where costs are incurred, where
success depends on management
effec4veness and how and where value is
added
Q/A
• What are the approaches to analyze the
external business environment?
• How these external factors affect the IS/IT
strategy?
• How do methodologies to develop SPIS differ
one to other?
Questions to be Answered from Previous
Session: Analysis of Existing Systems
How well the existing IS/IT support and enhance the
operational performance?
How well the existing IS/IT support management
control?
How well the existing IS/IT fits in the ongoing
development of business?
Points to identify: system deficiency, obsolescence,
ineffective linkages, poor utilization, etc.
The answers to these questions are used for
benchmarking the current condition