Turban and Volonino
Chapter 13
IT Strategy and Planning
Information Technology for Management
Improving Performance in the Digital Economy
7th edition
John Wiley & Sons, Inc.
Slides contributed by Dr. Sandra Reid
Chair, Graduate School of Business & Professor, Technology
Dallas Baptist University
Copyright 2010 John Wiley & Sons, Inc.
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Chapter Outline
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13.1 Alignment of Business and IT Strategies
13.2 IT Strategy Initiation
13.3 IT Strategic Planning
13.4 Outsourcing, Offshoring and IT as a
Subsidiary
• 13.5 Managerial Issues
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Learning Objectives
1. Explain the importance of aligning the business
strategy and IT strategy and how this alignment is
achieved.
2. Recognize the challenges to IT-business alignment
and how to address them.
3. Recognize why IT plays a critical strategic role within
organizations.
4. Explain how IT is providing value to businesses.
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Learning Objectives – cont’d
5. Describe IT strategic planning within
organizations.
6. Understand the major reasons for
outsourcing.
7. Understand how to manage outsourcing and
offshoring opportunities.
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Figure IT7eU
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13.1 Alignment of Business and IT Strategies
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Business & IT Strategies – Survey Data
• 87% surveyed believe IT is critical to their
companies’ strategic success.
• Few work with IT to achieve strategic success.
• 33% of leaders reported that IT is very
involved.
• 30% reported business executive responsible
for strategy works closely with IT division.
• Alignment improves revenue.
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Figure 13.1
The relationship among business, IS, and IT-strategies. (Source:
Ward and Peppard, 2002.)
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IT & Business Alignment
• IT must align function’s strategy, structure, technology
& processes with those of the business units toward
common goals.
• IT must align strategy with organizational strategy.
• IT strategic alignment goal to ensure that IT priorities,
decisions & projects are consistent with overall
business needs.
• Shared ownership & shared governance structure that
crosses organizational lines & makes executives
responsible for success of key IT initiatives.
Click link for an article with more: How to Develop a Shared
Vision: The Key to IS Strategic Alignment
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Table 13.1
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Activities Central to Alignment
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Understanding IT & corporate planning.
CIO is member of senior management.
Shared culture & good communication.
Deep commitment to IT planning by senior
management.
Shared plan goals.
Deep end-user involvement.
Joint architecture/portfolio selection.
Identity of plan factors.
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Challenges in Achieving IT-Business Alignment
• Promoting collaboration between IT &
organizational business units.
• Persuading senior management about
importance of IT to business.
• Contributing to strategic planning & business
growth initiatives.
• Identifying opportunities for business process
automation & improvement.
• Improving internal & external user experience &
satisfaction.
Top Business Issues Facing CIOs & IT Directors
for what industry leaders forecast….
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Strong CIO Characteristics
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Political savvy.
Influence leadership & power.
Relationship management.
Resourceful.
Strategic planner.
Does what it takes.
Leads employees effectively.
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Table 13.2
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13.2 IT Strategy Initiation
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Critical Strategic Role of IT
• Global economy is defined by innovate use of
IT.
• Companies must determine use, value &
impact of IT to identify opportunities & create
value which supports overall strategic vision.
• CIO is key mover in upper management.
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Value Add by IT
• Direct – by reducing cost through efficiencies.
• Indirect – increased revenue through
improved productivity and/or reduction in
employees.
• Enabling temporary or sustained competitive
advantage.
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Competitive Advantage Thru IT
• Gained by providing real or perceived value to
customers.
• Resources must be considered valuable by
customers.
• Resources must be considered as rare.
• Resources must be appropriable.
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Table 13.3
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Sustained Competitive Advantage
• Imitability – can another firm copy the
resource?
• Mobility – easily acquired resource?
• Substitutability – is an acceptable alternative
available?
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Table 13.4
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Table 13.5
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Figure 13.2
How CIOs spend their time. (Source: Luftman, 2007.)
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13.3 IT Strategic Planning
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Good IT Planning Processes
• Yearly, quarterly, monthly.
• Planning is continual, not one-time.
• May result in formal IT strategy, or annual
reevaluation.
• Organizational planning of IT resources done
throughout the organization.
• End-users must understand.
Mistakes: Strategic Planning Don'ts (and Dos)
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Steering Committees
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Direction setting
Rationing
Structuring
Staffing
Communicating
Evaluating
Governing
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Figure 13.3
IT strategic planning process. (Source: Drawn by J. Sipior.)
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Business Service Management
• Approach for linking KPIs of IT to business goals
to determine impact on business.
• KPIs measure actual performance of critical
aspects of IT such as projects, servers, networks
against predefined goals such as growing
revenue, lowering costs, reducing risk.
• KPIs measure real-time performance or predict
future results. Proactive vs. reactive.
• KPIs measures results of past activity.
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Figure 13.4
Business service management (from FireScope). (Source:
firescope.com/solutions/businessservicemanagement/FireScope delivers a single view
into the business impact of IT operations by aggregating all IT technology and business
metrics into realtime dashboards, customizable for the needs of each member of IT.
Used with permission.)
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Figure 13.5
Business systems planning (BSP) approach.
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Table 13.6
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Critical Success Factors
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What objectives are central to organization?
Critical factors to meeting objectives?
What decisions or actions are key?
What variables underlie decisions & how are
they measured?
• What information systems can supply
measures?
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Figure 13.6
Critical success factors-basic processes.
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Scenario Planning
• Ensure not focusing on catastrophe to
exclusion of opportunity.
• Allocate resources more prudently.
• Preserve options.
• Ensure not still “fighting the last war.”
• Give opportunity to rehearse testing &
training of people to go through process.
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Table 13.7
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Resource Allocation
• Consists of developing plans for hardware,
software, data communications & networks,
facilities, personnel, financial resources need
to execute master plan.
• May be contentious process due to limited
resources.
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13.4 Outsourcing, Offshoring, and IT as a
Subsidiary
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Reasons To Outsource
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Desire to focus on core competency.
Cost reduction.
Improve quality.
Increase speed to market.
Faster innovation.
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Table 13.8
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Risks Associated with Outsourcing
• Shirking – vendor deliberately underperforms
while claiming full payment.
• Poaching – vendor develops a strategic
application for a client & then uses it for others.
• Opportunistic repricing – client enters into longterm contract & then vendor changes financial
terms or overcharges for unanticipated
enhancements & contract extensions.
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Hidden Costs of Outsourcing
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Benchmarking & analysis
Investigating & contracting with a vendor
Transmitting work & knowledge to outsourcer
Ongoing staffing & management of
outsourcing relationship
• Transitioning back to in-house
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Strategies for Risk Management in Outsourcing
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Understand project
Divide & conquer
Align incentives
Write short-period contracts
Control subcontracting
Do selective outsourcing
Top 10 Risks of Offshore Outsourcing
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Evaluating Outsourcing
• How well is business value delivered?
• Balanced scorecard is useful tool to measure
value of outsourcing relationship.
• Multi-vendor approach should include
measures for each.
The hidden risk in outsourcing overseas
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13.5 Managerial Issues
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Leaders Must…
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Align IT strategy & business strategy
Organize for effective planning
Initiate IT strategy
Undertake IT strategic planning process
Deal with outsourcing & offshoring
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