W3 - Strategic Framework and eBiz

Source / Reference:
1)  "Systems Planning in the Information Age" by C H Sullivan 1985

2) The strategic Framework http://www.youtube.com/watch?v=Csi-dlHV6sw

3) SWOT analysis http://en.wikipedia.org/wiki/SWOT_analysis

4) PEST analysis http://en.wikipedia.org/wiki/PEST_analysis

Subject:
In Lect 3 - Why is strategic framework important?
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Response:

This blog post focuses on strategic framework and system planning. A brief introduction on strategic framework is given first, followed by a description and reflection of the reviewed paper. Then, comment on Sullivan's Framework is given and coming next is an illustration of SWOT analysis and PEST analysis by analyzing PARKnSHOP.

 
Strategic framework is necessary for all business no matter it is a small shop or an international business. It provides a border context within which the analysis techniques and tools are applied for strategy formulation. A clear strategic framework helps the organization to have a better system planning, especially in the Information Age. 

Description and reflection on the reviewed paper

The article examines and compares past and current systems planning practices such as stages of growth (SOG) and IBM's Business Systems Planning  (BSP). It also introduces the idea of information technology architecture planning and presents the results of empirical research. 

 

Sullivan has suggested a framework on system planning which consists of two major factors. One is infusion which means the degree to which information technology has penetrated a company in terms of importance, impact, or significance. The other one is diffusion which means decentralization, or the degree to which technology has been disseminated or scattered throughout the company. 

In the article, Sullivan said that the critical success factors planning apparently is best suited to the environment in which technology is more distributed than it is crucial -- high diffusion but low infusion.

In my opinion, this statement is quite correct. In early days, people usually treated Information Technology as a tool to accomplish basic tasks like financing, data processing, or calculation. They thought IT is crucial to complete these tasks only but not for the whole business strategy. However, I think IT/IS should be more distributed as Sullivan said. IT/IS is not only a tool to complete basic tasks but also an important component of the business which should be involved in every section of the business. In order words, technology should be scattered throughout the company instead of focusing on a basic function. For example, instead of using computer to record data only, company should translate those data into useful information to help the company to make more accurate decision. 

There are two widely used analysis techniques. Here I will use the PARKnSHOP as an example to illustrate SWOT analysis and PEST analysis.


SWOT Analysis

SWOT analysis is useful in understanding the Strengths and Weaknesses of a business, and pointing out the Opportunities and Treats a business faces. It examines the internal and external micro-environment.


Case study:
For PARKnSHOP, 

• Strengths: adequate resources, long experience, advanced technology, stable connection with suppliers
• Weaknesses: high labor cost, high operational cost
• Opportunities: customers are more interested in low-price product due to inflation
• Treats: competitors like Wellcome provide lower price

PEST Analysis

PEST analysis is useful in understanding the big picture of the Political-Legal, Economic, Socio-Cultural and Technological environment a business is in. It examines the macro-environment.

Case study:
For PARKnSHOP,

• Political-Legal factors: tax for plastic bag
• Economic factors: inflation
• Socio-Cultural factors: customers' interest on healthy food
• Technological factors: online purchasing

Conclusion
It is important to use different analysis techniques to examine the business and environment before and during planning business strategy. Because it helps the company to know more about itself and the environment so as to build the most adaptive and suitable framework. Strategic framework is necessary and essential for a business to succeed.
 

W4 - Strategic Alignment Model (SAM)

Source / Reference:
1)  "Strategic Alignment: Leverage Information Technology for transforming organization" by J C Henderson and N Venkartraman 1993
http://search.proquest.com/docview/26252741/134A6C8B53F19A4F606/1?accountid=16210
2) "Improving Business and Information Strategy Alignment: Learning from the Banking Industry" by M. Broadbent And P. Weill 1993
http://scholar.google.com/scholar_url?hl=zh-TW&q=http://citeseerx.ist.psu.edu/viewdoc/download%3Fdoi%3D10.1.1.87.5585%26rep%3Drep1%26type%3Dpdf&sa=X&scisig=AAGBfm0WSi_OnfpZZQwI4f-8e8Eqb6GQlQ&oi=scholarr.

Subject:
In Lecture 4 - Which alignment strategy in SAM model is the best? and why?
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Response:
In my opinion, no alignment strategy is the best or the worst as it depends on many aspects of a business such as the industry nature, company size and technology support. As the market varies time to time, instead of saying the best strategic alignment model (SAM), it is better to describe it as the most suitable and adaptive model at a given stage or situation.

In lecture 4, Henderson and Venkataraman's strategic alignment model has been introduced.SAM consists of the following four components:

• Business strategy
• Information technology strategy
• Organizational infrastructures and process
• IT infrastructure and processes

It suggests four alignment strategies in SAM model. Here are the brief description and comments of the four perspectives.

Perspective One: Strategy execution 

 This perspective is anchored on the notion that a business strategy has been articulated and is the driver of both organizational design choices and the design of IS infrastructure. 

Comment:  

This is the most common and widely understood perspective of SAM. It proposed that the top management should be the strategy formulator while the IT management should be the strategy implementer. This perspective requires a stable business strategy first and then develops the organizational infrastructure and IT infrastructure to achieve the goals in business strategy. It helps the business to operate smoothly according to the business strategy. IT is the tool to implement business strategy instead of determining it like "Service Level". It is more suitable for business which has a stable execution process and clear business strategy.

Perspective Two: Technology transformation

 

This alignment perspective involves the assessment of implementing the chosen business strategy through appropriate IT strategy and the articulation of the required IS infrastructure and processes.

Comment: 

Unlike Strategy Execution, this perspective is not constrained by the current organization design. Thus is more suitable for business without a stable and solid organization design. Besides, it seeks to identify the best possible IT competencies, thus it is more suitable for technology-based industry, in which the business strategy is driven by technology leadership.  Mobile phone manufacturer like Nokia is one of the typical examples. Once its competitors launch a new mobile phone model, Nokia has to adjust the strategy to produce a more advanced one. 

 

Perspective Three: Competitive potential

This alignment perspective is concerned with the exploitation of emerging IT capabilities to impact new products and services, influence the key attributes of strategy, and develop new forms of relationships. 

Comment: 
One distinguish feature of this perspective is that it allows the adaptation of business strategy via emerging IT capabilities. That is, business strategy will change according to the IT strategy. It is thus more suitable to industry with low barrier of entry and large number of competitors, in which the business strategy is driven by business leadership such as food industry.

Perspective Four: Service level

This alignment perspective focuses on how to build a world-class IS service organization.

Comment:  

This perspective ensures the effective use of IT. It is mainly focuses on maximizing customer satisfaction. Thus it is more suitable to the servicing industry, in which the business strategy is driven by customers' feedback such as tourism industry. They can use information system to record and analyze the preference of customers and provide what they want. 

 

Conclusion:

There is no best strategic alignment perspective as  Henderson and Venkataraman said, "We do not believe that there is one universally superior mode to formulate and implement strategy". All four perspectives have its own merit. To choose the most suitable one, it is necessary to clearly analyze the business nature, industry environment and, technology required and its strength and weakness as well. In order words, choose the one which fits your business situation most.