IT Strategy

Introduction to alignment of
Business and IT strategy
IT Portfolio Management

Session 07
Prof. Milind kamat
Recap

SPJIMR Proprietary & Confidential 2

 Business strategy and IT Strategy Alignment
workstrems /Pillier teams get formed
Top Down Bottom-up
Workstream 1 Workstream 2
• Porter Framework and identify sources CA for • Information, Digital Technologies and their adoption
strategic choice of company in various industries driving innovation and thereby
• Business strategy = choosing between cost vs giving an advantage to firms
differentiation or with focus Cost vs differentiation or
combinations based competitiveness within Industry
• Analysed Value chain to identify sources of competitive
advantage aligned with choices
• Sources of competitive advantage = Many initiatives to
reorganise, reconfiguration VALUE CHAIN
• Each Initiative then needs to configure with Information
technology /Information systems 10 Lens Framework
• These will result in IT initiatives

1. Consolidation /Harmonisation of Initiatives

2. Design agree on score cards for Desirability, Feasibility, viability
3. IT Portfolio Management
4. Select initiatives with management committee sponsorship
p
IT strategy is overall process of providing IT systems and services aligned with
Business strategy , Business environment and Technology trends to Enterprise
The general process of how top-down, bottom-up
initiatives are driven in a large organisation
Generally, cross-functional teams are formed.
• Directly /indirectly, for Top-down identification of initiatives team/teams are loaded 2/3,
1/3 business people vs tech people
• Ration is reversed for the Bottom-up approach You will learn many
• There could be several teams based on size and nos people participating topics of importance
• Generally, teams sought external inputs from analyst firms, advisory firms, tech expert in
TIDA
• Exercise could be spread over a quarter and culminating in 2 or 3 days off-site and
teams presenting their initiatives EA
• Almost all organisations appoint top management committees to finally ratify initiatives
after due diligence of initiatives with many parameters evaluated per initiatives
Key aspect of
• Budget, technical feasibility, organisation preparedness, Risks, business value
forming governance
• Some initiatives may be selected just because they will be needed for essential
mechanism for
compete
overseeing IT
• IT initiative identification is part larger strategy alignment exercise across organizations
initiatives
and functions
You will learn in EA
• IT strategy EXECUTION is also a challenging domain
• User buyin, change management, stakeholder management, communication, data
management, cutovers, obsolesce
• Also need cross-functional teams and steering committees per initiative or group of initiatives
IT Portfolio
Management
 What is IT portfolio
Management?
• Building IT Assets : The concept of technology
portfolio management is to build a Technology
portfolio of projects and non-financial assets(ips, or
Platforms like Leader or Blair in case 2) that
supported the strategic goals of the company.
• Evaluate Risk/Reward from IT Assets : With financial
portfolio management, a company seeks to achieve
an aggregate return from various financial
instruments of varying risks and returns. Similar to a
portfolio of financial instruments, a technology
portfolio is generally composed of various projects
with different risk/return profiles.
• We had interesting discussion on Leader Vs
Blair in case 2 , risks /Returns over 10 year
period
• IT assets aligned to Business strategy : Lastly, like
financial portfolios, technology portfolio elements
are generally chosen based on their support of the
management‘s strategic objectives. This is core of
Enterprise architecture. IT budgets needs to split
across IT portfolios of Infrastructure , Apps & data
based on Business priorities and Business & IT
alignment
 IT Projects
classification
:Weill And
Broadbent
Framework

Examples Examples Examples Examples

Infrastructure Transactional Informational Strategic
Provides the foundation of Cut costs or increase Provide information for any Gain competitive advantage
shared IT services used by throughput typically by purpose including to or position in the
multiple applications (e.g., automating the repetitive account, manage, control, marketplace (e.g., ATMs were
servers, networks, laptops, transactions of the firm (e.g., report, communicate, initially very successful for
customer databases — billing system or insurance comply or analyze (e.g., the innovating banks and
excludes applications). renewal) sales analysis, six sigma, then became transactional),
government reporting) Smart connected products

Four IT Asset classes

 IT strategy and Business strategy
Alignment

Challenges in IT strategy alignment with Business IT PORTFOLIO alignment is key activity in IT Strategy
 Goals,Objectives of Business and IT Goals , Objectives alignment

Rethinking as IT as Investment Portfolio

Management objectives in Investing in IT
Asset class, Risk, Return
 IT portfolios of various industries & IT portfolio alignment with Business strategy
Get Approx IT budget as per Industry benchmarks

IT portfolio of different industries

IT Asset Risk profile IT Asset Class Strategies
2010
Deriving Business
value from IT
based on IT
architecture
Maturity
MDCM(A)
 MDCM
• The “MDCM, Inc. (A): IT Strategy Synchronization” case examines the
issues of formulating a set of IT objectives aligned with corporate
strategy. Specifically, the case describes a firm that has grown rapidly
through acquisitions. As a result of these acquisitions, the new
conglomerate is not responsive to the competitive environment. The
firm has therefore launched a new transformation strategy called
Horizon 2000, but it has yet to develop a corresponding IT strategy.
• This case is the first in a series; the second case is “MDCM, Inc. (B):
Strategic IT Portfolio Management.” Students solve Case A by
applying the management by the objective business framework and
developing an executive-level IT strategy for the firm.
 Intro
• MDCM, Inc. The U.S.-based company specialises in medical device contract
manufacturing and assembly. For the past five years, MDCM has grown by making
more than twenty acquisitions of companies based outside the United States. This
growth strategy was necessary for MDCM to better match its services to its
customers, who had become larger and more global.
• In 2000 the company launched a new strategic initiative called Horizon 2000. The
initiative aimed to create better synergies from prior acquisitions. Although the
initiative made great progress in many areas, it did not include any directives for IT
change. After almost two years, it became apparent that MDCM’s IT capabilities
were not aligned with the demands of the new organisation. Although the firm and
scenario are fictitious, the case is representative of many firms that have grown
through mergers and acquisitions
Objective

• In Case A the CIO of MDCM, Shawn Atkins, needed to

determine the company’s IT strategy and objectives and
ensure that they were properly aligned with the company’s
overall strategy and the new organisation developed under
Horizon 2000
 GROUP WORK
• You are a member of the MDCM executive team.
• Use the information given in this case to help solve this management crisis with your
group's other executive team members.
• Define enterprise-wide strategic intent and business objectives; understand the strategic
context of your firm. This context defines the focus of your technology investments
• Corporate OBJECTIVES: aligned to Business Strategy
• Develop e-business and IT objectives matched to the corporate objectives
• Your team should define the overall corporate OBJECTIVES ALIGNED WITH STRATEGY
for MDCM, the business goals matched to these OBJECTIVES, and the related high-
level IT objectives.
• Be prepared to present your recommendation to the MDCM corporate board.

40 Mins for Group work + 20 Mins to consolidate in PPT

Coco, please create google drive link
Please put the academic group id and members in first slide