Project and Information Systems: IS Strategy Triangle Model

Project and Information Systems:

IS Strategy Triangle Model

Jason C. H. Chen, Ph.D.Professor of MIS

School of Business AdministrationGonzaga UniversitySpokane, WA 99258

chen@jepson.gonzaga.edu

Dr. Chen, Special Topic: Project Management 2

PM (and any Business) should focus on:

Entrepreneur企业家

creativity

Learning Objectives

• Understand the concepts of Project and Information Systems

• Understand IS Triangle Strategy Model and how to employ it to improve competitive advantage for project management

• Understand Porter’s Competitive Advantage Strategy and how to apply it to create/improve organization competitive advantage

IS vs. IT

IS = IT?

Which component is more important?

Computers Impact

The good news:Computers allow us to work 100% faster.

The bad news:They generate 300% more work.

Question?

• What is the only entity remains unchanged in the business?

• Answer:• “Change”

INTRODUCTION• Shouldn’t managers rely on experts when it comes

to making the decisions on IS for their organizations?– Managers today need to know about their

organization’s capabilities and uses of information as much as they need to understand how to obtain and budget financial resources.

– A manager who does not understand the basics of managing and using information cannot expect to be successful in today’s business environment.

Figure I.1 - Reasons why business managers should participate in information systems decisions

• IS must be managed as a critical resource• IS enables ________ in the way people work together.• IS are part of (and integrate) almost every aspect of

business.• IS enable or inhibit business ___________ and

new __________.• IS can be used to combat ____________

Reasons:

change

business challenges from competitors

opportunities strategies

Technology vs. Technique• Technology

– is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function.

– It can also refer to the collection of such tools, machinery, and procedures.

• Technique– Personal habits– Work style

Failed IS Projects• Standish Group found that 67 percent of all

software projects are challenged – Late, over budget or fail to meet performance

criteria.• Managing a business project means managing

an information systems project. – Why?– Many systems use or integrate the Internet.

Successful IS Projects

• To succeed, “a” general manager must be a project manager and must learn how to manage this type of risk.

• Executive management no longer has an option but to consider skilled IT project management as fundamental to business success.

The Need for Project Management

• Critical for companies today: the ability to adapt existing business processes faster than the competition

• Typical adaptation projects include:– “Rightsizing” the organization (what is another

name?) – Reengineering business processes– Adopting more comprehensive, integrative

processes

• What are the three elements in the “Project Triangle”?

• What is the center in the triangle?

Project Triangle (Project Management Trade-offs)

Time Cost

The objective of the PM is to define project’s scope realistically and ultimately deliver quality of product/service on time, on budget and within scope.

The center of project triangle is

QUALITY

Typical Project Management trade-offs

• Scope– Product: quality, features, functions– Project: work required to deliver product/service

• Time – the time required to complete the project• Cost – all the resources required to carry out the

project.• Cost vs. Quality

– The quality of a system will normally impact its cost.• Figure above shows the three sides of the project

triangle.

Project Manager’s Role• The project manager will typically be involved in:

– Ensuring progress of the project according to defined metrics..

– _____________– Ensuring progress toward deliverables within _____ and _________________ – Running coordination meetings.– Negotiating for resources on behalf of the project.

• Business projects are often initiated because of a successful business case. – A successful project begins with a well-written business case

(i.e., spells out components of the project.)

Identifying risks.time

resource constraints

But, not to determining the best fit of the project in the organizations vision

The GreatDividing Line Between

SUCCESSand

FAILURECan be Expressed

In Five Words

“I Did Not Have ______”TIME

Planning is everything ...What are Two Major Outputs for an organization?

Products,Services

Vision

Strategy

create

develop

Tactic

MissionCustomers,market,

competition

What is “Strategy”?• A strategy is a plan of action designed to

achieve a vision.– The science or art of combining and employing the

means of war in planning and directing large military movements and operations.

– "Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".

Strategy vs. Tactics

• Strategy versus Tactics– Long range versus day-to-day– Dreaming versus doing– Doing the right thing versus doing things right

• The fundamental principles of strategy are the same for all, all times, and all situations. Only tactics change, and tactics are modified to the times.

• In warfare, battlefield tactics is how to handle one’s army when it is face-to-face with the enemy.

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” Sun Tzu

Strategy vs. Tactics

• Name an example of Strategy vs. Tactics

“All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.” Sun Tzu

Information System Strategy Triangle

Business (Firm)Strategy

Organizational Strategy IS/IT Strategy

Where is the business going and why?

What is required? How it can be delivered?

Directi

on for b

usiness

Needs and priorities

Infrastructure and services

Supports busin

IT impact and potential

1. Architecture/Infrastructure2. MIS organization (Sourcing, Governance etc.)3. Funding

Where is the business going and why?

What is required? How it can be delivered?

Directi

on for b

usiness

Needs and priorities

Infrastructure and services

Supports busin

IT impact and potential

1. Architecture/Infrastructure2. MIS organization 3. Funding

PROJECT MANAGEMENT

Information Resources can be used efficiently and effectively.

• A business strategy is a well-articulated vision of where the business seeks to go and how it expects to get there.

• An organizational strategy is the organization’s design, as well as the choices it makes to define, set up, coordinate, and control its work processes.

• IS strategy is the plan the organization uses in providing information systems and services.

WHY STRATEGY?

• Why is it important for business strategy to drive organizational strategy and IT strategy? What might happen if business strategy were not the driver?

Why is it important for business strategy to drive organizational strategy and IT strategy? What might happen if

business strategy were not the driver?

Typically, managers seem to think that changing or upgrading an information system (or even a component of an information system) will only positively impact a business. Quite the opposite, in fact, is true. By making changes in organizational strategy or IT strategy first, the triangle is "out of balance" and there will be consequences in the affected areas. For example, building a virtual organization, but not changing the business strategy to something like …

"insuring our people are productive and have the widest possible work place opportunities" can lead to significant disconnects between workers, their managers, and their customers. And, worse, without supplying the virtual worker with the appropriate information system (a computer at home, a laptop, etc) will lead to a decrease in productivity by the virtual worker, and a major disruption of business operations.

Example• Give an example in which a company fails to

perform well because it does not align its three strategies.

• Any?– too much focus on IT– used to be considered as a “hardware” company

(Mainframe, Mini-computers, PC, DOS etc.)– new division established in early 1990: GLOBAL

SERVICIE DIVISION– it now becomes a “Service” corp. – “TOTAL solution”

Louis V. Gerstner, Jr. IBM former CEO and president (1992-2002)

Prior to joining IBM, Mr. Gerstner served for four years as chairman and chief executive officer of RJR Nabisco, Inc. This was preceded by an 11-year career at American Express Company, where he was president of the parent company and chairman and CEO of its largest subsidiary, American Express Travel Related Services Company. Prior to that, Mr. Gerstner was a director of the management consulting firm of McKinsey & Co., Inc., which he joined in 1965.

In January 2003 he assumed the position of chairman of The Carlyle Group, a global private equity firm located in Washington, DC.

• Each Group finds out another example (not limited to the high-tech industry) and analyze it using the IS/IT Triangle Strategy model.

Another Example?• Give another example (not in the high tech

industry) in which a company fails to perform well because it does not align its three strategies.

• Any?– too much focus other than IT– inefficient organization structure– Inefficient IT usage

FORD IS Strategy Triangle: Old Strategy

TOO MANY BRANDS/FOCUSES

COMPLICATED and Inefficient

structureN

Inefficient and ineffective IT usage

FORD IS Strategy Triangle:New Strategy (ONE FORD)

ONE FORD STRATEGY:

One Team,One Plan,One Goal

SIMPLE and Efficient Structure

Efficient and Effective IT Usage and Support

A simple-sounding plan with big consequences

Alan Mulally: President and CEO, Ford Motor Company

In September 2006

Prior to joining Ford in September 2006, Mulally served as executive vice president of The Boeing Company, and president and chief executive officer of Boeing Commercial Airplanes. In that role, he was responsible for all of the company’s commercial airplane programs and related services. Mulally also was a member of the Boeing Executive Council and served as Boeing’s senior executive in the Pacific Northwest.

Management styleMulally negotiated four new agreements with United Auto Workers, which has brought down labor costs from $76/hour to $55/hour.

BRIEF OVERVIEW OF BUSINESS STRATEGY

FRAMEWORKS

Striving for Competitive Advantage

• Firm level: Industry & Competitive Analysis

• Business level

Competitive Forces Model (more details will be discussed next class)

Competitive StrategyD’Aveni’s Hypercompetition Model (7s)

Value-Chain Analysis

Business Strategy Frameworks• Porter’s Generic Strategies Framework

(and its variants)• Hypercompetition and the New 7-Ss

framework (D’Aveni)

Figure 1.2: Porter’s Generic Strategy Framework – 3 Strategies for achieving Competitive Advantage

Dr. Chen, The Trends of the Information Systems Technology TM -40Competitive Mechanism

Overall Cost Leadership

DifferentiationIndustrywide (Broad Target)

Particular Segment only

(Narrow Target)

Lower CostPosition

Uniqueness Perceived by

Customer

Competitive Advantage

Porter’s Competitive Advantage Strategies

• Cost leadership: be the cheapest• Differentiation: focus on making

your product and/or service stand out for non-cost reasons

• Focus: occupy narrow market niche where the products/services can stand out by virtue of their cost leadership or differentiation.

Cost Leadership

Business Strategies and its Competitive Advantage

Dr. Chen, The Trends of the Information Systems Technology TM -42

Cost Focus

Differentiation

Differentiation Focus

Industrywide

(Broad Target)

Particular Segment

only (Narrow Target)

Competitive Mechanism

Lower CostPosition

Uniqueness Perceived by

Customer

Industrial economy Knowledge-based economy

BRIEF OVERVIEW OF ORGANIZATIONAL

STRATEGIES

Summary of Key Strategy Frameworks

• Generic Strategies: Competitive Advantage (CA) through low cost, differentiation or focus

• Hypercompetition: CA is temporary, created through speed and aggression in the market – to be introduced next class

Industries Competitive Advantage

(Characteristics)

Competitive Advantage(How to)

Porter’s Model

Relatively stable Establish a strong, long-term position and defend it.

Attain a fit with the environment as in traditional markets

Hyper-competition Model

Dynamic1) Ever-increasing competition2) Changing power between players

Short-lived, take advantage of any small window of opportunity that arises (thru speed and aggression)

1) change rules of competition2) create disruptions (during which temporary advantages can be exploited)

Porter’s Model vs. Hypercompetition Model

Competitive

(Value)

Figure - Business Level: The Value Chain

Manufacturing Industry Value Chain Product and Service Flow

Research and Development

EngineeringProduction

and Manufacturing

Marketing Sales and

Distribution Service

Primary ActivitiesDr. Chen, The Trends of the Information Systems Technology

Administrative and Other Indirect Value Added

Support Activities

Four Important Entities for a Successful Enterprise

• Capital （资本）• Technical （技术）• Human （人才）• _________ （信息）Information

Essential Value Propositions for a Successful Company

• __________ Model• __________ Competency

– outsourcing– offshoring

• __________ – Set corporate goals and get executive

sponsorship for the initiative

BusinessCore

Execution

Major Issues for the Next Society

1. Internationalization

2. Technology

3. Population

4I + 1K

InternationalizationIntegrationInnovationInformation andKnowledge

• Research and study the following– “Porter’s Five Competitive Force” Model– Google mini-case (group)

Mini Case Study

• Case Study : Google• Questions #1 thru # 4

Information System Strategy Triangle for GOOGLE

1. Innovation and Openness2. Differentiation

New concept of Organization (organize the world’s information and make it universally accessible and useful)

1. Internet (Web-based Applications)

2. Cloud computing

Q#1. How is Google’s mission statement related to its business strategy?

• Ans: Google’s primary goal is to “organize the world’s information and make it universally accessible and useful” (mission statement).

• Google continues to take risks and expand into new markets to further its reach into the information world. It takes advantage of new avenues to expand its market share by making information freely available on its Intranet, and by willing to take risks by investing in speculative and strange projects if they see a large potential payoff.

2. How does Google’s information systems strategy support its business strategy?

• Ans: Through openness and innovation. It permits users to download their own software, maintain official and unofficial blogs, and buys and makes software to suit the needs of the business.

• IT encourages innovation by allowing employees to spend 20% of their time on a project of their own choosing. This “flexible” IT structure supports the innovation and creativity that its business strategy espouses.

3. How does Google’s organizational strategy supports its business strategy?

• Ans: Google has a culture of innovation and creativity. However, it still provides a level of structure when making decisions. Specifically, Google’s mission statement relates to its business strategy by making data on all ongoing projects and systems available to all of its employees through its corporate Intranet.

• Any employee can see what is transpiring in other areas and can lend a hand through Google’s “free day” policy and other open work-environment strategies.

4. Which of Porter’s three generic strategies does Google appear to be using based upon this case? Provide a rationale for your response.

• Ans: Differentiation, though one may argue that cost leadership is also utilized with its very reasonable ad costs. However, though the use of its innovative processes, and unique business model, Google has differentiated itself from its competitors by keeping a clean and simple interface (which most of the other search engines have emulated), and by continuing to invest in its employees, to provide innovation on a large scale.

Project and Information Systems: IS Strategy Triangle Model

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