IT Importance in Strategic Planning 6 Pages

IT Importance in Strategic Planning 6 Pages

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

© Copyright 2016 John Wiley & Sons, Inc.

Chapter 5 IT and Business Transformation

Sloan Valve

•What was wrong with their Product Development Process?

•What did Sloan do? What is NPD?

•Did it help?

•Are all enterprise system implementations this successful?

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© 2016 John Wi ley & Sons, Inc.




Silo (Functional) Perspective

• Specialized functions (sales, accounting, production, etc.

• Advantages: • Allows optimization of expertise. • Group like functions together for transfer of knowledge.

• Disadvantages: • Sub-optimization (reinvent wheel; gaps in communication;

bureaucracy) • Tend to lose sight of overall organizational objectives.

Executive Offices CEO


Operations Marketing Accounting Finance Administration

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The Process Perspective

• Examples of processes: • Fulfill customer orders • Manufacturing, planning, execution • Procurement (see below)

• Processes have: • Beginning and an end

• Inputs and outputs • A process to convert inputs into outputs • Metrics to measure effectiveness

• They cross functions

Receive Requirement for Goods/Services

Create and Send Purchase Order

Receive Goods Verify Invoice Pay Vendor

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Cross-Functional Nature of Business Processes

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How to Manage a Process

• Identify the customers of processes (who receives the output?)

• Identify the customers’ requirements (how do we judge success?)

• Clarify the value each process adds to the organizational goals

• Share this perspective so the organization itself becomes more process focused

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Comparison of Silo Perspective and Business Process Perspective

Silo Perspective Business Process


Definition Self-contained functional units such as marketing, operations,


Interrelated, sequential set of

activities and tasks that turns

inputs into outputs

Focus Functional Cross-functional



Optimizes on functional goals,

which might be suboptimal for

the organization

Optimizes on organizational

goals, or the “big picture”

Benefits Highlighting and developing core competencies; functional


Avoiding work duplication and

cross-functional communication

gaps; organizational


Problems Redundancy of information throughout the organization;

cross-functional inefficiencies;

communication problems

Difficult to find knowledgeable

generalists; sophisticated

software is needed

What do you do when things change?

•Dynamic and agile processes

•Examples: • Agile: Autos are built with wires and space for

options • Dynamic: Call centers route incoming or even

outgoing calls to available locations and agents • Software defined architectures (see chapter 6)

•IT is required to pull this off well

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Techniques to Transform a Static Process

•Radical process redesign • Also known as business process reengineering

•Incremental, continuous process improvement • Including total quality management (TQM) and

Six Sigma

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Incremental Change • Total Quality Management

• Often results in favorable reactions from personnel • Improvements are owned and controlled • Less threatening change

• Six-Sigma is one popular approach to TQM • Developed at Motorola • Institutionalized at GE for “near-perfect products”

• Generally regarded as 3.4 defects per million opportunities for defect (6 std dev from mean)


Improve- ment

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Radical Change

• Business Process Reengineering (BPR)

• Sets aggressive improvement goals.

• Goal is to make a rapid, breakthrough impact on key metrics in a short amount of time.

• Greater resistance by personnel.

• Use only when radical change is needed.


Improve- ment

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Comparing the Two

Improve- ment

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Key Aspects of Radical Change Approaches

• Need for quick, major change

• Thinking from a cross-functional process perspective