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 PERSPECTIVE VERSUS
BUSINESS PROCESS PERSPECTIVE
4
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
President
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
Perspective
Definition Self-contained functional units such as marketing, operations,
finance
Interrelated, sequential set of
activities and tasks that turns
inputs into outputs
Focus Functional Cross-functional
Goal
Accomplishment
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
efficiencies
Avoiding work duplication and
cross-functional communication
gaps; organizational
effectiveness
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)
Time
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.
Time
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
