Strategic Frameworks for Project Justification PSC 5170
Dec 14, 2015
Strategic Frameworks for Project Justification
PSC 5170
Organization Goals
Business Vision Mission Objective Tactic
= Business Justification
IS Vision Mission Objective Tactic
= Project Contribution
Roles Sponsor: funds and champions the
project in the organization Client: reviews the project
milestones and decision points from the business point of vies
User: works with the system on a regular basis
Strategic Information Systems IS that help gain strategic advantage Significantly change manner in which
business supported by the system is done
Outwardly aimed at direct competition
Inwardly focus on enhancing the competitive position
Create strategic alliances
Value Chain Model Chain of basic activities
that add to firm’s products or services
Primary activities Secondary activities
Value Chain
Value Chain Primary Activities Inbound Outbound Operations Marketing and Sales After-Sale Services
Value Chain Support Activities Technology development Procurement Human Resources Management Management Control
accounting/finance coordination general management central planning
Porter’s Competitive Forces Model
The threat of entry of new competitors The bargaining power of suppliers The bargaining power of customers (buyers) The threat of substitute products or services The rivalry among existing firms in the industry
The model recognizes five major forces that could endanger a company’s position in a given industry.
External Competitive External Competitive ForcesForces
Competitive Forces Threat of entry of new
competition Bargaining power of
suppliers Bargaining power of buyers Threat of substitute products
or services Rivalry among existing firms
Strategies for Competitive Forces
Note - strength of force is determined by factors in industry
Gain a competitive edge Build defenses against forces Formulate actions to
influence forces
Three Generic Strategies Cost leadership (lowest
cost in industry) Differentiation (of
products/services/quality) Focus (finding a specialized
niche)
Be Low Cost Producer - IT strategic if it can: Help reduce production costs &
clerical work Reduce inventory, accounts
receivable, etc. Use facilities and materials
better Offer interorganizational
efficiencies
Produce Unique Product - IT strategic if it can: Offer significant component of
product Offer key aspect of value chain Permit product customization
to meet customer’s unique needs
Provide higher/unique level of customer service/satisfaction
Fill Market Niche - IT strategic if it can: Permit identification of
special needs of unique target market
Spot and respond to unusual trends
Strategic Questions Can IT create barriers to
entry? (new entrants) Can IT build in switching
costs? (buyers) Can IT strengthen customer
relationships? (buyers)
Strategic Questions (cont)
Can IT change the balance of power in supplier relationships? (suppliers)
Can IT change the basis of competition? (competitors)
Can IT generate new products?(competitors, substitutes)
Risks of IS Success
Change the Basis of Competition Lower Entry Barriers Promote Litigation or
Regulation Awake Sleeping Giant Reflect Bad Timing Are Too Advanced
Transformational Information Systems Radical changes in an
organization’s business processes
Radical changes in an organization’s structure
Radical changes in an industry’s value streams
Business Process Reengineering (BPR)
Completely changes manner in which business is done
Fewer steps, shorter cycle times Complete, more expert handling
of events Not incremental improvement Typically uses IT as an enabler Involves discontinuous thinking
Characteristics of BPR Combining jobs Empowering employees Jobs done simultaneously Customizing product/service Work performed where most
logical Single point of customer
contact
Transformational Information Systems
Radical changes in an organization’s structure reduce layers of management empower front-line workers loosely couple work units
Radical changes in an industry’s value streams disintermediation creating new markets