Friday, September 08, 2006
- StartSmart Consulting
IT Strategy:
Of late, there is a lot of emphasis on IT ROI. While this is commendable, extending this argument to convert the IT Organization into a profit center is taking it to another extreme. For example, are HR, finance, and marketing profit centers? Why not?
The model of the “internal” IT Organization as a profit center just does not work.
The concept of profit centers is built around profitability, which in turn requires an unwavering focus on the business model. Consequently, profit centers must meet certain minimum criteria:
· Revenues and costs: Accurately quantify revenues and costs
· Market: Focus on customer relationships that are generating higher profits and either discontinue or deemphasize those that aren’t
· Product Mix: Create a portfolio of products and services driven by market demand. For example, a profit center will not introduce products that the market does not need. It will discontinue a product if it is not profitable. Sometimes, it will introduce loss leaders to build brand loyalty which in turn will translate into revenues through the sale of higher margin products.
· Product pricing: Price products and services to maximize profits. Pricing can be done on a cost plus basis or, more accurately, on market conditions i.e. what the market will bear. The latter usually results in substantially higher profits, even though, sometimes, the reverse is also true. For example, the cost of construction has almost tripled in Florida after the hurricane season. In other words, in a free market system, a market eventually determines the “value” of a product or the “price” a customer is willing to pay for it.
· Timing: It is often said that in business timing is everything. Profit centers are profitable when they can quickly respond to market opportunity.
This is by no means an exhaustive list but it should be sufficient to provide an idea of the general focus and direction of “profit driven” enterprise.
IT Value Mapping (Friday, September 08, 2006) Why do some IT organizations create unprecedented shareholder value, while others earn the contempt of their business leaders? It is no secret that aligning IT with business improves IT ROI, what is often in doubt is how to make it happen. Can you say with certainty that your IT is aligned with business? Can you prove it? If improving IT ROI is an imperative for you, read on. This paper will show you how to improve ROI by 10% or more…and
IT Strategy Framework (Monday, September 25, 2006) IT Strategy requires a process and a framework. The former provides the steps and the latter the toolkit. Together they help an organization get to an IT Strategy that maximizes IT ROI. This article addresses the latter.
What is IT Strategy? (Saturday, October 14, 2006) There are many definitions of IT Strategy. Which one is true?
Help! We are being treated as a cost center! (Wednesday, October 18, 2006) Let’s face it. An IT organization that has to justify its budget as a “cost center” has lost the respect of the business community somewhere along the line.
Talk to Me: The Disconnect Between Business and IT (Monday, May 07, 2007) The disconnect between business and IT is often lamented. A lot is spoken and written about this chasm. Ostensibly, a lot is done to bridge it. Yet, most would agree the chasm still exists.
Why IT ROI doesn't matter? (Friday, November 03, 2006) Does IT ROI matter? Great many intelligent people are spending sleepless nights and countless dollars calculating IT ROI. The author argues that they are wasting their time and shareholder dollars!
Achieving and Sustaining Business and IT Alignment (Thursday, November 16, 2006) This article was originally published in 1999. However, it is on the money even today. Authors Jerry Luftman and Tom Brier walk through the issue of business and IT Alignment with specific examples and advice on how to achieve this goal. A must read!
Enterprise Information Systems Strategy and Planning (Thursday, November 16, 2006) Porter (2001)’s proposition of the evolution of technologies in business emphasizes the need for
information systems strategies to enable the real-time optimization of the value chain. It is echoed throughout the
literature that information technology strategies need to be aligned with business strategies. This paper proposes a
framework for the development of information systems strategies and plans driven by business objectives and
strategies. It provides an integrated framework for the development of technology architectures and business
processes across the value chain. A systematic approach to enterprise information system planning is presented.
7 Steps to Business and IT Alignment (Monday, November 20, 2006) No business will ever reach the goal of “business and IT alignment”. Should this discourage you from pursuing business and IT alignment? NO! It is a worthy goal to pursue. Indeed, it is a critical one to pursue. You might never reach alignment but you can take steps to get ever closer. This requires a process. Often, we ignore the fact that business and IT alignment is a process. This process does not have a starting point nor does it have an end. It is a series of “learn and do” cycles that incrementally get towards alignment. Let me explain.
IT Strategist's Dilemma (Saturday, December 09, 2006) Every strategist faces the "stay the course" or "cut and run" choice, at least once in their careers. How do you decide which course is the correct one? More, importantly, is this even a correct or complete set of choices?
IT Strategy Template (Friday, January 12, 2007) Enclosed is a simple template to create an IT Strategy for your organization. This is intended to be the starting point not a definitive or exhaustive workbook on creating an IT Strategy.
It's not just IT, it is Your Brand (Monday, January 22, 2007) When we talk about "business and IT alignment", we often forget about the elephant in the room - the impact of IT on brand. This article discusses the connection and provides examples of how IT can help or hurt your brand.
7 Signs of Trouble in Paradise (Monday, February 26, 2007) Ever wonder what happens when business and IT are not aligned? Well, like most other things in life, there are symptoms of misalignment. Monitoring them and analyzing them can help you avert disaster.
Part IV: A Framework For IT Value (Monday, April 30, 2007) Last week, we discussed the cost dimension of IT Value. This week, we will discuss the time to market dimension.
Talk to Me: The Disconnect Between Business and IT (Tuesday, May 08, 2007) The disconnect between business and IT is often lamented. A lot is spoken and written about this chasm. Ostensibly, a lot is done to bridge it. Yet, most would agree the chasm still exists.
The Importance of Risk Management (Monday, June 25, 2007) A very good discussion on the importance of risk management. The content is rudimentary but the discussion fundamental to IT Governance.
Kiss and Make Up (Tue, 26 Jun 2007 00:00:00 -0500) Industrial manufacturers often have strained relationships with their IT organizations because manufacturers demand better IT support while simultaneously targeting IT for not cutting costs. Some companies have successfully emerged from this predicament using a lean, best practice model which we call "the 1 percent IT organization." This means IT has a cost structure approaching 1 percent of revenue. An IT organization that can transform its operating model to act as both cost center and strategic enabler will be poised to manage both the cyclicality of the present and the growth needs of the future.
Is Your Company World Class in IT? (Monday, July 09, 2007) Metrics make us feel secure because of the implicit promise of control. However, metrics are as meaningful as the spin surrounding them!
Enabling the Strategy Focused Organization (Monday, January 14, 2008) Is IT Value compromised because of the strained relationship between business and IT? How can the CIO overcome this challenge?
IT Strategy: Does IT Matter? (Monday, February 04, 2008) This paper presents results from investment in IT at a macro economic level. Proof positive that IT Matters? You decide.
Measuring eGov ROI (Tuesday, February 05, 2008) An interesting discussion on eGov ROI. Lessons learnt can be applied to business. Good read!
IT Strategist as a Race Car Driver? (Tuesday, February 12, 2008) Learning from Mario Andretti sounds like fun but what has that got to do with IT Strategy? Read on!
Trippling Innovation Success Rate! (Tuesday, February 12, 2008) Innovations are notorious for their high failure rate. Is there a way to reduce it? Read on...
Measuring Information Productivity (Monday, March 03, 2008) Excellent paper on IT value measurement. This framework powered Baseline's 500. Very informative.
Influences on IT Strategy (Monday, March 03, 2008) Excellent overview of IT Strategy and things that have an influence on its outcome. Must read!
IT Strategy For Business Value (Monday, March 10, 2008) The paper presents a framework for developing an IT Strategy for business value.
IT Strategy Framework with SOA (Monday, March 10, 2008) A very good presentation that takes IT Strategy to solutions architecture using SOA. Good read!
Developing an IS/IT Strategy (Monday, March 17, 2008) A very good presentation on developing an IT Strategy. Must Read!
A Framework for Developing IT Strategy (Monday, March 17, 2008) A very good discussion on developing IT Strategy including detailed steps and explanations. Must Read!
IT Strategy for the Law Firm (Monday, March 17, 2008) A presentation on the challenges facing CIOs at law firms and how to create an IT Strategy to overcome them.
Demystifying Project Portfolio Management (PPM) (Monday, March 24, 2008) Project Portfolio Management is a critical concept and tool for IT Managers. Have you cut through the hype so you can use this tool?
Managing for Shareholder Value in difficult times (Monday, June 02, 2008) Is there "managing" to anything else? Read this excellent discussion on how everything in an enterprise should be managed.
Measuring Innovation (Monday, July 07, 2008) How do you know if innovation is really producing results? Measure it young man. Here are some pointers to help you along the way...
The History and Future of Value Management (Monday, July 07, 2008) An excellent presentation on measuring and managing "value" - discusses various frameworks. MUST READ!
A Framework for Strategic IT Alignment (Monday, September 15, 2008) Is IT Alignment a strategic weapon to gain competitive advantage? Duh! But do you know to what extent information intensity affects competitive advantage? Hmm...
DAM/VAM: A Structured Methodology for Developing and IT Strategy (Monday, November 17, 2008) Demand and value assessment methodology is a structured approach to quantifying the demand for and the value from IT investments. This guide provides a step-by-step approach to implementing DAM/VAM. Excellent Read!
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