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IS/IT Strategic Analysis: Determining the Future

Potential

Presented by: Benny Sia

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Table of Contents Objectives Analytical tools Value Chain Analysis

– Internal and external analysis Conclusions References

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Objectives Understand the current situation The use of analytical tools Linkage of each systems To what extent these systems enable

separate activities to perform harmoniously. Strategic thinking

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Analytical tools Application portfolio Porter’s 5 Forces Value Chain models SWOT One problem – which to use and when? Neuman1 recognizes that they’re a means of

helping the thinking process, not a recipe for identified of strategic systems.

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Application Portfolio Each tools will be considered as part of the

process for developing IS/IT strategies. However, high potential possibilities need

for further investigation. Provide current situation which would help

in the IS/IT integration.

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Competency analysis To gain competitive advantage. Example, bank develop excellent mortgage

product for younger people, good relationships with other banks, but why the sales are so poor? Reasons – slowness and unreliable application process using older system. The process could not deliver the ‘service promise’ inherent with product and customer.

Identify how priority IS investment are essential to competitive disadvantage.

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Value Chain Analysis Value chain of the business unit is only one

part of a larger set of value-adding activities in an industry.

The actions of other parties – customers, suppliers and competitors – will have a significant impact on what the firm does and how it does it.

People’s output can be your input. External an Internal value chain

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External Value Chain Maximize its value-added and minimize its

costs on how well the demand and supply information are matched at all stages.

Poor information means resources are wasted will increase cost without increase revenue.

Non-profit industries such as government, health care and charities always matching of supply and demand to achieve break-even.

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External value chain Strategic thinking

– What information is available?– Who are they?– How they can be influenced?

Key of information flow can be examined to see how the process be improved in terms of accuracy, speed, cost or timeliness

Many information exchanges cannot easily be improved without willing cooperation of trading partners.

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External value chain Example on reduction of intercompany cost

due to better information exchange. Thomas Holiday case

– Introduce Top system– Enable travel agents to book holiday via their

system– Immediate reduced double-handling cost and

speed up the process– Save time and money for both parties

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Internal value chain Assessing and improving how company

operates What the company does rather how it does

it – look at the activities it performs to contribute to the value-adding process

2 types of business activities – primary and support activities

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The use of value chain analysis Information flow throughout the industry,

when and where the information is available, who has it and how to turn that into advantage. Example, fashion goods – ‘demand’ information is critical factor.

Information exchange with customers and suppliers throughout the chain to improve the performance. Example, EDI

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How effectively the information flows through the primary processes– Within each activity to optimize performance– Linking activities together to avoid unnecessary

cost and missed opportunities– Enable support activities to contribute to the

value-adding

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Conclusion Value chain analysis should extent their

context ( industry value chain) in order to achieve maximum leverage IS/IT investment.

Future planning IS/IT should identify the business opportunities and threats presented by developing use of IS/IT in the industry.

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References1. Neumann, S., (1994), Strategic Information Systems,

Macmillan, London.2. Porter, M.E, (1985), Competitive Advantage: Creating

and sustaining Superior Performance, Free Press, New York.

3. Strategy: value chain analysis, (2003), [ Online], Available: http://www.tutor2u.net/business/strategy/value_chain_analysis.htm [17 August 2004].

4. Ward, J. & Peppard, J., (2002), Strategic Planning for Information Systems, 3rd Edition, p. 237 – 275, Wiley & Son, UK.