IT Strategy 2.0: Balancing Innovation and Implementation
-
Upload
venkat-venkatraman -
Category
Business
-
view
4.378 -
download
1
description
Transcript of IT Strategy 2.0: Balancing Innovation and Implementation
Alignment in the 21st Century:Alignment in the 21st Century:Balancing Innovation andBalancing Innovation and
ImplementationImplementation
Professor N. VenkatramanBoston University School of Management
SAP Users Group @ MaastrichtApril 20, 2007
(c) Venkatraman, 2007 2
Imagine life without……
(c) Venkatraman, 2007 3
Yet.. there are conflicting views on therole and value of IT…
“expensive.. But necessary evil” “Am I getting value from IT investments?” “Are we investing in the right areas?” “Can IT become my core competence?” “Why not outsource and offshore?” “I see my competitors using IT strategically..” “I know that IT will become more central in the
future… but I do not know how to extract value”
(c) Venkatraman, 2007 4
My Agenda
Alignment in the 21st century:Innovation and Implementation
IT Strategy 2.0
Reframing the Business--ITConversation
(c) Venkatraman, 2007 5
New Excitement.. circa 2007
CIO as the Chief Innovation Officer!
I.T contributing to Revenue and Growth
From Business Process Reengineering toCrafting Business Model Innovations
Pervasiveness of I.T in products, processesand services
(c) Venkatraman, 2007 66© N. Venkatraman, 2006
Source: Bill Gates
(c) Venkatraman, 2007 8
We see I.T everywhere now..
(c) Venkatraman, 2007 9
A Car is a computer on wheels connectedto the network
(c) Venkatraman, 2007 10
Software is shaping next generationbusiness processes..
(c) Venkatraman, 2007 11
with new web functionality…
(c) Venkatraman, 2007 12
We see convergence and overlapacross industries and markets
(c) Venkatraman, 2007 13
Four conversation questions
1.How different will your business landscapebe in the next 3-5 years?
2.What’s the role of Innovation.. especiallybusiness model innovation for your futuresuccess?
3.Is I.T central to business modelinnovations?
4.How important is I.T to achieving yourcurrent business profitability?
(c) Venkatraman, 2007 14
Alignment 1.0
ITITStrategyStrategy
BusinessBusinessStrategyStrategy
(c) Venkatraman, 2007 1515
We have captured value from IT
People Processes Technology
+ +
OO + IT = EOO
(c) Venkatraman, 2007 16
Alignment 1.0 Mechanisms
Business process reengineering (massive scale) Decentralize and centralize (adapt over time) Standardize to reduce inefficiency Outsource and multi-source IT functionality Cross-functional global teams Service level agreements Business--IT partnerships
Etc…
(c) Venkatraman, 2007 17
Alignment 1.0 Scorecard
BIf we are charitable..
(c) Venkatraman, 2007 18
Alignment 2.0: The Network Era
Network Era
Client/Server Era
Mainframe Era
(c) Venkatraman, 2007 19
We are in an era of global network
Live
ConsumePlay
Work Create
Connect
(c) Venkatraman, 2007 20
And globalization of work and businessprocesses
(c) Venkatraman, 2007 21
Innovation… The new focus?
(c) Venkatraman, 2007 22
ProductsProcessesServicesPeople
My view on business model innovations
MooreMoore’’ssLawLaw
Bandwidth Bandwidth LawLaw
MetcalfMetcalf’’s s LawLaw
(c) Venkatraman, 2007 23
Alignment 2.0:New Perspective, New Mandate
BusinessBusinessStrategyStrategy
I.T.I.T.StrategyStrategy
Drives
Shapes
(c) Venkatraman, 2007 24
Alignment Agenda 2.0
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
(c) Venkatraman, 2007 25
Alignment Agenda 1.0 focused onoperational, execution issues
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
(c) Venkatraman, 2007 26
Alignment Agenda 2.0: BuildingBlocks (1)
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
CostCenter
(c) Venkatraman, 2007 27
Cost Center
Best-in-class global sourcingpartners and vendors
Sourcing
Detached from businessoperations
Organization
Lowest delivered costbenchmarked against
external referent; not directlyconnected to strategy
Business Case
Best in class global ITinfrastructure
Focus
(c) Venkatraman, 2007 28
Alignment Agenda 2.0: BuildingBlocks (2)
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
CostCenter
ProfitCenter
(c) Venkatraman, 2007 29
Profit Center
Selective use of best-in-classglobal sourcing partners and
vendors
Sourcing
Embedded (and partnering) withbusiness operations
Organization
Contributions to customer valueand current profitability levels
Business Case
Support current businessoperations
Focus
(c) Venkatraman, 2007 30
IT and Implementation Benefits
Data Information Knowledge Action Results} } } }
DesignGap
ExpertiseGap
ProcessGap
ExecutionGap
(c) Venkatraman, 2007 31
Alignment Agenda 2.0: BuildingBlocks (3)
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
CostCenter
ProfitCenter
GrowthCenter
(c) Venkatraman, 2007 32
How to think about innovation?
MooreMoore’’ssLawLaw
BandwidthBandwidthLawLaw
MetcalfMetcalf’’ssLawLaw
BusinessBusinessModelModel
InnovationInnovation
Supporting the growth agenda
(c) Venkatraman, 2007 33
Growth Center
Selective use of innovation networkpartners and vendors
Sourcing
Embedded within businessoperations—shared responsibility
Organization
Contributions of IT to businessmodel innovations
Business Case
Support future growth trajectoriesthrough new business model
innovations
Focus
(c) Venkatraman, 2007 34
Alignment Agenda 2.0: BuildingBlocks (4)
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
CostCenter
ProfitCenter
GrowthCenter
InvestmentCenter
(c) Venkatraman, 2007 35
What’s your experimentationequation?
Google’s equation is 70-20-10. What’s your equation?
(c) Venkatraman, 2007 36
Investment Center
Selective use of innovation networkpartners and vendors
Sourcing
Decoupled from current operationsOrganization
Allowing for experimentation ofplausible business models
Business Case
Influence future growth trajectoriesthrough selective experimentation
Focus
(c) Venkatraman, 2007 37
The building blocks have differentpersonalities…
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
CostCenter
ProfitCenter
GrowthCenter
InvestmentCenter
(c) Venkatraman, 2007 38
These building blocks are also dynamic
StrategicStrategicFocusFocus
Leadership ResponsibilityLeadership Responsibility
Innovation
Implementation
Business IT/IS
(c) Venkatraman, 2007 39
Where’s Your IT Capital Allocated?
What % for Innovation?
What % for Implementation?
(c) Venkatraman, 2007 40
Where’s Your IT Core Competence?
IT Competence for Innovation?
IT Competence for Implementation?
(c) Venkatraman, 2007 41
Where’s Your IT Sourcing focused?
IT Sourcing for Innovation?
IT Sourcing for Implementation?
(c) Venkatraman, 2007 42
Where’s Your IT Mandate?
IT Mandate for Innovation?
IT Mandate for Implementation?
(c) Venkatraman, 2007 43
What about IT Performance Metrics?
IT Performance Metrics for Innovation?
IT Performance Metrics for Implementation?
(c) Venkatraman, 2007 44
There’s legacy ‘management’ problem
We say innovation.. But we manage ITfor implementation
We say future.. But we manage IT fortoday
We say shared business-IT responsibilitybut we blame IT for the problems
(c) Venkatraman, 2007 45
Managing for the future with I.T.
Stra
tegy
Information
Technology
Leadership
No Businessinnovationwithout IT
Value creation fortoday andtomorrow
(c) Venkatraman, 2007 46
Your Challenges
The impact of I.T will be more than everbefore Pervasive Fast changing Value potential
Management of IT is equally important Multiple roles within enterprises Leadership and strategy linkages
(c) Venkatraman, 2007 47
Putting these ideas into action
Clarity of Mandate for IT throughmanagement workshops
Recognition of the four building blocksfor business innovation andimplementation
Reinforce joint business-IT responsibilityDevelop an IT Strategy 2.0 scorecard
Are you ready to take on theexpanded IT mandate to win??
Thank You Very Much