Aligning it with business strategy
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Aligning IT With Business Strategy. David Caruso VP & Research Fellow AMR Research Inc. The Good News:. IT Has A Seat in the Boardroom Now… The Bad News: Major IT implementations targeting traditional cost savings haven’t achieved expectations

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Aligning IT With Business Strategy

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Aligning it with business strategy

Aligning IT With Business Strategy

David Caruso

VP & Research Fellow

AMR Research Inc.


The good news

The Good News:

  • IT Has A Seat in the Boardroom Now…

    The Bad News:

  • Major IT implementations targeting traditional cost savings haven’t achieved expectations

  • Changing business models push the action beyond the ERP footprint

  • The new focus: Strategic applications - Global processes – 2nd order benefits


Technology investment gets competitive

Technology Investment Gets Competitive

The visible reasons:

  • Entering new markets & channels

  • Dealing with a network supply chain model

  • Cost reduction in mainstream activities…

    The power play:

  • Industry leaders are focusing core competencies to dominate markets


High tech margin model

Compete with innovation

Capture market share & margins

Compete on price

High Tech Margin Model

Pounds

Sell price

Mfg cost

Time


It governance where does the corporate world stand

IT Governance: Where Does the Corporate World Stand?

  • Leaders: Top 20% - The Value managers

    • In place business-led IT governance councils

  • Middle of the Pack: 50% - Transitional players

    • ERP steering committees- now concerned with wringing value out of systems

  • The Rest: remaining 30% - Late starters

    • No formal business/IT operating models


  • Aligning it with business strategy

    AMR IT Governance Council Model

    Technology Strategy/

    Infrastructure Requirements

    Business Strategy

    Organisation design

    Application Portfolio/

    New investment requests

    Market Needs/

    Competitive strategy/

    Benchmarks

    IT Budget/constraints

    Education

    Key Performance Indicators

    Program management

    Prioritised & funded IT Plans

    Executive Ownership

    Communication

    IT

    Governance

    Council

    Business & IT Alignment

    Right team

    Right Agenda

    ROI & Reporting

    Guidelines


    Seven habits of highly effective it governance

    Seven Habits of Highly Effective IT Governance

    • Clarity of Mission

    • Organised for action

    • Well crafted agenda

    • Control of the Budget

    • Standardised processes

    • Messages that matter

    • Executive ownership of benefit delivery


    When it all goes right

    When It All Goes Right…

    • Industry example: Fujitsu

    • Process Focus:

      • Established Benchmarks, Process Improvement, Measurement…

    • Chief strategic thrust:

      • Use Process and Technology to Impact Competitive Position.

    • Tools:

      • Extended ERP to Fully Realise Business Process Design

    • Results:

      • Build cycle-- 21 days down to 2.3 days

      • Inventory cycle - 60 days down to 27

      • Forecasting Accuracy - 70% up to 85%

      • On-time Deliveries - 80% up to 92%

      • Sales doubled to $1.5B--headcountdown 20%

    300% ROI in

    First Year


    Aligning it with business strategy

    Institutionalising IT and Business Alignment

    Marketplace Benchmarks

    Critical Success Factors

    Compare

    Corporate Financial Performance

    Drive

    Accrue

    KPIs

    Corporate Business Processes

    KPIs

    Divisional Business Processes

    KPIs

    Operating Business Processes


    The it win align yourself with your business partners

    The IT Win: Align Yourself with your Business Partners

    • Talk their language

    • Educate them

    • Provide Aggressive Assessments of Cost and Time

    • Focus on Time-to-Benefit

    • Show them how to measure success for the Initiatives


    Thank you

    Thank you,

    David Caruso

    AMR Research


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