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Strategic Frameworks for Project Justification

Strategic Frameworks for Project Justification. PSC 5170. Business Vision Mission Objective Tactic = Business Justification. IS Vision Mission Objective Tactic = Project Contribution. Organization Goals. Sponsor: funds and champions the project in the organization

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Strategic Frameworks for Project Justification

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  1. Strategic Frameworks for Project Justification PSC 5170

  2. Business Vision Mission Objective Tactic = Business Justification IS Vision Mission Objective Tactic = Project Contribution Organization Goals

  3. 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 Roles

  4. 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

  5. Value Chain Model • Chain of basic activities that add to firm’s products or services • Primary activities • Secondary activities

  6. Value Chain

  7. Value Chain Primary Activities • Inbound • Outbound • Operations • Marketing and Sales • After-Sale Services

  8. Value Chain Support Activities • Technology development • Procurement • Human Resources Management • Management Control • accounting/finance • coordination • general management • central planning

  9. Porter’s Competitive Forces Model The model recognizes five major forces that could endanger a company’s position in a given industry. • 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 External Competitive Forces

  10. 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

  11. 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

  12. Three Generic Strategies • Cost leadership (lowest cost in industry) • Differentiation (of products/services/quality) • Focus (finding a specialized niche)

  13. 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

  14. 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

  15. Fill Market Niche - IT strategic if it can: • Permit identification of special needs of unique target market • Spot and respond to unusual trends

  16. Strategic Questions • Can IT create barriers to entry? (new entrants) • Can IT build in switching costs? (buyers) • Can IT strengthen customer relationships? (buyers)

  17. 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)

  18. 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

  19. 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

  20. 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

  21. Characteristics of BPR • Combining jobs • Empowering employees • Jobs done simultaneously • Customizing product/service • Work performed where most logical • Single point of customer contact

  22. 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 Transformational Information Systems

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