Strategic Frameworks for Project Justification

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Strategic Frameworks for Project Justification

• PSC 5170

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Organization Goals

• Business
• Vision
• Mission
• Objective
• Tactic
• Business Justification

• IS
• Vision
• Mission
• Objective
• Tactic
• Project Contribution

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Roles

• 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

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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

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Value Chain Model

• Chain of basic activities that add to firms
  products or services
• Primary activities
• Secondary activities

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Value Chain
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Value Chain Primary Activities

• Inbound
• Outbound
• Operations
• Marketing and Sales
• After-Sale Services

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Value Chain Support Activities

• Technology development
• Procurement
• Human Resources Management
• Management Control
• accounting/finance
• coordination
• general management
• central planning

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Porters Competitive Forces Model
The model recognizes five major forces that could
endanger a companys 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
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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

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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

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Three Generic Strategies

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

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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

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Produce Unique Product - IT strategic if it can

• Offer significant component of product
• Offer key aspect of value chain
• Permit product customization to meet customers
  unique needs
• Provide higher/unique level of customer
  service/satisfaction

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Fill Market Niche - IT strategic if it can

• Permit identification of special needs of unique
  target market
• Spot and respond to unusual trends

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Strategic Questions

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

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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)

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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

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Transformational Information Systems

• Radical changes in an organizations business
  processes
• Radical changes in an organizations structure
• Radical changes in an industrys value streams

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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

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Characteristics of BPR

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

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Transformational Information Systems

• Radical changes in an organizations structure
• reduce layers of management
• empower front-line workers
• loosely couple work units
• Radical changes in an industrys value streams
• disintermediation
• creating new markets