Bielefeld-040109 Information Strategy as a Key Success Factor for Enterprises and Universities...

Bielefeld-040109

Information Strategy as a Key Success Factor for Enterprises and Universities Presented by Dr. Donald A. MarchandProfessor, Strategy & Information Management, IMD,Lausanne, Switzerland, and,Chairman & President, enterpriseIQEcublens, Switzerland

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Copyright © 2003 All Rights Reserved2

2.16 2.172.28

2.402.53

2.672.78

2001 2002 2003 2004 2005 2006 2007

“The Information Technology (IT) Paradox”

Source: Gartner Dataquest June 2003

Worldwide IT Spending(In Trillions of Dollars)

The Elusive Value of IT

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CustomerBenefit

The ITIndustry

Capital Flows

IT Innovation

Information Technology Investments

CompetitiveNecessity{

IncreasedCompanyOutput

Falling MarketPrices (Competition)

√

√

BusinessPerformance(Profitability)X

CompetitiveAdvantage{

Source: Hitt and Brynjolfsson, 1996

The Link of IT Spending to Company Performance

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To Impact Business Performance, Managers Typically Look at IT as a Visible (Hard) Factor That They Can Invest in and Influence

IT Practices

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Soft Factors are not Captured and Factored into these Measurement Approaches

Information Technology Practices

InformationManagementPractices

InformationBehaviorsand Values

Information Orientation (IO)

• Difficult to Measure Employees’ Behaviors and Values{• Difficult to See Information’s Value

• Difficult to Manage Better Knowledge Management and Use

The Cemex Way: The IT Legend

In our fifth e-strategy brief, we look at a rarity: a company

in the industrializing

world that has used e-business to steal a march on its rich-world rivals (Wired)

CEO Zambrano can check sales figures or kiln temperatures in any plant in the world from a communications center in Monterrey that looks like a set from a science fiction movie (Forbes) or NASA’s control room in Houston (The Economist).

“Cemex in a league with Dell and Cisco as one of the world's leading digital re-inventors.” (Business Week)

“Cemex's ready-mix delivery trucksare equipped with dashboard computers that allow tracking by global positioningsatellite (GPS) technology.”

“In Latin America, Cemex uses time

division multiplexer satellite

networks.” (ComputerWorld)

In each case, "post-merger integration teams" ie, executives armed with laptops, were dispatched to analyse the new acquisition, to cut

costs, and to harmonise its technical systems and management methods with CEMEX's.

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2Refocus in the CoreBusiness-Cement:Becoming a DomesticLeader

Building IT Infrastructure- built satellite telecommunications system & other IT infrastructure- trained people how to use it

x1984

Started selling

non-corebusinesses

x1985

L. Zambranobecame

CEO

x1987IniguezjoinedCemex

3Globalization:Latin Emerging Markets

Focusing on People & Processes- developed post acquisition expertise- hired "people oriented" IT managers- conducted training on human philosophy by Fernando Flores- implemented business process re-engineering program- built an entrepreneurial mood

x1992

AcquiredSpanish

operations

x1993

Cemtecwas

formed

x1995

LaunchedDSO

x1997

Entered Asia - acquired a company

in Philippines

GlobalGrowth

DomesticConglomerate

Building InformationCapabilities

x1906

Companywas formed

1

Cemex – Global Growth Through Superior Information Capabilities

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E-Business:1. Intranet Internet Extranet

Expansion intoNon-Latin EmergingMarkets

4GlobalGrowth

Building InformationCapabilities

x1997

Entered Asia - acquired a company

in Philippines

x1999Listed

inNYSE

5

x2000

AcquiredSouthdown;CxNetworks

formed

x2001

Growth in Developed Markets& Embarking on E-Ventures

The Cemex Way: Information, IT & People- standardizing information system & process- e-enabling work force & supply/demand chain- creating information-culture among & providing training to employees, customers, suppliers & alliance partners, e.g. e-selling, e-procurement & e-workforce initiatives

E-Business:3. distribution logistics (CoSite) & expansion in the construction industry (Arkio)

Time& Milestones

E-Business:2. CxNetworks a. dot.com - Construmix - Latinexus - Construplaza b.e-business consulting - Neoris

Cemex – Global Growth Through Superior Information Capabilities

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The Cemex Way: The Facts

“Contrary to what you read in the popular press, our success was not based on developing a good IT system. The press likes to focus on IT and our outcomes, but not about what we have been able to accomplish with our people. What we did was

create a new culture at Cemex, one that was based on commitments, and action.”

Gelacio Iniguez, former CIO, Cemex, current CTO of CxNetworks

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What is the Relationship Between the Deployment and Usage of IT and Information in your Organization?

Deployment x Usage = Multiplier Effect

Deployment of I/T inside and outside the organization

Usage of I/Tby managers, employees, suppliers, customers, and partners

for Driving Business Performance

Deployment + Usage = OK Return

Deployment - Usage = Dilutes Value

Deployment ? Usage = Business Value ?

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Breakthrough: Scientific measure of the interaction of people, information and technology and its proven link to business performance


InformationManagementPractices

InformationBehaviorsand Values

Information Orientation

Business Performance

• Market Share Growth

• Financial Performance

• Level of Innovation

• Superior Company Reputation

{

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•Conducted at Europe’s leading Business School -- IMD in Lausanne, Switzerland

– Over 100 global companies including:

– More than 1200 senior managers– Across 26 industries – Nearly 40 countries

• Leading international business publications

Oxford M.I.T. Wiley

Four Years of Leading EdgeInnovative Research

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New Performance Metric

Information Orientationis the first,validated Measure

of Information Effectiveness to Business Performance

PeopleInformation Behaviorsand Values (IBV)

InformationInformation ManagementPractices (IMP)

TechnologyInformation TechnologyPractices (IMP)

IT for Management Support

IT for Innovation Support

IT for Business Process Support

IT for Operational Support

Proactiveness

Sharing

Transparency

Control

Formality

Integrity

Sensing

Processing

Maintaining

Organizing

Collecting

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Information Management Practices

Information Behaviors And Values


Proactiveness

Sharing

Transparency

Control

Formality

Integrity

The Maturity Framework: Management Prescriptions for Information and Knowledge Use

Sensing

Processing

Maintaining

Organizing

Collecting

IT for Management Support

IT for Innovation Support

IT for Business Process Support

IT for Operational Support

IO M

atu

rity

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Differences Between High and Low Companies

European BankEuropean Bank

BBVABBVA

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The Displays a Company’s Strengths and Weaknesses

Hot!!!

Cold!!!

ResultsCapabilities IO total

The displays the ranking of managers’ responses to the IO DiagnosticTM relative to the enterpriseIQ international benchmark.

This report provides a drill-down analysis across 24 critical management areas that affect a company’s performance.

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• The majority of IT resources and personnel were committed to converting the IT operational and transaction systems of the bank with that of a merged bank. After five years, only 80% of the two systems had been merged.

• Two additional restructuring programs, the transition to the Euro, and Y2K during the late 1990s continued to focus the IT department’s attention almost exclusively on infrastructure and operational issues.

A Large Northern European Retail Bank: Low , Low Business Performance

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• Customer channels fragmented

• Cross-selling in the branches failed

• Relationship managers relied on personal systems

• Product managers had inadequate decision-making tools and complained of overload

• Senior managers blamed "IT problems" for under performance

Low , Low Business Performance

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Contrasting levels of information Practices produce different IO and Business Performance results

Top 5%

A Large Southern European BankHigh IO, High Business Performance

Bank ABank A

Developing High IODeveloping High IO

Banco Bilbao Vizcaya Argentaria (BBVA): Executing Growth Strategies with Dynamic Information Capabilities

• Develops an acquisition policy• Invests US$ 4 billion in Latin

America

x1995

1st 1000-Day

Program launched

x1997

2nd 1000-Day

Program launched

x

Business Strategies

• New banking model: branches to focus on selling to customers, not performing transactions

• Increases the effective use of customer information

Building Dynamic

InformationCapabilities to Achieve

High IO

• IBV: Promotes transparent company culture & encourages employees to share information in & across branches

• ITP: Develops a single IT infrastructure to integrate all channels

• IMP: Sets up information management tools and processes; & trains employees on how to collect, maintain and use information

x xOct. 19,

1999 BBV &

Argentaria merge

No clear strategy: internal political struggle; lack of leadership

• ITP: Builds a single IT infrastructure in Latin America

• IMP: Changes partners’ systems & processes

• IBV: “Cross fertilization” program to change management’s mind-set

x1988

Banco de Bilbao & Banco Vizcaya

merge

1989One co-

chairman dies; Ybarra

becomes sole chairman

1994Uriarte initiates executive

meeting to develop transformation plan & starts road shows to

rebuild morale & establish sharing culture

Time & Milestones

Company transformation Expansion into Latin AmericaSet-back

Banco Bilbao Vizcaya Argentaria (BBVA): Executing Growth Strategies with Dynamic Information Capabilities

xFeb. 2000

3rd 1000-Day Program

launched - CRE@; alliance with Telefonica

• Integrates 2 banks• Acquires more operations• Transfers banking model to partners to create a

global BBVA brand & to leverage its technology, people, knowledge, and large customer base

xJan. 1, 2000Merger project starts

Business Strategies

xJune 2000

Acquires Bancomer

xOct. 19,

1999 BBV &

Argentaria merge

Jan. 2001 Merger project complete; buys out 2 banks in Argentina & Colombia; drops some Telefonia projects; launches new Telefonia initiatives

x

Time & Milestones

Creating an International Brand

Building Dynamic

InformationCapabilities to Achieve

High IO

High IOHigh IO

• Integrates systems & processes of the 2 banks’ global operations and other newly acquired operations, and creates an acquisition & merger capability

• Integrates e-technologies into its business model:• Launches e-sell, e-make , e-buy & IT architecture

initiatives • Develops E-banking, e-Commerce & e-Ventures

initiatives, e.g. BBVAnet• Launches initiatives with Telefonia: Uno-e.com, CRM,

BBVA Ticket, Adquira.com, FoodService & Katalix

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Characteristics of Organizations with Low and High IO - Examples

• People do not know enough about their customers to adequately serve and anticipate their needs

• Efforts to serve customers have failed due to a lack of information and sharing across channels

• There is no clear payback from ever increasing IT investments

• Many decisions are made on gut-feel rather than the facts

• Information is easily accessed across organizational boundaries and hierarchies

• Managing Information – collecting, organizing, maintaining – is viewed as everyone’s responsibility

• Information Technology is viewed as integral to the organization’s business – not simply as a support function

• Managers have a keen sense of urgency about what they don’t know

Low IO High IO

IO enables an Organization’s strategy

BehaviorsBehaviors InformationInformation TechnologyTechnology

Vision:Global Leader

Vision:Global Leader

Through:• Customer Focus• Differentiation• Strengthening Core

Activities• Leveraging IT

Superior Organizational Services and

Products

Superior Organizational Services and

Products

Leadership ChallengesLeadership Challenges

Effective Use of Information & Knowledge

Effective Use of Information & Knowledge

HIGHER HIGHER

Leads to

Information Effectiveness

Proactiveness

Sharing

Transparency

Control

Formality

Integrity

Sensing

Processing

Maintaining

Organizing

Collecting

Management

Innovation

Business Process

Operations

• Customer-Driven• People-Centric• Team-Focused• Entrepreneurial• Results-Oriented

Leveraging What We KnowLeveraging What We Know

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FinancialWhat we must deliver to our shareholders

ClientWhat our clients expect from us

InternalWhat processes we

must excel at

Client Focus Delivery Focus Operational Excellence

Maximum Client ValueLong-term supplier for

high quality products The right product mixHigh quality and

certified manufacturing

Maximize business opportunities

Build consistent and deeper client relationships

Package and ship products efficiently

Grow revenueIncrease shareholder value

Manage our inventory

Understand client needs

Expand and leverage leadership in logistics

intelligence

Enhance and comply with quality management processes

Maximize salesMaintain top

financial strengthMaximize

investment return

Improve expense productivity

Streamline and improve business and information processes

Example – Company Performance Scorecard

Information OrientationHow we must develop our

information capabilitiesEnsuring the effective usage of information within and across

functions

Missing Performance Measure!

Many organizations have developed performance scorecards, but until the IO Maturity Framework and Metric were developed, they had no effective way of seeing, measuring and managing their information capabilities.

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Technology

Management

Innovation

Business Process

Operations

People

Proactiveness

Sharing

Transparency

Control

Formality

Integrity

Information

Sensing

Processing

Maintaining

Organizing

Collecting


Business Performance

• Market Share Growth

• Financial Performance

• Level of Innovation

• Superior Company Reputation

{

Breakthrough: The Information Orientation of an organization is linked to performance

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Information Orientation (IO) measures the effectiveness of information and IT usage by the organization’s people which impacts performanceNew Business

Formula D x U = BV

Deployment x of I/T

Effective =Usage of I/Tby our people

Expected- Business Value

PerformanceInformation =Orientation (IO)

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How Managers Can Extract the Full Organizational Value from Information and Technology (I/T) –The Multiplier EffectNew Business Formula D x U = BV

Deployment x of I/T

Effective =Usage of I/Tby our people

Impact on- Business Value

Cost Savings for Efficiency

Creating Value for Effectiveness

Competitive Necessity

Competitive Advantage

Technology Orientation


Technology Strategy

Information Strategy

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• The mindset and actions of an organization’s managers are critical to effective information use and to achieving performance results with information, people and IT capabilities –only managers can drive information strategy!

• Building an organization’s Information Capabilities is as much about people behaviors and information practices as it is about IT –managers’mindsets and actions influence information behaviors and values!

• Leveraging information and knowledge for performance impact is no longer « soft » or « intangible »: We can see, measure and leverage these assets by managing the Information Orientation of our organization.

Lessons Learned About Managing Information, People and IT to Improve Organizational Performance

Bielefeld-040109 Information Strategy as a Key Success Factor for Enterprises and Universities...

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