Consistency between Business Strategy and IT

maandag 5 november 2012

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Author:

Date: November 5th, 2012

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Master class CIO

Harry Bouwman

Consistency between Business Strategy and IT

OutlinePresentation and discussion

I. From strategy to business models

• Networked society

II. IT driver and enabler: what is the consequence for IT

management

• Some theory

• Service focus

III. Design of service(s) platforms and business models

Business models and internal IT: B/EA

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Some assumptions on network economy

• Networked economy as a service economy

• From auxiliary services to product as support to services

• Upstream service value creation

• Servitization

• Service bundling, service unbundling

• Service experience

• Values

• Ethics and core values, corporate governance

• Sustainable society: leasing business model for products


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Some assumptions on network economy

• Interdependencies across industry sectors, across firms

and organizations, and internally

• Micro-eco-systems

• Resource dependencies: control on arm length

• Keystone firms or dominators

• Mutli-level Business Models


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Consistency or gaps:

from strategy to architecture


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Strategy design: SWOT (Selznick, 1957)

Strategic Planning School (Ansoff, 1965)

Strategic positioning (Porter, 1980)

Competitive Advantage

Resource Based View (Barney)

Resource dependency (power)

(Pfeffer & Salancik, 1978)

STOF

(Bouwman et al, 2008)

CANVAS

(Osterwalder & Pigneur, 2020)

CSOFT

(Heikilla et al., 2010)

BM component

(IBM, 2005)

Eco-systems

Platforms

BM tooling

Business Architecture

Enterprise Architecture

Business Processes

Process tooling

Business strategyBusiness

model

Business

Architecture

I. From strategy to business models


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Why study business models?(Pateli and Giaglis, 2004, Osterwalder and Pigneur, 2002; Chesbrough, 2011)

• Understanding BM elements and their relationships in a

specific business domain

• Communicating and sharing this understanding to the outside

world

• Using them as a foundation for change

• Measuring the performance of an organization: KPi’s

• Simulating and learning

• Experimenting with and assessing new business models

• Changing and improving the current way of doing business

5-11-2012

Business Model approaches

• Business Model Canvas (Dubosson-Torbay et al, 2002;

Osterwalder et al 2010)

• STOF (Bouwman et al, 2008)

• C-Soft (Heikkila, 2008)

• Four-Box Business Model (Johnson, 2010)

• Business Model Schematics (Weil & Vitale, 2001)

• Entrepreneur's business model (Morris et al, 2005)

• E3-value (Gordijn & Akkermans, 2001)

• Component Business models (IBM, 2005)

• BEAM; business eco-systems analysis and modeling (Tiam

et al, 2008)

• K.and many others


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Business ecosystem(Moore, 1993)

Network of organizations, including suppliers, lead producers,

competitors, and other stakeholders

Emerge around a core technology (i.e. platform)

Engaged in cooperative activities

Develop complementary around the core technology

Co-evolve capabilities and roles over time

Lead by a central company towards shared vision

Central company may change over time

Google ecosystem


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Main roles in business ecosystem(Iansiti & Levien, 2002; 2004)

Keystones

• Create value by providing the core platform

• Share the value of platform with other members

• Critical for survival and stability of business ecosystem

• Enhance the overall health of business ecosystem

Main roles in business ecosystem(Iansiti & Levien, 2002; 2004)

Dominators

Extract most of the value from business ecosystem and left

less for others

Tend to eliminate other members and take over the business

ecosystem

Reduce the diversity, eliminate competition, hinder innovation


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Discussion

• Due to network economy interdependencies between

organizations are that strong that developing a strategy for

a firm can only make sense if these interdependencies are

taken into account


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II. IT driver and enabler:

what is the consequence for IT

management?


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Trends according to Gartner

• Gartner 10 trends 2013: drivers or enablers?• Mobile device battles

• Mob Apps & HTML 5

• Personal cloud

• IoT

• Hybrid IT & Cloud computing

• Strategic Big Data

• Actionable analysis

• Mainstream in-memory computing

• Integrated Eco-systems

• Enterprise App Stores


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Consequences for IT (internal)

• What is your prime concern?

• IT as driver or as an enabler

• Enabler; Edward Jones Case: consistency of Strategy and IT

• Driver:

Making money with IT

Business case: social media, cloud, ubiquitous computing:

sensors and mobile, NFC,

• Enabler:

How to integrate social media in IT operations?

Private, public, hybrid cloud; BYOD, K.


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Consequences for IT (internal)

• BITA: Aligning business and IT within organization

• Your organization: incumbent versus start up; public versus

private owned company; government versus business

• Agility or Architectures: or both?


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Some theory


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Strategic Alignment Model (SAM) (Henderson & Venkatraman 1993)

• SAM advocate alignment (Strategic

Fit and Functional Integration)

between and within four domains:

• Business domain

• IT domain

• Organization Infr. & processes

• IS Infr. & processes

• Based on SAM, 4 alignment

perspectives are possible:

1. Strategy Execution

2. Technology Potential

3. IT as Competitive Potential

4. Service level

• Since SAM, several alternative SAM-

based models are introduced.Venkatraman et al. (1993)

Information Management Model(Maes 2000)

• Extend SAM model with a new row (Structure)

and a new column (Information and

Communication)

• New row, because business-IT relationship is not

only a question of strategic, but also structural

and operational correspondences

• (ARCHITECTURES: BA/EA, IA and IT-infra).

• New column, because business-IT relationship is

much more complex involving cultural, political,

financial and semantic aspects.


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Business Architecture(Versteeg and Bouwman 2006)

Business Architecture

• Architectural approach to bridge business with IT

• Business strategy gets better formulated and understood

and is a pre-structuring device for the development of

subsequent architectures.

• Product/service development, operations, customer

relation and interaction

> Information Architecture

• IT-functions (functional modeling)

• Data, objects (data modeling)

> Process Architecture

• Information Arch. are related to business processes

leading to IT-units

> Application Architecture

• Business domain acquire services form ICT-suppliers.

Enterprise architecture


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Discussion

Organizations have to understand both the role of IT as a

driver and as enabler, and this has to be expressed as part of

a strategic vision

For large information intensive organizations as well as high

tech corporations and organizations there has to be a clear

relation between strategy, business and enterprise

architecture


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III. Design of service(s) (paltforms) and

business models


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Focus on services

Highest added value comes

from services

•Service innovation

•New Service Design

•Servitization

•Service bundling, service

unbundling

•Upstream service value

creation

•Productization of services

•Service platforms


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5-11-2012

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STOF-modelDouble role IT


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STOF focus

• Strategy implementation and operationalization

• Multi-actor, networked enterprises

• Technology driven and enabled

• Service/product as unit of analysis

• Design oriented: critical design issues

• Tooling: design handbook, business modeling,

and decision support tools

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Platforms


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Service platform

A

Customer Service provider

<lookup><invoke>

<register>

Service

x

Service

y

<advertise><monitor>


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Heavy weight and light weight

approaches to service design,

engineering and business modeling


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User experience Platforms and ecosystems:Business models and modelling

Design Cycle Method Kernel theories Method, Tooling Kernel theories

Idea Focus group,

Participatory Observation

Domestication

Lazy User

Adoption and

acceptance models

Descriptive

Case study

Business model design

BM Quick Scan

STOF/CANVAS/CSOFT model

With support theories in service marketing,

service engineering, platform theories,

information economics, strategy analysis,

organizational theory, stakeholder analysis

Concept Conjoint

analysis

Lab. Experiment

Fit theories, context

aware behavior,

WTP

Business model stress

testing

Agile BM application

Social network analysis

(qualitative)

BM-DSS

Financial modeling: pricing;

WTP

Risk and uncertainty

Agile software development

(micro) Eco-systems,

Platform theory,

Open-closed models,

Social Network Theory

Implementa-

tion

Field experiments HCI, WTP, TTF

IG and SQ

Technical artifact

Business MODEL Tooling:

VIP model

BM and EA/BA

BM –DSS

NVP, Real Options

Service life cycle and platform engineering;

UML diagrams

Collective action

Critical mass theory

Governance

Commercial-

ization

Evaluation, Use and

Impact:

Market observation

(SEM, LCA)

Log data analysis

Adoption, acceptance

and use research

Social and digital

exclusion

Continuance

Business Model roadmaps

Ecosystem analysis

Social network analysis

(quantitative)

BM-KPI


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BM and an agile approach

BM Visualization as first phase of scrum approach

Cases TomTom, Yes2Web, Dialogues House (ABN-AMRO)

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BM and EA platforms

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Citizens/Consumers

Business services

= Platform for citizens/consumers

healthy living

Information systems services

= Platform for business services

Technology services

= Platform for information

systems services


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Networked BM: STOF-VIP

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Discussion

Time to market of heavy weight approaches is too long, while

the level of detail is more attractive and does lead to

implementations that work


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Closing remarks, QuestionsShift in focus from

Strategy to BM: single firm, marketing strategy (CANVAS)

• Mainly brainstorm tool for individual firms

• Network economy

Via

BITA and Architecture thinking

To

Consistency of strategy, BM and B/EA

Service design and BM (STOF)

BM tooling: ICT enabled, networked enterprise

STOF and beyond

• Value and Information exchange, processes

alignment

05/11/2012

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Consistency between Business Strategy and IT

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