IT and Network Organization Antoine HARFOUCHE, PHD.

IT and Network Organization IT and Network Organization

Antoine Antoine HARFOUCHE, PHDHARFOUCHE, PHD


Startegic alignment in Network organizations

Session 6:


Core Concepts

• Business-IT alignment – is a dynamic state in which a business

organization is able to use IT effectively to achieve business objectives

– improved its financial performance or marketplace competitiveness.

– the ability of IT to produce business value– the harmony between IT and business decision-

makers within the organizations


Why the alignment matters?

Operational excellence is central to creating and sustaining strategic advantage and change!

Operational excellence is central to creating and sustaining strategic advantage and change!


IS has a key roleon the strategic level


Process Executio

n

Process Executio

n

Technologies

Technologies

KnowledgeKnowledge

Organizational Structure

Organizational Structure

HumansHumans

PROCESS PERFORMANCE

PROCESS OUTCOMES

VALUE GENERATEDVALUE GENERATED

IS can also influenceThe operational level


Strategic Alignment


• Five strategies for dealing with competitive forces, enabled by Network organizations– Low-cost leadership – Product differentiation– Focus on market niche– Strengthen customer and supplier intimacy– Blue Ocean Strategy

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The strategic dimension of the alignment


• Low-cost leadership– Produce products and services at a lower price than

competitors while enhancing quality and level of service

– Examples: Wal-Mart

• Product differentiation– Enable new products or services, greatly change

customer convenience and experience– Examples: Google, Nike, Apple

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• Focus on market niche– Use information systems to enable a focused strategy

on a single market niche; specialize– Example: Hilton Hotels

• Strengthen customer and supplier intimacy– Use information systems to develop strong ties and

loyalty with customers and suppliers; increase switching costs

– Example: Netflix, Amazon

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• BOS: Value Innovation

- Objective is to create a completely new industry through fundamental differentiation as opposed to competing in an existing industry by tweaking established models.

- BOS advocates creating new uncontested space through what the authors term “value innovation”. This means increasing value by introducing new benefits and services, while simultaneously reducing costs by eliminating less valuable features or services.

- COSTS + VALUE

-- VALUE INNOVATION --


• To achieve value innovation Kim and Mauborgne propose an analytical tool called the Four Actions Framework. Four key questions challenge an industry’s strategic logic and established business model:

- COSTS + VALUE

-- FOUR ACTIONS FRAMEWORK --

ELIMINATE RAISE

WHICH FACTORS CAN YOU ELIMINATE THAT YOUR INDUSTRY HAS LONG COMPETED ON?

WHICH FACTORS SHOULD BE RAISED WELL ABOVE THE INDUSTRY’S STANDARD?

REDUCE CREATE

WHICH FACTORS SHOULD BE REDUCED WELL BELOW THE INDUSTRY STANDARD?

WHICH FACTORS SHOULD BE CREATED THAT THE INDUSTRY HAS NEVER OFFERED?

BOS:


EXISTING INDUSTRY

•Fiercely Competitive•Increased commoditization

= Blood in the water

Source: Chan Kim, Renée Mauborgne

The aim of BOS is not to out-perform the

competition in the existing industry, but to create a

new market space or blue ocean, thereby making the

competition irrelevant


The technological dimension of the alignment


• The ICT’s impact on competitive advantage– Transformation, destruction, threat to some

industries• E.g. travel agency, printed encyclopedia, newspaper

– Competitive forces still at work, but rivalry more intense

– Universal standards allow new rivals, entrants to market

– New opportunities for building brands and loyal customer bases

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The technological dimension of the alignment


– Managers set organizational structure for responding to business challenges

– In addition, managers must act creatively in:

• Creation of new Business models

• Occasionally re-creating the organization

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The organizational dimension of the alignment


The IT strategy dimension of the alignment

• Benefits of personalization• Benefits of co-creation• Benefits of integrating communication

channels in one channel• Benefits of e-communication• Benefits Virtual Communities• Benefits of Disintermediation


Example: Business Travel

Source: Biau & Sun


Conclusion

IT and Network Organization Antoine HARFOUCHE, PHD.

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