IS Strategy and Acquisition

Question 1

What is a business model?

Answer 1

A business model is what an organisation does to sustain itself: how the company makes money. It’s the primary activity of the company that derives value.

Question 2

What is a value chain?

Answer 2

The series of activities that a company undertakes in order to produce a product or service.

Question 3

What is a value system?

Answer 3

The idea of a value chain can be extended to that of a value system, the activities of the companies that work together to create a product or service. For example, car manufacturers rely on parts manufacturers and the parts manufacturers rely on other companies, and so on, right back to the production of raw materials.

Question 4

What are the primary and support activities of an organisation?

Answer 4

Primary activities: inbound logistics Operations Outbound logistics Marketing and Sales Service Support activities: Firm infrastructure HR management Technology Procurement

Question 5

What are some competitive forces?

Answer 5

Threat of new entrants into the market Threat of substitute products or services Bargaining power of suppliers Bargaining power of buyers

Question 6

What are some competitive strategies?

Answer 6

Lowering costs Differentiation Focus

Question 7

What is strategic planning?

Answer 7

Strategic planning is something that organisations do in order to formulate their business strategies. In its proper form, it’s a deliberate process where a long-term view is taken, not a short-term view - perhaps a five-year horizon or something similar. During strategic planning, it is important to scan the environment. - The micro environment - the firm itself and what’s going on inside it, and also its immediate context such as suppliers and competitors. - The macro environment - the larger situation in which the organisation finds itself. That might include politics, geography, the ecology and external factors like that. Legal aspects, for example, would be part of the macro environment.

Question 8

What are the 3 stages of strategic planning?

Answer 8

Analysis - Describe current and desired situations. Analyse and priorities needs for change Choice - Seek alternative actions. Select actions and make an action plan Implementation - Implement plan and describe results. Evaluate results

Question 9

What is a strategic map?

Answer 9

A strategy map is a diagram that is used to document the primary strategic goals being pursued by an organization or management team

Question 10

What is strategic agility?

Answer 10

Strategic agility is the ability to change strategy quickly. There has to be planning but the planning must also plan for change to allow for change if need be.

Question 11

What is strategy alignment?

Answer 11

When companies formulate their information technology and information systems strategies, it’s important that they are linked back to the business strategy. Three distinct types of strategy are relevant. - The business strategy—what the company is going to do to win market share or make money. - The information system strategy—information systems what the organisation needs to support the implementation of its business strategy. - The information technology strategy—hardware, software and other technology services needed to provide the information systems.

Question 12

What is a strategic information system?

Answer 12

A strategic information system is one that really makes a difference to the business and provides high strategic value. In 2003, a very influential paper was published called “IT Doesn’t Matter”. The contention was that IT had become so ubiquitous that it was no longer a source of strategic advantage for organisations. In other words, IT is simply a cost of doing business; you must have the technology to operate in today’s business world. Every organisation can use IT in the same way as every other organisation, so it doesn’t provide any particular advantage. But evidence suggests otherwise. Since 2003 we have seen many innovations which companies have been able to exploit to gain market advantage—mobile computing, the internet of things, machine learning, blockchain and so on. For example, the Uber app and associated back-end systems can be seen as a strategic information system, because without it Uber’s business strategy wouldn’t be feasible.

Question 13

What can technology facilitate?

Answer 13

Innovative, competitive applications; new products Process improvements, efficiencies Data gathering Links with partners Locking in suppliers and customers

Question 14

What is IS strategy?

Answer 14

Different ways of producing IT strategy have been suggested or tried. It’s probably true that most organisations use a mixture; more complicated methods like BSP probably don’t get used so much, but companies do make use of lightweight tools like SWOT analysis. When starting to formulate IS strategy, it is important to look at the current business strategy. IS strategy is all about identifying the applications we’re going to need to support the business in the future, including applications that we could class as strategic.

Question 15

What are some methods of IS strategy?

Answer 15

Business Systems Planning (BSP) Scenario Planning “Stages of IT Growth” model Critical Success Factors (CSF) SWOT analysis PESTLE analysis

Question 16

What is CTO/CIO?

Answer 16

Chief Technology Officer or Chief Information Officer

Question 17

What is McFarlans strategic grid?

Answer 17

Question 18

How do organisations acquire information systems?

Answer 18

The process of acquiring information systems has five steps.

1. First, we have to identify the information systems that we’d like to have. This is often part of strategic planning.
2. Next, we decide on a suitable IT architecture, or changes to our existing architecture. This tells us what technologies we need.
3. We run projects to procure or create the necessary technology components.
4. We install, integrate and test the technology components and incorporate them into appropriate business processes to form the required information systems.
5. Then we can use the systems. Over time we can maintain and enhance them. In terms of value, if we’re talking about software, most of the cost is involved in step 5, the enhancement and maintenance stage.

Question 19

What is COTS?

Answer 19

Commercial of the shelf

Question 20

What is in-house development?

Answer 20

…

Question 21

What is outsourced development?

Answer 21

When companies and government bodies outsource their IT, it means getting a third party to provide services connected with information systems and technology. Organisations identify vendors, typically IT companies, who can provide services of one type or another. Why are organisations doing this? There are many reasons, but cost is often a driver. Outsourcing might be done in an attempt to reduce headcount or to save other costs, or for various other reasons. There is often the idea that we can get better service by using experts, or that we should concentrate on what we’re good at instead of IT.

Question 22

What is end user development?

Answer 22

End-user development (EUD) helps to solve this problem. EUD is “a set of methods, techniques and tools that allow users of software systems, who are acting as non-professional software developers, at some point to create, modify, or extend a software artifact” (Lieberman et al 2006).

Question 23

What are the pros and cons of COTS?

Answer 23

On the plus side, there are many products to choose from. We don’t have to waste time writing code. We know what to buy, and we can be assured about products in advance by reading reviews. It can also be less expensive, if we need a product where there is a lot of competition in the market. On the other hand, buying existing software can be a less flexible solution than building our own. It may not match our requirements particularly well, and we don’t have much control over how the software works, if any. We will also be stuck with a piece of software that’s probably not integrated into our other applications—and this can become a real headache when we want to operate the systems as part of organisation-wide business processes.

Question 24

What are some information system acquisition methods?

Answer 24

The idea of leasing software has increased in popularity, especially as cloud services have become a more attractive option. Increasingly, organisations subscribe to software online. On the other hand, we can still buy software to install in-house. We can build applications ourselves. That has been common, but requires expertise and is typically expensive and risky. Or we can pay somebody to do it—outsourced development is the most common type of IT outsourcing. A thing to note is that building a system in house can be quite difficult as requirements are hard to know from the get go and are often figured out throughout the project. Finally, we could create a solution using end-user tools such as spreadsheet software. This is the route that many end users take when confronted with the reality that IT department has a backlog of requests measured in years.

Question 25

What are the benefits and risks of cloud services?

Answer 25

Benefits: Lower capital costs Lower IT operating costs Ease of installation and maintenance Optimized IT infrastructure Scalability Deferred responsibility Risks: Environmental security Data privacy and security Data availability and business continuity Record retention requirements Disaster recovery Deferred responsibility

Question 26

How do organisations carry out procurement of information systems?

Answer 26

Very commonly, the procurement of information systems follows a “waterfall” lifecycle. It’s a simple way of organising projects where one task finishes before the next task starts. In a typical waterfall project, there is one investigation stage, one analysis stage, one design stage, and so on. It’s fine for short projects—but as the projects get longer, problems can creep in. From a procurement perspective, the waterfall approach may be the only way to do things, because of (for instance) contractual constraints. But many organisations try to use a more agile approach in procurement. One effect of that is to defer detailed requirements analysis until the project is in progress.

Question 27

What is the IS procurement process?

Answer 27

1. Requirements, criteria 2. Request for Tender 3. Evaluation, selection 4. Contract, service levels

Question 28

What are some IS procurement selection factors?

Answer 28

Quality (requirements fit) Cost Support, training docs… Vendor stability, record

Question 29

What are some IS procurement issues?

Answer 29

System = commodity, not change Detailed requirements in request for tender (RFT) Vendor carries most risk Expensive fixed-price, fixed-timeline contract High costs, missed deadlines, poor quality, project failure, litigation, unmet needs…

Question 30

What are some IT outsourcing issues?

Answer 30

IT is not homogeneous IT capabilities evolve It’s hard to assess the costs and benefits of IT activity The choice of IT practices makes a big difference High switching costs

Question 31

What are some IS outsourcing risks?

Answer 31

If we focus specifically on the outsourcing of application development, there are some particular issues we need to be aware of. - Contracts can be restrictive and stop the customer changing their mind as systems are delivered. Agile methods are based on the idea that requirements change, because experience shows that requirements do evolve as people understand what’s possible. So, the idea of a contract that specifies requirements absolutely can be problematic. - Another problem is “short-termism”, where the vendor is looking for quick, easy solutions rather than laying the foundations, with appropriate architecture and groundwork, for IT systems that will endure. This can often arise when the work has been chopped up into small contracts, which is a favoured approach thought (often wrongly) to reduce risk. Some others include: Technical management focus Adversarial relationship Requirements gap Poor design Lack of integration Failure of organisational change

Question 32

What is knowledge asymmetry?

Answer 32

Vendors expertise is attractive but clients risk losing crucial knowledge

Question 33

What are some outsourcing success factors?

Answer 33

In IT outsourcing, it is thought that partnership quality is a good indicator of likely success. Partnership quality is based on things like trust, understanding and sharing risks. On the other hand, it may be more a question of paying attention to basic aspects such as: - choosing a vendor that offers the right services, - ensuring the client states clearly what they want, and - managing the vendor effectively. Research shows that these are important factors. Everybody, including the vendor, should work to the client’s commercial interests. This can be a problem where the procurement situation sets up a conflict of interest. For instance, most vendors want repeat business. Therefore they may be incentivised to complete work slowly and in the process to identify additional work that needs to be done (and therefore needs to be paid for, in excess of the original contract budget).

Question 34

What are the 2 different outsourcing options?

Answer 34

building a relationship vs a transaction…

Question 35

What is an outsourcing exit strategy?

Answer 35

Back out plan Avoid outsourcer bankruptcy Progressive approach

Question 36

What is SWOT analysis?

Answer 36

SWOT analysis is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning.

Question 37

What is PESTLE?

Answer 37

A PESTLE analysis is a framework to analyse the key factors (Political, Economic, Sociological, Technological, Legal and Environmental) influencing an organisation from the outside. It offers people professionals insight into the external factors impacting their organisation.

Question 38

What is BSP?

Answer 38

Business systems planning (BSP) is a method of analyzing, defining and designing the information architecture of organizations.

Question 39

What are the advantages of business-IT alignment?

Answer 39

Reduce IT expenses (at least 10% of IT spending does not benefit business goals)

Increase collaboration

Gain visibility into problem areas

Improve ROI by fine-tuning investments

Speed up time-to-market

Synchronize all units to become agile

Upskill your industry and employee knowledge

Achieve your strategy

Make smarter decisions in every area: infrastructure design, application lifecycles, planning and budgeting, marketing and sales, outsourcing, staffing, partnerships and vendors, etc.

Question 40

What are casual loop diagrams?

Answer 40

Causal Loop Diagrams (CLDs) are used to conceptually model dynamic systems in a holistic manner, mapping how variables (i.e., factors, issues, processes) influence one another.