Lecture 1: IT Strategy 1/2 Flashcards
Since when is IT a disruptor?
2014 –> Cloud/ IoT
What does IoT enable?
That products and serv. become digitally compatible
What are the six characteristics of the cloud?
- long tail customization
- always-on
- on-demand
- scalability, elasticity
- collaboration, interaction, interoperability
- mash-up/ reconfiguration/ lego-economy
Which sectors where affected first by digitization?
Music (2000s), books & retail, consulting &CPG & cars, cleaning services & food, mining
–> First light B2C products
Which industries have the highest IT expenditure?
Financial services, telecommunications, health
For which industries is the proportion of IT expenditure highest compared to ROS?
Health, Logistics, Financial Services
What were the key steps taken in 2000 to overcome the problems of not scaling, inflexible, high cost IT systems?
- architectural decoupling and renovation of core systems
- implementation and securing of standards
- migration to standard components
- decoupling of management responsibilities
Examples of poor IT management
DaimlerChrysler, FoxMeyer, CDUniverse
How did “legacy issues” develop? (History)?
- development of application silos through uncoordinated individual initiatives
- use of unstructured development methods and programming languages
What is the as-is situation with legacy issues?
- extreme maintenance costs
- brain monopolies
- missed business opportunities
- lacking strategic mobility
What are the options for action concerning legacy issues?
- total replacement –> breakdown of running business
- keep going –> non-linear increase of complexity
- renovation -> high investment without additional benefit
What do higher IT investments need?
Better management
Where was the focus in IT placed in the past and where is it placed now?
In the past on IT efficiency so about direct effect of IT Management on IT cost reduction.
Now: IT effectiveness so about the indirect impact of IT management on total costs and on revenue.
What is the goal of IT management?
Less frictional loss between business and IT.
Business should drive IT and vice-versa.
What are the business threats that lead companies to use IT?
- cost pressure
- shorter product cycles
- competition
What are opportunities for business to drive IT?
- the global presence of the company
- rapid response to customer
- high-volume, real-time transactions
What are the threats to IT that drive business?
- exploding complexity
- legacy and discontinuity
- vendor lock-in
- economic vulnerability
What are the opportunities for IT to drive business?
- new effective channels
- storage capacity
- automated identification of objects and individuals
What should there be between “business drives IT” and “IT drives business”?
Innovation and Alignment –> less friction
What is strategy? (4 different definitions. I learn one)
Porter: About being different. To deliberately chose a different set of activities to deliver a unique mix of values.
Common characteristics of strategy?
- big picture
- medium to long-term
- target-setting
- planning
What is the management cycle?
- Target
- Plan
- Execute
- Control
Classification by business processes in the pyramid?
- Strategic
- Dispositive
- Operative
Do many companies have an explicit IT strategy?
No, most have no defined IT strategy. Those that have one mostly do not have one that is derived from business strategy. Often not up to date or personalizable.
3 Strategic decision areas regarding IT
- organization/ governance
- skills/ resources (HR, provider, offshoring)
- application/ architecture (application landscape, project portfolio, infrastructure)
What is the link between Organization and Skills?
- degree of vertical integration/ outsourcing
What is the link between Skills and Application?
Standard vs. individual software
What is the link between Organization and Application?
- strategic alignment
- innovation
- role of the CIO
IT processes chart
- IT Strategy and Management
- Application Management
- Infrastructure Management
What are some features of growing industrialization?
- differentiation pressure
- cost pressure
- focus on core business
- automation
Can the core business change over time?
Yes, for example for VW and GM financial services are the new core business
How should the product portfolio be developed?
It should be developed demand-specific.
You should define the functionality, service level, and prices focusing on optimization of resources and cost
What is “Factory”?
You should establish automated and repeatable processes that are standardized across systems. You should select the technology appropriate for your services.
What are the three demand decoupling points?
Application, location, user groups
Make or buy for when low proficiency and low business importance?
outsource (commodity)
