Lecture 1: IT Strategy 1/2

Question 1

Since when is IT a disruptor?

Answer 1

2014 –> Cloud/ IoT

Question 2

What does IoT enable?

Answer 2

That products and serv. become digitally compatible

Question 3

What are the six characteristics of the cloud?

Answer 3

• long tail customization
• always-on
• on-demand
• scalability, elasticity
• collaboration, interaction, interoperability
• mash-up/ reconfiguration/ lego-economy

Question 4

Which sectors where affected first by digitization?

Answer 4

Music (2000s), books & retail, consulting &CPG & cars, cleaning services & food, mining

–> First light B2C products

Question 5

Which industries have the highest IT expenditure?

Answer 5

Financial services, telecommunications, health

Question 6

For which industries is the proportion of IT expenditure highest compared to ROS?

Answer 6

Health, Logistics, Financial Services

Question 7

What were the key steps taken in 2000 to overcome the problems of not scaling, inflexible, high cost IT systems?

Answer 7

• architectural decoupling and renovation of core systems
• implementation and securing of standards
• migration to standard components
• decoupling of management responsibilities

Question 8

Examples of poor IT management

Answer 8

DaimlerChrysler, FoxMeyer, CDUniverse

Question 9

How did “legacy issues” develop? (History)?

Answer 9

• development of application silos through uncoordinated individual initiatives
• use of unstructured development methods and programming languages

Question 10

What is the as-is situation with legacy issues?

Answer 10

• extreme maintenance costs
• brain monopolies
• missed business opportunities
• lacking strategic mobility

Question 11

What are the options for action concerning legacy issues?

Answer 11

• total replacement –> breakdown of running business
• keep going –> non-linear increase of complexity
• renovation -> high investment without additional benefit

Question 12

What do higher IT investments need?

Answer 12

Better management

Question 13

Where was the focus in IT placed in the past and where is it placed now?

Answer 13

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.

Question 14

What is the goal of IT management?

Answer 14

Less frictional loss between business and IT.
Business should drive IT and vice-versa.

Question 15

What are the business threats that lead companies to use IT?

Answer 15

• cost pressure
• shorter product cycles
• competition

Question 16

What are opportunities for business to drive IT?

Answer 16

• the global presence of the company
• rapid response to customer
• high-volume, real-time transactions

Question 17

What are the threats to IT that drive business?

Answer 17

• exploding complexity
• legacy and discontinuity
• vendor lock-in
• economic vulnerability

Question 18

What are the opportunities for IT to drive business?

Answer 18

• new effective channels
• storage capacity
• automated identification of objects and individuals

Question 19

What should there be between “business drives IT” and “IT drives business”?

Answer 19

Innovation and Alignment –> less friction

Question 20

What is strategy? (4 different definitions. I learn one)

Answer 20

Porter: About being different. To deliberately chose a different set of activities to deliver a unique mix of values.

Question 21

Common characteristics of strategy?

Answer 21

• big picture
• medium to long-term
• target-setting
• planning

Question 22

What is the management cycle?

Answer 22

1. Target
2. Plan
3. Execute
4. Control

Question 23

Classification by business processes in the pyramid?

Answer 23

1. Strategic
2. Dispositive
3. Operative

Question 24

Do many companies have an explicit IT strategy?

Answer 24

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.

Question 25

3 Strategic decision areas regarding IT

Answer 25

• organization/ governance
• skills/ resources (HR, provider, offshoring)
• application/ architecture (application landscape, project portfolio, infrastructure)

Question 26

What is the link between Organization and Skills?

Answer 26

• degree of vertical integration/ outsourcing

Question 27

What is the link between Skills and Application?

Answer 27

Standard vs. individual software

Question 28

What is the link between Organization and Application?

Answer 28

• strategic alignment
• innovation
• role of the CIO

Question 29

IT processes chart

Answer 29

• IT Strategy and Management
• Application Management
• Infrastructure Management

Question 30

What are some features of growing industrialization?

Answer 30

• differentiation pressure
• cost pressure
• focus on core business
• automation

Question 31

Can the core business change over time?

Answer 31

Yes, for example for VW and GM financial services are the new core business

Question 32

How should the product portfolio be developed?

Answer 32

It should be developed demand-specific.
You should define the functionality, service level, and prices focusing on optimization of resources and cost

Question 33

What is “Factory”?

Answer 33

You should establish automated and repeatable processes that are standardized across systems. You should select the technology appropriate for your services.

Question 34

What are the three demand decoupling points?

Answer 34

Application, location, user groups

Question 35

Make or buy for when low proficiency and low business importance?

Answer 35

outsource (commodity)