Ross & Weil - Chapter 1 (Foundation of Execution) Flashcards
Why do some companies grow better than their competition and have better success with their strategic initiatives?
They have a better foundation for execution, making IT an asset instead of a liability and creating a foundation for business agility.
What do companies have when they have digitized core processes?
Higher profitability, faster time to market, more value from IT investments.
Also 25% lower IT cost.
What is the foundation of execution?
The IT infrastructure and digitized business processes automating a company’s core capabilities.
Why do core processes need to be digitized?
- Non-automated & low-level processes can contain mistakes that can cause a ripple effect with big consequences
- Routine activities need to be automated so that they are performed reliably and predictably. Then focus can be on higher-order processes
What are the characteristics of a foundation of execution?
- Evolves over-time to include more business functions;
- Depends on alignment of business objectives and IT capabilities
- Focus on: competitive distinctive capabilities & mundane, every-day processes
- Provides a platform for innovation
What does the digitization of core business processes enable?
- It makes individual processes less flexible, while making the company more agile.
What are indicators a company does not have a foundation to support its strategy?
- Different parts of the company answer customer questions differently
- Difficult to meet new regulatory policies, because then the whole infrastructure needs to change
- Business lacks agility
- IT is consistently the bottleneck
- Across the company there are multiple business processes doing the same
- Information to make key decisions are lacking
- Lots of human data entry between systems
- Unknown if the company gets good value from IT.
What is the wrong process of aligning business and IT?
- Management decides strategy direction;
- IT, together with management, designs IT-enabled solutions to support strategy;
- IT delivers applications, infrastructure & data to implement the solutions;
Why is the wrong process of aligning business and IT wrong?
- The company builds IT solutions instead of IT capabilities;
- Each strategic initiative requires new IT solutions, so they do the process again;
- You end up with too many different applications and systems that hinder coordination;
How do you build a foundation for execution?
-> Careful selection of which processes and IT systems to standardize and to integrate
- > Master 3 disciplines:
1. Operating model
2. Enterprise Architecture
3. IT Engagement Model
What does the operating model refer to?
- The level of business process integration and standardization
- Integration enables end-to-end processes, but forces common understanding of data
- Standardization creates efficiencies, but limits customer service
What does Enterprise Architecture refer to?
- The logic for business processes and IT infrastructure
- Long-term view, so that capabilities can be build
- Four Maturity stages
What does the IT engagement model refer to?
- System of governance to ensure business and IT projects achieve local and company-wide objectives
- Alignment between IT objectives and company objectives and coordinates IT and business process decisions
Why does growing complexity demands a solid foundation for execution?
Growing complexity in companies’ systems can fossilize operations:
- Creates rigidity and excessive cost;
- Change could lead to the need to completely rewire systems;
- There is no added value in complex systems;
Why does business agility increasingly depend on a foundation of execution?
- Agility becomes a strategic necessity due to globalization, increasing regulation and faster cycle times;
- Change needs to be relatively easy to implement due to changing demands;
- Agility can be measured in percentage of revenue created from new products – the more agile, often the higher percentage;
