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IT Strategy 2.0: Balancing Innovation and Implementation

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The new challenges facing the CIOs in large organizations

Text of IT Strategy 2.0: Balancing Innovation and Implementation

  • 1. Alignment in the 21st Century:Balancing Innovation andImplementationProfessor N. Venkatraman Boston University School of Management SAP Users Group @ MaastrichtApril 20, 2007

2. Imagine life without (c) Venkatraman, 2007 2 3. Yet.. there are conicting views on the role and value of IT expensive.. But necessary evil Am I getting value from IT investments? Are we investing in the right areas? Can IT become my core competence? Why not outsource and offshore? I see my competitors using IT strategically.. I know that IT will become more central in the future but I do not know how to extract value(c) Venkatraman, 2007 3 4. My Agenda Alignment in the 21st century: Innovation and Implementation IT Strategy 2.0 Reframing the Business--IT Conversation(c) Venkatraman, 20074 5. New Excitement.. circa 2007 CIO as the Chief Innovation Ofcer! I.T contributing to Revenue and Growth From Business Process Reengineering to Crafting Business Model Innovations Pervasiveness of I.T in products, processes and services(c) Venkatraman, 2007 5 6. 66 (c) Venkatraman, 2007 N. Venkatraman, 2006 7. Source: Bill Gates 8. We see I.T everywhere now.. (c) Venkatraman, 20078 9. A Car is a computer on wheels connected to the network (c) Venkatraman, 2007 9 10. Software is shaping next generation business processes.. (c) Venkatraman, 2007 10 11. with new web functionality (c) Venkatraman, 200711 12. We see convergence and overlapacross industries and markets (c) Venkatraman, 2007 12 13. Four conversation questions1.How different will your business landscape be in the next 3-5 years?2.Whats the role of Innovation.. especially business model innovation for your future success?3.Is I.T central to business model innovations?4.How important is I.T to achieving your current business profitability?(c) Venkatraman, 200713 14. Alignment 1.0 IT BusinessStrategy Strategy (c) Venkatraman, 2007 14 15. We have captured value from IT + +People Processes Technology OO + IT = EOO15 (c) Venkatraman, 2007 15 16. Alignment 1.0 Mechanisms Business process reengineering (massive scale) Decentralize and centralize (adapt over time) Standardize to reduce inefficiency Outsource and multi-source IT functionality Cross-functional global teams Service level agreements Business--IT partnerships Etc (c) Venkatraman, 2007 16 17. Alignment 1.0 ScorecardB If we are charitable.. (c) Venkatraman, 200717 18. Alignment 2.0: The Network Era Network EraClient/Server EraMainframe Era (c) Venkatraman, 2007 18 19. We are in an era of global networkLive Connect WorkCreateConsume Play(c) Venkatraman, 200719 20. And globalization of work and business processes (c) Venkatraman, 200720 21. Innovation The new focus? (c) Venkatraman, 200721 22. My view on business model innovationsMooresLaw Products ProcessesServices People Metcalfs Bandwidth LawLaw(c) Venkatraman, 2007 22 23. Alignment 2.0: New Perspective, New MandateDrives Business I.T. StrategyStrategyShapes (c) Venkatraman, 200723 24. Alignment Agenda 2.0 InnovationStrategicFocus Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 24 25. Alignment Agenda 1.0 focused onoperational, execution issuesInnovationStrategicFocus Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 25 26. Alignment Agenda 2.0: BuildingBlocks (1)InnovationStrategicFocus Cost Center Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 26 27. Cost Center FocusBest in class global IT infrastructureBusiness CaseLowest delivered cost benchmarked againstexternal referent; not directly connected to strategyOrganizationDetached from businessoperations Sourcing Best-in-class global sourcing partners and vendors (c) Venkatraman, 200727 28. Alignment Agenda 2.0: BuildingBlocks (2)InnovationStrategicFocusProfit Cost CenterCenter Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 28 29. Prot Center FocusSupport current business operations Business Case Contributions to customer value and current profitability levelsOrganizationEmbedded (and partnering) withbusiness operations SourcingSelective use of best-in-class global sourcing partners andvendors(c) Venkatraman, 200729 30. IT and Implementation BenetsData Results Information KnowledgeAction}}} } DesignExpertiseProcessExecutionGapGapGapGap (c) Venkatraman, 2007 30 31. Alignment Agenda 2.0: BuildingBlocks (3)Innovation Growth Center StrategicFocusProfit Cost CenterCenter Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 31 32. How to think about innovation? Moores LawBusinessMetcalfsModelLaw Innovation Bandwidth LawSupporting the growth agenda (c) Venkatraman, 2007 32 33. Growth CenterFocusSupport future growth trajectoriesthrough new business model innovationsBusiness Case Contributions of IT to business model innovations OrganizationEmbedded within businessoperationsshared responsibility SourcingSelective use of innovation networkpartners and vendors(c) Venkatraman, 2007 33 34. Alignment Agenda 2.0: BuildingBlocks (4)Innovation GrowthInvestment CenterCenter StrategicFocusProfit Cost CenterCenter Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 34 35. Whats your experimentationequation? Googles equation is 70-20-10.Whats your equation?(c) Venkatraman, 200735 36. Investment CenterFocus Influence future growth trajectoriesthrough selective experimentation Business Case Allowing for experimentation of plausible business models OrganizationDecoupled from current operations SourcingSelective use of innovation networkpartners and vendors (c) Venkatraman, 200736 37. The building blocks have different personalitiesInnovation GrowthInvestment CenterCenter StrategicFocusProfit Cost CenterCenter Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 37 38. These building blocks are also dynamic InnovationStrategicFocus Implementation BusinessIT/IS Leadership Responsibility (c) Venkatraman, 2007 38 39. Wheres Your IT Capital Allocated? What % for Innovation? What % for Implementation?(c) Venkatraman, 200739 40. Wheres Your IT Core Competence?IT Competence for Innovation?IT Competence for Implementation?(c) Venkatraman, 2007 40 41. Wheres Your IT Sourcing focused?IT Sourcing for Innovation? IT Sourcing for Implementation?(c) Venkatraman, 2007 41 42. Wheres Your IT Mandate?IT Mandate for Innovation? IT Mandate for Implementation?(c) Venkatraman, 200742 43. What about IT Performance Metrics? IT Performance Metrics for Innovation?IT Performance Metrics for Implementation?(c) Venkatraman, 2007 43 44. Theres legacy management problem We say innovation.. But we manage ITfor implementation We say future.. But we manage IT fortoday We say shared business-IT responsibilitybut we blame IT for the problems (c) Venkatraman, 2007 44 45. Managing for the future with I.T. Value creation fortoday andNo Businesstomorrow innovation without IT Inf chnTe yor oltegma ogra tio yStn Leadership (c) Venkatraman, 2007 45 46. Your Challenges The impact of I.T will be more than everbefore Pervasive Fast changing Value potential Management of IT is equally important Multiple roles within enterprises Leadership and strategy linkages (c) Venkatraman, 2007 46 47. Putting these ideas into actionClarity of Mandate for IT throughmanagement workshops Recognition of the four building blocksfor business innovation andimplementation Reinforce joint business-IT responsibility Develop an IT Strategy 2.0 scorecard(c) Venkatraman, 2007 47 48. Are you ready to take on the expanded IT mandate to win??Thank You Very Much

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