BANKING INFORMATION SYSTEMS LECTURE 11

Strategy Development for E-banking •  As with all banking, but in a more critical sense, e-banking is highly dependent on technological development.

•  E-banking links customers to suppliers in a much “looser” relationship than traditional banking, giving rise to security issues which must be addressed strategically.

•  E-banking offers opportunities for enhancement of the customer experience, through which banks are able to leverage competitive advantage.

Corporate Strategy as Plans or Patterns •  The planning approaches to strategy is highly design oriented, whereby plans are drawn up which the organization then uses as a framework for development over the following planning period.

•  This traditional view of strategy as a planning activity has been argued that it is ill suited to information systems, where both the human centered nature of the domain, and its reliance on ever changing technologies, makes planning difficult.

Plans Vs. Patterns

Strategy Development Tools: Strategic Alignment

•  A strategic alignment model is presented as a framework for the process, which then progresses by means of determining the current status of an organization's IS and IT planning (the ‘IS Map’), and analyzing the business (e-banking) and IS domains of the organization in continuous alignment.

The Alignment Problem •  The purpose of strategic alignment is to align information

technology with an organization's corporate and/or business unit strategies.

1.   It cannot be assumed that all organizations have a corporate or business strategy, and if they do not there is little with which to strategically align information technology.

2.   Information technology cannot be viewed as distinct from the rest of the business, assuming that once corporate strategy is detailed, a strategy for e- business can be formulated to ‘fit’ the corporate strategy, without regard to any other issues.

Extended Strategic Alignment Model

What it Means: •  The information need drives the process, while

central to that process is the organization's corporate strategy, together with the IS map: the framework of information systems currently used to support organizational activity.

•  Information needs are met through the business domain (business strategy and business organization) and IS domain (IS strategy and IS infrastructure and processes) interacting to support the organization.

This is a useful framework, but it does not guide the process of strategic alignment.

Determining the Current Status of IS and Corporate Planning in the Organization: The IS Map

•  This approach can be used by an organization to determine its current position in relation to corporate strategy, business unit (e-business) strategy, and IS.

Extended Strategic Alignment Model

What it Means: •  The information need drives the process, while

central to that process is the organization's corporate strategy, together with the IS map: the framework of information systems currently used to support organizational activity.

•  Information needs are met through the business domain (business strategy and business organization) and IS domain (IS strategy and IS infrastructure and processes) interacting to support the organization.

This is a useful framework, but it does not guide the process of strategic alignment.

Determining the Current Status of IS and Corporate Planning in the Organization: The IS Map

•  This approach can be used by an organization to determine its current position in relation to corporate strategy, business unit (e-business) strategy, and IS.

The Alignment Perspective

Strategy execuHon perspecHve

Technology potenHal

perspecHve

CompeHHve potenHal perspecHve

Service level perspecHve

Strategy Execution Perspective

•  It sees business strategy as the main driving force.

Technology Potential Perspective •  Focuses on available technologies and the infrastructure

necessary to their success, with business organization and e-business strategy following the technological lead.

Competitive Potential Perspective •  It seeks to exploit emerging IT capabilities to generate

competitive advantage, either by enhancing products or improving processes, with e-business strategy being modified to take advantage of new IT opportunities.

Service Level Perspective •  It concentrates on IS strategy and IS infrastructure to produce

an improved organization. The danger here lies in becoming detached from the business strategy and losing focus.

Strategic Action •  Once IS mapping has been used to determine an

organization’s alignment perspective, the strategic alignment model lays out a framework for translating this into action.

The Business Domain

•  The second part of the process of strategic alignment involves gaining improved understanding of the business domain.

The Information Systems Domain Analysis of IS infrastructure and processes commences with an internal and external environmental audit, using the strategic grid to summarize the current position.

1.   Conduct internal and external audit to determine the current position regarding applications used and the technology used to support them.

2.   Use the audits to determine the applications and technologies available to the organization.

3.   Classify applications according to the strategic grid. This should be done for both current and intended or available applications.

4.   Determine the available technologies, categorized as emerging, pacing, key or base.

5.   Match current applications and technologies to those available.

Competitive Advantage

•  Information systems can be used to give an organization an advantage over its competitors.

Cost Leadership

DifferenHaHon

CompeHHve

Focus

Advantage

Competitive Advantage

DifferenHaHon Making your product or service in some way different from that of your

compeHtors

Cost Leadership Generates an advantage by producing at a lower cost, and thereby increasing

profit margins

Focus The concentraHon on a parHcular area of the market where the organizaHon

aims to outperform compeHtors by its increased knowledge and skills

Competitive Advantage from Information Technology, Information Systems or Information?