Regardless of size and Presso Graphy industry, every enterprise is dependent upon information technology and must have a strategy for how to employ it, especially as the internet becomes more pervasive. Information technology strategy is an enabler of business strategy. Not only must an enterprise manage relationships with its constituencies, but it must be able to connect with them electronically through data arteries – information supply, value, and demand chains. The information supply and demand chains are external; the information value chains are internal.
An information technology strategy is a special case functional strategy because every function in the enterprise requires electronic information delivery capabilities, and many require electronic process control also. In very large enterprises, strategy may be formulated at both the enterprise and organizational unit levels.
As websites such as Facebook, LinkedIn, MySpace, Plaxo, and Twitter become more pervasive in business, linkages between application systems and databases and social networking websites will be more important to enable constituencies to communicate both collaboratively and cooperatively. Just as email has become a primary method of communication between enterprises and their constituencies, so will social networking sites especially for advertising and ecommerce.
Business intelligence information can be used to identify opportunities for competitive advantage. However, information technology itself can be an enabler of competitive advantage, especially when there are opportunities to digitize products or deliver information products electronically. In such cases, business strategy is inseparable from information technology strategy.
Information technology comprises the analytical and operational application systems, databases, and technical infrastructure (hardware and networks) of an enterprise. Not all computer technologies are information based. Computer technology is used for process control applications in special purpose equipment. However, connectivity is essential as applications become more integrated. As digital construction and manufacturing practices develop through such technologies as computer-aided design/computer-aided manufacturing (CAD/CAM), the processes, the control of processes, and the products and/or services delivered by processes all rely upon information technology for connectivity.
For example, in the manufacturing industry, not only can design and manufacturing work be conducted through integrated CAD/CAM processes with electronic linkages to carriers, such as FedEx and UPS, but the entire project and process management activities can be monitored electronically from ideation to product delivery.
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Through technologies such as electronic data interchange and electronic funds transfer, data and both digital and information products flow through information supply and demand chains in parallel to material supply and product and/or service demand chains. Within the enterprise, data flows through information value chains from supply chains and to demand chains.
Developing an information technology strategy document is essential for describing the requirements and for educating users because:
- The impact is enterprise or organizational unit wide and other elements of strategy cannot be implemented without it
- Administrative activities, such as legal, finance, and human resources, and operational activities, such as research and development, procurement, manufacturing or equivalent, distribution, marketing, sales, and service depend on information technology – analytical and operational systems support both administrative and operational functions
- The time frames, expenditures, risks, and magnitude of efforts are usually larger and more complicated than other initiatives and must be clearly understood; information technology projects have a tendency to go out of control and under deliver – therefore, contingency plans are always necessary
- The subject matter can be complicated if not well explained
Information technology strategy is usually packaged as a separate but related document to the strategic plan. It is deployed and executed through specific programs and projects that develop new or enhance or maintain existing application systems, databases, and technical infrastructure.
Large information technology development projects are usually cross-functional, and may be part of a broader initiative sponsored by multiple functions collectively. Broader initiatives that have information technology components include:
- Market research and development
- Product research and development
- Infrastructure research and development for processes and information delivery
For example – for the development of a:
- Digital manufacturing system integrating both research and development and sales and production activities (sponsors: Manufacturing and Sales functions – impact is on Research and Development, Procurement, Manufacturing, Distribution, Sales, and Service functions)
- Financial, managerial, and regulatory accounting and reporting system (sponsor: Finance function – impact is enterprise wide)
- Human resource management system (sponsor: Human Resources function – impact is enterprise wide)
- Sales tracking system (sponsor: Sales function – impact is on all salespeople enterprise wide)
Some projects can be solely for the Information Technology function, in which case it is a customer of itself.
Steering committees should be established for major programs and projects representing the various impacted functions in order to resolve cross-functional barriers. Major programs should come under the review of a planning and policy committee at the enterprise level.
Information technology strategy formulation is a project in its own right at the enterprise or organizational unit level. Very large projects are grouped as a program of inter-related components under a program manager. Projects can be stand alone also. A single project can deliver one or more application systems and related databases and technical infrastructure, or multiple projects may be required depending upon complexity.
For example, when launching a new product, it may be necessary to conduct marketing, product, and infrastructure development projects that include the delivery of new systems, and upgrades to existing systems. However, if an addition to the product line is launched at a later time, a new project or set of projects may be required to enhance or maintain the current systems, or even develop new ones.
The work breakdown structure for downstream development, enhancement, and maintenance projects decomposes into planning, analysis, design, construction, implementation, and performance measurement phases. The performance measurement phase can be conducted in parallel with the other phases, and each must end with a performance review. A feedback loop to future planning activities must be established so that lessons learned from the past can be reflected in future initiatives.
Meeting the cost and schedule requirements is always a major consideration. Hence, “meeting the date” is a frequent requirement for project success. However, after implementation, the scope of what was delivered and its quality is usually remembered more than when. In anticipation of the need to make changes after implementation, an adaption project may be necessary to tune, standardize, and integrate the deliverables.
The planning phase is conducted at the enterprise, organizational unit, or program levels for one or more projects depending upon size and complexity. However, each application system and related databases and technical infrastructure is delivered through a project with distinct analysis, design, construction, and implementation phases. Each phase always begins with a detailed planning activity to ensure that resources are allocated appropriately. The work breakdown structure does not preclude the use of iterative methodologies within each phase for rapid application development and prototyping. Development, enhancement, and maintenance of websites can be very rapid, and heavily interactive with user involvement, when the appropriate tools are used.
Key questions and deliverables by information technology strategy project and downstream phases include:
Strategy project (enterprise and organizational unit levels):
- How does information technology enable business strategy?
- What are the investment priorities?
- Information technology architecture (applications, data and databases, and technical infrastructure)
- High level project phasing and plans
Planning phase (enterprise, organizational unit, and program levels): Key questions:
- What are the administrative functions’ systems and information needs?
- What are the operational functions’ systems and information needs?
- What are the priorities for the candidate analytical systems?
- What are the priorities for the candidate operational systems?
- Process models
- Function models
- Data models
- Information models
- Economic evaluation
- Scope of analysis projects and schedules
Analysis phase (project level): Key questions:
- How do processes, functions, and systems fit together?
- How do systems processes and functions relate to enterprise processes and functions?
- How do systems processes and functions and enterprise processes and functions fit together?
- Functional requirements
- Economic evaluation
- Scope of design projects and schedules
Design phase (project level): Key questions (by system):
- What are the system’s functional requirements?
- What are the system’s technical requirements?
- What is the total cost of ownership and benefits (tangible and intangible)?
Deliverables include (by system):
- Application system specifications
- Data and database specifications
- Technical infrastructure specifications
- Scope of construction project and schedule
- Total cost of ownership/benefit analysis
Construction phase (project level): Key questions (by system):
- Is the system being constructed according to design?
- If not, what change orders are required, and why?
Deliverables include (by system):
- Tested application system and interfaces, databases, and technical infrastructure
- Trained users
Implementation phase (project level): areKey questions (by system):
- What are the costs and schedule relative to plan?
- What is the scope relative to plan?
- What is the quality relative to plan
- When will the benefits be realized relative to plan?
- What adjustments for tuning, standardization, and integratiisrequired relative to plan?
- What are the current anticipated enhancement requests?
- What are the current anticipated maintenance requests?
- What are the lessons learned for the future?
Deliverables include (by system):
- Working application system and interfaces, databases, and technical infrastructure
- List of enhancement requests
- List of maintenance requests
- Performance measurement report
As enterprises become more dependent upon the internet business for connectivity with constituencies, it is essential to develop, enhance, and maintain the information technology strategy on an ongoing basis. The strategy must emphasize connectivity through the data arteries as digital and information products become more pervasive.
Formulating information data technology strategy is an enterpriship (entrepreneurship, leadership, and management) competency.