Business Strategy vs. ICT Strategy vs. Digital Strategy.

Business Strategies have been around for a long time.  ICT Strategies less so.  But the new kid on the block is the Digital Strategy.  What is it, and how does it differ from the first two.
The Oxford Dictionary has two primary meanings associated with Strategy.  The first is below.  The second has a military context.  This is understandable as many management concepts still in use today originated from the military.
Definition of Strategy: a plan of action designed to achieve a long-term or overall aim.  Definition
It makes sense that a Business Strategy is therefore a plan of action designed to achieve a long-term or overall aim for a business, or an organisation.  Their names may vary from Business Strategy to Corporate Strategy, Organisational Strategy or something else.  However, most of us know what these look like even if their name may vary.  It is usually developed, or at least lead by the Chief Executive, and it may have extensive input from the Board.
An ICT Strategy can take a number of forms.  In many organisations it is a response to the needs of the Business Strategy.  That is, it defines the ICT plan of action designed to achieve the ICT related aims of the business.  It is usually developed by the Chief Information Officer (CIO) or an equivalent role.  The Chief Executive is often consulted and involved to varying degrees depending on the organisation and on the Chief Executive.  The Board could also be involved, although in my experience it is rare for most Boards in Australia to play an active role in the preparation of an ICT Strategy.
In my view, this approach to the development of strategy has been a big weakness for many organisations.  It is based on a flawed assumption.  And that assumption is that ICT can only form an output from Business Strategy.  By definition, that means that ICT is not a useful input into Business Strategy.  This is flawed thinking, and has been for many years.  ICT has the potential to impact on Business Strategy.  And this effect is becoming more pronounced with each passing year.  For instance ICT innovations are allowing new entrants to enter existing markets, the creation of brand new markets and the creation of new business models and industry structures.  ICT is changing our expectations (as clients and potential clients) for how we interact with organisations.  If you have any doubt, you would know that you and most of your friends use ICT daily to buy, consume or research various products and services.  If you still have doubts, read Marc Andreessen’s article, Why Software Is Eating The World.  I have put some direct quotes from this article below.
Despite this flawed assumption, Business and ICT Strategies have largely been developed in this way for many years.  In more recent times, and perhaps for only the past five years, the Digital Strategy has come along.  It primarily came out of marketing departments who realised that there were more digital marketing and advertising options that they were having to consider.  But beyond that, they also realised that customers wanted to interact with their companies in multiple ways, including digital and online ways.  In some cases they also saw their own market share being eroded by these new entrants that were capitalising on Digital approaches to doing business, and these Digital approaches were being very successful.
Hence we have seen the rise of the Digital Strategy.  While its development may be lead by the Marketing Department, it is increasingly becoming of major interest to Chief Executives and Boards.  There have been enough company failures caused through being blindsided by Digitally enabled alternatives that it is worth them taking a keen interest.  This also means that the Digital Strategy is taking on a broader view, not just a marketing view but a broader strategic view of the organisation, and considering things such as industry structures, competitor behaviour, organisational capabilities, organisational structures, and many aspects of an organisation’s business strategy.
This evolution of the Digital Strategy is now becoming what the ICT Strategy could have been, and perhaps in some rare cases, has always been.  The Digital Strategy is now becoming an input into the broader strategic view of the organisation, helping to inform the Board and Executive team, and providing an input into the entire organisation’s strategy.
A word of warning: Be careful assuming that the above descriptions apply in every organisation though.  In some cases ICT and Business Strategy formation does happen in concert with each other, but this is rare.  And in some cases a Digital Strategy remains a marketing only view although this is becoming less common as a broader view evolves of what a Digital Strategy should be.
Can all three strategies sit side by side?  The easy answer is yes.  But over time, it is natural that they could merge.  For instance, would Amazon or Google or Netflix or Apple or Skype have a Digital Strategy and a Business Strategy.  I cant say for sure, but I don’t believe that they would think of strategy in two separate domains in this way.  In most organisations, it will be useful to have a Digital Strategy.  It will introduce new ideas and concepts and challenge the existing organisation and hopefully have a positive impact on the overall strategy for the business.

Overall, the emergence of the Digital Strategy having a whole of organisation view, and even taking an industry and marketplace view, is a good thing.  It helps organisations to see the opportunity and risk that is in front of them.  The view of many commentators is that eventually every company will have to become a technology company or they will no longer be around.  If that is true then the sooner you start this evolution the better off you will be.  And if a Digital Strategy helps get you started then that is great news.

Business Strategy
Digital Strategy
ICT Strategy
Developed by the Board and Chief Executive
Always
Increasingly
Rarely
Strategy Development is Lead By
CEO and Board
Was Marketing, Increasingly CEO & Board
CIO
Implications for every aspect of an organisations
Always
Increasingly
Rarely
Considers Client and Market Needs
Always
Always
Rarely
Considers Industry and Competitor Behaviour
Always
Increasingly
Rarely
Considers new technology opportunities
Rarely
Increasingly
Always

Article Written By: Mark Nicholls.

Managing Director, Information Professionals. 
Mark is one of Australia’s most trusted IT Change Management advisors. He also has other entrepreneurial business interests that he operates through MaidenVoyages.

 If you liked this blog check out our other material at Informpros.com.au

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Excerpts from “Why Software Is Eating The World” (WSJ OP )
  • More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense.
  • The world’s largest bookseller, Amazon, is a software company
  • Largest video service by number of subscribers is a software company: Netflix
  • The most dominant music companies are software companies: Apple’s iTunes, Spotify and Pandora
  • The fastest growing entertainment companies are videogame makers—again, software.
  • And the fastest growing major videogame company is Zynga (maker of games including FarmVille), which delivers its games entirely online.
  • The best new movie production company in many decades, Pixar, was a software company. Disney—Disney!—had to buy Pixar, a software company, to remain relevant in animated movies.
  • Photography, of course, was eaten by software long ago. It’s virtually impossible to buy a mobile phone that doesn’t include a software-powered camera, and photos are uploaded automatically to the Internet for permanent archiving and global sharing. Companies like Shutterfly, Snapfish and Flickr have stepped into Kodak’s place.
  • Today’s largest direct marketing platform is a software company—Google.
  • Today’s fastest growing telecom company is Skype, a software company
  • LinkedIn is today’s fastest growing recruiting company. 
  • If you still need convincing or want to read more, read the entire article.

Is your business design holding you back?

Is your business design holding you back?

 All organisations are looking for ways to improve their performance. Private sector firms are striving to beat the competition by providing more value to the customer at the lowest possible cost. Government departments and not-for-profit organisations are under pressure to provide increased stakeholder-satisfaction with ever-diminishing resources. These challenges require an improvement in effectiveness – doing only those things that the customer/stakeholder values – and efficiency – doing more with less.
The key to meeting these challenges could lie in taking a more systematic approach to business design. In this article, I will introduce a business design framework that, correctly implemented, has the potential to vastly improve business performance. ‘Organisational Architecture[i]’ is a simple, yet very powerful framework that seeks to improve an organisation’s performance by establishing alignment between the organisation’s environment, strategy, organisation design and culture. It all sounds like common sense, but it is amazing how many failures and near-failures can be traced back to getting this wrong.
In this framework, core organisational design has three elements:
·       The assignment of decision rights within the organisation: How centralised or decentralised should decision-making be? Are decision rights more appropriately assigned to individuals or to teams?
·       The evaluation of performance: What is the optimum balance between objective and subjective measures? Should performance benchmarks be absolute or relative? Is performance evaluated on an individual or team basis?
·       The rewarding of individuals: What is the optimum balance between straight salary and incentive-based compensation? What incentives can be utilised when cash incentives are restricted?
While it is clearly important to get each of these settings right, it is compatibilityand balance that are the real keys to success.  Where organisations often go wrong is that they see a particular technique that is working well in another organisation (for example, management by objectives, zero-based budgeting, participative management, total quality management, etc), implement that technique in isolation, and then wonder why it didn’t succeed. 
The correct (that is, ‘effective’) approach to implementing a new organisational design is to start with the organisation’s environment and strategy, craft an organisational design to suit, and then use internal communication channels to establish a compatible corporate culture.
As I said, this is a powerful framework. It can be very useful for explaining why an organisation has failed, or is not performing as well as it should (and I’m sure we can all think of some case studies here).  But more beneficially, it can be used to create an environment for superior performance, thus avoiding failure in the first place. The framework is also very flexible – it can be applied to whole organisations, or on any business unit that is seeking to improve performance. (And that’s all of them!)
Of course the devil, as they say, is in the detail. Some of the more important detail as I see it is:
·       Is your strategy the right one for your business’s environment, and is it well understood by all?
·       Who in your business has the information required to make value-enhancing decisions, and can they be given more decision-responsibility? Are corporate policies stifling creativity?
·       How can these key individuals (or teams) be incentivised?
·       What cultural changes are required to support the new approach?
We’d be really interested to hear your feedback on this framework. Can you see potential in this model for improving your organisation, or business unit? Do you have a similar (or even a very different) approach that you use? While this model is already well developed, we are currently looking for ways that it can be built upon, and to that end your input would be greatly valued.


[i] The ‘Organisational Architecture’ framework has been developed by James Brickley, Clifford Smith and Jerold Zimmerman, and is described in their book, Managerial Economics and Organizational Architecture, fifth edition, Irwin, McGraw-Hill.
Article Written By: Cary Clarke

Senior Consultant, Information Professionals.  

Cary Clarke is an experienced finance executive with a strong track record of financial leadership and business improvement. He has overseen business improvements in the areas of planning and control frameworks, capital structuring, organisation design, business model redesign and technology implementation.

 If you liked this blog check out our other material at Informpros.com
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What Makes a Happy Business?

Written by David Ekert – Senior Consultant, Information Professionals

In management discussions, we often talk about culture and how important a strong, vibrant culture is to the success of an organisation.  I have been thinking about this lately, particularly after coming across a business where the culture was lacking something.  I tried to analyse why this was the case – using all the objective tools in my armoury.  Then I realised something – when talking to the people in the business, I realised that this was not something that could be measured: I saw that they were not happy.

So why is this the case?

The company (who must obviously remain anonymous) has teams of very experienced people running multi-million dollar projects. They are under constant pressure to maintain service levels and margins in an industry where skills are hard to find, customers are demanding and there is constant downward pressure on costs.  Head Office is in a nice city location.  Their operations are spread across a number of regional cities where heavy industry is the norm.

clear line of sight  Good practice says that there needs to be a clear line of sight between a company’s strategy and its operations. Communication from the top down is frequent and inclusive.  If targets are challenging (as they should be), or funds are tight (as they often are), then the senior management of the business should be proactive in communicating why this is the case.  There’s no better way to get acceptance of changing plans than having a senior executive personally standing in front of his or her teams and explaining why things are as they are.

So let’s compare this with the company that I referred to earlier.  At an operational level, they have no visibility of the Company’s overall strategy or strategic plans.  Their budgets are handed down from senior management, with little opportunity for local management to contribute.  In one location, they have never personally met their Chief Executive.  They must use a much-maligned internal service provider, who constantly under-quotes on jobs and does not need to justify cost escalations or, worse, inaccurate and delayed billing.  Personal computers are allocated on a hand-me-down basis.  The list goes on – but you get the idea.

So, is it any wonder that the people I spoke to are not happy?  Is it any wonder that their attitude to Head Office (the “window lickers” as one person described them) is negative and resentful?  Should we be surprised when the people I was talking to are very resistant to change (“why bother”) or feel that they are not being heard?  Keep in mind: this is a successful public company. 

I wonder how many readers would relate to some aspects of the situation that I have described.  Maybe it’s time for all of us to have a good, honest look at our organisation’s culture and to identify the causes of cultural issues.  In an earlier blog post (http://blog.informpros.com/2012/05/strategic-business-planning-casting.html) , I wrote about widening an organisation’s involvement in strategy-setting.  Involvement is a part of the story – communication of plans and the state of the business is just as important. 

Dealing with the people aspects of management and change are vital.  There is a lot of talk about customer engagement in marketing.  In Human Resources and Leadership it is about staff engagement.  Engagement happens in many ways.  And happiness is a sign of its existence.

Is yours a happy company?

David Ekert
David Ekert, Information Professionals Senior Consultant. 
David is an experienced Program Manager, CIO, business manager and a CPA (Certified Practicing Accountant). David has a broad range of Finance, HR, IT and Program Management capabilities, having provided well considered opinions and trusted advice to others over a period of many years. David maintains his CPA and AIM memberships and keeps his knowledge current on emerging issues for his government and business clients.

Post your thoughts and comments below…

So you want to be a CIO?

The Reflective CIO – So you want to be a CIO?

Welcome to my premiere blog post. The theme is “The Reflective CIO” for those who have considered the question: “I want to be a CIO?”. I will present views based on my own observations and first hand experiences.

Over a 15 year period, across multiple organisations, my own CIO roles have been quite diverse. This includes very large public sector ICT environments in both NZ and Australia. I’ve driven rapid transformation of ICT services, reinvented an organisation using Business Process Reengineering (BPR), leveraged ICT to transform business operations, commissioned data centres, and managed all facets of ICT operations, projects, strategy and architecture and stakeholder relationship management. Acting as a change agent and a change protagonist has been a common feature throughout my CIO career. I see leading change as a prerequisite quality for a CIO.
Being a CIO has presented me with many challenges. Many of these are as relevant today as they have always been and include:
  • How to be seen to reduce ICT costs without sacrificing service levels
  • How to improve business and ICT relationships and collaboration;
  • How to bring a commercial focus to public service ICT;
  • How to refresh capability and right-size ICT.
Plus there are many more and I will eventually cover them all in upcoming posts.  Through these experiences I have gained a damn good education as the top ICT decision maker in several excellent organisations.  This is an education I am happy to pass on, to fast track your own path, and improve the practice of the Chief Information Officer.

To get started, I have outlined my retrospective CIO wisdom to serve as food for thought.  In doing so, consider what type of CIO you are, or would you want to be?  We all have our strengths and weaknesses.  And yours, just like mine, mean that you will be better suited to some challenges than others, and will best solve these challenges in your own way.  As you ponder this, consider these, the things in my view that will never change:

1. You will need dogged determination if you are to succeed as a CIO
 

I rate ‘dogged determination’ as the number one prerequisite attribute for a CIO. The lyrics: “I get knocked down, but I get up again” come ringing in my ears like a resounding anthem. You have an undeniable duty to take your organisation on a journey. That journey may involve smooth sailing or, more likely, a rough crossing through unchartered waters. 

2. Should the Business drive ICT or should ICT drive the business?

Current technology trends include the needs to navigate through the cloud, embrace (or contain) social media and exploit Big Data. In the past, equivalent evolutions might have included such things as: client server technologies, ERP and wireless networks. At the same time CIOs need to be intimately connected to the business with their fingers on the pulse, formulating approaches to help differentiate the business in the market, support operational improvements, or help protect market share from companies or products that didn’t even exist last month.
it is clear that ICT is indeed driving every business, many markets and whole industries.  Technology and business challenges are irrefutably and increasingly linked and paradigm shifts will continue to emerge. But one thing should always remain constant.  All ICT should always be approached from the business perspective.

3. Success will be measured through the eyes of your customers
Achieving 99.9% server availability alone doesn’t cut it anymore. In fact such service levels will be assumed and organisations will look to source such guarantees over the cloud. Only end to end service availability counts. That includes the servers, the applications, the structured and unstructured data and records, the web services, the networks and the tools that bind them all together. Add the business processes and the performance of staff and the value chain is complete.
Ultimately it’s about the number of repeat orders, the number of referrals and/or the value and volume of sales. It’s about the utilisation of assets, the return on investment and the value of shareholder earnings. In short, it’s not about technology at all.  ICT organisations will need to significantly redefine themselves if they are to have relevance. New value propositions need to be devised and new business models need to be created to ensure your organisation is gaining the value from ICT that it will need not only to survive, but to prosper.

4. You’re only as good as the team you lead

ICT in a large and complex organisation generally extends well beyond the capacity of even the most seasoned CIO. Inevitably the CIO’s role must elevate to that of a ‘Lead CIO’ with ‘trusted advisors’ taking their places as Subject Area CIOs – example subject areas could be Strategy/Architecture, Portfolios, Programs and Projects, Capability Development & Sourcing, Service Delivery, Relationship Management.

As you decide what type of CIO you are going to be, it will be important for you to appoint complementary skills to your team. If you are a big picture conceptual strategic thinker with a mission to transform the business, you will need to include some ‘finisher’ traits with attention to detail. Likewise, too much technological competence and not enough business and customer affinity may seriously hinder stakeholder management and relationships.


5. Don’t expect recognition and you won’t be disappointed
Once you have dusted yourself off from all the knockbacks and redefined your purpose in real business terms you are ready for your due recognition. Surprise! It’s not coming. In actual fact it’s your peers on the executive team who are basking in his/her new found glory. Sales targets are being trumped month after month. Customer satisfaction is reaching new heady heights. The share price is 20% up for the year and a generous bonus is winging its way through in bits and bytes to their bank accounts. You’ve done well!

6. Talk the talk before you walk alongside your customers
For many years observers have marvelled over the seemingly irresistible tendency for ICT people to riddle plain English sentences with incomprehensible jargon. This trait singularly accounts for more broken relationships with business associates than any other vice. Why do we do it? Well apart from attempting to preserve the mystique behind our craft, it seems that we have a belief that it elevates us to a specialist status. In actual fact it simply reveals our craft to be more of a black art than any science, rendering it and us to be untrustworthy and unreliable. If ICT is to be an integral part of the business and not stand apart then using business language that business people can understand will get you there more quickly than anything else.  If you feel ready to take on that challenge, perhaps you’re ready to be a CIO.
Well that’s my starting post. I would welcome your thoughts.


If you like this article, share it! 

Tony Welsh
Associate Partner, Information Professionals

Tony has over 30 years experience as an ICT professional including 15 years in Chief Information Officer (CIO) roles. His particular skills include ICT and business strategic planning, program management, business and ICT alignment and stakeholder management. He is particularly valuable for organisations seeking to get more out of their ICT investments and/or to use ICT to transform their organisation.

Strategic Business Planning: Casting a Very Wide Net

by David Ekert, Senior Consultant, Information Professionals

I just did a Google search on “Strategic Business Planning” – and got 88.2 million hits! Now, I haven’t read every one of them, but I bet that they would fall into one of these categories:
  • Definitions of strategy. Which would be contained in:
  • Copies of academic papers on the subject. Which would lead to:
  • Arguments about these academic papers. Which would be described in:
  • Course notes from universities. And finally:
  • A fair percentage from consultants who can advise you on how to best develop your strategy.
Perhaps it is obvious, but I like to keep an all-embracing view on strategy development and management, so we dont lose the context on where something fits.
Does Strategic Planning always go well? Of course not. And in my opinion this view is sector-agnostic, in that I have seen the best and worst of planning and implementation in both public and private sector worlds.
I have been involved in organisations who do this very well. In these organisations, everyone, and I mean everyone, knows what the organisation stands for, where it is going, how it proposes to get there, and how each person contributes to this. There are direct links from the highest level of strategic planning through business unit plans to individuals’ performance agreements.
I have also had experience with organisations where it is not done well. One of these organisations worked hard at it, although missed some key aspects of success. They ran through planning sessions every year, dutifully described projects to achieve strategic objectives through the year and then produced a report every three or four months on how they were going, with lovely colour scales. The good bit – if a program hadn’t started yet, it got the best green rating, because (stay with me here) if it hadn’t started yet, it wasn’t late finishing (yet)!
As you may be able to tell, I enjoy talking about, discussing and understanding strategic business planning. The whys, hows, whos, who cares etc are all of interest to me. One topic close to my thinking is that the usual targets of marketing and sales, while vital, don’t tell the whole story. There are so many areas of consideration, like the dollars, the people, the supply chain, risks.
As a CPA (Certified Practicing Accountant), although working more in the IT, Planning and Strategy, and Program Delivery worlds these days, I do recognise the integral nature of finance and budgeting to every aspect of an organisation, and therefore to Strategic Business Planning.
And what about ICT (Info & Comms Technology)? Every one of the above areas I mentioned, in fact almost every area of business is now touched in some way by ICT. But it is also an area where it is treated in so many different ways from a Strategic Planning perspective, sometimes ignored, but I would argue, rarely integrated well.
Is it coming a time where we let ICT out of the back office and recognise the part that it plays in delivering real value to a business? And in fairness can also have a significant capacity for creating risk?
And how does that impact stakeholder involvement across the business or ensure the right perspectives is flowing into the planning process? Perhaps those thoughts are for another time.

SCOPE Conference in Chicago – First Report

Mark Hewitt’s first post covers an update from SCOPE regarding Technology in Supply Chain. Why is this important, and what should and could you consider if you have an eye on Supply Chain improvements?  The audience is particularly for Utilities, Transport and Distribution providers, and Asset intense industries, including resources and mining.

SCOPE Spring brings together many different exhibitors covering all aspects of technology used in the modern Supply Chain. Each can be grouped into one of 5 categories which targets specific applications and are adopted by various industries to suit the nature of their logistical challenges. This report introduces these categories and what they are about.

1. Supply Chain Modeling

What is it – Supply Chain Models maps out all the physical locations within a delivery system from raw goods/manufacturers through warehouses and on to the customer. Scenarios are applied to identify improvements in efficiency and reliability.

Who does it – Companies include Barloworld and Llamasoft

Where is it being used and why – Modeling is used to review and make strategic decisions on how best to deliver and service clients.

2. Transport Management Systems

What is it – Transport Management Systems (TMS) are used in the routing and scheduling of various transport modes to drive improved efficiency, consolidation and utilization of resources.

Who does it – Companies include Transwide and Agile Pacific

Where is it being used and why – Manufacturers and Suppliers with large numbers of deliveries and collections helps their efficiency in their transport functions using both internal fleet and transport providers.

3. Warehouse Management Systems

What is it – Warehouse Management Systems direct selection of locations for picking and putaway activities within the warehouse.

Who does it – Companies include Highjump and Tecsys

Where is it being used and why –WMS is needed for large installations and reduces the dependency on staff in product knowledge and identifying where to find or put materials to fulfill orders. Layout within the warehouse is determined based on placing like items together with the fastest moving items being located for the shortest path to dispatch or staging areas.

4. Automation Tools

What is it – Automation covers a wide variety of labour intensive activity in warehousing and transport. Included are scanners, robots, sorting and storage equipment that eliminate manual handling and/or administrative effort.

Who does it – Companies include Cipherlab and Scottech

Where is it being used and why – Automation is applied in any activity requiring human effort. Information such as details of a delivery or receipt of supply is captured and processed instantaneously. Mechanical equipment replaces the labour and achieves velocity and accuracy throughout logistics activity.

5. Reporting and Analysis Tools

What is it – Numerous tools are available to show operational efficiency, compliance and manage risk. Graphic summaries and reports present key information to assess performance.

Who does it – Companies include Tableau and Pelyco Systems

Where is it being used and why – Successful Supply Chain Managers find it essential to monitor and measure their business activities to ensure targets are met and to identify areas where attention is needed.

So why all this technology?
The answer is simply to move products more cost effectively, accurately, minimize the labour intense activities and provide a better service.

Business strategy and analysis is critical in identifying the benefits available to your business and the critical task of selecting the right fit. Then it is on to the less glamorous task of making the change to your business and with your people for your organisation to continue to be successful.

SCOPE Report Two – Will look at the presentations that provide some insight into what is happening in today’s Supply Chains.