The Relationship between IT and Business Strategy - Case Study Example

Scrutinise IT and Business Alignment at the World Bank Synopsis Here in this section it is to define corporate/business strategy, IS strategy and generic strategies, Outlining a model for strategy formulation, Considering IT’s role in organisations and discussing the relationship between IT & Business Strategy. It is discussing the models for industry competitive analysis and IT-enabled business transformation to enable assessment of the alignment of individual IT projects with business operations and strategy. This enables assessment of the portfolio of IT projects & initiatives and approach to organising and managing the IT function as core enabler of business model which can be used to benchmark IT projects & investments portfolio with other firms in the industry. Objectives of World Bank The main is Social Inclusion and Poverty Reduction. The network, which can connect many hundreds of participants over nine states, has extended participation to areas and groups normally excluded from dialogue and allowed open and transparent policy debate between actors, including the federal government, local government, die international community; and civil society. This is resulting in new levels of mist and cooperation and renewed hope in the fight against poverty. Outline of Global Business Processes Prior to the deployment of the global communications network, each local office was a disconnected island with its own stand-alone information system and custom business processes. World Bank staff in the field were cut off from tidiest of the World Bank, and managers often felt they were flying blind because they did not have access to information they needed to manage the country office work program. Project team leaders could not collaborate with team members in the Washington office and with other country offices. Budget information was centralized and country teams had no access, with the result that budget management was very difficult. The business strategy of decentralizing World Bank staff and decision making to the field was not feasible under these conditions. With the deployment of the global communications network, the Bank was able also to standardize and centralize the World Bank's information systems, which brought standardized business processes to each country office and reduced the World Bank's cost of doing business. Examples included are: 1. The SAP system consolidated 65 disparate business systems into one and standardized the processes for project-cycle work, reducing cycle time with electronic approval of project steps. 2. Real-time project status reports from field-based project staff, central to the analysis of project portfolio risk and proactive project management of risky projects, became accessible to team leaders in the country offices. This included information on project and country budgets no matter where the expense was incurred and booked. Budget management and forecasting improved to make the Bank better able to deploy resources to high-priority areas, 3. The World Bank's knowledge systems and documents were readily searched and accessed on the intranet from any access point in the global communications network, by users with appropriate access and secured connections. 4. Global payroll operations and standardized HR processes helped the Bank deal with complex retroactive payroll adjustments, benefit processing, and learning programs and protected the Bank from the consequences of inconsistent application of complex policies in each office. 5. Electronic workflow approvals could be accessed from any remote location, improving processing cycle time for project work as well as administrative and budgetary approvals. Standardized processes in country offices helped the World Bank to ensure better fiduciary controls in remote offices and to use staff more productively for value-added work instead of struggling with idiosyncratic processes invented by each office. For example, the country office procurement process was now identical to mat used by the Washington headquarters office, allowing transparency in procurement contracting, and reduced cycle time of procurement and, more importantly, fungibility of staff between Washington and country offices. (Magretta, J. (2002). “Why Business Models Matter”. Harvard Business Review, May.) The global communications network and systems enabled the World Bank to make its decentralization strategy work—enabling improved client responsiveness and improved project success indicators. As a result of off shoring, the World Bank improved client services with highly qualified staff. This sourcing strategy helped the Bank reduce costs and deliver on its IT strategy. Facing the Stigma Not surprisingly, the global network proved indispensable immediately after the events of September 11, 2001. Restrictions on staff travel made reliance on the voice, data, and video traffic over the network critical to continued operations. Again, during the SARS crisis, key members of a project team were unable to travel to China to negotiate a huge and critical agreement Instead of just cancelling everything and stopping the negotiation until a team could be sent, the Bank suggested and China representatives agreed—to negotiate by videoconference. Local IT staff from the China country office arranged for a network connection to be established in the finance ministers offices and the meetings went on—often at night for one of the parties, given the 12-hour time difference. Coping with the knowledge boom The management had a strong outreach program, increasingly relying on technology leverage to accomplish its goals. The overall vision was to spur me knowledge revolution in developing countries to be a global catalyst for creating, sharing, and applying cutting-edge knowledge necessary for poverty reduction and economic development was a 160-person organization responsible for learning and knowledge programs supporting a wide range of areas: Poverty reduction, environmentally and socially sustainable development, financial and private-sector development, human development, and infrastructure. First, mere were many global differences in connectivity, affordability, and access to technology. Another challenge was the nature of tacit knowledge unique knowledge in the heads of the individual experts and professionals who delivered services throughout the world. Tacit knowledge was immensely difficult to document and share. It was widely recognized and others at the Bank that technology alone would not be sufficient. The power of IT could be best leveraged when other non technical issues were addressed at the same. Strategy with IT at the World Bank As far as the annual review of information technology (IT) strategy and performance with the management committee of the World Bank (the Bank). The group of managing directors chaired by the president of the World Bank had set aside the day to discuss how IT could further enable the Bank's business. As they contemplated the key topics for discussion, he gazed through the glass walls of his office at a 50-inch plasma display on the lobby wall. The screen flickered a steady stream of colour coded, real-time information relaying the status of all activities of the Bank's global IT infrastructure—clear evidence of the organization's reliance on 24X7 support for videoconferencing, enterprise applications, and Web services around the globe. They began to shape his presentation around the two key questions he would be addressing: Now that we have the foundation in place, how can IT help the core business serve our clients better? How do we measure and communicate the value mat IT contributes to the business? I. The impact of Strategic Alignment Model This model is concerned with decisions such as product-market offering, competitive differentiation, make-versus-buy decisions, partnerships and alliances and choices pertaining to the logic of the administrative structure and the specific rationale for the design and re-design of critical business processes (product delivery, product development, customer service, total quality) as well as the acquisition & development of human resource skills necessary for achieving the required organisational competencies. Two fundamental shifts in business strategy took place: 1. Decentralization: Moving the Bank's business operations closer to the clients by decentralizing staff and decision making to local offices in more than 100 client countries. 2. Creation of a knowledge bank: Delivering more comprehensive and integrated (and mere fore more effective) development solutions by increasing collaboration, consultation, and knowledge sharing both within the organization and with partners and stakeholders at all points in the development process—especially in the design stages to ensure buy-in and capacity for successful implementation. He authorities decided to revamp the information systems and build a global network. IT staff from around the Bank were consolidated. Their goal was to achieve two competing objectives: 1. Enable a global decentralized organization close to the customer. 2. Provide the collaborative tools and global development knowledge that would help the far-flung Bank staff and stakeholders work more closely and effectively than ever before to scale up the impact of the Bank’s work. (Applegate, Austin and McFarlan’s Corporate Information Strategy and Management. New York: The McGraw Hill Companies, Inc.) There were now three main categories of IT services available to all Bank offices: These were fixed-cost, standard underlying network infrastructure services mat provided the platform all users needed to access information—enterprise desktop software, e-mail, workgroup file storage, all local and global network connectivity, as well as the standard intranet platform and the global support centre. This shared-services model recognized that adding or removing even 100 users to or from the network did not alter the cost of the underlying infrastructure. II.PMI method as a decision making technique Weighing the Pros and CONS of a decision, PMI method can be used very effectively. By this stage it may already be obvious whether or not it should implement the decision. If it is not, consider each of the points written down and assign a positive or negative score to it appropriately. The scores assign may be quite subjective. I draw up the PMI table below:  PLUS MINUS INTERESTING The economy: (+6) Terrorism(-4) Governmental Support(-2) Quality labour(+5) Diverse people (-3) Difficult to establish initially(-2) A lot of opportunities(+7) HIV/AIDS, Terrorism(-4) Support of Govt. and NGOs(+3) Government’s strong support to bring business(+3) Organizational and Environmental Obstacles(-2) Ethical commitment (+1) DECISION MAKING PROCESS: Since the company is considering establishing a greater presence it is the primary thing to list out all plus points her in the PMI method to analyze. WHY IT IS USED? PMI Edward de Bono refines the T-Chart idea into a three part structure, which he calls PMI for plus, minus, and interesting. Here you first list all the plus or good points of the idea, then all the minus or bad points, and finally all the interesting points--consequences, areas of curiosity or uncertainty, or attributes that you simply don't care to view as either good or bad at this point (consequences that some people might view as good and others might view as bad, for example). The "interesting" category also allows exploration of the idea or choice outside the context of judgment--you don't have to evaluate the attribute into a positive or negative category. As simple as this technique seems to be, and as often as others will tell you, "Well, of course, everyone does that all the time," this is a very powerful but much neglected technique. Most people believe they list the pluses and minuses of a decision before making it, but in actual practice, many people make a decision or form an opinion before they consider the evidence in an orderly way. Only after they make a decision do they hunt around for reasons to support it. This simple technique of deliberate pro and con identification is extremely powerful and extremely neglected. Get into the habit of using it and you'll see your decision making quality improve remarkably. Rewarding Performance Rewarding performance must be motivated by giving proper appreciation, awards etc. Scholars have defined motivation from different perspectives. Some of the important efforts are presented in this sub-section. Need disposition theory: A basic assumption in the motivation theory is that an organism behaves in order to reduce its needs. A need is a requirement that must be met for optimal adjustment of an organism to the environment. Need disposition theory presents the point of view that people are motivated to take action and invest energy in pursuit of three motives, 1. Achievement, 2. Affiliation and 3. Influence. The desire for achievement is evident when employees try hard to learn a particular skill set. Affiliate motives become important when they recognize that value of the support and friendship of their mates. The motivation towards influence can be seen in the employees who strive to have more control over their learning and it can be seen also in them who strive to have their say in the way they perform. These investments were essentially a step function where an e-mail server cluster, for example, was added or removed only if mere was a swing of 1,400 users. The basic package was generally viewed as a "common good." In fiscal-year 2004, the Information Technology Services Board (ITSB)—which oversaw the IT charge- back system—proposed to the Information Policy Council (IPC) network links to all country offices should be rolled into the basic package rather than paid locally by each country office. This was the last step in creating a truly global master service-level agreement where all staff no matter where they were got corporate information services These services provided systems and applications infra- structure to support enterprise functions such as financial and human resource management, front line operations, and back-office administration. Each year; the IPC looked at the investment plan for supporting corporate systems. The cost for these services was centrally budgeted and not charged back—allocations were part of the annual budgeting process. Optional IT services. These included me purchase of desktop and notebook PCs, video referencing activity, remote access, wireless devices, and long-distance telephone calls. (Point-to-point calls within the World Bank were carried on its private network over the Internet protocol; external calls were handled by common carriers.) Update information - What is happening at present We considered, the recent developments may present too optimistic a view of the World Bank t and whether exclusivity could not inhibit competition in the longer term by raising entry costs. The extent of competition currently owes much to own efforts to install considerable expense, as well as to its marketing and product innovation. Its success in establishing its current market share shows that the exclusivity is less a barrier to entry than a cost of entry, no different in its effects to other costs .It is still incurring losses, but there is no evidence that it is reconsidering its presence in the market, and it is too soon in our view to suggest that its financial position shows any fundamental weakness as a result of exclusivity. Similarly, given recent market developments, we find it difficult to argue that exclusivity diminishes incentives to innovation or efficiency, or otherwise adversely affects consumers or the public interest. It is received no evidence that in any sense inefficient: its distribution arrangements in particular, indeed, were regarded as highly efficient, hence the desire of some of concessionaires should be allowed. Therefore, the imposition of exclusivity as it is currently developing does not operate against the public interest. This conclusion applies equally to exclusivity considered as a practice as the scale monopolist, and more widely to exclusivity considered as a practice of members of a complex monopoly group. The application architecture becomes more important, and more confusing It is noted that the shift in focus of automation within enterprises as it is mature day-to-day operations, and towards supporting management and strategy-setting activities. And also those processes which reach outside the organization – is driving change in the innovative ways in which people, processes and information have to interact to have a modern system. What is change? It is noted that Change is occurring not only in the “process support” layer, via the innovative ideas like new approaches to business process management (BPM) and service oriented architecture (SOA). Apart from all other traditional structure via master data management (MDM) and information integration technologies; it's also occurring in the “information management” layer. Moreover it is also in the new system and in the “user experience” layer, via the emergence of a variety of “rich client” web-based technologies. There will be a much greater focus on business value in SOA in the new context It is sometimes back SOA was a very hot topic especially in the year of 2005– and it will continue to be that much important in 2006. However as new organisations begin to grapple with the important SOA arrangements and go rather fast to the pilot projects .It is focusing on using service-oriented concepts to improve application integration and they will begin to have much more help in ensuring that their initiatives aren't that much cool but of course deliver real business value. Principally, on standards and platforms for helping organisations use web services technologies to improve integration, the exceeding industry focus has so far been on the “bottom up” aspects of SOA. How can a group of services best be designed so that they represent real business requirements? Not enough attention has been paid to the “top down” aspects of SOA which really drive business value. And so on. Some other features are, For innovation and disruption, user experiences and information access will be key areas Suppliers will continue to shift away from traditional product licensing models IT supplier acquisitions will continue at the same rate as in 2005 Virtualisation will become more sophisticated and will deliver more strategic value IT process automation and improvement will drive spending and attention Once more, “open” will be a buzzword to watch out for and be wary of. It was clear that “open systems” were all the rage in the late 80s and it is also going to be a period in which organisations will have to carefully scrutinise for a long period of time vendors’ claims to openness as in general sense. The significant value of a great developer platform and developer programme has been known for a very long time – and it's very easy to create a open developer programme and make it sound like an open community development effort. Hot-bed of activity -The identity management market With the likes of BMC, HP and Oracle, following the likes of CA, IBM and Sun, and acquiring identity management specialists to bolster their capabilities in the enterprise market, the leading infrastructure, application and enterprise management vendors responded. Conclusion The expectations placed on the Bank's IT function had steadily expanded in the five years since the function was consolidated and resources aligned to business needs. Indeed, It is reported that when he went to conferences with other CIOs, most complained that their main problem was lack of support from the top management. TT is the key to scale; our clients and especially the worlds poor are depending on us to scale up our impact. As prepared for the annual IT review discussion with management committee, to think of new and innovative ways the Bank could increase the leverage of IT. B It is believed that the creative and productive utilization of IT by staff presented numerous opportunities to support clients and directly assist developing countries in using IT to accelerate development.The strategic assessment was translated into a business strategy leveraging IT. References 1. Magretta, J. (2002). “Why Business Models Matter”. Harvard Business Review, May. 2. McFarlan, F.W. (1984). “Information Technology Changes the Way You Compete”. Harvard Business Review. May. 3. Venkatraman, N. (1994). “IT-Enabled Business Transformation: From Automation To Business Scope Redefinition”. Sloan Management Review, Winter, Vol. 35,  Issue 2,  P. 73 (15 Pp.). 4. Walsham, G. (1993). Interpreting Information Systems In Organizations. Wiley. 5. Applegate, Austin and McFarlan’s Corporate Information Strategy and Management. New York: The McGraw Hill Companies, Inc. 6. Boddy, D., Boonstra, A. and Kennedy, G. (2002). Managing Information Systems: An Organisational Perspective. Harlow: Financial Times Prentice Hall. 7. Henderson, J. C. and Venkatraman, N. (1993). “Strategic Alignment: Leveraging Information Technology For Transforming Organizations”. IBM Systems Journal, Vol. 32, No. 1: 4-16. 8. Luftman, J. N., Papp, R. and T. Brier (1999) Enablers and Inhibitors of Business-IT Alignment, Communications of the AIS, 1 (Article 11), pp 1-33. 9. Luftman, J.N., Bullen, C.V., Liao, D. Nash, E. and C. Neumann (2004). Managing the Information Technology Resource: Leadership in the Information Age. Upper Saddle River, New Jersey: Pearson Education, Inc. 10. Victorian London - Publications - Social Investigation/Journalism - London Labour and the London Poor; 1851, 1861-2; Henry Mayhew, The Victorian Dictionary, compiled by Lee Jackson, http://www.victorianlondon.org, an internet web site. Read More