IT STRATEGY FOR BUSINESS

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1 IT STRATEGY FOR BUSINESS PARAG KULKARNI Chief Scientist Capsilon Pune PRADIP K CHANDE Group Director TRUBA Group of Institutes Bhopal OXTORD UNIVERSITY PRESS

2 Contents Preface Acknowledgements v ix 1. IT AND STRATEGY 1 Information Revolution 2 Business and Strategy 7 Information Technology Strategy 8 Strategies and Success 13 ' Design Parameters 17 Strategic Positioning 19 Evolution of Strategy 22 Strategic Sequences and Getting Them Right 24 Development of a Strategy 26 Strategic Planning and IT 31 Types of IT Strategies 33 Context and Strategy 35 Evolving a Dynamic Nature of the Business 36 Case Study: Strategic Decision-making - Media Tel: Success Story MANAGING IT 49 IT Management and its Role 51 IT Governance 56 IT Infrastructure 62 IT Governance and Strategy 62 Technology Management Process 66

3 II Contents Steps in Technology Management 68 Strategic Aspects of IT 70 Positioning the Company for Change 71 Information Technology and Business Alignment 72 Risk Management 75 Implementing IT 78 Exploiting IT Capabilities 80 Using IT in a Strategic Manner 81 Measuring IT 81 Performance Measures and Balanced Score Card 82 Implementing Change in IT Management 87 Case Study: Information Technology Management at Max Pipes E-STRATEGY 94 What is E-strategy? 95 E-business and E-strategy 101 Developing an E-strategy 102 E-business Objectives 103 E-commerce and E-business 106 Business Model and E-business Model 106 Making e-strategy Work 111 E-strategy and E-economy 116 Best Practice and Competitive Advantage 125 Case Study: Product Repositioning - E-strategy at IDD IT STRATEGIES FOR IT COMPANIES 137 Knowledge Industries 139 Project Companies and Product Companies 139 Strategic Aspects for an IT Product Company 143 IT Strategic Perspective for Product Company 148 IT Strategies for Product Companies 150 Information Technology Strategy Development 152 IT Strategy and Innovation Driving Factors of Start-up Product Companies 159 IT Strategies for Product Life Cycle and Dealing with Chasm 159 Project Life Cycle and Strategies at Various Stages 160 Technology Selection and Its Strategic Aspects 164

4 Contents xiii IT Strategies for IT Companies and Non-IT Companies 167 Technology Change Management 168 Case Study: Strategic Decision-making at ER Private Ltd IT STRATEGIES FOR OUTSOURCING AND OFFSHORING 177 Need for Offshoring and Outsourcing 178 Identifying Goals and Needs While Outsourcing 183 Costs of Outsourcing 186 The Outsourcing Environment 190 Outsourcing Special Scenarios 191 IT Strategies for Outsourcing 195 IT Strategies for Outsourcing and Measurement of Success 204 Case Study: Outsourcing and Offshoring at K-skills IT STRATEGIES FOR KNOWLEDGE MANAGEMENT 211 Knowledge Management and IT Strategies 212 IT Strategies and Knowledge Management Road Map 214 Role of Knowledge Management in IT Strategies for IT Companies 215 Knowledge Industry and Knowledge Strategy - Knowledge Workers 217 IT Strategic Services, Product and Consulting 218 Case Study: IT Strategies for KM at SIS Securities IT STRATEGIES FOR NON-IT COMPANIES 228 Role of IT in Non-IT companies 229 IT Investment Decision 231 Measurement of IT 232 IT Strategies for Non-IT Companies 233 Technology Selection and Learning Methodologies 236 Managing IT as a Business 239 Strategies for Operations and Production Management 240 IT for Business Performance Management 242 Technology Selection and Learning Methodologies in. Non-IT Companies 246 IT Strategies for Service, Product, and Consulting Companies 248 Enabling Business with IT in Various Sectors 248 Strategic Importance of IT and ROI on IT Investment 251 IT for Supply Chain Management and Constraint Management 253

5 XIV Contents Offshoring and Outsourcing Strategies 256 IT-enabled Business Models and Security Aspects of IT Strategy 257 Case Study: IT Strategy for AB Autos IT STRATEGIES IN SPECIFIC SCENARIOS 265 IT Strategies in Specific Scenarios 266 Enterprise Resource Planning Implementation 270 Mapping IT Strategic Initiatives to ERP 272 Supply Chain Management 273 Supply Chain Contribution and Business Strategy 273 IT Strategies for Business Process Outsourcing 276 Knowledge Process Outsourcing (KPO) 277 Customer Relationship Management (CRM) 278 Other Companies, Tools, Techniques, and IT Strategies 279 Case Study: IT Srategies and Security Issues at WS-BPO IT STRATEGY IMPLEMENTATION 285 IT Strategy Implementation 286 Development of IT-strategic Plan 287 System and Technology Strategies: Implementation Aspects 290 IT Strategy Implementation to Gain Competitive Advantage 291 IT Strategy Implementation and Leadership 294 Implementation of an IT Innovation Strategy 295 IT Strategy Implementation for Differentiation 297 IT Strategy and Specialization 299 Staffing-related IT Strategies 300 Implementing IT Strategies for Execution 302 IT Strategy to Improve Various Aspects of Execution 309 IT Strategy and Business Strategy: Alignment, Measurement Inter-relationship and Effectiveness Study 310 IT Strategy Audit 311 Case Study: IT Implementation at Broke-Anytime GLOBAL IT STRATEGIES 317 IT Strategy in Global Environment 319 Global Product Life Cycle 320 Risks and Advantages of a Single-Country Strategy 322

6 Contents XV Parameters of Global Strategy 323 Making IT Work in a Global Environment 326 The Technology Environment and Global IT Strategy 329 Global Scenarios 331 Globalization and its effect on IS/IM/IT Strategy 334 Global IT-strategic Issues 336 Global Project Management 339 Security 340 Global Innovation and Knowledge Management 341 Cost/Benefit Analysis of Global Strategies 342 Strategic KM in Global Organizations 344 Convergence Model for IT and IS in a Global Organization 346 Case Study: Global IT Strategy at ADS Systems IT STRATEGY FOR MERGERS AND ACQUISITIONS 354 Mergers and Acquisitions 355 Information Technology Compatibility in M&A 362 IT Organizational Changes Related to Mergers 365 Do Start-ups Need Merger-Ready IT Plans 367 Critical Technology Factors for Success 367 Identifying IT Competitive Advantages 369 IT Portfolio 370 Due Diligence 372 IT Strategic Positioning for M&A 373 Objectives and Methods for IT Strategic Positioning from Merger Perspective 376 KM-related Issues in M&A and Role of Information Technology 376 Pre-merger IT Strategies 379 Changes in IT Scenarios in M&A 382 IT Framework and Strategy matrix for M&A 384 Case Study: Merger and Acquisition at MST IT SECURITY STRATEGIES 393 IT Security Issues 394 Security Strategy Framework 396 Need for Security Strategies 398 Security Strategies and Technological Security Measures 399 Outsourcing and Offshoring related Security Challenges 402

7 XVi Contents E-commerce Security 408 Cyber Law and Other Legal Aspects of Security Strategies 409 Security Policies and Strategies 410 Security Certifications and Audits 411 Case Study: Security Strategy Implementation to Build Competitive Advantage 414 Bibliography 417 Index 422

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