Information Technology Sourcing Strategic Analysis Research Paper Please read this information on IT sourcing strategies:Chapter 12.4 – “IT Sourcing and Cl

Information Technology Sourcing Strategic Analysis Research Paper Please read this information on IT sourcing strategies:Chapter 12.4 – “IT Sourcing and Cloud Strategy”Report on outsourcing and insourcing by Deloitte Consulting describes the sourcing trends that are important for IT.Find 2 peer-reviewed articles from academic journals on information technology sourcing. Summarize each article and compare and contrast the sourcing approaches in each article. Identify the factors that were important in each sourcing strategy and whether the sourcing decision was strategic for the long term or tactical for the short term. Which strategy did you think was more effective and why? Your paper should be in APA format and 3-4 pages, not counting the title page and reference pages. Make sure you have in-text citations and a reference page. Chapter 12
IT Strategy and Balanced
Scorecard
Prepared by Dr. Derek Sedlack, South University
Learning Objectives
IT Strategy
and
Strategic
Planning
Process
Aligning IT
with
Business
Strategy
IT Sourcing
and Cloud
Strategy
Balanced
Scorecard
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
• Value Drivers
– Enhance the value of a product or service to
consumers, creating value for the company (such as
advanced IT, reliability, and brand reputation).
– Three general types of Business Value Drivers:
• Operational Shorter-term factors
• Financial Medium-term factors
• Sustainability Long-term factors
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
• IT Strategic Planning
– A systematic process for determining what a
business should become and how it can best
achieve that goal.
• Reactive Approaches Fail
– Fail to align IT to real business needs.
and, as a result
– Fail to deliver value to the business.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
IT Strategies Support the Business Strategy
• Four IT Strategic Plan Objectives:
1. Improve management’s understanding of IT
opportunities and limitations
2. Assess current performance
3. Identify capacity and human resource
requirements
4. Clarify the level of investment required
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
IT Deployment Strategies
• In-house development
– Systems are developed or other IT work is done inhouse, possibly with the help of consulting
companies or vendors.
• Sourcing
– Onshore: sourced to consulting companies or
vendors that are within the same country.
– Offshoring: work sourced to other countries.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
Figure 12.2 IT strategic planning process.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
IT Steering Committee
• Set the direction
– Links corporate strategy with the IT strategy,
• Allocate scarce resources
– Approves the allocation of resources for and within the
information systems organization including outsourcing
policy.
• Make staffing decisions
– Key IT personnel decisions involve a consultation and
approval process made by the committee, including
outsourcing decisions.
• Communicate and provide feedback
– Information regarding IT activities should flow freely.
• Set and evaluate performance metrics
– Establish performance measures for the IT department and
see they are met.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
• Governance
– Formally established statements that direct the
policies regarding IT alignment with organizational
goals and allocation of resources.
• Long-range IT plan (Strategic IT plan)
– What IT should do to achieve the goals, objectives,
and strategic position of the firm and how this will
be achieved.
– The overall direction, requirements, and sourcing of
resources.
– Time frames are set for three to five years into the
future.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
• Medium-range IT plan
– Identifies general project plans in terms of the
specific requirements and sourcing of resources as
well as the project portfolio.
• Tactical Plan (Short-range)
– Details budgets and schedules for current-year
projects and activities.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
• Project Portfolio
– Lists major resource projects that are consistent
with the long-range plan.
• Applications Portfolio
– A list of major, approved information system projects
that are also consistent with the long-range plan.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Strategy and Strategic Planning
Process
1.
2.
3.
4.
5.
6.
What are value drivers?
What are the three categories of value drivers?
Why do reactive approaches to IT investments fail?
What is onshore sourcing?
What is the goal of IT–business alignment?
Why is IT strategic planning revisited on a regular
basis?
7. What are the functions of a steering committee?
8. Describe the IT strategic planning process.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Learning Objectives
IT Strategy
and
Strategic
Planning
Process
Aligning IT
with
Business
Strategy
IT Sourcing
and Cloud
Strategy
Balanced
Scorecard
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Aligning IT with Business Strategy
• IT Business Alignment Improvement Activities
1. Commitment to IT planning by senior
management.
2. CIO is a member of senior management.
3. Understanding IT and corporate planning.
4. Shared culture and good communication.
5. Multilevel links.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Aligning IT with Business Strategy
• Strength of CIO & C-Suite Relationship Influences
Performance
1. Achieve better results.
2. Adapt quickly.
3. Think together.
4. Act together.
5. More aligned on strategy.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Aligning IT with Business Strategy
• CIO Skillset
– Political savvy
– Influence, leadership, and power
– Relationship management
– Resourcefulness
– Strategic planning
– Doing what it takes
– Leading employees
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Aligning IT with Business Strategy
• IT/Business Alignment
– CIO drives business change through the use of
digital technology, not just supporting business, but
introducing profitable new lines of business.
– Even older organizations, considered traditional and
slow-moving, can become agile, even innovative
through technology.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Aligning IT with Business Strategy
1. How can IT–business alignment be improved?
2. How does strong collaboration among the CIO and
other chief-level officers influence performance?
3. What skills are important to a CIO’s success?
4. How did the CIO of CBA contribute to the bank’s
competitiveness?
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Learning Objectives
IT Strategy
and
Strategic
Planning
Process
Aligning IT
with
Business
Strategy
IT Sourcing
and Cloud
Strategy
Balanced
Scorecard
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Balanced Scorecard
Old Approach to Business
• Lagging Indicators
– P&L, Cash Flow, Balance Sheets
– Confirm what has happened.
– Evaluate outcomes and achievements.
– Represent history, not ideal for managing day-to-day
operations and planning.
Multidimensional Approach to Business
• Leading indicators
– Predict future events to identify opportunities.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Balanced Scorecard
Figure 12.3 Balanced Scorecard (BSC) uses four metrics to
measure performance.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Balanced Scorecard
Balanced Approach Metrics
• Financial
– Revenue, earnings, asset utilization
• Customer
– Market share, Brand image, price-value relationship
• Business processes
– Cycle times, cost per process/transaction
• Innovation, learning and growth
– Employee skills, IT capabilities, R&D
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Balanced Scorecard
IT & Business Strategy Alignment through BSC
• Clarify and update strategy
• Align IT strategy with business strategy
• Link strategic objective to long-term goals and annual
budgets
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Balanced Scorecard
Identify
performance
metrics
Implement
necessary data
collection tools
Select
meaningful
objectives
Collect, analyze,
and data with
targets
Select effective
measures and
targets
Revise actions
Alignment
The BSC methodology process.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
Balanced Scorecard
1. How did the BSC approach differ from previous
measurement approaches?
2. How does the BSC approach “balance” performance
measurements?
3. What are the four BSC metrics?
4. Give an example of each BSC metric.
5. How does BSC align IT strategy with business strategy?
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Learning Objectives
IT Strategy
and
Strategic
Planning
Process
Aligning IT
with
Business
Strategy
IT Sourcing
and Cloud
Strategy
Balanced
Scorecard
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
Cloud Strategy and Services
• Cloud Strategy
– Short for cloud computing IT strategy.
• Edge Service
– Term that refers to a cloud service.
• Tactical Adoption Approach
– Incremental deployment resulting in apps and
services, patched to create end-to-end business
processes.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
Cloud Complexity
• Extensibility
– The ability to get data into and out of the cloud
service.
• Migration Issues
– Cybersecurity, privacy, data availability, and service
accessibility.
• Newer Challenges
– Cloud integration with on-premises resources,
extensibility, and reliability.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
• Sourcing Driving Factors
– Generate revenue
– Increase efficiency
– Agile enough to respond to market changes
– Focus on core competency
– Cut operational costs
– More accepted IT strategy
– Cloud and SaaS have been proven
– Move IT from capital to recurring operating
expenditure
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
Outsourcing Risks
• Shirking
– The vendor deliberately underperforms while
claiming full payment.
• Poaching
– The vendor develops a strategic application for a
client and then uses it for other clients.
• Opportunistic repricing
– Client enters into a long-term contract with a vendor,
the vendor changes financial terms at some point or
overcharges for unanticipated enhancements and
contract extensions.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
• Work Not Readily Offshored
– Work that has not been routinized.
– Work that if offshored would result in the client
company losing too much control over critical
operations.
– Situations in which offshoring would place the client
company at too great a risk to its data security, data
privacy, or intellectual property and proprietary
information.
– Business activities that rely on an uncommon
combination of specific application domain
knowledge and IT knowledge in order to do the work
properly.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
Outsourcing Lifecycle
Strategy
Reassessment
Selection
Negotiation
Implementation
Oversight
Management
Build
Completion
Change
Exit
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
Vendor Selection Criteria
– Experience with very similar systems of similar size,
scope, and requirements; experience with the ITs
that are needed, integrating those ITs into the
existing infrastructure and the customer’s industry.
– Financial and qualified personnel stability. A
vendor’s reputation impacts its stability.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
Focus On Value Not Costs
– Costs undermine goals.
– Close relationships are mutually beneficial.
– Both sides are best served viewing relationship over
simple transaction.
Before Signing…
– Do a trial run.
– Create SLAs.
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.
Chapter 12
IT Sourcing and Cloud Strategy
1. What contributes to the complexity of a cloud strategy?
2. How does tactical adoption of cloud services differ
from a coordinated cloud strategy?
3. What are the major reasons for sourcing?
4. What types of work are not readily outsourced
offshore?
5. When selecting a vendor, what two criteria need to be
assessed?
6. What is the risk of an overemphasis on cost when
selecting or dealing with an IT vendor?
7. What needs to be done before signing a contract with
an IT vendor?
Copyright © 2015 John Wiley & Sons, Inc. All rights reserved.

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