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Strategic Frameworks for Project Justification

This document outlines strategic frameworks essential for project justification within organizations. It emphasizes the importance of aligning business visions, missions, objectives, and tactics with organizational goals. The frameworks include the Value Chain Model, which identifies primary and secondary activities that enhance value, and Porter’s Competitive Forces Model, addressing threats from competitors and market dynamics. Additionally, it explores how Information Systems can provide a competitive advantage through cost leadership, differentiation, and niche market targeting while considering the risks associated with successful implementation.

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Strategic Frameworks for Project Justification

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  1. Strategic Frameworks for Project Justification PSC 5170

  2. Business Vision Mission Objective Tactic = Business Justification IS Vision Mission Objective Tactic = Project Contribution Organization Goals

  3. Sponsor: funds and champions the project in the organization Client: reviews the project milestones and decision points from the business point of vies User: works with the system on a regular basis Roles

  4. Strategic Information Systems • IS that help gain strategic advantage • Significantly change manner in which business supported by the system is done • Outwardly aimed at direct competition • Inwardly focus on enhancing the competitive position • Create strategic alliances

  5. Value Chain Model • Chain of basic activities that add to firm’s products or services • Primary activities • Secondary activities

  6. Value Chain

  7. Value Chain Primary Activities • Inbound • Outbound • Operations • Marketing and Sales • After-Sale Services

  8. Value Chain Support Activities • Technology development • Procurement • Human Resources Management • Management Control • accounting/finance • coordination • general management • central planning

  9. Porter’s Competitive Forces Model The model recognizes five major forces that could endanger a company’s position in a given industry. • The threat of entry of new competitors • The bargaining power of suppliers • The bargaining power of customers (buyers) • The threat of substitute products or services • The rivalry among existing firms in the industry External Competitive Forces

  10. Competitive Forces • Threat of entry of new competition • Bargaining power of suppliers • Bargaining power of buyers • Threat of substitute products or services • Rivalry among existing firms

  11. Strategies for Competitive Forces Note - strength of force is determined by factors in industry • Gain a competitive edge • Build defenses against forces • Formulate actions to influence forces

  12. Three Generic Strategies • Cost leadership (lowest cost in industry) • Differentiation (of products/services/quality) • Focus (finding a specialized niche)

  13. Be Low Cost Producer - IT strategic if it can: • Help reduce production costs & clerical work • Reduce inventory, accounts receivable, etc. • Use facilities and materials better • Offer interorganizational efficiencies

  14. Produce Unique Product - IT strategic if it can: • Offer significant component of product • Offer key aspect of value chain • Permit product customization to meet customer’s unique needs • Provide higher/unique level of customer service/satisfaction

  15. Fill Market Niche - IT strategic if it can: • Permit identification of special needs of unique target market • Spot and respond to unusual trends

  16. Strategic Questions • Can IT create barriers to entry? (new entrants) • Can IT build in switching costs? (buyers) • Can IT strengthen customer relationships? (buyers)

  17. Strategic Questions (cont) • Can IT change the balance of power in supplier relationships? (suppliers) • Can IT change the basis of competition? (competitors) • Can IT generate new products?(competitors, substitutes)

  18. Risks of IS Success • Change the Basis of Competition • Lower Entry Barriers • Promote Litigation or Regulation • Awake Sleeping Giant • Reflect Bad Timing • Are Too Advanced

  19. Transformational Information Systems • Radical changes in an organization’s business processes • Radical changes in an organization’s structure • Radical changes in an industry’s value streams

  20. Business Process Reengineering (BPR) • Completely changes manner in which business is done • Fewer steps, shorter cycle times • Complete, more expert handling of events • Not incremental improvement • Typically uses IT as an enabler • Involves discontinuous thinking

  21. Characteristics of BPR • Combining jobs • Empowering employees • Jobs done simultaneously • Customizing product/service • Work performed where most logical • Single point of customer contact

  22. Radical changes in an organization’s structure reduce layers of management empower front-line workers loosely couple work units Radical changes in an industry’s value streams disintermediation creating new markets Transformational Information Systems

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