Running head: IT STRATEGY
1
IT Strategy for [Company Name]
[Student Name]
[Course and Instructor]
IT STRATEGY
2
IT Strategy for [Company Name]
[To introduce your IT strategy, provide an executive summary that clearly describes what
you are recommending and why it will benefit the business. Include a brief summary of the
financial benefits. This introduction should be a paragraph or more, but less than a page.]
Description of the Business
[In one or more paragraphs provide a description of the business and the issues /
opportunities associated with the business. This section should include what is known about the
products, customers, competitors, and financial situation for the case study. The description of
the business should be less than a page.]
IT Strategy Proposal
[In one or more paragraphs, introduce the IT initiatives you are proposing. You must have
at least three initiatives, but you can have more than that.]
[Heading for Initiative One]
[Describe initiative one in detail. Make sure you include how the initiative will benefit
the business. Any technical terms need to be explained so that a business person can understand
what you are proposing. Each initiative should be less than one page.]
[Heading for Initiative Two]
[Describe initiative two in detail.]
[Heading for Initiative Three]
[Describe initiative three in detail.]
Sourcing Strategy
[In one or more paragraphs, describe your sourcing strategy. Will the implementation of
the initiatives be done with in-house or outside resources, or a combination of the two? Will
IT STRATEGY
3
ongoing support be done with in-house or outside resources, or a combination? In other words,
who (what organization) will do the work? You will need to explain why are proposing a certain
strategy. For instance, outside expertise may be needed to supplement the internal personnel
regarding the use of certain technologies. Make sure the financials reflect the costs in your
sourcing strategy.]
Financial Case
[Describe the cost / benefit analysis in one or more paragraphs. Be very clear about how
much the IT initiatives will cost and what the expected benefits will be. Cite resources that you
used to develop your cost / benefit analysis. For instance, you may have found an article on
another company that was able to achieve a 20% increase in sales with an initiative similar to
what you are recommending. The more concrete examples you can cite, the more believable the
financial case will be. After summarizing the financial reasons for your proposal, refer the reader
to Table 1. Update Table 1 on the next page with the data from your return on investment
spreadsheet.]
.
Running head: IT STRATEGY
4
Table 1
Return on Investment
[Company Name]
Initial Investment
Hardware costs
Purchased software costs / licenses
Development costs
Training costs
Conversion costs
[Other initial investments]
[Other initial investments]
Total Initial Investments
Year
1
2
3
$0
$0
$0
$0
$0
$0
$0
$0
Benefits from Technology Strategy
Increased sales and revenue
Reduced personnel costs
Reduced product costs
Reduced distribution costs
Reduced advertising and marketing costs
[Other benefits]
[Other benefits]
[Other benefits]
Total Benefits
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Costs (Excluding Initial Capital Investments)
Depreciation on capital expenditures
Software licensing fees
Ongoing user support and training
$0
$0
$0
$0
$0
$0
$0
$0
$0
IT STRATEGY
5
Ongoing systems support
Hosting / Cloud computing
General and administrative
[Other costs]
[Other costs]
[Other costs]
Total Costs
Totals
Net Benefits (Costs)
Tax
Value after tax
Depreciation added back
Cash flow
Cumulative cash flow
Evaluation Metrics
Net present value (NPV)
Internal rate of return (IRR)
Payback period (in years)
Three-year total ROI
($0)
($0)
$0
0.0%
0.0
0.00%
$0
$0
$0
$0
$0
$0
$333
$0
$0
$0
$0
$0
$0
$333
$0
$0
$0
$0
$0
$0
$333
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Running head: IT STRATEGY
6
Implementation Timeline
[Describe the timeline and sequencing of the IT initiatives in one or more paragraphs.
Make sure the timeline is consistent with the financials. For instance, if initiative three does not
go live until year two, you cannot show any benefits for that initiative in year one. Be very clear
about when the initiatives will be implemented. Will all initiatives be implemented at the same
time or will the initiatives be implemented one at a time? Explain why you are proposing a
specific sequence. In addition to describing the timeline, you can include an APA figure for the
timeline, if that is additive.]
Plan for Sustaining the IT Initiatives
[In one or more paragraphs describe your plan for ongoing operations and support of the
IT investments you are proposing. If you plan to use a particular governance model and / or a
portfolio management approach, describe it here. Include the KPIs (key performance indicators)
that you will use to measure the value of the IT work.]
Summary
[Provide a one- or two-paragraph summary of your IT strategy and how it will add value
to the business.]
IT STRATEGY
7
References
Last Name, F. M. (Year). Article Title 1. Journal Title 1, Pages From - To.
Last Name, F. M. (Year). Article Title 2. Journal Title 2, Pages From - To.
Last Name, F. M. (Year). Article Title 3. Journal Title 3, Pages From - To.
Last Name, F. M. (Year). Article Title 4. Journal Title 4, Pages From - To.
Last Name, F. M. (Year). Article Title 5. Journal Title 5, Pages From - To.
Last Name, F. M. (Year). Book Title. City Name: Publisher Name.
Gray cells contain calculations that should not be altered.
Jimmy Beans Wool
Technology Budgeting Tool
4/9/2017
Company Data
Required rate of return
Tax rate
10%
30%
Initial Investment
Hardware costs (e.g., servers, networking hardware, PC upgrades)
Purchased software costs / licenses (e.g., e-commerce, ERP, CRM software)
Development costs (e.g., systems design and configuration / development)
Training costs (e.g., develop and conduct initial training)
Conversion costs (e.g., initial data conversion from existing systems being
[Other initial investments]
[Other initial investments]
Total Initial Investments
YEAR
Benefits from Technology Strategy
Increased sales and revenue
Reduced personnel costs
Reduced product costs
Reduced distribution costs
Reduced advertising and marketing costs
[Other benefits]
[Other benefits]
[Other benefits]
Total Benefits
YEAR
Costs (Excluding Initial Capital Investments)
Depreciation on capital expenditures (calculation uses three-year period)
Software licensing fees
Ongoing user support and training (e.g., help desk and training personnel)
Ongoing systems support (e.g., IT maintenance)
Hosting / Cloud computing
General and administrative
[Other costs]
[Other costs]
[Other costs]
Total Costs
YEAR
Totals
Net Benefits (Costs)
Tax
Value after tax
Depreciation added back
Cash flow
Cumulative cash flow
YEAR
Evaluation Metrics
Net present value (NPV)
Internal rate of return (IRR)
Payback period (in years)
Three-year total ROI: (total benefits before taxes - total costs)/total costs
1
2
3
$10.000
$400.000
$230.000
$20.000
$25.000
$0
$0
$685.000
1
2
$200.000
$150.000
$0
$8.000
$100.000
$0
$0
$0
$458.000
1
2
$228.333
$120.000
$25.000
$15.000
$14.000
$5.000
$0
$0
$0
$407.333
1
($685.000)
($685.000)
$17.996
11,46%
2,44
20,43%
3
$300.000
$75.000
$0
$12.000
$90.000
$0
$0
$0
$477.000
3
$228.333
$100.000
$25.000
$15.000
$14.000
$5.000
$0
$0
$0
$387.333
2
$50.667
$15.200
$35.467
$228.333
$263.800
($421.200)
$360.000
$0
$0
$14.400
$90.000
$0
$0
$0
$464.400
$228.333
$80.000
$25.000
$15.000
$14.000
$5.000
$0
$0
$0
$367.333
3
$89.667
$26.900
$62.767
$228.333
$291.100
($130.100)
$97.067
$29.120
$67.947
$228.333
$296.280
$166.180
Running head: IT STRATEGY
1
IT Strategy for Jimmy Beans Wool
xxxxxxxxx
7100 - IT Policy and Strategy
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IT STRATEGY
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IT Strategy for Jimmy Beans Wool
Jimmy Beans should avoid brick and mortar expansion and focus on organic growth
online by selling yarn and fabric. In order to gain an average of thirty percent online, it should
streamline its operations by centralizing the product information and digital assets. Jimmy Beans
should implement three IT initiatives to achieve its business strategy.
a) Implement a Product Information Management (PIM) system to control product
information
b) Implement a Digital Asset Management (DAM) system to store and manage digital
assets. Integrate PIM with DAM system for publishing the product information and asset to
ecommerce website
c) Implement Google Analytics to gain insights on website and take data driven
decisions.
Jimmy Beans should not invest in high cost technology until it is ready to scale and
should possibly try to keep low capital and operating expenditures. With the implementation of
IT initiatives over three years, the company would achieve ROI of 20.43%.
Description of the Business
Jimmy Beans Wool is an ecommerce company that sells yarn online and fabric in retail
store located in Reno, Nevada. Jimmy Beans wool was creative in use of social media and
established a loyal follower online, particularly for the company posted product reviews and
instructional videos in YouTube. In five years that company started, the company realized 50
percent organic growth from 2007 to 2012, reaching $1 million in sales, which increased to $7
million in 2013 (Seeking even faster growth, and E-commerce Company stumbles (April 2014)).
IT STRATEGY
3
In its unrealistic pursuit to grow rapidly and hit the $100 million sale target in a very
short timeline, founders Laura and Doug Zander, tried several strategies to achieve the rapid
growth, however, the sales fell flat and the cash burn rate was increasing. In an effort to double
the sales rapidly, the company, which was known for yarn, also started selling fabric by putting
an investment of $150,000 in inventory. The company increased its retail footprint by moving
from a 3500 square feet foot space into 20,000 square feet and an additional $25,000 investment
towards renovations and remodeling. Ms. Zander increased the marketing staff from a team of
four to eight. None of these measures increased the sales of the company. Eventually, the
founders stopped taking salaries, paid employees from personal savings and were forced to restrategize the growth plans. To bring back the company on track, the company management,
should decide on realistic goals and implement the business and IT strategy.
IT Strategy Proposal
IT Strategy doesn’t simply refer to set of IT plans but is a holistic combination of
demand, control and supply factors (Aaron, 2009). IT strategy should align with the business
strategy of the company. Before finalizing the IT initiatives, it is recommended that the company
adopt the following business strategy of cutting down the unnecessary expansion costs and
sticking with the organic growth (Turban, Volonino & Wood, 2015). The steps below detail the
implementation steps of business strategy:
1) Focus on yarn production as the major source of revenue. Fabric component can be
only small component of the target sales.
2) Cut down the marketing team from team of eight to four.
3) Focus on online sales rather than opening new brick and mortar stores.
4) Invest in eCommerce platform to grow online global sales and gain loyal customers.
IT STRATEGY
4
As part of its business strategy to grow eCommerce revenues, the following IT initiatives are
proposed:
Implement an Product Information Management (PIM) system
As the number of products in enterprise grow significantly, it would become
difficult to manage the product data. Many retail companies have successfully implemented PIM
system, which is essential to centrally manage the product information required to sell and
market products (Boyd, 2006). This product data in turn is distributed to target channels such as
websites and print catalogs. By implementing the PIM system, Jimmy Beans Wool would
achieve product data view which is accurate, timely and consistent (Power, 2010). This would
also avoid the cost of duplication of products.
By implementing the PIM, Jimmy Beans would establish the groundwork for an
enterprise view of its business operations. An enterprise scale PIM products such as Hybris,
STIBO would typically have ability to integrate with ecommerce portals driven by Oracle or
Adobe web engines. Apart from centralizing the product information, PIM can also integrate
with a Digital Asset Management (DAM) system. As the number of products grow significantly
in number, Jimmy Beans can use the product data in PIM for insights in business analytics which
would empower the company to make data driven decisions.
Implement a Digital Asset Management (DAM) system
DAM is a classification of Enterprise Content Management tools. For Jimmy Beans, it is
recommended to have a digital asset management (DAM) to achieve the goal of managing the
asset lifecycle. Any eCommerce business should have right process and systems to manage the
content lifecycle, which includes digital asset creation, storage, distribution to users, publishing
to different channels, and asset retirement (Regli, 2009). A digital asset can be defined as any
IT STRATEGY
5
digital information that is of value to the company. To grow online sales, Jimmy Beans should
store its digital assets such as product images, product manuals, product documentation,
marketing content and instructional videos in a central digital asset management system.
From a systems architecture perspective, DAM can be integrated with PIM and the
content can be published to web. There are several DAM product vendors such as OpenText,
Adobe, a DAM which enable the integration with PIM. By implementing a PIM-DAM integrated
system, Jimmy Beans Wool can achieve the following wins:
•
Reduce operational costs by having a centralized repository for all common
marketing materials (Spark, 2003)
•
Improve time to market by reducing asset development life cycle through
automation
•
Decrease risk of rights infringement by limiting the asset sharing based on the
rights that are available on the particular asset
•
Increase visibility of asset effectiveness by creating asset usage reports
•
Improve usability and performance by workflow driven collaboration between the
teams and units
Implement standard Google Analytics on eCommerce platform
After the successful implementation of PIM-DAM system and content publish to website,
Jimmy Beans should focus on applying analytics on the eCommerce portal. The company should
track web analytics using freemium tools such as Google Analytics standard version (Farney and
McHale, 2013). By gaining insights on the customer interaction on websites, the company can
effectively plan the business and take data driven decisions based on historical performance. This
would help the company in demand forecasting for peak seasons such as thanksgiving and
IT STRATEGY
6
holidays. The company can also track the effectiveness of online promotions and improve the
strategy iteratively based on the key insights.
As Jimmy Beans Wool continues to expand, a core strategy of ensuring longevity and
sales expansion is to grow the loyal customers, who can act as the virtual brand ambassadors for
the company. By implementing analytics tool on the web, the company can establish the key
performance indicators (KPIs) such as Net Promoter Score (NPS) which would measure the
extent the customers would recommend the products to others. The data can also be combined
with the results from social media to provide a holistic view of customer’s relationship with the
company. For example, while promoting the company pages in Facebook and twitter, the
company can combine and leverage the insights in designing an online promotional campaign.
Overall, using analytics would enable Jimmy Beans Wool management to understand its
customer and use the valuable information for predictive modeling and business planning.
Sourcing Strategy
As PIM and DAM are specialized systems, outside expertise from experienced service
integrators would be required to rollout the systems. As part of implementation plan, external
consultants would conduct the definition and design phase. The in-house IT team in Jimmy
Beans can ask for the best practices and recommendations from the consultants to ensure the
scalability and effectiveness of system. During development, a mix of both internal and external
teams would work together for product customization and integration. This would enable Jimmy
Beans to gain the technical know-how and ensure that it can support the systems in long run.
Also, to reduce the development costs, the external service provider would integrate the software
using an offshore development team. The financials reflect the cost of employing external
consultants during development.
IT STRATEGY
7
Financial Case
The primary significant cost for rolling out PIM and DAM systems is the enterprise
product licensing costs. As indicated in Table 1, the licensing cost for the product is $400,000. It
is recommended that the PIM and DAM products are purchased as a SAS model and be hosted in
Amazon cloud to minimize the on-premise hardware costs. The second highest cost would be the
actual implementation costs with hybrid model of internal and external teams, which is to the
tune of $230,000. Other implementation costs such as data migration ($25,000) and change
management costs such as training costs ($20,000) have been factored in.
The typical revenue growth of Jimmy Beans annually is $1 million. With the
implementation of IT initiatives, the company would gain an estimated 20% to 36% increase in
sales over 3 years. This projection meets the organic growth target of Jimmy Beans and is
achievable for its revenue size in online commerce. Moreover, the company can cut down its
marketing team which is reflected in savings in reduced personal costs. Furthermore, by avoiding
the duplication of creation of digital assets and centralizing, the company can just focus on
online advertising compared to the traditional advertising costs incurred with marketing
agencies.
The complete cost benefit analysis details are captured in Table 1. It can be inferred that
the projected ROI for the IT initiatives is 20.43% which is good for a retailer. With a positive
NPV and IRR of 11.46%, Jimmy Beans Wool would reap its benefits within 3 years.
Running head: IT STRATEGY
Table 1
Return on Investment
Jimmy Beans Wool
Initial Investment
Hardware costs
Purchased software costs / licenses
Development costs
Training costs
Conversion costs
[Other initial investments]
[Other initial investments]
Total Initial Investments
8
Year
1
2
3
$10,000
$400,000
$230,000
$20,000
$25,000
$0
$0
$685,000
Benefits from Technology Strategy
Increased sales and revenue
Reduced personnel costs
Reduced product costs
Reduced distribution costs
Reduced advertising and marketing costs
[Other benefits]
[Other benefits]
[Other benefits]
Total Benefits
$200,000
$150,000
$0
$8000
$100,000
$0
$0
$0
$458,000
$300,000
$75,000
$0
$12,000
$90,000
$0
$0
$0
$477,000
$360,000
$0
$0
$14,400
$90,000
$0
$0
$0
$464,400
Costs (Excluding Initial Capital Investments)
Depreciation on capital expenditures
Software licensing fees
Ongoing user support and training
Ongoing systems support
Hosting / Cloud computing
$228,333
$120,000
$25,000
$15,000
$14,000
$228,333
$100,000
$25,000
$15,000
$14,000
$228,333
$80,000
$25,000
$15,000
$14,000
IT STRATEGY
9
General and administrative
[Other costs]
[Other costs]
[Other costs]
Total Costs
$5,000
$0
$0
$0
$407,333
$5,000
$0
$0
$0
$387,333
$5,000
$0
$0
$0
$367,333
Totals
Net Benefits (Costs)
Tax
Value after tax
Depreciation added back
Cash flow
Cumulative cash flow
$50,667
$15,200
$35,467
$228,333
$263,800
$421,200
$89,667
$26,900
$62,767
$228,333
$291,100
$130,100
$97,067
$29,120
$67,947
$228,333
$296,280
$166,180
Evaluation Metrics
Net present value (NPV)
Internal rate of return (IRR)
Payback period (in years)
Three-year total ROI
($685,000)
($685,000)
$17,996
11.46%
2.44
20.43%
Running head: IT STRATEGY
10
Implementation Timeline
PIM is the source of product information and a part of product metadata would be shared
with DAM. To establish the product taxonomy, it is recommended that Jimmy Beans implements
PIM first followed by DAM with a timeline overlap in year one. The integration of PIM-DAM
systems can have rolled out within a 9-month timeline. Assuming a start date of 3/1/17, below is
the high-level overview of the timeline for the three IT initiatives:
Activity
Start
End
PIM implementation
3/1/17
8/31/17
DAM implementation
6/1/17
8/31/17
PIM-DAM integration
9/1/17
10/31/17
PIM-DAM deploy and training
11/1/17
11/30/17
Google Analytics
3/1/18
3/31/18
There is a three month overlap between PIM and DAM implementation. The third
initiative Google Analytics would be rolled out in year 2 as it would be applied on website which
would be supported by a PIM-DAM system. Hence, it is logical to apply Google Analytics once
the PIM-DAM system integration is rolled out and stability is achieved. The standard product for
Google Analytics doesn’t incur licensing costs and is easy to set up from an in house IT team
member.
Plan for Sustaining the IT Initiatives
As part of the implementation of IT initiatives in Jimmy Beans, a governance team would
be formed who would support the initiatives. The representative governance body is shown in
IT STRATEGY
11
table below. This would constitute sponsors who would support the investments, process
improvement team to implement the best practices in the process, a governance body on PIM and
DAM taxonomy, a project manager who would lead the project rollouts, and a software support
team.
Role
Description
Name/Title
Provide executive support for
Executive Sponsor
John Doe, VP Operations
the project
Provides all technology support Charlie Ray, VP Information
Technology Support
for the project
Technology
Advises team on process
Process Improvement
Jim Jones, Process Team Lead
improvement techniques
Provides taxonomy
Taxonomy
improvements for changing
Matt Uvena, Taxonomy Lead
Governance
business needs
Manages the IT implementation
Project Manager
Sonny Smith, Project Manager
and project team
Provides all software support
Timothy Day, Software Group
for the project
Lead
Software Support
In implementing the projects, project and change management KPIs per ITIL frameworks
would be used to govern the IT work. The PMO and IT teams in Jimmy Beans would measure
IT STRATEGY
12
KPIs such as adherence to project budget to assess the financial impact and project delays to
assess the schedule impact. The governance committee would ensure that the business objectives
are achieved during the implementation of project.
Summary
Jimmy Beans Wool should focus on growing online sales globally for its yarn and fabric
products. To enable the company for online growth, it is recommended that Jimmy Beans
centralize and streamline its product catalog by implementing three step IT initiatives. Firstly, the
company should implement a PIM system to store all the product information. Secondly, a DAM
system should be rolled out to store and manage the digital assets. The PIM and DAM systems,
with a three-month timeline overlap, would be integrated as part of an overall nine month IT
rollout plan in year one. Finally, the integrated PIM-DAM system enabling the Jimmy Beans
Wool website would be reinforced by Google Analytics to gain data insights which would be
used for predictive modeling, forecasting and understanding customer.
By implementing the proposed IT initiatives, Jimmy Beans Wool would gain an average
of thirty percent growth in online sales in three years. This would also cut down the unnecessary
costs for the company, streamline its operations and ensure the scalability of operations.
IT STRATEGY
13
References
Seeking even faster growth, and E-commerce Company stumbles (April 2014) Retrieved on
February 18, 2017 from NY time’s website
https://www.nytimes.com/2014/04/03/business/smallbusiness/seeking-even-fastergrowth-an-e-commerce-company-stumbles.html
Aron, D (October, 2009). Creating Winning IT strategies [PowerPoint Slides] Retrieved
February 25, 2017 from
https://www.youtube.com/watch?v=QbyJY9KlrtM&feature=youtu.be
Turban, E., Volonino, L., & Wood, G. R. (2015). Information technology for management:
Digital strategies for insight, action and sustainable performance.
Boyd, M. (October 01, 2006). Product Information Management -- Forcing the Second Wave
Of Data Quality. Dm Review, 16, 10.)
Power, D. (January 01, 2010). INTEGRATION Why Product Information Management?
Information Management Sourcemedia, 20, 3, 43.
Regli, T. (January 01, 2009). The state of digital asset management: An executive summary of
CMS Watch's Digital Asset Management Report. Journal of Digital Asset
Management, 5, 1.)
Spark, D. (August 01, 2003). DIGITAL ASSET MANAGEMENT, 26.
Farney, T., & McHale, N. (January 01, 2013). Maximizing Google Analytics: Six High-Impact
Practices. Library Technology Reports, 49, 4.
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