2e
Chapter 2
Strategic
Planning
Information Technology for Managers
George W. Reynolds
Strayer University
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website, in whole or in part.
Learning Objectives
• What is an effective strategic planning process, who
needs to participate in it, and what are the
deliverables of such a process?
• How is IT planning tied to overall strategic planning,
so that business objectives and IT activities are well
aligned?
Information Technology for Managers
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website, in whole or in part.
2
Need for Managers to Understand the
Relationship Between Strategic Planning
and IT
ology for Managers
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website, in whole or in part.
3
Understanding the Relationship Between
Strategic Planning and IT
• Improves alignment between business and IT
– Alignment - IT organization and its resources are
focused on actions that support the key objectives
defined in the strategic plan of the business
• Implies that the IT and business managers have a
shared vision
Information Technology for Managers
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website, in whole or in part.
4
Understanding the Relationship Between
Strategic Planning and IT (continued 1)
– Shared vision helps an IT organization in:
• Hiring the right people with the right skills and
capabilities
• Choosing the right technologies and vendors to
explore and develop
• Installing the right systems
• Focusing on those projects that facilitate the
organization to move toward achieving its vision and
mission
Information Technology for Managers
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website, in whole or in part.
5
Strategic Planning
ology for Managers
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website, in whole or in part.
6
Strategic Planning
• Helps managers to:
– Identify desired outcomes and formulate feasible
plans
– Achieve their objectives by using available resources
and capabilities
• Annual process
• Approaches
– Issues-based
– Organic
– Goals-based
Information Technology for Managers
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7
Figure 2.1 - Goals-Based Strategic
Planning Process
Information Technology for Managers
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website, in whole or in part.
8
Analyze Situation
• Assessing strengths and weaknesses across all
the levels and business units of a firm
• Preparing a historical perspective
• Gathering data about internal processes and
operations
• Analyzing the collected data
• Examining the industry in which the organization
competes
Information Technology for Managers
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website, in whole or in part.
9
Analyze Situation (continued 1)
• Collecting and analyzing facts about its key
customers, competitors, and suppliers
• Aiming to:
– Identify strategically important issues that the
organization must address
– Reveal the firm’s competitive position against its
rivals
• Michael Porter’s Five Forces Model: Used for
assessing the nature of industry competition
Information Technology for Managers
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website, in whole or in part.
10
Figure 2.2 - Porter’s Five Forces Model
Information Technology for Managers
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website, in whole or in part.
11
Analyze Situation (continued 2)
• Competitive financial analysis helps in determining
how key financial parameters match up against the
competitors
• Strengths, Weaknesses, Opportunities, Threats
(SWOT) matrix
– Illustrates that an effective strategy derives from:
• Maximizing a firm’s strengths and opportunities
• Minimizing its weaknesses and threats
Information Technology for Managers
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website, in whole or in part.
12
Set Direction
• Vision/mission statement
– Communicates an organization’s overarching
aspirations
– Guides organization through changing objectives,
goals, and strategies
– Components
• Mission statement
• Vision of a desirable future
• Set of core values
– Inspires and requires employees to stretch to reach
its goals
Information Technology for Managers
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website, in whole or in part.
13
Set Direction (continued 1)
• Objectives: Statement of a compelling business
need that an organization must meet to achieve its
vision and mission
Information Technology for Managers
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website, in whole or in part.
14
Set Direction (continued 2)
• Goal: Specific result that must be achieved to
reach an objective
– Associated with a single objective
– Tracks progress in meeting an organization's
objective
– Big Hairy Audacious Goals (BHAGs)
– Need to be SMART (specific, measurable,
achievable, relevant, time constrained)
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website, in whole or in part.
15
Strategies
• Allow an organization to achieve its vision, mission,
objectives, and goals
• Require managers to consider:
– Long-term impact of each strategy on revenue and
profit
– Degree of risk involved
– Amount and types of resources that will be required
– Potential competitive reaction
– Results of the SWOT analysis
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website, in whole or in part.
16
Strategic Plan
• Defines objectives, establishes SMART goals, and
sets strategies
– Objectives, goals, and strategies are communicated
to business units and functional units
• Depends on the autonomy granted at lower levels
Information Technology for Managers
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website, in whole or in part.
17
Figure 2.3 - Strategic Planning Pyramid
Information Technology for Managers
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website, in whole or in part.
18
Setting the IT Organizational Strategy
ology for Managers
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website, in whole or in part.
19
Strategic Plan of an IT Organization
• Required to identify technologies, vendors,
competencies, people, systems, and projects
• Needed to aid in investments that support the
objectives, goals, and strategies
• Depends on the way the rest of the organization
perceives it
– Perception can be as a cost center/service provider,
a business partner/ business peer, or as a game
changer
Information Technology for Managers
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website, in whole or in part.
20
Figure 2.4 - Drivers that Set IT
Organizational Strategy and Determine IT
Investments
Information Technology for Managers
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website, in whole or in part.
21
Identifying IT Projects and Initiatives
• Require interacting with various business
managers and observing other IT organizations
and competitors
• Need to support corporate objectives and goals
• Classify various potential projects by type
Information Technology for Managers
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website, in whole or in part.
22
Table 2.5 - Project Classification Example
ology for Managers
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website, in whole or in part.
23
Prioritizing IT Projects and Initiatives
• Process of setting priorities and determining the
resulting budget, staffing, and timing needs
– Defines which projects will be initiated and when
they will be executed
• Involves reviewing and evaluating from different
perspectives
Information Technology for Managers
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website, in whole or in part.
24
Figure 2.5 - Projects Must Relate to Goals
and Objectives
Information Technology for Managers
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website, in whole or in part.
25
Effective Strategic Planning: Chevron
ology for Managers
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website, in whole or in part.
26
Effective Strategic Planning: Chevron
• Outline of a goals-based strategic planning process
developed for Chevron
• Involves:
–
–
–
–
Situational analysis
Set direction
Define strategies
Deploy plan
Information Technology for Managers
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website, in whole or in part.
27
Situation Analysis
• Strengths
–
–
–
–
–
Financial strength
Presence in all phases of the energy industry
Broad geographic presence
High reserves ratio
Leading position in the United States
• Weaknesses
– Entanglement in environmental disaster in Ecuador
– Strain on sales of refined products
Information Technology for Managers
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website, in whole or in part.
28
Situation Analysis (continued 1)
• Opportunities
– Planned investments for future development
– Strategic acquisitions and agreements
• Threats
– Rising production costs and capital expenditures
– Regulation of greenhouse gas emissions
– Changing economic, regulatory, and political
environments
– Commodity prices risks
Information Technology for Managers
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website, in whole or in part.
29
Set Direction
• Objectives
– Increase revenue and profits
– Estimate investments for future to increase
production and revenue, to support objectives
• Goals
– Reduce time lag between initial exploration and start
of production
– Execute project start-ups with more than $1 billion
Chevron investment
Information Technology for Managers
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website, in whole or in part.
30
Set Direction (continued 1)
– Add to portfolio through exploration and targeted
acquisitions
– Maintain or improve the success rate of exploration
wells
– Sustain to be a leader in personal safety, measured
by injuries requiring time away from work
• Goal of zero-incidents
• Achieving world-class performance in all measures of
safety
Information Technology for Managers
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website, in whole or in part.
31
Define Strategies
• Create shareholder value and achieve sustained
financial returns from operations
• Invest in people to strengthen organization
capability and develop a talented global workforce
• Execute with excellence through application of
operational excellence and capital stewardship
systems and disciplined cost management
• Grow profitably by using competitive advantages
Information Technology for Managers
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website, in whole or in part.
32
Define Strategies
• Attain world-class performance in operational
excellence with a goal of zero safety and operating
incidents
Information Technology for Managers
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website, in whole or in part.
33
Chevron Strategic Plan
• Communicated to all business units worldwide
• Each unit is encouraged to perform its own
strategic planning process that can lead to
accomplishment of corporate goals
• Focuses on technologies that aids in finding,
developing, and producing crude oil and natural
gas
Information Technology for Managers
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible
website, in whole or in part.
34
Chevron Strategic Plan (continued 1)
• Identifying projects and initiatives
– Loulie Ehrlich was appointed CIO and President of
the Chevron Information Technology Company
– Focus on accelerating insights, automating
operations, and connecting people
– Hire IT professionals with bachelor’s or master’s
degree in various fields
Information Technology for Managers
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible
website, in whole or in part.
35
Chevron Strategic Plan (continued 2)
– Information Technology Company supports
businesses by developing and supporting
information technologies
– Uses distributed sensors, high-speed
communications, and data analysis techniques to
monitor and fine-tune remote drilling operations
Information Technology for Managers
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible
website, in whole or in part.
36
Chevron Strategic Plan (continued 3)
• Prioritizing projects and initiatives
– To identify new oil deposits, the company uses
sound waves to create images of the earth, deep
below the ocean floor
– Collaborates with oil service companies and top IT
companies to obtain state-of-the-art solutions
– Established eight global “mission control” centers to
improve the performance of forty of the company’s
biggest energy projects
Information Technology for Managers
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible
website, in whole or in part.
37
Chevron Strategic Plan (continued 4)
– Focus on leak detection by using modeling
technology in most of the company’s pipeline
– IT operates through a network that connects more
than 50,000 desktops around the world
• Enables collaboration and communication
– Digital imaging helps better manage an oil field once
it is producing oil
Information Technology for Managers
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly acce ssible
website, in whole or in part.
38
Chevron Strategic Plan (continued 5)
– IT organization is responsible for:
• Network operations and security
• Purchasing and deploying hardware
• Setting global technology standards and strategy
Information Technology for Managers
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website, in whole or in part.
39
Summary
• Strategic planning
– Helps managers identify desired outcomes and
formulate feasible plans to achieve objectives
– Requires analysis of internal and external
environment
• Set direction involves defining the mission, vision,
values, objectives, and goals of the organization
• Define strategies involves describing the way an
organization will achieve its mission, vision,
objectives, and goals
Information Technology for Man
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website, in whole or in part.
40
Summary (continued 1)
• Organization’s objectives, goals, strategies, and
measures (OGSM)
– Must be deployed to its various business units and
functional units so that everyone knows what is
expected and how to achieve it
• IT strategy will set direction for the technologies,
vendors, competencies, people, systems, and
projects
Information Technology for Managers
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website, in whole or in part.
41
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