Answer each question

IT for Management: On-Demand Strategies for Performance, Growth, and Sustainability
Twelfth Edition
Turban, Pollard, Wood
Chapter 12
IT Strategy, Sourcing, and Strategic Technology Trends
Learning Objectives (1 of 4)
Copyright ©2021 John Wiley & Sons, Inc.
IT Strategy and Competitive Advantage
IT Sourcing Strategies and IT Service Management
Strategic Technology Trends
IT Strategic Planning, Process, and Tools
IT Strategy
IT Strategy
A plan of action to create an organization’s IT capabilities for maximum and sustainable value in the organization, goals, and objectives and specifies the necessary financial requirements, budgets, and resources.
Business strategy
sets the overall direction of a company
defines how a business will achieve its mission, vision, and organizational goals
Copyright ©2021 John Wiley & Sons, Inc.
Aligning IT Strategy and Business Strategy
Business–IT alignment refers to applying IT in an appropriate and timely way that is consistent with business strategies, goals, and needs.
The first step in achieving business–IT alignment is to understand business objectives and how IT capabilities can best support business requirements.
Business–IT alignment can be improved by focusing on the following five activities:
Commitment to IT planning by senior management
CIO is a member of senior management
Understanding IT and corporate planning
Shared culture and effective communication
Multilevel links
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
The Open Group Architecture Framework (TOGAF)
A useful IT strategy tool that is used to align IT goals with overall business goals to improve business efficiency.
Used by more than 60% of Fortune 500 companies
TOGAF provides a systematic approach to designing, planning, implementing, and governing the enterprise IT architecture.
TOGAF also helps organizations to plan their cross-departmental IT efforts.
TOGAF is free for organizations to use internally.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Resistance to Business–IT alignment
87% of business leaders believe that IT is critical to their companies’ strategic success, but not all of them work with IT to achieve that success.
Less than 50% of business leaders reported that the IT function was very involved in the strategic planning process.
Copyright ©2021 John Wiley & Sons, Inc.
Competitive advantage
An edge that enables a company to outperform its average competitor in ways that matter to its customers.
To create a competitive advantage, an organization must evaluate four major factors with the company and the environment in which it operates:
Target market
Copyright ©2021 John Wiley & Sons, Inc.
Competitive Advantage Tools

Copyright ©2021 John Wiley & Sons, Inc.
Porter’s Competitive Forces Model
Porter’s Value Chain Model
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Porter’s Value Chain Model
Primary activities
Inbound logistics
Outbound logistics
Sales and marketing
Support activities
Accounting, legal and finance
Product and technology development
Identifies where the greatest value exists in an organization and how that value can be increased.
Organizational activities: Primary and Support
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
IT Agility, Responsiveness, and Flexibility
Copyright ©2021 John Wiley & Sons, Inc.
Agility means being able to respond quickly.
Responsiveness means that IT capacity can be easily scaled up or down as needed, which essentially requires cloud computing.
Flexibility means having the ability to quickly integrate new business functions or to easily reconfigure software or apps.
Competing Globally
Globalization is the free trade of goods and services across national borders and cultures as the interdependence of nation’s economies grows driven by people, technology, information, and cash flow.
Copyright ©2021 John Wiley & Sons, Inc.
When Countries Compete
Comparative advantage is a country’s ability to produce goods or services more efficiently and inexpensively than another.
Opportunity cost is the benefit that is missed or given up when an individual, business, or country chooses one alternative over another.
Goods-based comparative advantage A situation in which a country can produce goods for a lower opportunity cost than other countries.
Copyright ©2021 John Wiley & Sons, Inc.
IT-Enabled Service-Based Comparative Advantage
Information technology has made the concept of global competition more relevant than ever for governments.
Service-based comparative advantage A country’s capacity to produce and sell services at a lower opportunity cost than its trading partners.
Copyright ©2021 John Wiley & Sons, Inc.
IT Strategy and Competitive Advantage: Questions
What is business–IT alignment?
Why would an IT department want to achieve business–IT alignment?
What is the difference between the goals of a business strategy and an IT strategy?
Name the five activities that organizations need engage in to improve business–IT alignment.
How does business–IT alignment help companies gain a competitive advantage in the marketplace?
What are the seven skills that a CIO needs to help improve business–IT alignment?
Name the five competitive forces in Porter’s five forces model.
In what ways can ICT help a country achieve a comparative advantage?
Copyright ©2021 John Wiley & Sons, Inc.
Learning Objectives (2 of 4)
Copyright ©2021 John Wiley & Sons, Inc.
IT Strategy and Competitive Advantage
IT Sourcing Strategies and IT Service Management
Strategic Technology Trends
IT Strategic Planning, Process, and Tools
IT Strategic Planning, Process, and Tools
IT strategic planning is the process of defining an organization’s strategy or direction in adopting, implementing, using, and disposing of its IT assets.
When an organization is developing an IT strategy, it should ask questions such as the following:
What is the long-term direction of the business?
What is the overall plan for deploying resources?
What trade-offs are necessary? What resources will need to be shared?
What is the company’s position compared to that of its competitors?
How does a company achieve competitive advantage over rivals in order to achieve maximize profitability?
Copyright ©2021 John Wiley & Sons, Inc.
The Five Components of an IT Strategy
Applications strategy
Plan the direction and principles concerning the development, operation, and maintenance of IT applications throughout the enterprise.
Integration strategy
Consider how to connect all IT applications in a seamless way.
Infrastructure strategy
Develop and maintain the IT infrastructure including its safety and security.
Services strategy
Plan for, provide, and manage IT services when, where, and at what level the business and its different functional areas require.
Sourcing strategy
Plan how to acquire IT infrastructure, software, and services either internally or with one or more external suppliers.
Copyright ©2021 John Wiley & Sons, Inc.
Identifying Value Drivers
Value driver enhances the value of a product or service to consumers, creating value for the company. Advanced IT, reliability, and brand reputation are examples.
Copyright ©2021 John Wiley & Sons, Inc.
Developing an IT Strategic Plan
IT strategic plan is a formal document that details how the IT department will provide, support, and ensure ongoing business operations.
The four objectives of the IT strategic plan are to:
Improve management’s understanding of IT opportunities and limitations
Assess current performance
Identify capacity and human resource requirements
Clarify the level of investment required
Copyright ©2021 John Wiley & Sons, Inc.
IT strategic plan components
Long-range IT plan: (the strategic IT plan)—aligns with strategic-level business planning.
Medium-term IT plan: aligns with managerial or administrative level business planning.
IT tactical plan: aligns with operational-level business planning.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Strategic Planning Tools
Copyright ©2021 John Wiley & Sons, Inc.
The Balanced Scorecard
Balanced scorecard is a strategic management methodology for evaluating performance based on both financial and nonfinancial metrics.
The BSC is used to translate strategic plans and mission statements into a set of business objectives and performance metrics that can be quantified and measured to evaluate how well objectives are being achieved.
Business objectives are the goals of an organization and the building blocks of a strategy
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Steps in the BSC Methodology
Establish the organization’s vision for the future.
Identify BSC performance metrics that link vision and strategy to results.
Select meaningful strategic objectives.
Measure each objective.
Set target(s) for each objective.
Determine the action(s) and initiative(s) needed to achieve each target.
Implement necessary tracking, analytics, communication, and reporting systems, including sensors, data visualization, mashups, and dashboards via social and mobile channels.
Collect, analyze, and compare performance data with targets.
Revise actions to improve performance gaps and take advantage of new opportunities.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Process Deliverables
The deliverables from the IT strategic planning process should include the following:
An evaluation of the strategic goals and directions of the organization and how IT is aligned
A new or revised IT vision and assessment of the state of the IT department
A statement of the strategies, objectives, and policies for the IT department
The overall direction, requirements, and sourcing of resources
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
IT Strategic Planning, Process, and Tools: Questions
What are the three levels of an IT strategic plan?
What is the purpose of the IT strategic planning process?
Why would an organization conduct a SWOT analysis?
What is the purpose of using the BSC in the IT strategic planning process?
How does the BSC approach differ from previous measurement approaches?
What are the four BSC perspectives?
What are the four deliverables of the IT strategic planning process?
What is the purpose of an IT steering committee?
What five tasks do the steering committee perform?
What are the three general types of business value drivers?
Copyright ©2021 John Wiley & Sons, Inc.
Learning Objectives (3 of 4)
Copyright ©2021 John Wiley & Sons, Inc.
IT Strategy and Competitive Advantage
IT Sourcing Strategies and IT Service Management
Strategic Technology Trends
IT Strategic Planning, Process, and Tools
IT sourcing
The strategy used to acquire and maintain IT systems and IT services.
Two broad categories:
In-house systems development
Offshoring Systems development and/or support are provided by a supplier in a country that is different from the country of the sourcing organization.
Cloud services
Copyright ©2021 John Wiley & Sons, Inc.
IT Onshoring
The practice of acquiring and maintaining IT systems and services from external third-party providers located in the same country as the company sourcing the systems and services.
The types of work that are ideal for onshoring include the following:
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 ©2021 John Wiley & Sons, Inc.
Cloud Services
Cloud services—also referred to as edge services—IT services, from infrastructure to apps (Xaas), are delivered by a third-party vendor over the cloud.
Cloud Strategy: A complex strategy to source scale and deliver IT capabilities on demand without physical location, labor, or capital restrictions in addition to on-premise systems.
Tactical adoption approach: Deploying cloud services incrementally results in apps and services that are patched together to create end-to-end business processes—this is short-sighted.
Cloud adoption needs to occur according to a coordinated strategy.
Copyright ©2021 John Wiley & Sons, Inc.
Cloud Strategy Challenges
The top challenges about migrating to the cloud revolved around cybersecurity, privacy, data availability, and the accessibility of the service.
The newer challenges relate to cloud strategy, including integration of cloud with on-premises resources, extensibility, and reliability of the cloud service.
Extensibility is the ability to get data into and out of the cloud service.
Copyright ©2021 John Wiley & Sons, Inc.
Outsourcing lessons
Copyright ©2021 John Wiley & Sons, Inc.
Manage change
Assess organizational readiness
Anticipate risks and formulate a plan for mitigating them
Build project management infrastructure
Create a governance mechanism
Properly define how success will be measured, both qualitatively and quantitatively.
IT Service Management
IT services is the application of business and technical expertise to enable organizations in creating, managing, optimizing, and accessing information and business processes.
IT service management (ITSM) is a strategy by which IT systems are offered under contract to customers and performance is managed as a service to achieve greater business–IT alignment and smooth business processes and operations.
Service relationship is the degree of cooperation between a service provider and service customers, vendors/suppliers, and regulatory agencies including service provision, service consumption, and service relationship management.
Copyright ©2021 John Wiley & Sons, Inc.
Levels and Types of IT Services
IT services can be sourced in three different ways:
Internal service provider delivers IT services to a single business unit in its own organization.
Shared service provider provides IT services to different business units in its own organization.
External service provider delivers IT services to customers outside the organization.
ITIL®4: IT Infrastructure Library (ITIL) serves as a roadmap for process improvement to help IT professionals build a foundation for ongoing service excellence while meeting budget and regulatory requirements.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Organizations and people: Organizational culture, systems of authority, roles, skills and competencies needed to plan, manage, and deliver IT services.
Information and technology: Information and technology needed to deliver IT services as well as that needed to manage the services.
Partners and suppliers: They contribute in various ways to the services that are delivered.
Value streams and processes: All the activities, workflows, controls, and procedures necessary to provide high-quality on-time services to create value for customers and users.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Service Value Chain Key Activities
Copyright ©2021 John Wiley & Sons, Inc.
Plan Ensure a shared understanding of what the organization wants and how it will be done by creating plans, portfolios, architectures, policies, etc.
Improve Create improvements initiatives to ensure continuous improvement of all products, services, and practices across all four ITSM dimensions.
Engage Interact with stakeholders and understand their needs.
Design and transition Create new and changes services and ensure stakeholders expectations around quality, cost, and time to market are met.
Obtain/build Create service components, ensure they are available when and where needed, and ensure they meet agreed-upon specifications.
Deliver and support Ensure services meet stakeholder delivery and support expectations.
Benefits of Using a Structured ITSM Strategy
Lower IT operation costs
Higher returns on IT investments
Minimal service outages
Ability to establish, well-defined, repeatable, and manageable IT processes
Efficient analysis of IT problems to reduce repeat incidents
Improved efficiency of IT help desk teams
Clear expectations of service levels and service availability
Risk-free implementation of IT changes
Better transparency into IT processes and services
Copyright ©2021 John Wiley & Sons, Inc.
The Outsourcing Life Cycle
Copyright ©2021 John Wiley & Sons, Inc.
Phase 1: Assess opportunities and develop your overarching strategy and process- or geography-specific business cases for outsourcing.
Phase 2: Prepare and issue the request for proposal (RFP), evaluate the proposals that are submitted, and select a service provider.
Phase 3: Develop and negotiate the outsourcing contract that will serve as a framework for your relationship with your new business partner.
Phase 4: Plan and execute the service transition.
Phase 5: Ongoing management of the SLAs and managing the service provider relationship.
Copyright ©2021 John Wiley & Sons, Inc.
Request for Proposal (RFP)
The requirements defined in the RFP document should include:
Service scope
Technical architecture, vision, and strategic objectives
Service delivery model, service management processes
Governance model and forums
Commercial objectives
Cost treatment and allocation
Pricing model
How assets will be treated
Legal terms
Employee transfer
Risk and compliance
Copyright ©2021 John Wiley & Sons, Inc.
Ask for “Proof of Concept” or a Trial Run
Proof of concept (POC) is a vendor demonstration of a product to see how or how well it works.
Trial run is when a vendor product or service is tested in a pilot study or limited area of the business to confirm its usefulness to the company.
Copyright ©2021 John Wiley & Sons, Inc.
Finding, Selecting and Managing Vendors
Two criteria to assess first are:
Experience with very similar systems of similar size, scope, and requirements.
Financial and qualified personnel stability.
The most important factor in managing a vendor is communication.
Vendor management organization (VMO) is a business unit with an organization that is responsible for evaluating suppliers of goods and services and overseeing regular interaction and long-term relationships with vendors.
Copyright ©2021 John Wiley & Sons, Inc.
Outsourcing Benefits
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Outsourcing Risks and Hidden Costs
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Opportunistic repricing
Breach of contract by vendor
Inability of vendor to deliver as promised
Vendor lock-in
Loss of control over data
Lower employee morale
Relationship setup costs
IT Sourcing Strategies and IT Service Management: Questions
What contributes to the complexity of a cloud strategy?
How does tactical adoption of cloud services differ from a coordinated cloud strategy?
What is onshore sourcing?
What are the major benefits and risks of outsourcing?
What needs to be done before signing a contract with an IT vendor?
What is the purpose of an RFP?
What is ITSM?
What are the four dimensions of ITIL®4?
What is the difference between an outsourcing contract and an SLA?
What is the purpose of a VMO?
Copyright ©2021 John Wiley & Sons, Inc.
Learning Objectives (4 of 4)
Copyright ©2021 John Wiley & Sons, Inc.
IT Strategy and Competitive Advantage
IT Sourcing Strategies and IT Service Management
Strategic Technology Trends
IT Strategic Planning, Process, and Tools
Strategic Technology Trends
Strategic technology has the potential to make significant impacts on an organization’s long-term plans, programs, and initiatives.
The first step to considering and adopting new technologies is to find them.
Approaches to finding trending strategic technologies include exploring the research and development activities of major research centers and IT consulting firms and attending technology industry conferences, such as COMDEX, IBM Inter-Connect, Google Next, Adobe Summit, and HIMSS.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Copyright ©2021 John Wiley & Sons, Inc.
Strategic Technology Trends: Questions
What are three ways that a company can identify and keep up with emerging strategic technologies?
Why would a company want to invest in strategic technologies?
What does an organization need to put in place to identify suitable strategic technologies?
What are the five steps in the technology scanning process?
Copyright ©2021 John Wiley & Sons, Inc.
Copyright © 2021 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.
Copyright ©2021 John Wiley & Sons, Inc.

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