Manual A framework for the strategic management of information technology

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Information Technology Strategic Planning

The model consists of two complementary views: top-down which is done by top management to identify the business objectives and environment and bottom-up which is done by operational managers to analyze the major processes. Both views are targeted to specify the required IT to fulfill the business objectives. They adapted the Strategic Options Development and Analysis SODA model to perform the top-down view and business process analysis and modeling to perform the bottom-up tasks.

Table 1 list IT strategy basic development methods that have been used to form the models discussed. Azyabi [ 7 ] conducted a study of 34 SMEs in the Victorian State of Australia that used IT strategic development methods, perceived benefits, and encountered barriers, as pointed out in the previous section and motivated to conduct this study in Brunei, and found that only three methods are found to have indirect influence on IT strategy development: critical success factors, transaction cost, and balanced scorecard.

The major benefits include achievement of organizational efficiency, facilitating alignment between business and IT strategies, and improving organizational performance. The most significant barriers to develop IT strategy are financial and human resources limitation and lack of time and focus on day-to-day operations.

The results further reveal that small-sized enterprises are less familiar with critical success factors and transaction cost than the medium-sized enterprises. However, there is no difference among manufacturing and service organizations in facilitating alignment between business and IT and obtaining competitive advantages. Small-sized enterprises experience bottleneck and barriers through lack of relevant IT experience and lack of time and focus on day-to-day operation than medium-sized organizations.

Azyabi [ 7 ] research has some weaknesses in the form of small sample size and generalizability; however, it is unique in the Asia-Pacific region and has further provided a source of motivation to conduct a similar study within the context of Southeast Asia. In fact from the review of the literature, it was found that researchers have conducted the studies from various dimensions, and no consistent pattern could therefore be applied leading toward a big research gap in the literature.

As mentioned, most of these studies were conducted in the Western worlds, and the findings might or might not be applicable to this part of the globe.

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Up to our knowledge, no such study has focused on the multidimensional aspect of the strategic IT development process, benefits of using, and barriers of not using the strategic development process within Southeast Asian perspective. There is another gap that exists within Southeast Asian perspective, and the present study could fill in the research gap. Although the business environment and business volume among Bruneian SMEs are very different than their Australian counterparts, however by conducting this study, we would be able to find empirical evidence as how one of the Southeast Asian economies and strategic business development approach is different.

The findings may further be utilized to generalize among other Southeast Asian context. The purpose of this study was purely descriptive in nature. Creswell [ 64 ] suggested that descriptive research is to collect data about an existing situation or issue. Yin [ 65 ] suggested that survey is an appropriate method for descriptive research.

In the light of the above cited discussion, a questionnaire adapted after an Australian study [ 7 ] was used for this study. The questionnaire consists of two parts, starting with Section A that collects information on the demographical data about the respondents, organizations, and IT functions. Section B collects information about the IT strategy development methods. Section B is further divided into four parts: collecting information about awareness framework, opportunity frameworks, positioning frameworks, and other frameworks.

There are several types of validity measures such as face validity and construct validity. Campbell and Fiske [ 66 ] propose two types of validity: convergent and discriminating validity. Convergent validity is measured by average variance extracted for each construct during the reliability analysis that should be 0. In general results show that both validity and reliability requirements are met.

A questionnaire was sent to SMEs according to a random sampling plan. The SMEs were selected from a key business directory of Brunei www. Out of these organizations, 70 organizations responded, and responses from 67 organizations were retained as they were filled by the top management; three were dropped because of the fact that it was not filled as per instructions. The summary of the responses are given in Table 3.

This section discusses the survey findings about these aspects and a summary is shown in Table 4. Others are mostly from service industry Question 3 asked the respondents if they have a group of people dedicated to the IT function. The survey questioned the participants about their level of use and familiarity with IT strategy basic development methods. They were asked to respond to this question by encircling a number on a five-point scale where 1 means fully used, 2 means partly used, 3 means familiar and has indirect influence, 4 means familiar but not used, and 5 means unfamiliar.

A summary of how the surveyed SMEs are using and are familiar with the IT strategy basic development methods is shown in Table 6. From the table data, it is evident that none of the IT strategy basic development methods are fully or partially used by the participating SMEs. Only three IT strategy basic development methods have indirect influence on SMEs: critical success factors mean score: 3. SMEs are generally familiar with many IT strategy basic methods e. The mean of these development methods is above 4. In order to find any difference between basic strategy development methods and organization size, statistical t-test was conducted and the results are presented in Table 7.

The results further indicate that none of the IT strategy basic development method is used by the Bruneian SMEs either fully or partially even though the SMEs are familiar with these methods. A comparison was also made with the Australian study and results reveal that two of the basic strategy development methods such as critical success method and transaction cost are significant rather than the balanced scorecard. The responding SMEs were divided into two main industry sectors: manufacturing and non-manufacturing. The findings indicate that none of the IT strategy basic development methods are used by the Bruneian SMEs either fully or partially, even though they are familiar with most of these methods.

One qualitative question asked respondents to add any further comments about IT strategy development in SMEs. Some of them mentioned that these methods are well recognized in academic field but are not known in the SME context under these terms and names. Furthermore, some respondents reported that these methods could be more applicable for large organizations rather than SMEs. These reasons may help explain to some extent the absence of the use of these methods among the surveyed SMEs.

The results of student t-test in Table 7 indicate that small organizations with less than 50 employees are less influenced by and are less familiar with the transaction cost and critical success factors than medium-sized organizations with more than 50 employees. On the other hand, no such significant difference can be observed between these two groups of SMEs toward balanced scorecard. In addition, Bruneian SMEs are not struggling for their survival solely on IT [ 69 ] and are less influenced by the basic strategy development methods compared to Australian counterpart.

However, no such difference is significant between Bruneian and Australian SMEs on the basis of industry sector. This pioneering study conducted among Bruneian SMEs has met both of its objectives.

Information Technology Strategy Frameworks: Building for the Future

As mentioned in the introduction, the main objectives of this study were to investigate the extent to which Bruneian SMEs use or are familiar with the basic IT strategy basic development methods. Regarding the first objective on the use of the IT strategy development methods, it was found that none of the provided basic IT strategy development methods is used by these surveyed SMEs either fully or partially; only three methods have indirect influence on IT strategy development in these SMEs: critical success factors, transaction cost, and balanced scorecard.

Moreover, no statistical difference was found with the familiarization with the basic IT strategy development methods on the basis of organization size and industry sector that conclude our second objective. The study further found some similarities in the use of basic IT strategy development methods with Australian SMEs on the basis of industry sector; however, on the basis of organization size, the results are in contrast, and it is because of the more developed business practices of Australian SMEs.

The study findings further provide insight in building up an empirical foundation for understanding the organizational use of IT strategy basic methods, among Bruneian SMEs within the Southeast Asian context. The basic question that needs an immediate attention is from the policy planners that are to find out the reasons why these SMEs are not utilizing the basic IT strategy development methods especially when they are aware of the benefits of the strategic process. The plausible reason is that Bruneian business environments do not demand the competitive advantage.

This was also supported by one of the studies on e-commerce adoption among Bruneian SMEs and had further concluded that Bruneian businesses need to develop a business culture where competitive advantage could be achieved through e-commerce adoption [ 19 ]. We believe that there are some success stories among small businesses, and the planning agencies could further organize a forum where other small businesses can learn from the best practices.

We also believe that until or unless the stated barriers were not curtailed or reduced, these SMEs would not be gaining. Once the owners are educated and started developing SISP, these SMEs would increase competitiveness, reduce cost, and share knowledge with the members and stakeholders; the overall business processes would finally be improved to get the business, otherwise outside competitive forces will reshape the local business SMEs.

Like every research this study is not free from its weaknesses and limitations. Properly addressing these limitations in the forthcoming researches could improve the findings. Firstly, the small sample size has been a major impediment especially generalizing the results across the region. Secondly, the small contribution of the manufacturing sector among these surveyed SMEs because of the absence of very large share of this sector in Bruneian business has made the sample size bias in nature which is apparently beyond the control of the researchers. Thirdly, the study needs to include barriers of not doing the SISP to highlight the various reasons that need to be addressed by the relevant authorities Finally, most of the items in the questionnaire are self-reported and would further induce response bias, and we did not do any precautions to address this issue.

So caution should be used is generalizing the results.

What is the Balanced Scorecard?

We therefore recommend that future studies would address this issue accordingly. Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution 3. Help us write another book on this subject and reach those readers. Login to your personal dashboard for more detailed statistics on your publications. We are IntechOpen, the world's leading publisher of Open Access books.

Built by scientists, for scientists. Our readership spans scientists, professors, researchers, librarians, and students, as well as business professionals. Downloaded: Abstract The chapter investigates the 85 small and medium organizations in Brunei Darussalam within the context of information technology IT strategic planning process. Keywords IT strategy strategic planning methods small and medium enterprises Brunei Darussalam. Introduction The adoption of Information Technology among business organizations have entered the maturity stage especially with the advent of Web-based developments, new opportunities have been brought into the organizational functions and business processes that has enabled them to meet the market demands and to sustain their capacity building.

On these rationales, this pioneering study was conducted to investigate the main strategic issues of Bruneian SMEs with two basic objectives: To find out the extent to which the SMEs are using or familiar with IT strategy development methods To investigate the difference in the use of basic strategy development method on the basis of organization size small or medium and industry sector manufacturing and non-manufacturing. Review of literature Literature is full of studies that has not only highlighted the various IT strategies that are applied and used among SMEs [ 25 , 31 , 32 , 39 , 40 ] but also included studies that highlighted the benefits of having IT strategic methods [ 7 , 25 ] and studies focusing on the barriers to IT strategy development [ 7 , 51 ].

Table 1. IT strategy basic development methods. Methodology 3. Table 2. Reliability and validity. Table 3. Profile of respondents. Table 4. Profile of organizations. Table 5. Profile of IT function. Table 6. Results of IT strategy development basic methods. Table 7. T-test results of the use of the IT strategy basic methods based on organization size.

Table 8. T-test results of the use of the IT strategy basic methods based on industry sector. Discussion The findings indicate that none of the IT strategy basic development methods are used by the Bruneian SMEs either fully or partially, even though they are familiar with most of these methods. Download chapter PDF. More Print chapter. How to cite and reference Link to this chapter Copy to clipboard.

Cite this chapter Copy to clipboard Afzaal H. Seyal March 25th Under the pressure of long-term resource constraints, planners learn how to set up a circulatory flow of capital and other resources among business units. As practiced by Phase II companies, however, portfolio analysis tends to be static and focused on current capabilities, rather than on the search for options. Moreover, it is deterministic—i. And Phase II companies typically regard portfolio positioning as the end product of strategic planning, rather than as a starting point.

Phase II systems also do a good job of analyzing long-term trends and setting objectives for example, productivity improvement or better capital utilization. But instead of bringing key business issues to the surface, they often bury them under masses of data. Moreover, Phase II systems can motivate managers in the wrong direction; both the incentive compensation program and informal rewards and values are usually focused on short- or medium-term operating performance at the expense of long-term goals.

In an environment of rapid change, events can render market forecasts obsolete almost overnight.

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Having repeatedly experienced such frustrations, planners begin to lose their faith in forecasting and instead try to understand the basic marketplace phenomena driving change. The result is often a new grasp of the key determinants of business success and a new level of planning effectiveness, Phase III. In this phase, resource allocation is both dynamic and creative.

A Japanese conglomerate with an underutilized steel-fabricating capacity in its shipyard and a faltering high-rise concrete smokestack business combined them into a successful pollution control venture.

The team members discovered that design improvements had given the competitor such a commanding advantage in production cost that there was no point in trying to compete on price. Accordingly, the sales force was trained to sell life-cycle cost advantages. Another strategy, derived from an external perspective, was devised by a U. When sales in one of its major product lines declined swiftly following the introduction of a new, cheaper competitive product, it decided to find out the reason.

Through field interviewing with customers, it discovered that the sales slide was nearly over, something competitors had not realized. Since sales of the product had dropped off to a few core markets where no cost-effective alternative was available, it decided to put more support behind this product line, just as the competition was closing its plants. The manufacturer trained the sales force to service those distributors who continued to carry the line and revised prices to pick up competitive distribution through master distributor arrangements.

It even resisted the move of the trade association to reduce government-mandated safety requirements for handling the newer products. A distinguishing characteristic of Phase III planning in diversified companies is the formal grouping of related businesses into strategic business units SBUs or organizational entities large and homogeneous enough to exercise effective control over most factors affecting their businesses. The SBU concept recognizes two distinct strategic levels: corporate decisions that affect the shape and direction of the enterprise as a whole, and business-unit decisions that affect only the individual SBU operating in its own environment.

Strategic planning is thus packaged in pieces relevant to individual decision makers, and strategy development is linked to strategy implementation as the explicit responsibility of operating management. There are limitations to the SBU concept. In other situations, strategy may dictate a concerted thrust by several business units to meet the needs of a shared customer group, such as selling to the automotive industry or building a corporate position in Brazil. In still other cases, the combined purchasing power of several SBUs or the freedom to transfer technologies from one business to another can be more valuable than the opportunity to make profit-oriented decisions in discrete business units.

For example:. The most significant way in which Phase III differs from Phase II is that corporate planners are expected to offer a number of alternatives to top management.

Strategic information system

This change is quite pervasive; in fact, one simple way of determining whether a company has advanced to Phase III is to ask managers whether their boss would regard presenting strategy alternatives as a sign of indecisiveness. This knowledge unsettles top management and pushes it to a heavier involvement in the planning process, Phase IV.

Phase IV joins strategic planning and management in a single process. Only a few companies that we studied are clearly managed strategically, and all of them are multinational, diversified manufacturing corporations. However, it is not so much planning technique that sets these organizations apart, but rather the thoroughness with which management links strategic planning to operational decision making. This is largely accomplished by three mechanisms:. A planning framework that cuts across organizational boundaries and facilitates strategic decision making about customer groups and resources.

As noted previously, many Phase III companies rely on the SBU concept to provide a planning framework—often with disappointing results. However, there are frequently more levels at which strategically important decisions must be made than the two implicit in SBU theory. Business-unit planning —The bulk of the planning effort in most diversified make-and-sell companies is done at a level where largely self-contained businesses control their own market position and cost structure.

These individual business-unit plans become the building blocks of the corporate strategic plan. Shared resource planning —To achieve economies of scale or to avoid the problem of sub-critical mass e. In some cases, the assignment of resource priorities to different business units or the development of a plan to manage a corporate resource as a whole is strategically important. In resource-based or process-oriented industries, strategies for shared resource units often determine or constrain business-unit strategy. Shared concern planning —In some large companies, a distinct level of planning responsibility is required to devise strategies that meet the unique needs of certain industry or geographic customer groups or to plan for technologies e.

Corporate-level planning —Identifying worldwide technical and market trends not picked up by business-unit planners, setting corporate objectives, and marshaling the financial and human resources to meet those objectives are finally the responsibility of corporate headquarters.

Table of Contents

Even when additional planning levels are required, these companies need not insert another level of organizational hierarchy in order to plan shared resources or customer sector problems. Experience suggests, however, that it is important to recognize such issues where they exist and to assign explicit planning responsibility to an appropriate individual or group in the organization.

Otherwise, critical business decisions can slip between the cracks, and the corporation as a whole may find itself unable to capitalize on its strategic opportunities. Because the selection of a framework for planning will tend to influence the range of alternatives proposed, few strategic planning choices are more important. The definition of a strategic planning framework is, therefore, a pivotal responsibility of top management, supported by the corporate planning staff.

While planning as comprehensively and thoroughly as possible, Phase IV companies also try to keep their planning process flexible and creative. A principal weakness of Phase II and III strategic planning processes is their inescapable entanglement in the formal corporate calendar. Strategic planning easily degenerates into a mind-numbing bureaucratic exercise, punctuated by ritualistic formal planning meetings that neither inform top management nor help business managers to get their jobs done.

To avoid such problems, one European conglomerate has ordained that each of its SBUs initially study its business thoroughly, lay out a detailed strategy, and then replan as necessary. It has found that well-managed businesses in relatively stable industries can often exist quite comfortably with routine monitoring against strategic goals every quarter and an intensive strategic review every three to five years.

The time saved from detailed annual planning sessions for every business is devoted to businesses in fast-changing environments or those not performing according to the corporate blueprint. Although the leadership styles and organizational climates of companies that can be called strategically managed vary considerably, and in even one company a great deal of diversity can be found, four common themes emerge from interviews with personnel at all levels in strategically managed companies:.

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  • A shared belief that the enterprise can largely create its own future, rather than be buffeted into a predetermined corner by the winds of environmental change. Teamwork on task force projects is the rule rather than the exception in strategically managed companies. Instead of fearing these uniquely dangerous expeditions beyond the security of the organizational thrust, managers learn to live with the ambiguity that teams create in return for the excitement and variety of new challenges.

    The resulting continual reorganization can appear bizarre from outside the organization. Entrepreneurial drive among managers and technical personnel at all levels is a valued form of behavior in strategically managed companies. Six levels down from top management, an applications engineer in the specialty metals division was faced with a notice of a substantial cost overrun on an expensive piece of test equipment. As a result, the engineer did overrun the project budget, but the test equipment was available when needed.