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Professor N. Venkatraman
Boston University School of Management
SAP Users Group @ Maastricht
April 20, 2007Imagine life withoutÉÉ
(c) Venkatraman, 2007 2Yet.. there are conßicting views on the
role and value of ITÉ
ü Òexpensive.. But necessary evilÓ
ü ÒAm I getting value from IT investments?Ó
ü ÒAre we investing in the right areas?Ó
ü ÒCan IT become my core competence?Ó
ü ÒWhy not outsource and offshore?Ó
ü ÒI see my competitors using IT strategically..Ó
ü ÒI know that IT will become more central in the
futureÉ but I do not know how to extract valueÓ
(c) Venkatraman, 2007 3My Agenda
üAlignment in the 21st century:
Innovation and Implementation
üIT Strategy 2.0
üReframing the Business--IT
Conversation
(c) Venkatraman, 2007 4New Excitement.. circa 2007
ü CIO as the Chief Innovation OfÞcer!
ü I.T contributing to Revenue and Growth
ü From Business Process Reengineering to
Crafting Business Model Innovations
ü Pervasiveness of I.T in products, processes
and services
(c) Venkatraman, 2007 5(c) Venkatraman, 2007 66
© N. Venkatraman, 2006Source: Bill GatesWe see I.T everywhere now..
(c) Venkatraman, 2007 8A Car is a computer on wheels connected
to the network
(c) Venkatraman, 2007 9Software is shaping next generation
business processes..
(c) Venkatraman, 2007 10with new web functionalityÉ
(c) Venkatraman, 2007 11We see convergence and overlap
across industries and markets
(c) Venkatraman, 2007 12Four conversation questions
1.How different will your business landscape
be in the next 3-5 years?
2.WhatÕs the role of Innovation.. especially
business model innovation for your future
success?
3.Is I.T central to business model
innovations?
4.How important is I.T to achieving your
current business profitability?
(c) Venkatraman, 2007 13Alignment 1.0
BusinessBusiness ITIT
StrategyStrategy StrategyStrategy
(c) Venkatraman, 2007 14We have captured value from IT
+ +
People Processes
Technology
OO + IT = EOO
(c) Venkatraman, 2007 1515Alignment 1.0 Mechanisms
ü Business process reengineering (massive scale)
ü Decentralize and centralize (adapt over time)
ü Standardize to reduce inefficiency
ü Outsource and multi-source IT functionality
ü Cross-functional global teams
ü Service level agreements
ü Business--IT partnerships
§ EtcÉ
(c) Venkatraman, 2007 16Alignment 1.0 Scorecard
B
(c) Venkatraman, 2007If we are charitable.. 17Alignment 2.0: The Network Era
Network Era
Client/Server Era
Mainframe Era
(c) Venkatraman, 2007 18We are in an era of global network
Live Connect
Work Create
Consume
Play
(c) Venkatraman, 2007 19And globalization of work and business
processes
(c) Venkatraman, 2007 20InnovationÉ The new focus?
(c) Venkatraman, 2007 21My view on business model innovations
MooreMooreÕÕss
LawLaw
Products
Processes
Services
People
MetcalfMetcalfÕÕss Bandwidth Bandwidth
LawLaw LawLaw
(c) Venkatraman, 2007 22Alignment 2.0:
New Perspective, New Mandate
Drives
BusinessBusiness I.T.I.T.
StrategyStrategy StrategyStrategy
Shapes
(c) Venkatraman, 2007 23Alignment Agenda 2.0
Innovation
StrategicStrategic
FocusFocus
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 24Alignment Agenda 1.0 focused on
operational, execution issues
Innovation
StrategicStrategic
FocusFocus
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 25Alignment Agenda 2.0: Building
Blocks (1)
Innovation
StrategicStrategic
FocusFocus
Cost
Center
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 26Cost Center
Focus Best in class global IT
infrastructure
Business Case Lowest delivered cost
benchmarked against
external referent; not directly
connected to strategy
Organization Detached from business
operations
Sourcing Best-in-class global sourcing
partners and vendors
(c) Venkatraman, 2007 27Alignment Agenda 2.0: Building
Blocks (2)
Innovation
StrategicStrategic
FocusFocus
Profit Cost
Center Center
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 28ProÞt Center
Focus Support current business
operations
Business Case Contributions to customer value
and current profitability levels
Organization Embedded (and partnering) with
business operations
Sourcing Selective use of best-in-class
global sourcing partners and
vendors
(c) Venkatraman, 2007 29IT and Implementation BeneÞts
Data Information Knowledge Action Results
} } } }
Design Expertise Process Execution
Gap Gap Gap Gap
(c) Venkatraman, 2007 30Alignment Agenda 2.0: Building
Blocks (3)
Innovation Growth
Center
StrategicStrategic
FocusFocus
Profit Cost
Center Center
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 31How to think about innovation?
MooreMooreÕÕss
LawLaw
MetcalfMetcalfÕÕss BusinessBusiness
LawLaw ModelModel
InnovationInnovation
BandwidthBandwidth
LawLaw Supporting the growth agenda
(c) Venkatraman, 2007 32Growth Center
Focus Support future growth trajectories
through new business model
innovations
Business Case Contributions of IT to business
model innovations
Organization Embedded within business
operationsÑshared responsibility
Sourcing Selective use of innovation network
partners and vendors
(c) Venkatraman, 2007 33Alignment Agenda 2.0: Building
Blocks (4)
Innovation Growth Investment
Center Center
StrategicStrategic
FocusFocus
Profit Cost
Center Center
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 34Whats your experimentation
equation?
GoogleÕs equation is 70-20-10.
WhatÕs your equation?
(c) Venkatraman, 2007 35Investment Center
Focus Influence future growth trajectories
through selective experimentation
Business Case Allowing for experimentation of
plausible business models
Organization Decoupled from current operations
Sourcing Selective use of innovation network
partners and vendors
(c) Venkatraman, 2007 36The building blocks have different
personalitiesÉ
Innovation Growth Investment
Center Center
StrategicStrategic
FocusFocus
Profit Cost
Center Center
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 37These building blocks are also dynamic
Innovation
StrategicStrategic
FocusFocus
Implementation
Business IT/IS
Leadership ResponsibilityLeadership Responsibility
(c) Venkatraman, 2007 38Wheres Your IT Capital Allocated?
What % for Innovation?
What % for Implementation?
(c) Venkatraman, 2007 39Wheres Your IT Core Competence?
IT Competence for Innovation?
IT Competence for Implementation?
(c) Venkatraman, 2007 40Wheres Your IT Sourcing focused?
IT Sourcing for Innovation?
IT Sourcing for Implementation?
(c) Venkatraman, 2007 41Wheres Your IT Mandate?
IT Mandate for Innovation?
IT Mandate for Implementation?
(c) Venkatraman, 2007 42What about IT Performance Metrics?
IT Performance Metrics for Innovation?
IT Performance Metrics for Implementation?
(c) Venkatraman, 2007 43Theres legacy management problem
ü We say innovation.. But we manage IT
for implementation
ü We say future.. But we manage IT for
today
ü We say shared business-IT responsibility
but we blame IT for the problems
(c) Venkatraman, 2007 44Managing for the future with I.T.
Value creation for
today and
No Business
tomorrow
innovation
without IT

I
T n
e f
o
y c r
g h m
e n
t o a
a l t
r o io
t
g n
S
y
Leadership
(c) Venkatraman, 2007 45Your Challenges
ü The impact of I.T will be more than ever
before
§ Pervasive
§ Fast changing
§ Value potential
ü Management of IT is equally important
§ Multiple roles within enterprises
§ Leadership and strategy linkages
(c) Venkatraman, 2007 46Putting these ideas into action
ü Clarity of Mandate for IT through
management workshops
ü Recognition of the four building blocks
for business innovation and
implementation
ü Reinforce joint business-IT responsibility
ü Develop an IT Strategy 2.0 scorecard
(c) Venkatraman, 2007 47Are you ready to take on the
expanded IT mandate to win??
Thank You Very Much