1、 IT Strategy Finance Directors I T S t r a t e g y F i n a n c e D i r e c t o2 Introduction?Why do we need a Group IT Strategy?What will a Group IT Strategy deliver?How will we develop it?How much will it cost?What value will we get from it?What happens next?2 I n t r o d u c t i o n?Wh y d o w e n
2、 e e d3 Pre-1960 Back Office/Cost Control Front Office/Value Creation“DP”“IS/IT”“IT/IM”?1999 Mission Criticality Punch card computing(Finance/HR)Mainframe midrange computing(Manufacturing/Supply)Client/server computing(Service)Internet/network computing(Consumer)Ubiquitous computing(Home)IT is now a
3、t the heart of the CEOs agenda?Year 2000 wake-up call?Large scale computing is now mission critical?Pervasive IT now gnawing at the heart of the executive agenda 3 P r e-1 9 6 0 B a c k O f f i c e/C o s t C4 1997 A gap existed in Business/IT alignment before Y2K?Business/IT alignment the CIOs highe
4、st priority?Business and IT didnt often connect?Business frustration with IT Requirements/Delivery 4 1 9 9 7 A g a p e x i s t e d i n B u s i n e5?IT focus&finances deflected to compliance?Make-do-and-mend delivers zero business value?Increasing gap between IT and business alignment 1997 Requiremen
5、ts/Delivery 2000 Y2K has made the gap wider 5?I T f o c u s&f i n a n c e s d e f l e c t6?IT focus&finances deflected to compliance?Make-do-and-mend delivers zero business value?Increasing gap between IT and business alignment?How to ensure that IT is delivering business value The challenge looking
6、 forward 1997 Requirements/Delivery 2000 2002 Convergence?or Business as usual?6?I T f o c u s&f i n a n c e s d e f l e c t7 Implications for South African Breweries Listed on LSE XXXXXXXXX is on a journey from national brewer to major global player.the challenge is in defining the route Top 5 Brew
7、ery 1993 Dreher 1994 China 1996 Ursus 1999 Pilsner Urquell 1999 Listed LSE Integrated Global Beverage Business 7 I mp l i c a t i o n s f o r S o u t h A f r i c8?Globalisation?Growth through Acquisition?Customer Trends?E-Business?Competitive environment PLUS?Technology development leading to?Long-t
8、erm Shareholder Value Buyers Suppliers Competitors Substitutes New Entrants You There are 7 key areas where IT can address the“value gap”in XXXXXXXXX 8?G l o b a l i s a t i o n?G r o w t h t h r o9 Efficiency?Speed of delivery to global customers(35%)Competition?Response to competitors global initi
9、atives(34%)Customers?Meeting demands of foreign customers(46%)?Supporting current customers international operations(34%)Labour Markets?Access to skilled labour(22%)?Access to lower cost labour(8%)Regulations?Avoiding domestic regulations(17%)Drivers of Globalisation Of the many reasons for globalis
10、ation:customers,competitors&efficiency are likely to be highest on XXXXXXXXXs agenda 9 E f f i c i e n c y?S p e e d o f d e l i v e r10 The positive impact of globalization on stock price:Food Manufacturers 100 150 200 250 1991 1992 1993 1994 1995 1996 1997 Stock Price Index Indices of the 8 most g
11、lobal and 8 least global:Food Manufactures industry Least Global Most global FT/S&P World In some industries,there are markets for both more global and least global,but more global players still perform best Source:Mason,P and Moore,K.The impact of globalization on company performance:an analysis of
12、 the Auto-Components,Chemicals,Pharmaceuticals&Food Industries.Templeton/Citibank study,.Global companies are more successful 1 0 T h e p o s i t i v e i mp a c t o f g l o11 Globalisation involves complex and sometimes seemingly contradictory challenges:Visibility Competing with other global compan
13、ies.Trying to maintain global control.Mindset Instilling a global organization culture.Promoting technical skills required for globalization.Capability Trying to be globally efficient Centralizing certain value chain activities.Standardisation of product/service.Utilising personnel on a world-wide b
14、asis .Leveraging opportunities in new markets.Developing people to consider global issues.while maintaining a partnership to share certain resources .while containing new costs/risks.while allowing for the subsidiary contribution .while ensuring that the local relationships are not ignored .while be
15、ing aware of national cultures .while ensuring that soft cultural sensitivity skills are developed.while being locally responsive.while decentralizing others .while reflecting unique socio-cultural issues.while considering the limitations of national regulations Challenges of Globalisation 1 1 G l o
16、 b a l i s a t i o n i n v o l v e s c o mp12 Globalisation:IT implications Multi-local Global Information Applications Infrastructure Organisation Governance?Locally held,incompatible?Diverse range of transaction processing systems?Managed at a country level?All roles exist in all business units?Lo
17、cal autonomy funded by Business Unit profitability?Consistent data standards at appropriate levels?Some knowledge-sharing,centres of excellence,business templates?Some regional/global systems enabling regional/global processes?Standards based infrastructure designed globally,implemented&supported lo
18、cally?Some global/regional teams,more virtual teams,knowledge-sharing networks?Some global/regional funding/decision-making depending on where benefits realised 1 2 G l o b a l i s a t i o n :I T i mp l i c a t13 Growth through Acquisition Time The Accelerated Transition prolonged Value Creation in
19、the transition period Completion Shareholder value gap Four key factors contribute to post-acquisition success.of which the most important is speed Merger Success Prioritisation 76%cited clarity of purpose Speed 76%cited speed of implementing integration plans Culture 59%cited good cultural fit Co-o
20、peration 47%cited a high degree of partner co-operation 1 3 G r o w t h t h r o u g h A c q u i s i t i o n 14 Mergers&Acquisitions-IT in the Integration Process Pre-Acquisition Post-Acquisition Transition Strategy&Planning Gaining Control Creating Synergy Minimising the dip?Understand rationale?Int
21、egration approach&planning?Comparison to XXXXXXXXX architectures and identify key integration challenges?Prepare“Day 1”systems?Install“Day 1”systems eg.?email?phones/directories?financial reporting?Meet the IT team?Review major IT projects/contracts?Create program office Harmonising the Business Cre
22、ating Synergy?Detailed assessment of systems environment?Identify quick wins?Eliminate duplication of effort?Consolidate organisation and contracts where possible Minimising the“Dip”?Deliver tactical solutions to support business integration?Plot convergence path to XXXXXXXXX“Roadmap”4-8 weeks 6-9 m
23、onths 12-18 months Timescales 1 4 Me r g e r s&A c q u i s i t i o n s -I T15 Customer Trends?Retailers are going global.Ahold Poland,Spain,USA,Argentina,Czech Republic,China,Thailand,Malaysia,Singapore,Indonesia Puerto Rico,Canada,China,Mexico,Brazil,Germany,United Kingdom,Argentina and South Korea
24、 Irish Republic,France,Hungary,Poland,the Czech Republic and Slovakia Merger with Promodes,Spain,Portugal,Turkey,Italy,Poland,Czech Republic,Taiwan,Malaysia,China,Thailand,Korea,Hong Kong,Singapore,Indonesia,Brazil,Argentina,Mexico,Colombia,Chile(Planned:Greece,Slovakia,Hungary,Switzerland)1 5 C u s
25、 t o me r T r e n d s?R e t a i l e r s 16 Customer Trends-IT implications 1.Information Overview Procurement Production Logistics Manufacturer Distribution Store Retailer 2.Value Chain Integration 3.Supply Chain Alignment 1 6 C u s t o me r T r e n d s -I T i mp l i c17 Drinks Sector?With mature We
26、stern markets,the developing economies are becoming the competitive battleground for many global beverage companies(eg.Hungary)?IT Investments in Customer Relationship Management and Data Warehousing are being used to gain competitive edge in terms of consumer insight customer relationships competit
27、or intelligence 1 7 D r i n k s S e c t o r?Wi t h ma t u r e 18 Opportunity management Track opportunity through sales cycle,pipeline analysis.Account and contact management Contact management,major/key account management,visit reports,.Sales&profit analysis Sales process tracking,account profitabi
28、lity,territory profitability,customer&product segmentation and analysis Marketing encyclopaedia Product literature,price lists,CBT,market research analysis,education Electronic mail and administrative tools E-Mail,Web,expense sheets,templates,diary.Campaign and promotion management Promotion managem
29、ent,campaign analysis and reporting,planning,segmentation,list generation,take-up Forecasting Track and forecast revenue by opportunity,product unit volumes,customer and by sales person Quote&order generation Develop,verify,submit,and revise quotes;configure products;convert to order,remote order ca
30、pture Customer Relationship Management integrates the“Front Office”activities 1 8 O p p o r t u n i t y ma n a g e me n t T r a19 E-Business-Scope Internal network Customer network Consumer network Supplier network E-Business impacts on a wide range of consumer goods companies processes HR IT Financ
31、e R&D Manufacturing Procurement Logistics Marketing Sales Key Account Management 1 9 E-B u s i n e s s -S c o p e I n t e r n a l20 Impact on Business Value Role of E-Business Enabler Transformer E-Business-Opportunity Identification Channel Enhancement Value Chain Integration Industry Transformatio
32、n Convergence the challenge is to set the level of ambition for XXXXXXXXX2 0 I mp a c t o n B u s i n e s s V a l u e R o21 Business-to-Consumer E-Business establishes a direct channel to the consumer.by tapping into communities of interest 2 1 B u s i n e s s-t o-C o n s u me r E-B u s i22 Business
33、-to-Business(Sell side)enables closer links between retailer and manufacturer Through Wal-Marts Retail Link,suppliers are able to participate in a much richer electronic dialogue than pure EDI:-Collaborative forecasting Co-Managed Inventory Category Profitability Price File Management Assortment Man
34、agement Vendor Scorecards Problem Resolution Sales&Promotion Analysis Space/Category Management Product Introductions 2 2 B u s i n e s s-t o-B u s i n e s s (S e l l 23 Business-to-Business-e-Procurement Procurement volume Perception Procurement volume Reality Internal costs The forgotten factor Pr
35、imary Indirect Indirect Indirect Primary Primary Profit6%HR17%Direct28%Taxes13%Indirect36%Source:AMR;CAPS(Center for Advanced Purchasing Studies)Division of a Corporate Dollar Typical areas of benefits cited:-?Increasing corporate contract compliance?Increased leverage of purchasing power?Reduction
36、in Process costs?Business Process Outsourcing Multi-nationals are targeting savings of up to 10%of their indirect procurement expenditure.which can lead to substantial savings 2 3 B u s i n e s s-t o-B u s i n e s s -e-P r24 Technology Development Infrastructure maturity?Infrastructure is particular
37、ly critical in the markets in which XXXXXXXXX operates 0100200300400500600700ChinaSouth AfricaRussiaPolandCzech RepublicHungarySingaporeUnited KingdomFranceUSA00.511.522.5USAUnited KingdomFrancePolandSingaporeSouth AfricaRussiaChinaCzech RepublicHungaryTelephone Lines 1998 Number of main lines in us
38、e per 1000 inhabitants Investment in Telecommunications 1995-1997 Average percentage of GDP%Source:IMD World Factbook 1999 and many developing markets are in catch-up mode 2 4 T e c h n o l o g y D e v e l o p me n t I n f25 Technical Development Wireless Telecomms?Next generation networking technol
39、ogies are providing opportunities for developing markets to leapfrog the developed world.?World Bank now sees investment in telecomms infrastructure as a key enabler of economic growth?With the use of technologies like VSAT,African countries are getting wired?In the medium term web-based ERP could b
40、ecome a practical option 2 5 T e c h n i c a l D e v e l o p me n t Wi r e l26?Globalisation?Growth through Acquisition?Customer Trends?E-Business?Competitive environment PLUS?Technology development leading to?Long-term Shareholder Value Buyers Suppliers Competitors Substitutes New Entrants You You
41、have identified 7 key areas where IT can address the“value gap”in XXXXXXXXX 2 6?G l o b a l i s a t i o n?G r o w t h t h r27 Target Setting Resource Allocation Strategic Options Strategy Evaluation Strategy Operations Execution Forecasting Management Control Monitoring Value-based Performance Manag
42、ement can be used to operationalise Strategic Priorities 2 7 T a r g e t S e t t i n g R e s o u r c e A l l28 Current IT environment IT Budgeting/Spend Central/Eastern Europe Hungary Poland Romania Slovakia Russia Pilsner Urquell Canary Islands Africa Beer Division ABI Southern Sun Group Central Ma
43、nagement XXXXXXXXXI Africa Asia 2,148 2,651 898 316 576 1,095 2,810 35,333 2,500 2,033 357 77 240 60 16 18 219 120 1,609 400 250 2.8%1.1%1.5%2.0%3.2%0.5%2.3%2.2%0.6%0.8%IT spend$000s Sales$M IT%sales China Total Industry benchmark 51,520 210 3,219 1.6%1.7%2 8 C u r r e n t I T e n v i r o n me n t I
44、 T B29 Cut costs Increase throughput?Shorter time to market?Premium pricing?Superior quality?25-40%return?Higher ROA?Low risk Increased control Better information Better integration Improved quality Increased sales New business Innovative services Market positioning Competitive advantage Competitive
45、 necessity?50%fail?Some spectacular successes?2-3 year lag?Premium pricing?Higher revenue employee Business integration Business flexibility Reduced marginal cost of BUs IT Reduced IT costs Standardization?More growth?Higher?Less ROA?Higher INFORMATIONAL STRATEGIC INFRASTRUCTURE TRANSACTIONAL?Broadb
46、ent&Weill 1998 adapted from:P.Weill&M.Broadbent“Leveraging the New Infrastructure:How market leaders capitalize on IT”,Harvard Business School Press,1998 A typical IT portfolio 2 9 C u t c o s t s I n c r e a s e t h r o u g h p30 INFORMATIONAL STRATEGIC INFRASTRUCTURE TRANSACTIONAL?Broadbent&Weill
47、1998 adapted from:P.Weill&M.Broadbent“Leveraging the New Infrastructure:How market leaders capitalize on IT”,Harvard Business School Press,1998 XXXXXXXXXs main focus has been on the lower two sections Largely Financial Measures enabled by Hyperion Main focus of investment Managed at Business Unit le
48、vel 3 0 I N F O R MA T I O N A L S T R A T E G I C I31 INFORMATIONAL STRATEGIC INFRASTRUCTURE TRANSACTIONAL?Broadbent&Weill 1998 adapted from:P.Weill&M.Broadbent“Leveraging the New Infrastructure:How market leaders capitalize on IT”,Harvard Business School Press,1998 Industry Benchmark Manufacturing
49、 sector benchmark(5 year averages)22%22%11%14%Largely Financial Measures enabled by Hyperion Main focus of investment Managed at Business Unit level Manufacturing sector benchmark would suggest that some companies are investing much more in the upper sections 3 1 I N F O R MA T I O N A L S T R A T E
50、 G I C I32 PUBLIC INFRASTRUCTURE(eg.Internet,vendors,Telcos,Industry Networks)FIRM INFORMATION TECHNOLOGY INFRASTRUCTURE 20%Local IT for Business Processes Centrally Coordinated/Shared Business Unit 1 Business Unit 2?Broadbent&Weill 1998 adapted from:P.Weill&M.Broadbent“Leveraging the New Infrastruc
