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What is IT Strategy?

July 7th, 2014 by
What is Business and IT Strategy?

Business & IT Strategy

We hear it almost every day, IT Strategy, Business Strategy, strategic customer accounts, strategic widgets, etc. Strategy is applied to so many areas and so many things that the word has almost become meaningless.  The term “strategy” has become trite because it is used so much with so little understanding.

With all the buzz around strategy, and the lack of clarity and simplicity for what Strategy actually IS, I did a lot of research several years ago and produced my own model:

 

Making IT and ERP Investments Strategic and Business Aligned

What I discovered is almost universal confusion of what is tactical and strategic. The reason is simple, strategy is hard– really, really hard. Tactics are not easy but lots of folks can take a more limited and more focused approach to produce tactical advantages, and in turn they call this strategy. Here is an oversimplification:

  • Tactics – execution steps which provide short term wins (short term competitive advantage)
  • Strategy – methods, which includes the tactics, to prevent opponents from winning (mid-long term barriers to competition)

Looked at another way, tactics are more like operational effectiveness. This is how well you execute in a given area or context. Strategy is more directly related to market strength. How well you engage, penetrate, and hold markets in comparison to your competitors.

For an illustration of tactics vs. strategy, Wayne Gretzky said it best: “I skate to where the puck is gonna be, not where it has been.” Most hockey players ran to the puck where it was in play, just in time to see it passed to another player. Gretzky would go to where the puck was going to be and was prepared for the puck when it arrived.

Do You Have an IT Strategy?

First let me be candid, at the risk of offending my CIO and CTO friends at some pretty large companies, I’m not sure there is a genuine “IT Strategy.” Unless you are in a Technology business I don’t think the term applies.

There IS however an IT Enabled Business Strategy. By ensuring IT is focused on Business Strategy, the IT organization becomes a strategic business asset. By focusing on how IT can help a business to become more competitive now (tactical), by gaining market share, helps IT demonstrate value. By focusing on how IT can work create barriers to competition (hold on to market share), IT becomes strategic. To put this in business terms, customer acquisition is more like a tactic (an event) while customer retention and selling into your customer base is strategic.

What Would an IT Strategy Look Like?

What do I mean by all this? If your IT organization is able to engage, penetrate, and hold the “internal IT market” within your enterprise, you might have an “IT Strategy.” Like any marketspace, if you are doing this through monopoly power, then you are not strategic but relying on enterprise enforcement to ensure your monopoly position. It is only a matter of time, or changing directors, that this monopoly will be broken up. Business units across various enterprises are taking their own budgets and bypassing the “IT monopoly” through BYOD (Bring Your Own Device), Cloud, etc.

If you are not operating in a monopoly environment, the way to engage, penetrate, and hold the IT organization’s “market” is to deliver real, lasting, and hard to duplicate value to the greater enterprise.

Conclusion on Building a Strategy

This short post only scratches the surface of strategy development. However, if you really want to become strategic you must learn your enterprise’s competitive landscape. If you can’t identify your enterprise’s marketspace competitive pressures, and understand your place in those areas, then real strategy will be elusive if not impossible. In fact, even genuine tactical advantage will be extremely difficult. After all, what are you trying to gain competitive advantage against?

So, if you want to make an SAP, ERP, or other IT project strategic it is important to understand how to design for business value and competitive advantage.




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Will SAP HANA Lead to a Big Data Revolution?

December 17th, 2012 by

SAP HANA – Big Data

Lots of folks focus on HANA as a competitor to Oracle, and it is.  Even if HANA adoption and sales were to completely devastate SAP’s biggest competitor (Oracle) that would not be HANA’s biggest impact–, the HANA product has the potential to disrupt entire industries in the context of Big Data.

Unlike Big Data, I’ve been skeptical about the benefits and use of social media in the enterprise, writing about it in Why Social Media Marketing Success Is Elusive for Business and Social Media Fads and the Risk to the Enterprise.  On the other hand, Big Data hasn’t gotten anywhere near the attention even though it has a fairly clear business case.  Big Data has the capability to transform enterprises, organizations, and even entire industries.  We are not talking about abstract “build it and they will come” theories here either.  We are talking about a revolution in the way business is done.

Big Data will have huge impacts on customers, products, even whole regions of the world.  What do I mean when I refer to Big Data?

BIG DATA:  The ability to analyze large volumes of both structured data (like transactional data streams) AND unstructured data (social media, industry information, news trends, etc.) leading to market makers and market losers across virtually all industries.

This ability to synthesize structured and unstructured data streams with technology advances WILL transform companies and industries.
 
Over the next 5 – 10 years:

  • Computing power will continue to grow.
  • High speed memory processing (like in SSD drives) will improve.
  • Massive memory storage will come down in price.
  • In-memory database technologies will mature.

This “perfect storm” of Big Data know-how and technology advances will lead to the ability to identify:

  •  Subtle and even unknown market segments.
  •  Market and sales trends.
  •  Customer sentiments, needs, and wants.
    • Leading to new product or service opportunities.
  • Competitor strengths or weaknesses.
  • Etc., etc., etc.

Big Data will be part of the ERP iii [FN1] technology innovation driving customer focus related to customer acquisition, customer retention, and marketplace performance.  Big Data represents a business transformation shift in how business will be done in the future–, it represents a potential seismic shift in business performance in the marketplace.

The Big Data Revolution

The struggles are the semantics in how to synthesize the information and filter the nuggets from the noise.  Big Data allows you to understand what the keys are in terms of words, concepts, and ideas.  It then allows you to synthesize those keys with the various data sources.
 
In other words, how do you take the product sales information (transactional data), customer demographics (transactional), corporate market knowledge (unstructured internal), key word search (semi-structured internal and external such as with Google or Bing), with marketplace intelligence (unstructured external, including external social media), and innovate new or existing products and services?  That is the challenge that some folks are beginning to work on today.  That is the challenge that SAP’s HANA product enables for the future enterprise. 

Big Data means “Business Intelligence” will finally become, well, intelligent!

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[FN1]  For more information on ERP 3 see this comprehensive ERP treatise ERP vs. ERP II vs. ERP III Future Enterprise Applications.




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Why Social Media Marketing Success Is Elusive for Business

May 21st, 2012 by
Social Media in Business

Social Media in Business

In several social media channels I participate in one item continues to surface again and again –, “How do you ensure business benefit from social media?”  Underlying that question are the very basic issues of how do you ensure some kind of financial return. 

Although some social media folks understand the need for real, measurable results for business, especially in difficult economic times, there are those who simply insist that you must pay for something that is unproven and may never produce any real results.  They seem offended at the idea of insisting on financial results.

Many of today’s social media efforts are like “exploring” the great unknown without any clear map of where you are going or plan on how to get there – it is more like aimless wandering

Lots and lots of folks who call themselves “social media experts” really have no idea what to do when it comes to business.  They may be “experts” at individual interactions like building big personal “followings” but they struggle with using social media channels for business.  Add to all of this the recent news published in Forbes about GM pulling out of their advertising with Facebook (see The Real Reason GM Left Facebook) and you can see there is a real problem.

Resolving the Social Media Dilemma About Business Return on Investment (Social Media ROI)

Social Media Fads and the Risk to the Enterprise are real when there is no business consideration of profit (which companies need to survive) or focus on business activities.  I’m always baffled by the genuine lack of understanding of a need for profit in business if a business is expected to continue operating.  Too often the thought is that companies should just believe in social media, spend money on it, hire expensive social media consultants, and not consider the expenditure of their limited capital resources.

To finally achieve financial business benefit we have to identify the “root cause” of why financial business benefit is so elusive.  So far I haven’t even heard anyone articulate the cause of the difficulty in leveraging social media for business purposes which leads to a financial return.  Certainly there are some social media “rock stars” out there who defy the conventional wisdom but,…

Current social media marketing methods are colder than cold calls.

The Social Media Marketing Problem – Targeted Markets

The business problem for social media is that it is individual–, it is “social.” Okay, that sounds silly, what I mean is there are no target market economies of scale.  Sure, you can develop “volume” but is it the right volume, is it the right target, are you using the right channel, do you even know who you are trying to reach or how you are going about reaching them?  Do you know what they want?  Do you know how to use that medium to reach them?  More recently Harvard Business Review explored Three Myths about What Customers Want which directly addressed the issue that most customers do not want to engage with your brand.  Further, if it is related to sales activity they likely don’t want to engage much with your either.

The biggest platforms, namely Twitter and Facebook (and to a lesser extent LinkedIn) are limited in how you can segment, stratify, or gain market intelligence for marketing efforts.  The idea of one off, individual, personal connections has no economy of scale.  When I refer to “economies of scale” in this sense I am not referring to raw numbers, I am referring to economies of scale within your target market or potential customer base.  No private enterprise who wants to stay in business can afford to go after every possible customer.  This is why they target certain segments and markets. 

Consider the difference between social media and more established Internet channels.  When someone searches in Google they are looking for something very specific, it is highly targeted.  If their search is related to a product or service and they click on your ad you can bet they are reasonably far along in their purchase consideration.  They might still be researching but they are researching and find your blog post or company web site, but it is still a very targeted effort related to a purchase decision.  Your company blog or website is likely attracting people looking for information related to a potential purchase.  There is some initial “filtering” mechanism over enough users to provide a reasonably targeted “economy of scale.”  This is NOT the case with social media.  Many of today’s social media efforts are like “exploring” the great unknown without any clear map of where you are going or plan on how to get there.  Today’s social media is like yesterday’s cold call telemarketing but without any target list to start with.

Current social media marketing methods are colder than cold calls because there is so little ability for truly productive focus.  Where more traditional advertising mediums have built-in filtering mechanisms before human effort is involved social media is just the opposite.  The marketer becomes the filtering mechanism even before a virtual “cold call” can be effectively made. 

Today’s social media is like yesterday’s cold call telemarketing but without any target list to start with.

In many ways this is worse than the California Gold Rush in 1849.  People went West dreaming of Gold Rush riches just by digging up the ground around areas where gold had been found.  Today’s social media explosion is like digging for gold in the middle of the ocean.  You float around for a while, try to dive to the bottom, hope that you are actually able to go deep enough to land on mush and then start digging for gold.  Never mind that there may not be any gold where you are looking, or even if there is you may not be able to stay submerged long enough to collect it.  This is the current state of social media.   You go deeper and deeper into the water of  “social connections” until you finally hit the “mushy” ground of “enough” connections or “likes” and you start digging in the mush with your marketing effort, hoping to discover the “golden” sale.  If you chose the wrong social media outlet, or if you failed to accumulate the right “target” group, all of your energy, investment, and effort may be completely wasted.  Sure, you’re “popular” but popularity doesn’t pay the bills (unless you are a celebrity), never mind that economic conditions are difficult.  This doesn’t mean a few “lucky” individuals or situations won’t lead to “gold” but it does mean that for the time being it will be very difficult for social media business success to be scalable and adaptable.  Social media by its very nature is individual making it even more difficult.

Social Media Market (Unrealized) Potential

Today’s social media is much like China and India in times past.  They had gigantic populations consisting of over 1 billion people each but these were not marketable consumers.  It wasn’t until huge economic, social, and cultural changes took place over nearly a generation (or more) that Indian and Chinese markets were slowly opened.  In China this is still a slow, painful, and difficult process.

The Social Media Marketing Problem – Social Media Landscape

We looked at the social media effort required for each social media channel.  Now comes the rest of the ugly reality–, the social media landscape itself.  It is such a fragmented mess how do you even know where to spend your time, effort, and energy?  At some point in the not too distant future there WILL be consolidation.  There always is!  You may be spending tremendous efforts, finances, and energy on channels that in a year or two may be irrelevant.  In a year or two there may be completely different social media channels which make many existing ones obsolete.

If you want to see a PARTIAL picture of the “social media” landscape the Businessinsider has provided a good overview http://www.businessinsider.com/social-media-marketing-landscape-complicated-2012-5. The scary thing is this is probably not even half of the actual social media sites and resources.  Keep in mind this fragmentation in the available social media marketing “channels” is only compounded by the lack of segmentation to make any marketing effort meaningful.  So now you understand the problem.

Conclusion on Making Social Media Business Focused

The social media problem for business has two key parts, the current efforts are generally more labor intensive than telemarketing efforts.  The second part of the problem is the fragmented “channels” available.  Social media efforts beyond the individual (and not the company trying to use this) are so diluted, fragmented, and obscured that it will be some time before meaningful methods for business benefit emerge.  Figure out how to develop target markets meaningful to business and then how to deal with the fragmentation and these will serve as powerful marketing channels.  Whoever can figure these problems out, and then make them scalable and reproducible will have a blockbuster business.

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SIDE-NOTE:  When I refer to “social media” I am not referring to more established but modern internet marketing channels like blogs or web sites.  These may, or may not, contain any “social” components at all.  Unfortunately too many social media evangelists today throw everything into “social media” in a desire to be able to point to something that “works.”  Some of them do this out of ignorance, still others do it deliberately because they know that there is little or no payback method that is scalable and repeatable for true “social” media.




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