Toolkit: SWOT
January 15, 2009
I evaluate the SWOT analysis tool.
Toolkit: SWOT
This post is the sixth post in a series in which I discuss various frameworks and models that I might be able to use to answer questions on my CGU IST screening exam of Jan 23.
SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis an assessment tool which asks the question “what situation is the firm facing, and is it prepared to deal with it? As such, it should be performed periodically. SWOT is an informal model in which executives match internal factors (which are under the firm’s control) against external factors (which are not under the firm’s control) in the effort to see how the firm can better align those internal factors to fit or address those things outside the firm’s control. Using SWOT is a two part process.
In the first part, we identify the external and internal factors. We first identify what the firm is good at doing, and what deficiencies the firm has). We’re talking about capabilities and the lack thereof, which includes staffing, staff skill sets, infrastructure, products, services: anything we have control of in the firm. We might do this informally, or we might use a model like Porter’s value chain analysis to do so. Then we identify opportunities (those will allow the firm to grow) and threats (which will hamper or hurt our firm). We might use Porter’s five forces analysis to do this.
In the second part of our analysis, we look for ways to use our strengths to minimize or avoid threats and exploit those opportunities, and also we look at ways our weaknesses may exacerbate threats and lead us to fail to be able to take advantage of the opportunities.
Once we’ve completed our analysis, we can use the results to identify operational and strategic options.
Evaluation for use by the CIO
SWOT analysis is a useful tool for any executive, and the CIO is no exception to this. The CIO can use SWOT in at least three ways:
- It can help the CIO search for options to advance the strategic goals of the firm. Using SWOT analysis in which the strengths and weaknesses are those of the IT org, and the opportunities and threats are those faced by the firm may help the CIO identify ways that the IT org can step up and offer strategic options to the business executives. This is about business/IT alignment.
- It can help the CIO assess and prioritize organizational learning and lack of information deficiencies within the firm. If the CIO looks at the business executive’s SWOT analysis at a firm level, perhaps the CIO can identify ways in which the IT org can help alleviate learning based and lack-of-information based threats.
- The CIO can use SWOT to assess the IT org in order to evaluate it compared with what is required of it, IT wise. The IT related opportunities and threats may come from business initiatives or the environment in which the firm exists. The analysis can help identify areas that would be best handled by outsourcing (because they’re among our weaknesses), or in which staff needs training, or what infrastructure the firm still needs. It can help to identify potential new projects and initiatives (matching strengths to opportunities).
