It is a tradition in the School of Information Systems and Technology at Claremont Graduate University that a student who has recently passed the IST screening exam should give advice to those who have yet to take it in the form of a workshop.

I passed my exam in January 2009, and I’ve chosen to do it this year.   Specifically, between 2pm and 3:30pm tomorrow (Jun 20) in Burkle 24 on the CGU campus.

For all those who are attending (and for those who couldn’t), here are my slides and a ZIP file of all the notes and diagrams I made for myself as I studied for my own exam.

• Slides: 2009-IST-Screening-Exam-Workshop
• A ZIP file of my study notes.
• My posts on my experience.

1. It felt like driving on a winding in dense fog for six hours
2. The exam questions are complex
3. You have to be both accurate and brief
4. Trying to predict what topics will be important is both necessary and hard
5. Learning specific Word tasks saved me a lot of time and worry
6. I actively managed my morale, and that helped
7. Making analysis toolkits and being very familiar with them really paid off

It felt like driving on a winding road in dense fog for six hours

I’ve been trying to think of an adjective to describe how I felt during the exam.  “Intense” comes to mind, but it doesn’t really capture it.   The best I can do is to liken it to other situations.   I felt something like I did when I was driving on a winding road along the edge of a cliff in very dense fog in Pasa Robles a few years ago.  I couldn’t see more than 20 yards in front of me.   I couldn’t stop or even slow down too much below 30 or 40 miles per hour because a car in back of me would not see us in time to avoid crashing into us.   I could hardly see where the lane was, and I knew than any oncoming driver would be in the same boat.   The world dropped away except for the 20 yards in front of me, and I had to remain extremely focused.   I knew what the stakes were.    That’s what it was like to do the exam.   Only for six hours instead of the twenty minutes I drove in that thick fog.

What I had thought would happen to me when I was answering my practice questions did, in fact, happen:  under the pressure of the actual exam, I thought and wrote much faster than I had been doing for the practice questions.    I ended up writing between five and seven pages for each question.

The questions are complex

As I said in my description of taking the exam, real exam questions are complex, much more complex than my practice questions.  I should have realized that from looking at previous year’s questions, but until I actually had the actual exam questions that I had to answer personally staring at me, I didn’t realize the full extent of the complexity.

First, each question has a lot of parts.  The question with the least number of parts was the research question, with three parts, and the one with the most was the networking question, with fifteen parts.   By parts, I mean individual questions that you have to answer, not necessarily the numbered or lettered parts.

Second, each question has hidden, implicit parts.   Many questions were of the form: “compare X to Y”; or “why is A important?”  when A is an obvious alternative to B and C.     Before you can answer these questions, you must define X and Y, and A, B and C (because “why is A important?” really means “why is A more important than B and C?”).   When you count these implicit questions, the research question had seven parts, and the networking question had nineteen parts.    And of course, you’re probably going to have to drag in any number of additional issues, models and concepts in your answers, which means that you have to define them, too.

What this means is that on most of the questions, you do not have a lot of time to think about what you’re going to write.  You’ve got to know what you’re talking about and write it quickly.  And you can’t be long winded about it — you’ve got to get a succinct summary down in just a few paragraphs or sentences.   This was the real difference between my practice questions and writing the actual question.   I mostly spent more than an hour on my practice questions, and many of those topics turned out to be just implicit questions in the actual exam, not even explicit ones.    Which meant that I spent maybe five minutes summarizing what I wrote in an hour in practice.

You have to be both accurate and brief

Brevity is the soul of wit, and it is also critical in answering questions.   Taking what I’ve said above about question complexity, in nearly every question, you’re going to be having to cover a lot of different topics in a short amount of time.   Some of those topics you may know in great detail and subtlety.   If you try to include all that detail in answering but one part of a question, you will doom yourself to run out of time.   It is vital that you be able to distil your knowledge down to exactly what just what you need to say in order to sufficiently answer the question and say no more or less.     I really tried to do this in all my answers, but it is not easy.  I ended up always feeling slightly anxious that I did not demonstrate the depth or breadth of my knowledge sufficiently, even if I said enough to answer the question sufficiently.

Trying to predict what topics will be important is both necessary and hard

The amount of material that could be in the exam, the stuff you need to be very familiar with, is vast.   If I were to double space the notes I wrote for myself in my preparations for studying, I would have several hundred pages.  And knowing myself, I knew that I wouldn’t be able to remember everything in detail and synthesize it sufficiently with research concepts and business and policy concepts and models.   I had to to try to put myself in the shoes of the question writers and predict what things would be important (in that you could use them to cause someone to have to demonstrate a doctoral level of understanding) and what would not be important (would be too specific or pedantic).   And then I spent my time ensuring that I knew the important things as best as I could, and tried to have at least passing familiarity with the rest.

I was mostly accurate with my assessments of importance, but two questions were on topics I did not expect.   One business topic I remember as being nearly a footnote, but now that I look back at my notes, I see it was covered in about 20 pages in Applegate.  At no point had I ever heard or read anything about research concepts in that area, which was one part of the question.   Thankfully, I had worked hard to build my business and policy tookit and my research toolkit, and so I at least had that to fall back on.

The other topic I did not expect was a philosophy of science question — I had decided that that particular philosophy was so unimportant or rare that I wouldn’t be asked about it.  I was wrong.

Learning specific Word tasks saved me a lot of time and worry

I know that this is a weird thing to talk about in the context, but I really practiced using the version of Word installed on the computers I’d be using in the exam so that I would spend as little time as I could fiddling with the software.   This was a big deal for me because (for various reasons) I have not used Word since the mid-1990s.   Keep in mind that, for the exam, you’re not going to be using your CGU account  — you’re going to be using a fresh account set up purposely for the exam, and so Word is going to be in its default configuration and not the one you may be used to.  You need to know these things:

• How to set the page header
• How to include a page number in the page header
• How to double space your body text
• How to make bulleted and numbered lists
• How to make section headers
• How to setup auto save
• How to save to both a floppy disk and a network drive

You turn in your answers on a 3.5 inch floppy disk: one in the morning, and one in the evening.   One important thing I learned after the morning session was not to eject the floppy without first quitting all your Word windows.   I did so and Word was stuck trying and trying to access the floppy.  I eventually had to reboot the computer to get it to work again.

I actively managed my morale, and that helped

So much of doing well on the exam is simply believing that you can pass, and so I really focused on keeping my morale up in the days leading up to the exam and during it.

Seeing my collegues working, and seeing their faces as they work, can be bad  for my morale, especially if they look confident when I am not feeling so confident.   I sat as far away from my colleagues as possible (which was easy since there were only three of us)  and I tried hard not to look over at them at all.   Also, at lunchtime I went off by myself: I didn’t want to discuss the first session or hypothesize about the second session.   I didn’t want to find out about things that I might have answered wrong or incompletely, or learn about something that thought I understood but didn’t.   All I wanted to do was forget the first session completely, and empty my mind in preparation for the second session.    And I think that really helped me.

Also, the keyboards in the lab are loud, and it is really distracting to me to hear the other people taking the test typing away on their answers, especially when I’m trying to think.   It’s even worse to hear them typing when I’m having trouble.    So (after a friend recommended it) I used earplugs, and it was wonderful — I highly recommend it.

Making analysis toolkits and being very familiar with them really paid off

I wrote before the exam that I was planning on making some analysis toolkits in order to prepare me to answer questions from both the research and business & policy perspectives.   And then I wrote a series of articles describing all the models in my business & policy toolkit.    I had a less formally defined research toolkit (which I should write up) which had Benbesat & Zmud (2003), the four traditions of research (fixed, flexible, design science, action science), the basic philosophies of science (positivism/empiricism, relatvism, scientific realism), design theory/kernel theory and eight or ten of the core IS theories.

This really paid off in all of the second session questions, because I used my toolkits on all of them.  If I hadn’t had my toolkits, I don’t know what I would have done for SCR4, one of the business questions: I needed both my research toolkit and my business & policy toolkit.

The days leading up to the exam

I studied for around four months, all told.  First, I studied between late June and the first week of August, and then between beginning of December and Jan 23.   As I’ve described before, the way I study is to first prepare detailed notes which incorporate data from all the source materials I have, then generate lists of concepts and definitions I need to know, and then figure out some general toolkits that I might apply to questions in order to answer them.

I’d finished my notes near the middle of December, generated my lists of concepts to study from shortly thereafter, and developed my business and policy toolkit and my research toolkit towards the middle of January. So the last week before the exam I spent going over and over the lists of concepts, quizzing myself on whether I knew them or not.   I would print them out, cross out the ones I thought I knew, highlight the ones I didn’t know, then go back to my notes for review.

I was feeling confident, because there were only a few things that I thought I was having trouble with, and I felt like I was just filling in the last nooks and crannies.

The day before the exam

The exam was on Jan 23rd, and I got a hotel room at the Howard Johnson’s in Claremont for the night of the 22nd.   To drive between my home in Altadena and Claremont to get there in time for the exam’s start at 9:30am on Friday would have meant that I would have to leave very early in order to either beat or deal with rush hour traffic, and I didn’t want to arrive at my test all stressed out from the drive.  More importantly, my daughter still wakes up four to five times a night, and I wanted to get a good night’s sleep.

I spent the 22nd familiarizing myself with the computers in the computer lab in which I would be taking the test by answering some practice questions.  Then I ran around town buying supplies: ear plugs (because the clacking of the keys on the keyboards of the other people in the room was quite loud), drinks, and healthy brain food for breakfast and lunch the next day.

My goal for the day was to not study too much, because I didn’t want to stress my self out trying to cram every last thing into my head.   I wanted to be rested and filled with energy for the exam, mentally and physically.   I stopped studing around 4:30pm, and took a walk.  I talked to my family over Skype (I always feel like I really live in the 21st century when I do video chat), had dinner, watched a movie (”Jumper”, which I liked, for the most part), and read a little fiction before bed.

I had a moment of panic at 9pm because I got a page from one of the critical servers at work saying that something appeared to be dreadfully wrong.   I checked it out immediately, saw that there wasn’t anything wrong with the server itself, and decided that it was a problem with the monitoring server.  A bit more investigation showed that I was right, but it took ten minutes for my heart to stop pounding.

I went to bed at 9:30pm, and slept well, lulled to sleep by the sound of the freeway 60 yards from my room.   I went to bed feeling good, feeling like I had done all I could do to prepare.

The exam itself

I got up at 7:30am feeling well rested and confident, but ever so slightly nervous.  I ate my breakfast, and got coffee at Starbucks.  I arrived at the IS building, where the test would be given, at 8:30am and met the other people taking the test.  There were to be just three of us: Jesus Canelon Herrera, Justin Ku, and me.   We started the first session at 9:20am.

It was databases, systems and networking in the morning, and as soon as I saw the questions, I felt optimistic: I felt that I could answer all of them.    The questions were complicated, with many subparts, and one hour per question was hardly enough time for me to just barely cover them.   The networking question, for example, had sixteen sub-parts (if you counted all the various concepts that you had to define and discuss).    That’s about three to six minutes per sub-part, if you spent an hour on the whole question.    I did end up spending about an hour on each question, and I answered them in the order of how confident I was about being able to answer them: the systems question first, then the database question, and finally the networking question.    I was racing to complete the last section of the networking question as Rita (the proctor) walked in and said time was up at 12:20pm.

We broke for lunch, to return at 2pm to start the second half.   Jesus and Justin went off somewhere for lunch, and I went to have lunch in my car and get in some last minute review for the second half.   Since I had databases, systems, and networking in the morning, I knew I would have two management and policy questions and one research question in the afternoon.

I tried to review for a while, but couldn’t decide what I should be looking at, and so stopped and just went back inside the building and tried to think of nothing important.  I was largely successful and went back into the testing room at 2pm still feeling pretty confident.

When I saw the three questions for the afternoon, I had several minutes of near panic.  The first question was about a topic that Applegate spends maybe three pages on and deals with very generally, and asked about research concepts and frameworks.   I hardly understood the question at first.  In the third question, one of the three parts covered a topic I consciously chose not to learn very well because I figured it seemed so peripheral that I would never see a question on it.  Wrong!   On the second question, I felt pretty comfortable, and so I started there and finished that in an hour and felt pretty good about it.   Then I went back to the first question, applied my business and policy toolkit and my research toolkit and got something pretty reasonable out of it.   On the last question, I answered the first and third parts mostly to my satisfaction, and then stared blankly at the second part for thirty minutes, finally squeezing out everything I could think of on that topic.   And then, it was over.

I was burned out.  I had started to reach the ends of my stamina while writing my answers to the last question sub-parts. The second half of the exam spooked me, and I left the building feeling somewhat discouraged.  I no longer had the confidence about my answers and ability that I had had throughout the morning.

The immediate aftermath

Grading the exams takes a month, apparently, so I’ve got a while to wait before I hear how I did.   The exams are graded on the following scale: “D” for doctoral level, “M” for masters level, “U” for undergraduate level.  You must get at least four answers graded at “D” level and none at “U” level to pass.   If I don’t pass, I’ve got one more chance before I get booted from the program and have to leave with a Master’s degree.

I had thought that once I had finished the exam that I could finally stop thinking about it and letting it run my life.   But that didn’t happen: I just traded worrying about how I would do for worring about how I did.   I’ve spent the time since the end of my exam worrying.   Trying to go back and figure out how I did.   Was there anything that could be graded at U level (”undergraduate”)?   Could I think of four questions where I could  say that I did “D” level work (”doctoral”)?    I don’t know on either.  Mostly because I don’t know what separates a “D” answer from an “M” answer, and from a “U” answer.

I should probably tell myself that my own standards are very high, and I equate “D” largely with perfection.   I may be thinking of “D” level as “TF” level — tenured faculty.  But maybe I’m not; I don’t know.

The thought that I might not pass makes me sick to my stomach, and I can see that if it does come to pass, I will have to work hard to not let that undermine the my own sense of my abilities.  I have to let failing the exam not become something that I use to sabotage myself when taking my next (and last) try.   I’ve thought this many times already since Jan 23rd.

Largely, because the grading system is so unknown, I feel like the only thing you can do on the screening exam is to go in and do the best you can do.   I really studied long and hard for this exam.  And when I took it, I felt like I performed near the best of my ability.   And still there were things that I didn’t know as well as I needed to, I think.  I just hope that that is good enough, and that I can stop thinking about it soon and get on with my life.

Today

By the end of Monday after the test, I no longer thought about how I did — the rest of my life had taken over.   I do feel a little gnawing hole in my stomach whenever I think about receiving my results, but that passes quickly.

Venkatraman et. al. in 1993 argued that the reason that firms often fail to see value from IT investment is due to lack of alignment between the business and IT strategy in the firm, and furthermore a lack of a dynamic alignment process that ensures continuing alignment in strategy and implementation between the business and IT organizations.

Venkatraman et. al. recognized four corporate domains in which choices can be made which affect alignment.  The four domains can be organized into external facing domains, and internal facing domains.  Another way to look at this is to classify them into strategic and functional domains.   Here is how the model is typically depicted:

In the model, “strategic fit” describes the interrelationships between the external domain and the internal domains, while “functional integration” describes the integration between the business and technology domains.

Strategic alignment at an organizational level can only occur when three of the four domains are in alignment.  The implication is that change cannot happen in one domain without impacting at least two other domains.   Venkatraman et. al. identified four dominant alignment perspectives which can be used for the analytic understanding of how business and IT can be aligned.   To understand the perspectives, we will define some terms.

• The anchor domain is the strongest domain for the firm, and will have the most representation at the executive level or will be where the core of the business lies. This domain in which changes are most often made.
• The pivot domain is the weakest domain for the firm. This is a “pointer” domain in a C programming language sense in that it indicates which other domain will be most affected by the change in the anchor domain.
• The impacted domain is the domain which will feel the greatest amount of impact from the change in the anchor domain.

The following diagram illustrates the four perspectives:

Venkatraman et. al. describes the four perspectives like so:

1. Strategy execution: this is the traditional perspective in which business strategy drives organizational design, and organizational design determines what IT infrastructure and processes will be needed.   Business management makes strategy, and IT management implements it.  This is the CIO as CTO
2. Technology potential:  business strategy is still the driver, but it involves the articulation of an IT strategy to support the chosen business strategy and the corresponding specification of the required IS infrastructure and processes.  This is the CIO as reactive leader perspective, in some sense.  The business executives drive technology vision and indicate the strategy that the IT group should use to achieve it, and the CIO architects a solution in strategic and infrastructural terms.
3. Competitive potential: we want to exploit new technological opportunities to gain competitive advantage:  offer new products and services or update existing ones, change business strategy, change organizational design and governance.  The IT executives must be able to be the catalyst for business change, identifying upcoming technology trends and options and understanding them as opportunities or threats/risks.  The business executives must be visionaries, able to take the offerings that the IT exec gives and see how to transform the business to exploit them to gain competitive advantage.
4. Service level:   In this perspective, information is our core product or service, and the IT org is the one that provides it.  This perspective is thus about IT/end-user alignment.  Business strategy does not play much or a part, or only a distant part.  Business management prioritizes which IT investments should be made with scarce resources within the organization and in terms of outsourcing and partnership arrangements in the marketplace.   The role of the CIO is to make the business succeed, in light of operating guidelines from the business executives.  In this way, the CIO acts as the business leader in this perspective.

Evaluation for use by the CIO

The real value of this model is in clarifying how business/IT alignment can happen within a firm for both the CIO and business leaders.   As such, this is a model that the CIO would use collaboratively with the business leaders in the firm in order that all can achieve a shared understanding of how strategy setting in the firm becomes implemented as architecture and processes.    The CIO would sit down with business leaders, and the group would identify the appropriate anchor domain (recall, the strongest domain, in which strategic choices are most often made) and pivot domain (recall, the weakest domain)  for their business model in order to understand both the appropriate role of IT for the firm, and also how changes in IT strategy, architecture and processes are expected to be made.

The strategic alignment model is about identifying strategic drivers and effects of those drivers, and detailing the governance and decision making structure implications those have.  The CIO and business top management can use the strategic alignment model both as an assessment tool (how does business/IT alignment happen today in the firm) and as a decision making tool for organizational change (what do we need to change about our strategic decision making in order to achieve a better fit with our external market forces).

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).

The enterprise architecture model is used to link business processes, data, technology and users in a high level overview document to be used to drive business/IT alignment and to drive IT purchasing and IT project portfolio management decisions.   It relates the business’ core business processes, its key customers, and the data and systems needed to link those.  Most fundamentally, a completed enterprise architecture model says how the firm wants to approach the architectural aspects of IT in the enterprise: how much process standardization across business units does the firm want, and how much data integration across business units does the firm need.

Typically, the top business executives and business unit heads draft the enterprise architecture, and Ross and Weill in their book Enterprise Architecture as Strategy recommend that this document be a one page diagram drawn at a high level.   The  executives drafting the architecture will take into account the corporate structure of the firm and the firm’s strategic goals in designing the architecture, and those will largely determine the amount of process standardization and data integration that the firm requires.  Ross and Weill identify four general types of firms:

• Diversity: the firm is composed of nearly independent business units that may operate in completely different markets. These kinds of firms need little in the way of process standardization or data integration.
• Replicated: the franchise model, like McDonalds. Business units in these firms have high amounts of firm-wide process standardization, but don’t need to share data.
• Coordinated: these firms need a high amount of data integration, possibly because they use the same data to sell different products through different business units to the same customers, but use business processes specific to the business units to do so.
• Unified: these firms need a high amount of both process standardization and data integration. They want to do certain kinds of business processes (procurement, human resources, etc.) the same throughout all business units, and the business units access the same data to different purposes.

Evaluation for use by CIO

The CIO will be involved in crafting the enterprise architecture for the firm, in partnership with the other top business executives..

The firm’s enterprise architecture document is very useful to the CIO for these reasons:

• It can be both a statement of where the firm is today, and a vision for where we want the firm to be, IT-wise, at some point in the future. The enterprise architecture document can thus serve as a strategic focus for the IT org, allowing it develop a strategic roadmap to get from now to where it needs to be.
• The enterprise architecture in one way is a statement of business/IT alignment. It says “here are our customers and the business processes we perform to serve them, and we expect IT to support each in these ways.” It will be created and maintained by the CIO in partnership with the business executives, and can serve as an easily understood and mutually agreed upon framework for discussions between the CIO and other business leaders.

The enterprise architecture model works well as an evaluative tool.   New IT projects and initiatives can be immediately evaluated by looking at them in context of the enterprise architecture.   Does the new project support a key business process or customer?  Will it produce an end result that conforms to our standardization and data integration model?   As such, the enterprise architecture can provide context for IT investment decisions and project design considerations

The strategic grid model is an IT specific model that can be used to assess the nature of the projects that the IT organization has in its portfolio with the aim of seeing how well that portfolio supports the operational and strategic interests of the firm.

The CIO plots projects and systems from the IT organization’s portfolio on a two dimensional graph.  The X axis represents impact of the project on IT strategy.  One way of expressing what we mean by this is: what options does this project offer the firm by way of affecting one of Porter’s five forces in our favor?   Does it change the nature of competition in our market, affect the bargaining power of buyers or suppliers, raise or lower the barriers to entry into our market, or change switching costs for our products and services?  Does it enable us to offer completely new products and services, or enable us to substitute one of ours for one of someone else’s in the eyes of their customers?

The Y axis represents the impact of the project on IT operations.   One way of expressing this is to say that projects that are high on this axis improve the efficiency or quality of our existing systems and business processes, or lower their costs.

The graph is usually drawn like so:

Another way to think about the two axes is in relation to Argyris’ organizational learning styles: single loop and double loop learning.    Impact on operational ability is like single loop learning: incremental process improvements on what we already do.   Impact on strategy is like double loop learning: look for a completely new process.

McFarlan divides the grid made by these axes into four quadrants:

• Support: low operational impact, low strategic impact. This quadrant is about local process improvements for individual users.
• Factory: high operational impact, low strategic impact. This quadrant is about operational improvements that affect large portions of the firm, and are aimed at improving performance or decreasing cost.
• Turnaround: low operational impact, high strategic impact. This quadrant is about exploiting new technologies to provide strategic opportunities.
• Strategic: high operational impact, high strategic impact. IT organizations that have most projects in this quadrant understand that IT can both improve core operations of the firm while simultaneously generating strategic options.

Evaluation for use by CIO

The CIO can use the strategic grid to assess business/IT alignment, to assign appropriate governance and oversight to individual projects, and to select projects and systems for outsourcing.

After plotting all projects in the portfolio on the grid, the CIO assesses where the bulk of them lay: that is how IT is being used in the organization.  This will indicate how well aligned IT strategy is to business strategy, and can be used as either a confirmation that the IT org is doing what is expected of it by the business organization, or as a wake up call.  If the projects that the IT organization is working on are not where the CIO expects the them to be, then they can see what kind of changes need to be made.

Secondly, different quadrants demand different kinds of project governance:  support quadrant projects can be handled by IT specialists and individual end users; factory quadrant projects should be handled by a business executives and IT executives working together; turnaround quadrant projects should be handled by business executives, IT executives and emerging technologies development groups; and strategic quadrant projects should be initiated, defined and managed at the top levels of the firm.   The failure of many projects may come about because the quadrant they lay in was misidentified and inappropriate governance was applied to them.

Thirdly, the CIO can use the position of a project in the grid to assess how good a candidate it is for outsourcing.   Support and factory projects are good candidates for outsourcing largely due to economies of scale that outsourcing vendors might be able to offer, access to skills and best practices that the IT org may not possess, and increased time to market/implementation.  Turnaround and strategic quadrant projects should be outsourced with caution; the firm may choose to outsource such project to access rare skills, resources or applications or to work around an out-of-control IT organization.

One of the criticisms of Porter’s five forces analysis is that it can tell you about what your problems are (or what your problems would be if you were to enter a new industry), but it doesn’t give you any tools with which to see what needs to change in the firm in order to affect the forces in your favor.   Porter proposed his value chain analysis model as an answer to that criticism.

Where the five forces model considers external forces on the firm, value chain analysis looks inside the firm. We consider the firm as a pipeline that converts raw materials into products and services, markets and sells those products and services to customers, and then supplies services to those customers regarding what they’ve bought from us.   This pipeline is called the value chain.  Each step in the pipeline adds value to the product in the eyes of the customer, and we should end up with our products and services being valued more highly than the sum of the costs of the individual steps in the processing pipeline.   The difference between our costs and the value of our product is the margin.

The pipeline has five parts which are traversed in sequence:

1. Input logistics: managing raw materials (which might be information) and getting them to the points where we begin transforming them into our products and services.
2. Operations: this is where we do something with our inputs in order to get them to the point to where they are ready for delivery to customers
3. Output logistics: managing outputs of our operations and delivering them to our customers
4. Marketing and sales: convincing people to use our products and services rather than our competitors, and turning them into customers
5. Service: after market services; customer support, tech support, warranty repair, value added information, etc.

Additionally, there are four domains which support all five of the pipeline steps:

• Firm infrastructure: this includes existing IT systems, manufacturing systems, etc.
• Human resources: hiring, firing, benefits, learning
• Technology development: this is not just information technology, but also manufacturing technology, delivery, power systems, who knows. Any upcoming technology that can affect us. This is research and development
• Procurement: buying the things we need. Not just raw materials, but all the supporting things that we need also.

The model is usually drawn something like this:

To use this model, we examine the pipeline for a product or service (or a suite of them) within the firm and detail the activities we do to achieve that part of the pipeline.   Secondly, we look for linkages between parts of the model.  A linkage exists when the cost or quality of one part of the model at least partially determines the cost or quality of another part.

Once we’ve identified our activities, we can examine them in the light of our strategic intent: cost leadership or differentiation.  We’ll ignore the “focus” intent because we’re at the level of a particular product or service here.

For cost leadership we’re going to go to our company accountants and have them assign a cost to each activity, and we’re going to look for ways to minimize those costs.   Minimizing those costs increases our margin, which gives us the ability to lower prices more than our competitors and still make a profit.   We’re going to be looking at these kinds of things: building economies of scale, decreasing or eliminating linkages, geographical factors (be closer to our suppliers or buyers), organizational learning, timing of entry to market, business environment ( regulations, union presence, etc.), vertical integration and how well different business units work together.

For differentiation, we’re going to look at our value chain to see which activities we can leverage or change in order to increase the uniqueness of our product/service relative to our rivals.  We’ll be looking at mostly the same kinds of things as for cost leadership: organizational learning, linkages, timing of entry to market, geography, business environment,  integration, coordination between business units, policies.

Evaluation for use by CIO

This is an excellent model for the CIO to use in order to better align what the IT organization is doing and providing with the needs of the business.   Once the business executives have filled out the model with business activities and how they impact the product pipeline cost, performance and quality wise, the CIO can use that information along with the strategic intent of the firm to look at how the IT organization is supporting and enabling those activities, and how well.    By starting with the fully dressed model from the business execs and filling in applications, infrastructure and capabilities the IT org supplies for each part of the model, the CIO can see strengths and weaknesses:  where IT support can be improved, where it is sufficient and why, and how to focus research and application of upcoming technologies to better help the firm achieve its strategic intent.   Looking at the business options available for promoting our strategic intent in activities in the value chain (listed above) can suggest to the CIO the kinds of projects the IT org should be working on.  Are we struggling with inter-business unit cooperation and coordination?   Perhaps the IT org should be implementing knowledge management systems, better communication and collaboration systems, and data integration projects.

The value chain analysis model is also effective for identifying IT activities that are ripe for outsourcing.    Does it support an activity that is not one of our core competencies (in that it helps us towards our goal of cost leadership or differentiation), and is itself not a core competency?  Then it’s a good opportunity for outsourcing.

Porter’s five forces model is used to analyze the external forces that act on a firm within a market and using it, management may be able to illuminate strategic options for improving the firm’s position relative to its competitors.   Also, the firm can use this model to think about the lay of the land in  new markets they might want to enter. The five forces are:

• Bargaining power of suppliers: If a supplier has power over the firm, this means they can control the deals they make with the firm, and  this affects the quality and price of the end product or service that the firm offers to its customers.  They do this by dictating price and availability of raw materials.  Things that affect this factor are: how many suppliers are there, how differentiated is the supplier we’re using, are there substitutes for the thing we’re getting from our supplier?  How likely is it that we might buy them?
• Bargaining power of customers: If customers have power over the firm, this means that they can easily threaten to switch to a competitor, or if they’re powerful, they may threaten to buy the company.  I imagine that if customers bring legal action against the firm, or stage boycotts, this is similar?
• Threat of new entrants: This is about barriers to entry.   How easy is it for a new rival to start up and be a full fledged competitor to the firm?   Things like specialized hardware and skills, important intellectual property rights, brand equity raise barriers to entry.
• Threat of substitute products: How likely is it that a competitor, or a firm from a different industry, even, may make products that allow customers to achieve similar goals in different ways.  Things like the likelihood that customers will switch and customer focus of the firm, strength of relationships with customers and brand equity affect this force
• Competitive rivalry in the industry: what is our relationship to other firms in our industry?  Highly competitive? Not very competitive?  This is about how strongly the industry will react to the actions of one firm.   High rivalry is indicated when the players are all about the same size; there are high exit costs; the market is saturated and the only way one firm can do well is at the expense of another in the industry.

The model is drawn as five boxes in a cross form, with “competitive rivalry” being fed by the other four boxes.

Porter says that there are three strategies to achieve strategic advantage, which I’ll call the strategic intent of the firm:

• cost leadership: reduce the cost to create our product/service to the point where it is difficult for our rivals to copy us.  To do this, we’re probably going to need to decrease the bargaining power of suppliers, as well as our operating costs.   In doing so, we increase switching costs (because our rivals’ products/services are more expensive) and raise the barrier to entry for new entrants.  Typically, this is about operating efficiencies and economies of scale.
• differentiation: increase the uniqueness of our product or service compared to that of our rivals.   This decreases the bargaining power of customers (they have to lose things to switch away).   How we actually implement this will affect what happens in the other forces.   Typically this is about R&D.
• focus: Our goal is to choose a narrow segment of the market and achieve either cost leadership or differentiation there.   We hope that this will increase customer loyalty and raise switching costs. Think: Apple.  They don’t have many products, but they do them very well and can thus charge a premium.

Evaluation for use by CIO in searching for options

There are two ways the CIO can use this model: to search for options, and to evaluate potential options.   In either case, you’re not going to use it directly, because your business colleagues are going to be the ones to carry out the analysis: they’re the business strategists.   The CIO will use the results of that in combination with consulting with the business executives.

In terms of searching for options, this model is somewhat hard to use in a general sense; you really need specifics about the firm and industry.  But if you sit at the table with the business execs as they perform and discuss their five forces analysis, you may be able to offer insights as to how upcoming technologies can be used to alter the balance of those forces in our favor, or how the firm’s current infrastructure could be leveraged to do so.

In terms of strategic intent, however, we can think of some generic strategies.  Is cost leadership our strategic intent?  Then the CIO may want to work with business leaders to create an enterprise architecture that emphasizes process standardization as a way of decreasing costs, and data integration to reduce duplicated effort.  You’re going to focus on the operations and overhead of the firm, and reduce costs and increase efficiencies there.   Is differentiation our strategic intent?  Then the CIO might want to seek ways to increase the power of the research and development arm of the firm, by increasing collaborative and knowledge sharing ability and supplying processing power, CAD/CAM systems, etc..  Is it focus?   The CIO may want to build analytical capacity to analyze our and related market segments so that we can choose a focus and keep it.

When the input or output of our firm is information, then the CIO has special powers over changing the impact of those forces.   Can we supply information to our customers that will add value to our product, increasing switching costs?   Can we do it in a way that is hard to duplicate (think Amazon recommender systems, data mining, data warehousing)?   Can we generate necessary input information ourselves?

Evaluation for use by CIO in evaluating potential options

Porter’s five forces model is quite useful, however, in evaluating an IT technology or project for its strategic impact.

• It may change the nature of the competition by informing customers and staff better, or by transforming business processes in such a way as to give competitive advantage, or help the firm more easily achieve economies of scale.
• It may change the bargaining power of buyers and suppliers. Forcing suppliers to conform to a certain EDI format, as Walmart does, is an example of this.
• It may raise or lower barriers to entry. It may offer capabilities that are expensive or illegal (intellectual property wise) for rivals to implement, or open new channels to market, or decrease time to market.
• It can increase switching costs. Examples, Google Apps and Intuit Quicken. Once they’ve got a customer’s data, that customer becomes increasingly unlikely to want to switch to another company.
• It can add value to existing products, or allow the creation of new products and services.

This post is the start of 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.   I had said that I wanted to build a toolkit of things that will help me answer questions.   I think that there are two tacks that I want to take: an IT policy and strategy toolkit, and a research toolkit.   This essay describes my IT policy and strategy toolkit.

I’m going to include these frameworks in my toolkit, and I will discuss each one in a separate post:

• The value of IT
• Porter’s five forces model of competition in a market
• Porter’s value chain analysis model
• McFarlan’s strategic grid model
• Enterprise architecture
• SWOT (Strengths, weaknesses, opportunities and threats)
• Henderson and Venkatraman’s strategic alignment model

The value of IT

While I’ve talked about this before and at greater length, let’s start by reviewing what IT can do for the firm.    The value of IT can be seen in three ways: it can deliver useful information to the people who need it when they need it; it can allow people to communicate and collaborate better; and it can supply one value at the moment of implementation while enabling other (possibly unknown at the time of implementation) options down the road with the same technology.   The way it does this is by improving processing power and speed (we can do more things faster, possibly things that humans cannot do by themselves), by delivering information faster and to the place and person who needs it, and by representing that information in ways most suitable for humans to understand, utilize and manipulate in order to enable sensemaking, decisions and action.