1 IT Strategy Finance Directors2IntroductionWhy 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 ?3Pre-1960Back Office/Cost ControlFront Office/Value Creation“DP”“IS/IT”“IT/IM”?1999Mission CriticalityPunchcard computing(Finance/HR)Mainframemidrange computing(Manufacturing/Supply)Client/servercomputing(Service)Internet/networkcomputing(Consumer)Ubiquitouscomputing(Home)IT is now at the heart of the CEOs agendaYear 2000 wake-up callLarge scale computing is now mission criticalPervasive IT now gnawing at the heart of the executive agenda41997A gap existed in Business/IT alignment before Y2KBusiness/IT alignment the CIOs highest priorityBusiness and IT didnt often connectBusiness frustration with IT Requirements/DeliveryBusiness NeedsIT Value-added5IT focus & finances deflected to complianceMake-do-and-mend delivers zero business value Increasing gap between IT and business alignment1997Y2KRequirements/Delivery2000Y2K has made the gap widerBusiness NeedsIT Value-added6IT focus & finances deflected to complianceMake-do-and-mend delivers zero business value Increasing gap between IT and business alignmentHow to ensure that IT is delivering business valueThe challenge looking forward1997Requirements/Delivery2000Business NeedsIT Value-added2002Convergence?orBusiness as usual?7Implications for South African BreweriesListed on LSE XXXXXXXXX is on a journey from national brewer to major global player .the challenge is in defining the routeTop 5 Brewery1993Dreher1994China1996Ursus1999Pilsner Urquell1999Listed LSEIntegrated Global Beverage Business8Globalisation Growth through AcquisitionCustomer TrendsE-BusinessCompetitive environmentPLUS Technology developmentleading to Long-term Shareholder ValueGlobalisationE-BusinessGrowthTechnology DevelopmentBuyersSuppliersCompetitorsSubstitutesNewEntrantsYouThere are 7 key areas where IT can address the “value gap” in XXXXXXXXXShareholder Value9EfficiencySpeed of delivery to global customers (35%)CompetitionResponse to competitors global initiatives (34%)CustomersMeeting demands of foreign customers (46%)Supporting current customers international operations (34%)Labour MarketsAccess to skilled labour (22%)Access to lower cost labour (8%)RegulationsAvoiding domestic regulations (17%)Drivers of GlobalisationOf the many reasons for globalisation: customers, competitors & efficiency are likely to be highest on XXXXXXXXXs agenda10The positive impact of globalization on stock price: Food Manufacturers1001502002501991199219931994199519961997Stock Price IndexIndices of the 8 most global and 8 least global: Food Manufactures industryLeast GlobalMost globalFT/S&P WorldIn some industries, there are markets for both more global and least global, but more global players still perform bestSource: Mason, P and Moore, K. The impact of globalization on company performance: an analysis of the Auto-Components, Chemicals, Pharmaceuticals & Food Industries. Templeton/Citibank study,.Global companies are more successful11Globalisation involves complex and sometimes seemingly contradictory challenges :VisibilityCompeting with other global companies.Trying to maintain global control.MindsetInstilling a global organization culture .Promoting technical skills required for globalization.CapabilityTrying to be globally efficientCentralizing certain value chain activities.Standardisation of product/service. Utilising personnel on a world-wide basis .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 being 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 regulationsChallenges of Globalisation12Globalisation : IT implicationsMulti-localGlobalInformationApplicationsInfrastructureOrganisationGovernanceLocally held, incompatibleDiverse range of transaction processing systemsManaged at a country levelAll roles exist in all business unitsLocal autonomy funded by Business Unit profitabilityConsistent data standards at appropriate levelsSome knowledge-sharing, centres of excellence, business templatesSome regional/ global systems enabling regional/ global processesStandards based infrastructure designed globally, implemented & supported locallySome global/ regional teams, more virtual teams, knowledge-sharing networksSome global/ regional funding/ decision-making depending on where benefits realised13Growth through AcquisitionTime TheAcceleratedTransitionprolongedValue Creation in the transition periodCompletionShareholder value gapFour key factors contribute to post-acq