Alaska Bible College Target Canadas Failure Questions answer the following questions on the word documentation feel free to ask when it is not clear.thank

Alaska Bible College Target Canadas Failure Questions answer the following questions on the word documentation feel free to ask when it is not clear.thank you This module consists of Chapter 2 and 3 from both books, Case Study 1 and Exercise 1. Make sure to
complete all before going on to Module 3.

Case Study 1:
After reading both articles; Target- Billion Dollar Mistake and IT lessons learned
from Target Canada, how could have IT Enterprise Architecture been used to make
Target’s venture into Canada successful? Does it seem they used any aspect of it?
Where were they lacking? What parts would have been more useful and how?
Be specific, stay away from generalities.
Your written report should be 3 pages (New Times Roman, double space, font size 12,
and normal margins). Cite resources within the paper and attach a list of references at
the end. I expect you to use published resources as well as the Internet, posted
additional resources and the books.
4 IT lessons learned from Target Canada.pdf
Target- Billion DollarMistake.pdf
Exercise 1:
Based on your findings from Case Study 1 and using any of the various frameworks, tools, models, maps,
techniques, standards, visualizations discussed in class, in the books or found elsewhere, pick a service,
technology or process that had issues or something they were not using but could been used. Please
create a one page diagram outlining what could have been done instead.
Good examples of diagrams are in both of the books and in the additional materials.
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Define Your
Operating Model
Designing a Foundation for Execution
E xc e r p t e d fro m
Enterprise Architecture as Strategy:
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Creating a Foundation for Business Execution
By
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Jeanne W. Ross, Peter Weill, David C. Robertson
Harvard Business Press
Boston, Massachusetts
ISBN-13: 978-1-4221-8078-5
8070BC
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Copyright 2008 Harvard Business School Publishing Corporation
All rights reserved
Printed in the United States of America
This chapter was originally published as chapter 2 of Enterprise Architecture as Strategy:
Creating a Foundation for Business Execution,
copyright 2006 Harvard Business School Publishing Corporation.
No part of this publication may be reproduced, stored in or introduced into a retrieval system,
or transmitted, in any form, or by any means (electronic, mechanical, photocopying,
recording, or otherwise), without the prior permission of the publisher. Requests for
permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions,
Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.
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You can purchase Harvard Business Press books at booksellers worldwide.You can order Harvard
Business Press books and book chapters online at www.HBSPress.org, or by calling 888-500-1016
or, outside the U.S. and Canada, 617-783-7410.
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De?ne Your
Operating Model
G E N E R A L H . N O R M A N S C H WA R Z K O P F once observed, “Lead-
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ership is a potent combination of strategy and character. But if
you must be without one, be without the strategy.”1 Few business
executives would be comfortable leading without a strategy. Business strategy provides direction, an impetus for action. Most companies also rely on strategy to guide IT investments. Accordingly,
IT executives work to align IT and IT-enabled business processes
with stated business strategy. But business-IT strategic alignment
can be an elusive goal.
Business strategies are multifaceted, encompassing decisions
as to which markets to compete in, how to position the company
in each market, and which capabilities to develop and leverage. In
addition, strategic priorities can shift as companies attempt to respond to competitor initiatives or to seize new opportunities. As a
result, strategy rarely offers clear direction for development of stable IT infrastructure and business process capabilities.
To best support a company’s strategy, we recommend that the
company de?ne an operating model. An operating model is the
necessary level of business process integration and standardization for delivering goods and services to customers. An operating
1
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ENTERPRISE ARCHITECTURE AS STRATEGY
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model describes how a company wants to thrive and grow. By providing a more stable and actionable view of the company than
strategy, the operating model drives the design of the foundation
for execution.
The choice of an operating model is a critical decision for a
company. It’s the ?rst step in building a foundation for execution.
An operating model enables rapid implementation of a range of
strategic initiatives. But that same operating model will fail to support initiatives that are inconsistent with the assumptions it’s
built on. Thus, the operating model is a choice about what strategies are going to be supported. Take, for example, the ease with
which Charles Schwab introduced online brokerage relative to
Morgan Stanley. Schwab had already implemented low-touch systems and processes. In contrast, Morgan Stanley had built its capabilities for more customer-intimate (and higher-cost) operations.
Similarly, Amazon could add consumer products to its product list
because its operating model highlighted its capabilities in distribution and online customer interactions. Barnes & Noble’s operating model was ill-suited to online sales but adapted easily to a
partnership with Starbucks, which enhanced its customers’ instore shopping experience.
The operating model decision (or lack thereof) has a profound
impact on how a company implements business processes and IT
infrastructure. A company without a clear operating model brings
no automated, preexisting, low-cost capabilities to a new strategic
pursuit. Instead, with each new strategic initiative the company
must effectively begin anew to identify its key capabilities. But selecting an operating model is a commitment to a way of doing
business. That can be a daunting choice.
Our research suggests the payoff for making that choice can be
huge. Companies with a foundation for execution supporting an
operating model reported 17 percent greater strategic effectiveness
than other companies—a metric positively correlated with profitability.2 These companies also reported higher operational ef?ciency (31%), customer intimacy (33%), product leadership (34%),
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De?ne Your Operating Model
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and strategic agility (29%) than companies that had not developed a foundation for execution.3
In this chapter we will ?rst de?ne the dimensions of the operating model—standardization and integration—and then describe
the four types of operating models: Diversi?cation, Coordination,
Uni?cation, and Replication. We will describe the critical components of each model and show how an operating model shapes
future strategic choices. We will then discuss important considerations in choosing an operating model.
Integration and Standardization:
Key Dimensions of an Operating Model
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An operating model has two dimensions: business process standardization and integration. Although we often think of standardization and integration as two sides of the same coin, they impose
different demands. Executives need to recognize standardization
and integration as two separate decisions.
Standardization of business processes and related systems means
de?ning exactly how a process will be executed regardless of who
is performing the process or where it is completed. Process standardization delivers ef?ciency and predictability across the company. For example, using a standard process for selling products or
buying supplies allows the activities of different business units to
be measured, compared, and improved. The result of standardization—a reduction in variability—can be dramatic increases in
throughput and ef?ciency.
Yet greater standardization has a cost. In exchange for increased
predictability, standardized processes necessarily limit local innovation. And the transition to standardization usually requires that
perfectly good (and occasionally superior) systems and processes
be ripped out and replaced by the new standard. This can be politically dif?cult and expensive.
Integration links the efforts of organizational units through
shared data. This sharing of data can be between processes to
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ENTERPRISE ARCHITECTURE AS STRATEGY
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enable end-to-end transaction processing, or across processes
to allow the company to present a single face to customers. For
example, an automobile manufacturer may decide to integrate
processes so that when a sale is recorded, the car is reserved from
among the cars currently in production. By seamlessly sharing
data between the order management and manufacturing scheduling processes, the company improves its internal integration and,
consequently, its customer service. In ?nancial services, sharing
data across processes enables a loan of?cer to review a customer’s
checking, savings, and brokerage accounts with the bank, providing better information about the customer’s ?nancial situation
and enabling better risk assessments for loans.
The bene?ts of integration include increased ef?ciency, coordination, transparency, and agility. An integrated set of business
processes can improve customer service, provide management
with better information to make decisions, and allow changes in
one part of the business to alert other parts of actions they need to
take. Integration can also speed up the overall ?ow of information
and transactions through a company.
The biggest challenge of integration is usually around data.
End-to-end integration requires companies to develop standard
de?nitions and formats for data that will be shared across business
units or functions. For business units to share customer information, they must agree on its format. Similarly, they must share a
common de?nition for terms like sale, which can be said to occur
when a contract is signed, when money is paid, or when product
is delivered. These can be dif?cult, time-consuming decisions.
Four Types of Operating Models
We have developed a straightforward two-dimensional model with
four quadrants, representing different combinations of the levels
of business process integration and standardization (?gure 2-1).
Every company should position itself in one of these quadrants to
clarify how it intends to deliver goods and services to customers.
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5
De?ne Your Operating Model
The four general types of operating models are:
1. Diversi?cation (low standardization, low integration)
2. Coordination (low standardization, high integration)
3. Replication (high standardization, low integration)
FIGURE 2-1
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4. Uni?cation (high standardization, high integration)
Coordination
Unification
• Shared customers, products, or
suppliers
• Impact on other business unit
transactions
• Operationally unique business units
or functions
• Autonomous business management
• Business unit control over business
process design
• Shared customer/supplier/product
data
• Consensus processes for designing
IT infrastructure services; IT application decisions made in business units
• Customers and suppliers may be
local or global
• Globally integrated business processes
often with support of enterprise
systems
• Business units with similar or overlapping operations
• Centralized management often
applying functional/process/business
unit matrices
• High-level process owners design
standardized processes
• Centrally mandated databases
• IT decisions made centrally
Diversification
Replication
• Few, if any, shared customers or
suppliers
• Independent transactions
• Operationally unique business units
• Autonomous business management
• Business unit control over business
process design
• Few data standards across business
units
• Most IT decisions made within
business units
• Few, if any, shared customers
• Independent transactions aggregated
at a high level
• Operationally similar business units
• Autonomous business unit leaders
with limited discretion over processes
• Centralized (or federal) control over
business process design
• Standardized data definitions but data
locally owned with some aggregation
at corporate
• Centrally mandated IT services
Low
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Business process integration
High
Characteristics of four operating models
Low
High
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Business process standardization
© 2005 MIT Sloan Center for Information Systems Research. Used with permission.
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ENTERPRISE ARCHITECTURE AS STRATEGY
Companies adopt an operating model at the enterprise level and
may adopt different operating models at the division, business
unit, region, or other level. To decide which quadrant your company (or business unit) belongs in, ask yourself two questions:
1. To what extent is the successful completion of one business unit’s transactions dependent on the availability,
accuracy, and timeliness of other business units’ data?
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2. To what extent does the company bene?t by having business units run their operations in the same way?
The ?rst question determines your integration requirements;
the second, your standardization requirements. What operating
model you choose will drive important design decisions around
the autonomy of business unit managers and the role of IT. Compare your answers to the characteristics of each operating model
in ?gure 2-1 to see where your company ?ts.
Diversi?cation: Independence with Shared Services
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Diversi?cation applies to companies whose business units have
few common customers, suppliers, or ways of doing business.
Business units in diversi?ed companies offer different products
and services to different customers, so central management exercises limited control over those business units (see the Diversi?cation quadrant in ?gure 2-1).
JM Family Enterprises (JMFE) has a Diversi?cation operating
model. Headquartered in Deer?eld Beach, Florida, JMFE had rev-
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enues of $8.2 billion in 2004, making it the United States’ ?fteenthlargest privately held company.4 JMFE comprises four closely related
businesses:
1. Southeast Toyota Distributors (SET) serves more than 160
dealers in Florida, Georgia, Alabama, and North and South
Carolina with vehicles, parts, and accessories. SET dealers
sell approximately 20 percent of all Toyotas sold in the
United States.
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Permissions@hbsp.harvard.edu or 617.783.7860
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De?ne Your Operating Model
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2. World Omni Financial Corp. (WOFC) is a diversi?ed ?nancial services company that provides a broad range of ?nancial products and services to consumers, dealers, and
lenders. Its offerings include automotive ?nancial products and services, third-party servicing solutions, wholesale ?oor-plan accounting and risk management systems,
full-service inspection, automated risk decision software,
and automotive remarketing services.
3. JM&A Group offers a variety of automotive ?nance and insurance (F&I) products and services, such as new- and usedvehicle protection plans, used-vehicle certi?cation programs,
prepaid maintenance plans, credit life and disability insurance, and F&I training and consulting services.
4. JM Lexus is the largest-volume retail dealership of Lexus
cars and sport-utility vehicles in the world.
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The lower left quadrant of ?gure 2-2 describes JMFE’s Diversi?cation operating model. Because the business units are synergistic, they can generate business for one another. For example, JM
Lexus is a customer of JM&A; SET sells automobiles to dealers whose
customers often ?nance those vehicles through WOFC; and WOFC
offers loans to dealers to ?nance the vehicles in stock, helping increase orders to SET.
JMFE provides some centralized services to its business units
through the JM Service Center. The largest of the shared services is IT; the others are procurement services, ?nancial services,
salon, ?tness center, bene?ts administration, food services, corporate staf?ng, distributive and document services, facilities, relocation, and dealer services. Motivation for forming shared services in
2001 included cutting costs on these services and realizing quick
economies following expected acquisitions.
Historically, JMFE has grown primarily through the growth of
individual business units. SET has become the world’s largest franchised Toyota distributor, and WOFC is one of the world’s largest
automotive ?nance companies. As JMFE’s current markets become
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8
ENTERPRISE ARCHITECTURE AS STRATEGY
FIGURE 2-2
Coordination
Merrill Lynch Global Private Client
Unification
• Single face to customer through
multiple channels
• Customer transactions are independent, but product data is shared
• Individual financial advisers own their
customer relationships
• Financial advisers customize their
interactions with customers
• Financial advisers in 630 offices
exercise local autonomy within bounds
of their responsibilities
• Total Merrill platform provides shared
access to technology and data
• IT organization provides centralized
technology standards
• Local and global customers; global
suppliers
• Global manufacturing, financial, HR,
order management, purchasing, customer service, and other processes
• Business units all support global
chemical research, development,
and sales
• Centralized management with matrixed
business unit/process/geographical
management
• Centralized process design implemented through ERP and corporate
process owners
• Centrally mandated, single instance of
key databases
• IT decisions made through central
shared IT services organization
Diversification
JM Family Enterprises
Replication
TD Banknorth
• Few shared customers or suppliers
• Mostly independent transactions with
intercompany transactions at arm’s
length
• Unique operations across business
units
• Autonomous business unit heads
reporting directly to CEO; arm’s-length
transactions between business units
• Business unit control over business
process design except for shared procurement, HR, financial, dealer, an…
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