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Term Paper: Organization Strategy Analysis Using SWOT
Backup and Disaster Recovery (BDR) solutions are of primary concern to businesses, especially in the wake of recent disasters, like 9/11 and Katrina. The IT project chosen for my course project combines the implementation of a BDR solution with an accounting package upgrade. The purpose of the upgrade was to elevate the accounting system to a level necessary for the chosen BDR solution.
The organization chosen for this project is that of a former employer of the author and this paper will discuss the organization’s strategy as applied to the IT project. There will be two main sections to this paper. The first section will include a discussion of the organizational strategy and Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis and the second section will discuss the application to IT professionals.
Organizational Strategy and SWOT Analysis
A discussion of organizational strategy helps the IT professional to understand the goals and business requirements of the organization. The IT professional uses this understanding to help convince upper management that the proposed project would help the organization fulfill the mission of the organization without jeopardizing the organizational strategy. This section includes analysis of the organizational mission, strategy, and design along with a SWOT analysis to help demonstrate the need to implement the proposed project
Organizational Mission and Strategy
The mission of the JStan Group is quite simply to provide technical services and solutions to the Small-to-Medium Business (SMB) market with complete customer satisfaction; see Appendix C: Mission and Vision Statements at the end of this paper. Concentrating on the SMB market provides a strategic edge to the organization by targeting a market that the competition has left untapped.
There is plenty of competition in this geographic location trying to catch the same fish: large companies. JStan lowered effective competition by choosing the SMB market. This led to a philosophy of doing whatever is necessary to fill the customer’s needs by following the mediating technology business model. A large number of smaller accounts are serviced at a very high level of customer satisfaction, covered in the next section. This led to effective relationships with vendors and customers alike. A competitor would need to build a large base of small accounts to effectively compete.
When you cut away the jargon, that's what strategy is all about-how you are going to do better by being different. The logic is straightforward: When all companies offer the same products and services to the same customers by performing the same kinds of activities, no company will prosper. (Margretta, 2002, p.7).
The mediating technology model devised by James D. Thompson would most closely match my chosen organization, which acts as the IT department for small to medium sized businesses. The organization’s line workers are engineers and technicians who work independently. See Appendix D: Organizational Chart for an illustration of the chain of command. This chart is used for reporting purposes; lines of communication exist directly between all company personnel for collaboration purposes.
Conducting input, conversion, and output activities independently of each other characterizes the mediating technology model. Each member of the organization contributes on an individual level through completing individual pooled tasks; the performance of the organization as a whole then comprises the output of each individual.
Appendix B: SWOT Chart
A SWOT analysis focuses on the internal and external factors that affect the effectiveness of an organization’s strategy and position in the marketplace. These influences are sub-categorized as strengths, weaknesses, opportunities, and threats. The responses to the interview questions contained in Appendix A: SWOT Interview Questions were used to create a SWOT chart. The SWOT chart provides an overview at a glance of each of the particular categories. The SWOT chart is contained in Appendix B: SWOT Chart and a detailed explanation of the categories follow:
Complete customer satisfaction is a prominent component of both the company’s mission and vision statements. The JStan group has been able to maintain this strength as demonstrated by the favorable customer perception with, according to Jacob, H (2009), a customer satisfaction rating over 98% from IP Telephony manufacturers and a position in the top 10% of authorized computer service centers. This favorable image is one of the company’s major strengths. Adding to this strength is an adaptable customer-service-oriented staff including skilled engineers and technicians.
There is no other Apple authorized sales and service center located in the company’s geographic area and this would also be considered strength. The strong brand recognition of the company that delivers Apple solutions would be difficult to compete against with the company’s strategic positioning and the high start-up costs that a perspective competitor would experience.
A new Customer Relationship Management (CRM) package is currently being implemented at the JStan Group, as stated by Jacob, M (2009), and this package is targeted at the service industry to increase marketing skills and provide analytic capability to users and management. None of JStan’s competitors is currently using such a system, which would also qualify the capabilities of the CRM package as strength.
Two technology issues related to internal operations inject weakness into the organization. These two issues include an obsolete accounting system and the lack of a BDR solution. The accounting system provides the major accounting functions to users but lacks analytic capability and will not interface with other systems. This lack of analytic capability leads to another weakness, which is the ability to predict future costs from past performance. No BDR solution has been implemented at the JStan group. If the system housing the accounting application package fails, the data will be lost.
Although the engineers and technicians working for the JStan Group are highly trained and skilled, they do lack some well-known certifications. This lack of credentials could cause lost sales when trying to open up a new territory or add a new account. Documentation standards do not exist and this lack of standards makes the task of researching a customer’s history difficult. Engineers and technicians must sometimes guess to determine previous work and this sometimes leads to duplicated effort.
The present state of the economy is driving many companies to downsize. Although downsizing is a reduction in force for the downsizing organization, the practice creates opportunity for organizations that provide managed services. This opportunity certainly exists for the JStan Group as the company grows the business of offering managed services. The economic downturn is also forcing companies to reduce costs in other areas. Replacing aging phone systems can actually save an organization money. The JStan Group realizes opportunities to increase business by bundling carrier offerings with new phone systems. In some cases this can reduce a company’s monthly phone costs by 25% or more.
Recent seminars presented by the JStan Group increased local awareness of the need for businesses to create business continuity plans and implement BDR solutions. This awareness increases the opportunity for the company to offer BDR solutions and generate residual income for off-site data storage. The BDR solution proposed by this project could help generate more opportunity in this industry by providing a live system to use for demonstration purposes.
The above mentioned seminars also increased the opportunity to provide network analysis services to client accounts. These services are designed to discover deficiencies in network implementations and recommend solutions. Providing the design, implementation, and maintenance of those solutions generates yet more opportunity.
While the economic downturn can create opportunities, threats may also result from such a condition. There are a number of threats resulting from this condition that apply to the JStan group. Among them is the practice of delaying the purchase of needed products and services until economic conditions improve. This threat has been realized frequently in the last year as demonstrated by a general reduction in sales revenue. Related to this threat is the collateral damage caused by corporate layoffs. As companies lay off employees, those employees buy fewer products and services. This reduction in consumer activity affects our clients who depend on those sales. The resulting chain of reductions may eventually be passed on to the JStan Group through the cancelling of contracts or upcoming projects.
Local cable service providers have begun to market telecommunications packages as a bundle to customers who receive cable and Internet access. These packages are priced very low because the service provider owns the infrastructure. The threat is that the JStan Group simply cannot compete on price alone when going up against these providers. Sales to customers who base the purchasing decision solely on price are virtually guaranteed to favor the competitor.
One final threat exists although not likely at the moment, is the loss of key personnel. Although always a possibility, this threat is a low one because the JStan Group also excels on providing employee satisfaction and provides quality working environment matched by none.
Application to IT Professionals
The second section of this paper discusses how IT professionals set about the tasks of helping organizations implement the organizational strategy. This section of the paper is divided into three topic areas which follow immediately and include the following:
- The Role of IT Departments and Professionals
- SWOT Analysis and Decision Making
- Organizational Stakeholders
The Roles of IT Departments and Professionals
IT professionals form the knowledge base of organizations and IT departments are organized to group those professionals into a functional unit. The IT department comprising the JStan Group's knowledge base also serves as the IT department for client organizations. Therefore, moving the organization forward when considering IT initiatives also requires the IT professionals to consider the effects of those initiatives on those client organizations.
The systems engineers who comprise the research and analysis component of the IT department must make business cases for new developments. Recommending technology for technology’s sake is not a viable alternative. In the case of the accounting package migration and BDR solution there is a business case to be made for both protecting the organization and increasing revenue. This business case may be developed by applying the principles in the following portion of the paper.
SWOT Analysis and Decision Making
A swat analysis is a good tool for determining the internal and external factors that affect an organization, but how can an IT professional use this information? According to Morrison (2009), a SWOT analysis is a useful input to the creative process of decision making. One method of developing a strategy is to get the SWOT categories USED by repeatedly asking and answering following four questions:
- How can we Use each strength?
- How can we Stop each weakness?
- How can we Exploit each opportunity?
- How can we Defend against each threat?
Applying this method to a given situation will enable an IT professional to make decisions regarding the given situation that do not conflict with the organizations internal and external influence factors.
Applying this method to the proposed IT project may lead to the decision to proceed with the implementation based on the indications that the implementation will stop a weakness and increase opportunity.
Appendix D: Organizational Chart
Organizational Stake Holders
An organization’s stakeholders place certain demands and expectations against the organization. Stockholders demand competitive returns on investments, employees demand job satisfaction, customers demand what they pay for, and suppliers search for dependable buyers. The specific stakeholders for this organization and their expectations are as follows:
- Henry Jacob, the President and CFO, expects a strong return on investment
- Morgan Jacob, the Vice President in charge of Sales, Marketing, and Operations expects that new projects will improve sales, increase marketing opportunities, and ensure continued operations at or above the current levels.
- Don Schreve, the Technical Services Manager, expects that new projects will be designed and implemented in a proficient manner without too much inconvenience to the technical staff whose first responsibilities are to external customers.
- Jillian Schreve, acting in the lead position of Accounting, Payables and Receivables. Currently handles accounting activities the new accounting package will directly affect her daily activities.
- Jim Boman, Systems Engineer, will take on the responsibility of implementing the new accounting package and expects the freedom perform the implementation using his own best judgment.
- Michael Spoerl, Senior Systems Engineer, will assume the responsibility to design and implement the new BDR solution if approved and also expects the freedom to carry out his responsibilities as he sees fit.
- Existing customers expect to continue business relations in an uneventful manner
In anticipation of presenting a business case for implementing a BDR solution and migrating the accounting system to a new accounting package at the JStan Group, this paper has presented an organizational strategy analysis. This analysis focused on organizational factors and intentionally left out technical details of the proposed project. The reasoning for this method of analysis is to make the case using business factors that will remain valid regardless of a particular technical solution.
This analysis included the organizational mission and strategy as well as a detailed breakdown of the organization's Strengths, Weaknesses, Opportunities, and Threats (SWOT). A demonstration of how a SWOT analysis aids IT professionals in decision making was included and that demonstration helps add value to the use of the tool.
Specific stakeholders were identified to determine what possible objections may arise toward the proposed project. Identifying the concerns of the stakeholders will permit the analyst to predict those possible objections and address them before presenting the business case for the project.
Combining the analysis contained in this paper with the analysis of the organization’s financial position and the details of the proposed IT project should lead the analyst to provide a successful presentation to the organization’s decision makers.
Magretta, J. (2002). Why business models matter. Harvard Business Review [Electronic version]. 80, 5..
Morrison, M. (2009). SWOT Analysis - Matrix, Tools Templates and Worksheets. Retrieved April 22, 2009 from http://www.rapidbi.com/created/SWOTanalysis.html
Appendix A: SWOT Interview Questions
Strengths and Weaknesses – Internal Factors
- What advantages does your company have?
We maintain a very close relationship with our customers to determine their needs. Our close monitoring of the systems we support permits us to recognize problems and take action before customers experience problems. (Jacob, H., personal communication, 2009).
- What do people in your market see as your strengths?
Our dedication to customer service and satisfaction is the most recognizable strength. Larger companies do not provide the level of caring that we expect from our employees. Our marketing efforts concentrate highly on presenting the customer satisfaction awards we have gained and this philosophy may be viewed as strength. (Jacob, H., personal communication, 2009).
- What are people in your market likely to see as weaknesses?
The small size of our company may be perceived by people in the market as a weakness if they have not dealt with us in the past. (Jacob, H., personal communication, 2009).
- What could you improve?
I would like to improve on our ability to track the profitability of projects we undertake. We would like to base time projections on past performance and develop more realistic proposals and scope of work documentation. (Jacob, H., personal communication, 2009).
- What factors lose you sales?
Sometimes we simply cannot compete on price and when the customer is buying on price alone we loose sales. (Jacob, H., personal communication, 2009).
- What type of industry reputation does the company maintain?
Our reputation is unrivaled in the industry with over a 98% customer satisfaction rating from IP Telephony manufactures and we are among the top 10% of computer service organizations. (Jacob, H., personal communication, 2009).
- Do you have any competitive advantages?
We have been able to form alliances with key leaders in the IP-Telephony and Backup and Disaster Recovery industries. When those alliances are joined with our continuing relationships with vendors major computer vendors and manufacturers we experience a competitive advantage of quicker time to deliver needed parts. (Jacob, H., personal communication, 2009).
- What are your feelings on technical certifications?
We do not feel that a certification is a true measure of technical proficiency. Our engineers and technicians are highly skilled in their particular specialties. However, certain lacking certifications would help increase the confidence level of some perspective future customers. Our personnel are working to attain those certifications. (Schreve, D., personal communication, 2009).
- Where are the good opportunities facing you?
Many companies in our area operate antiquated phone systems should be replaced. Some of these phone systems do not provide the communication support necessary in today’s changing environment while others are nearing end-of-life and support contracts for those systems will soon end. (Jacob, H., personal communication, 2009).
Business continuity and disaster recovery planning are disciplines that have been overlooked by many organizations in our area. We have developed a Backup and Disaster Recovery solution that we feel should generate plenty of opportunity. (Jacob, H., personal communication, 2009).
- Are there any market trends that could affect your business?
Many companies are downsizing to cut costs. This trend is giving rise to a demand for service organizations capable of providing managed services. The current recession is also forcing some companies to rethink purchasing decisions and delay needed services that they would normally contract for in better times. (Jacob, M. personal communication, 2009)
- Are you pursuing any niche markets?
One niche market that we corner in the area is the Apple market. We are the only Apple authorized sales and service center in the area. (Jacob, H., personal communication, 2009).
- Is changing technology threatening your position?
Technology changes overnight and company’s providing technology solutions must maintain a level of adaptability to meet those changes. I consider those changes more of a challenge than a threat. (Jacob, H., personal communication, 2009).
- Do you have bad debt or cash-flow problems?
The company has adequate financial backing. (Jacob, M., personal communication, 2009).
- Could any of your weaknesses seriously threaten your business?
Our current accounting package is obsolete and would not be transferable to a more modern platform. If the system housing the application dies we would be faced with rebuilding the system from hard copy records. The lack of a BDR solution could also seriously threaten the business in the event of a fire or other disaster. (Schreve, D. personal communication, 2009).
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Appendix C: Mission and Vision Statements
“To profitably provide business technology and services, with the highest quality of service and support available in our markets, with complete customer satisfaction”. (JStan Group, 2000).
Our goal is to help our business clients thrive in an ever increasingly competitive marketplace by providing to them the expertise, services, hardware, and solutions they need to succeed. We desire to be known as the place to supply these services, so that if given the opportunity, no prospect needing our services would consider using anyone else. We desire to provide a level of service that becomes the standard against which our competitors will be measured, and we expect at least one referral from each of our active clients every year. (JStan Group, 2000).