Formation 4

Module IV
Execution capacity of the

client
Introduction
Module I
Module II
Module III
Module V
Roll-out
Qtr 1
4
Qtr 2
Qtr 3
Qtr
Action 1
Action 2
Action 3
Action 4
Action 5
Module VI
Conclusion
Module IV
Contents of Module IV
Introduction
Assessment of execution capacity

Operational capacity assessment
Organizational capacity assessment
Information technology capacity assessment
A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Module IV
Introduction
Schedule for the A.T. Kearney Business Unit Strategy Training Program
Time
Monday
Tuesday
Wednesday
Thursday
Friday
Module II
Module III
Module V
Final presentation
8-9
Introduction
9-10
10-11
11-12
12-1
Module I
1-2
Lunch
Conclusion
Lunch
Lunch
Lunch
2-3
3-4
Module VI
Guest Speaker
Module IV
Guest Speaker
4-5
Case preparation
Case preparation
Case preparation
Strategy literature
review
7-8
Case presentation
Case presentation
Case presentation
Case Dinner
preparation
8-9
Dinner
Dinner
Dinner
Dinner
5-6
Lunch
6-7
9-10
10-?
Source: A.T. Kearney
Module IV
Introduction
Positioning of Module IV in the overall training context

Module II
Structure and
dynamics of the
industry
Module I
Identification of the key
issues of the
engagement
Module III
Characteristics and
dynamics of the
individual companies
Module V
Definition and
evaluation of strategic
alternatives
Module VI
Implementable
recommendations
Roll-out
Qtr 1
Qtr 2
Qtr 3 Qtr 4
Action 1
Action 2
Action 3
Action 4
Action 5
Module IV
Execution
capacity of the
client
Note: The order of presentation of the curriculum elements should not be interpreted as a sequential guideline for a strategy engagement. Different
elements of the program may be referenced at different times in the engagement
Module IV
Introduction
The intention of Module IV is to assess the clients execution capacity
Focus
To determine the degrees of strategic

freedom available to the client in terms of
the clients capacity to execute strategy.
The purpose is that strategic decision-
making should be tailored to the specific

capabilities of the client
Module IV
Introduction
Deliverable and techniques in Module IV
Deliverable
Techniques

Information capacity assessment
Module IV
Introduction

Module IV
Introduction
What is execution capacity?
Definition
Execution capacity of a company refers to the

current and potential resource and capability base
available to the company with regard to operations,
organization and information technology
Module IV
Introduction
A.T. Kearneys distinguishing characteristic in strategy is the assessment of the

clients execution capacity concurrent with the strategy formulation process
Strategy
analysis
Assessment of
the situation
Generation
and evaluation
of alternatives
Implementation
Concurrent
processes
Iterations
Iterations
Integrated
evaluation
and planning
Executionfocused
analysis
Assessment
of degrees of
freedom to
execute
Alternatives for
improving
execution
capacity
Implementation
Powerful
Contributions
Note:
The recommendations must have (i) high strategic potential as well as (ii) high likelihood of implementation and therefore bridge the gap between
strategy and operations
Module IV
Introduction
Execution capacity analysis focuses on identifying the resources and capabilities

available to the company within a reasonable planning timeframe
Illustrative
Operations
100%
100%
Information Technology
An assessment of the
clients execution
capacity can determine
whether the client can
realistically implement
the strategic solution
100%
The clients degree of

strategic freedom and
level of change readiness
to execute strategy can
also be determined
Organization
Note: All three execution capacity areas are, to a certain extent, linked to focus areas of A.T. Kearney, e.g. operational execution capacity could be seen in
relation to some of the operations practices; Organizational execution capacity could be seen in relation to the Enterprise Transformation methodology;
information technology capacity could be seen in relation to the Strategic Information Technology Practice and Jupiter
Module IV
10
Introduction
The three areas must be integrated when executing strategy, and therefore should
be evaluated together when assessing execution capacity
Illustrative
Operations
The three parts are not separate
entities, and any analysis of
one must be integrated with
analyses of the other two
elements. For example, the
organizational capacity
assessment will be a major part
of an IT or an operational
capacity assessment
Information
technology
Organization
Module IV
11
Introduction
Why focus on execution capacity?
Illustrative
Key question
Required
position
Does the client have the

execution capacity to move from
its current position to the position
required to successfully carry out
recommended strategies in terms
of:
Current
position
Resources?
Capabilities?
Module IV
12
Introduction
An execution capacity assessment helps to identify resource and capability

requirements for the client
Focus
Operations
100%
Gap
Current resource and

capability level
An assessment of a clients degrees of strategic

freedom to execute and an analysis of alternatives for
improving its execution capacity is built on an
evaluation of the clients current performance vis--vis
what will be required to execute the strategy
The analysis will focus on answering:
Is the current resource and capability level
sufficient to ensure competitiveness for the client?
In which functional areas have gaps been
identified?
100%
Information Technology
100%
Organization
Which specific gaps are critical hurdles for

further success?
To what extent can the gaps be eliminated?
Is the client ready to implement changes?
Module IV
13
Introduction
To identify and assess a business units execution capacity, one must analyze its
resources and capabilities
Tangible or intangible factors that are owned or

controlled by the company (e.g. plants, items of
capital equipment, cash, information)
The companys capacity for undertaking a particular

activity by deploying and cooperating resources
(e.g. delivering highly reliable services)
They are developed over time through complex

interactions among the companys resources
Capabilities, unlike resources, are based on

developing, carrying and exchanging knowledge
through the companys human capital
Resources
Capabilities
Module IV
14
Introduction

Module IV
15
Description
Defining operational execution capacity
Definition
Operational execution capacity is the extent to which
the client can employ its operational resources and

thus create capabilities to perform the activities
required to implement a new strategy within a
reasonable time frame
Module IV
16
Description
Operational execution capacity is the first dimension of the assessment
Key questions
Does the client have sufficient degrees of strategic
freedom or to what extent is the client constrained by
the current situation to execute operational tasks?
What is the clients current level of operational
resources and capabilities?
How are the current resources and capabilities
utilized?
How well is the client positioned in the supply
chain?
Does the client control all relevant activities in the
value chain?
Operations
100%
100%
Information technology
100%
Organization
What alternatives exist to improve the clients

execution capacity and to what extent will its current
level of operational resources and capabilities limit
the clients opportunities to implement the optimal
strategic solution?
Module IV
17
Description
The clients operational resources must be analyzed to understand the extent to

which the company can support its strategy execution
Operational resources
Personnel
Suppliers
Purchasing
Accounting
and finance
The
operations
function
Technical
engineering
Marketing
Customers
Product/services
development
Source: Slack, N. et. al. (1995); Operations Management

Module IV
18
Usage
High operational ability can contribute a range of performance advantages that

can be drawn upon in designing a business unit strategy
Doing things cheaply
A cost advantage
Doing things on time
A dependability advantage
Changing what you do
A flexibility advantage
Doing things correctly
A quality advantage
Doing things quickly
A speed advantage

Module IV
19
Usage
In essence, the execution strategy is dependent on the operations handling of its

performance objectives
Low price, high margin, or both
Short delivery lead time
Dependable delivery
Costs
Speed
Fast
throughput
High total
productivity
Dependability
Reliable
operation
Internal effects of the five

performance objectives
Error-free
processes
Ability to
change
Quality
Flexibility
On-specification products
and services
Frequent new products/services

Wide products/service range
Volume and delivery adjustments

Module IV
20
Example
An overview of the clients strengths and weaknesses can be realized through an

analysis of its operational resources
Differences between retail banking and corporate banking

Retail banking
Dependability and
flexibility must be
improved
Retail banking
Cost
Corporate banking
Speed
Corporate banking
Cost is the major
weakness for
corporate banking
Dependability
Quality
Flexibility

Module IV
21
Example
Identify resources along the value chain and understand their relative strengths
Operational resources can be identified at each step of the value chain

Define the value
chain
Define resources
Define capabilities
R&D
Resources Patents
Copyrights
Research
facilities
Skills of
research
personnel
Product
Design
Manufacturing
Physical
characteristics
Quality
Expertise in
design
Capabilities Capability in Design

basic research
capability
(Merck, AT&T) (Apple)
Ability to
develop
innovative new
products (Sony)
Speed of new
product
development
Marketing
and Sales
Raw materials Brand/

Size of plants
reputation
Location of
Advertising/
land and
promotion
buildings
Salesforce
Package
Capacity for Brand

continual
management
improvements and brand
in production
promotion
processes
(Procter &
(Toyota,
Gamble,
Nucor)
PepsiCo)
Flexibility and
speed of
response
(Benetton)
Distribution
Channels
Inventory
Warehouses
Distribution
fleet
Service
Warranty
Speed
Service
network
Efficiency
Quality and
and speed of
effectiveness
distribution
of customer
(Federal
service
Express)
(Walt Disney,
Marks &
Spencer)
Module IV
22
Example
Identify critical capabilities required to deliver customer value and assess the
companys strengths and weaknesses in these areas relative to competitors
Identify how the
current resources
can be improved and
which additional
resources should be
acquired to fill this
gap
Top performer
Assessment of capabilities
Capabilities required
Key operational
success factors
Determine the
importance of the
capability with
respect to the key
success factors
Client
Assess the strength of each capability
Weight
1
Lead time
Manufacturing
flexibility
Delivery within 24
hours
Highly reliable
service
Module IV
23
Example
A benchmarking analysis can help to uncover key issues and questions related to
the clients ability to exploit its current resources and capabilities
Example: Security system
Define the value

chain
Compare qualitative differences to competitors

R&D
Define the competitors

and benchmark
Pose key questions
Product
Design
Manufacturing
Distribution
& Sales
Service
Client
USD 3m budget
split among
variable
cost reduction,
sales support and
development
MSI medium scale integration serving the

high end
No low-end product
2 plants
Backwards integrated into integrated
circuit manufacture
Direct sales force for

systems and customer
segment regionally
organized
Sales agent network for
business segment
supplemented with five
direct salesmen
Service
handled by
sales agents
Competitor A
USD 9m budget
10% solid state products

A 1,000 for high end, A 100 for mid
range, A 10 for low range
Essentially an assembly operation
Purchases chips externally
Direct sales force for

all segments
Systems sales force
specialized by
customer group
Service
handled by
agent
network
Competitor B
Subcontracted
Low end product only, but rumors of a

medium product in development
100% solid state
Foreign sourcing and assembly
Infiltrating client's sales Infiltrating

agents network
client's
sales agent
network
Can the client be

the technical
leader in the
systems market?
Can client adopt a modular design?

Should a low end product be
outsourced?
Can client move to a

direct sales force in
the business segment?
Module IV
24
Methodology
Methodology for performing an operational capacity assessment
Input
Strategic era
analysis
Strategic planning
framework
Ratio analysis
Client
data/interviews
Expert interviews
Analyst reports
SEC filings*
Trade journals
Customer surveys
Annual reports
Identify the
clients operational
resources and
capabilities
Determine which resources
and capabilities are most
critical to successfully
implement the strategic
initiative
Identify the level of
resources and capabilities
available within the
company:
Purchasing
Personnel
Accounting and finance
Marketing
Product/service
development
Technical/engineering
Draw an operational map
using the key success factors
Identify the resources
employed to perform current
value chain activities, and
determine how efficiently
the resources are being
utilized
Output
Assess its
strengths and
weaknesses
Determine the
most critical
gaps
Pose critical questions:

Pinpoint the most critical
How can the client regaps to be closed
deploy the resources to
Use knowledge of operations
deliver products/services
to (re-) formulate strategic
differently?
alternatives
Can the client lever/
stretch the resources to
increase productivity?
Can the client reconfigure
the resources to achieve a
different set of
capabilities?
How can the clients
current capabilities be
applied in a different
activity?
How can the client better
use the resources to focus
on different customer
groups?
Compare the companys key
operational resources and capabilities
internally and against competitors
Conduct high-level gap analysis to
assess current capabilities
* Reports filed by publicly held companies with the Securities and Exchange Commission: e.g., 10K, 10Q
A determination of
the companys
ability to execute an
intended or proposed
strategy
An identification of
the critical
operational success
factors
An assessment of the
company's
operational resources
and capabilities
A gap analysis that
illustrates where the
company lacks
adequate resources
and capabilities
Module IV
25
Conclusion
Conclusion
Key points
Should be performed concurrently with all other analyses of the industry, client, and competitor
companies to relate strategic thinking to company capabilities
Purpose of the analysis is to understand the companys capacity or degrees of freedom to execute
certain strategies
Heavily interlinked with the company analysis in Module III
Benchmarking (see Module III) might provide additional insights
Strengths
If properly defined, a very strong technique used to ensure that a strategy is implementable
Weaknesses
If resources and capabilities are incorrectly assessed

An otherwise sound and logical strategy may be rendered useless
The performance measurement systems may be adversely affected
References
Colis, D., and Montgomery, C. (July-August 1995); Competing on Resources: Strategy in the 1990s
Grant, R., (1996); Contemporary Strategy Analysis
Wernerfelt, B. (1984); A Resource-based View of the Firm, Strategic Management Journal, Vol. 5
Hamel, G. and Prahalad, C.K. (May-June 1990); The Core Competence of the Corporation, Harvard
Business Review
Stalk G., Evans. P, and Shulman, L.E. (March-April 1992); Competing on Capabilities; Harvard
Business Review
Module IV
26
Introduction

Module IV
27
Description
Organizational execution capacity refers to the extent to which an organization can

bring about change
Definition
Organizational execution capacity is the clients ability

to change the organizational dynamics so as to increase
effectiveness. This refers to the degree to which the
organization can handle organizational change processes,
including changes in resources and capabilities within its
structure, style, staff, shared values and skills
Module IV
28
Description
Organizational execution capacity is the second dimension of the assessment

Key questions
Does the client have a sufficient degree of strategic
freedom to execute the required organizational changes?
Are the current organizational resources and
capabilities geared to undertake change?
Are the necessary systems and skills in place?
Can the organization, especially the management,
deliver the needed results?
- Historical performance
- Commitment and willingness
To what extent is the staff motivated and committed
to pursue organizational changes?
Operations
100%
100%
100%
Organization
What alternatives exist for improving the execution

capacity?
To what extent can the current level of organizational
resources and capabilities be (re-)allocated within
a reasonable time horizon?
How can the clients resources and capabilities be
stretched and leveraged?
To what extent is it necessary to acquire new skills?
Module IV
29
Usage
The organizational execution capacity should be measured with respect to both

tangible and intangible resources of the company
Financial
The companys borrowing capacity and its internal funds

generation determine its investment capacity and its cyclical
resilience
Tangible
Physical
Organizational
capabilities and
resources of the
company
Technological
Intangible
Human
Reputation
The size, location, level of technology, and flexibility of plant

and equipment; location and alternative uses for land and
buildings; reserves of raw materials as they determine the
companys set of production capabilities and determine the
potential for cost and quality advantage
Stock of technology including proprietary technology and

expertise in its application of know-how; resources for
innovation (research facilities, technical and scientific
employees)
The training and expertise of people determine the skills
available to the company; the adaptability of employees
determine the strategic flexibility; the commitment and loyalty
of employees determines the companys ability to maintain
competitive advantage
Reputation with customers through the ownership of brands,
established relationships with customers, the association with
a companys products with quality, reliability, etc.; the
reputation of the company with the suppliers of components,
finance, labor services and other inputs
Source: Grant, R.M. (1996); Contemporary Strategy Analysis

Module IV
30
Usage
A number of key factors will indicate the clients organizational execution capacity
Resources
Key indicators
Financial
Debt/equity ratio
Ratio of net cash to capital expenditure
Credit rating
Physical
Technological
Number and significance of patents

Revenue from patent licenses
R&D staff as a percentage of total employment
Human
Educational, technical, professional qualifications of employees

Pay rates relative to industry standards
Reputation
Resale values of fixed assets

Age of capital equipment
Scale of plants
Alternative uses of fixed assets
Brand recognition
Price premium over competing brands
Percentage of repeat buying
Objective measures of product performance
Level and consistency of company performance
Source: Grant, R.M. (1996); Contemporary Strategy Analysis

Module IV
31
Example
Determine the organizational structure of the company to identify the management

levels and skill base that is available
Is the organizational design and skill base optimal to implement the strategy
General Manager
Understand the
decision mechanism
of the company
Who are the key
decision makers?
Who has the
power?
Purchasing
Operations
Finance
...
...
...
...
Head of
Region A
...
...
Head of
Region B
...
...
Head of
Region C
...
...
Head of
Region D
...
...
Module IV
32
Example
Managerial experience and skill levels determine the management

teams capacity to undertake strategic change
Mapping of the managements capabilities
To which extent are

the individuals in the
management group
ready and capable to
undertake change?
Curriculum Vitae
1 = Poor
10 = Very good
Middle management
Mr. X
Mr. Y
Mr. Z
Leadership capabilities
Technical skills
Experience in
implementing change
10
Flexibility and mobility
Commitment to change
10
Operational skills
Linguistic abilities
Note:
A.T. Kearney executive search may be able to provide insights on key success factors in different countries
Module IV
33
Example
Map the capabilities for all management levels on defined dimensions
Dimensions will differ

depending on the level
of management
Middle managements capabilities map
Expected capability requirements
Knowledge of
company product range
To what extent are the
individuals in the
middle management
group ready and
capable to undertake
changes?
Current managerial capability available
Ability to run staff

on project basis
Knowledge
of customer
business
issues
Ability to flexibly
deploy staff
Willingness
to make and
accept
mistakes
Ability to appraise staff using

customer based measures
Module IV
34
Example
The organizations track record for the execution of previous strategies should
impact future strategic recommendations
By analyzing the
historical decisionmaking process of the
client, a picture of
change willingness
can be depicted
The management group has not properly followed through previous

strategies
Date
Decisions
made As original
Minutes of
the Board
meeting of
Implemented
Minor
changes
Major
changes
Not
implemented
3
3
3
3
3
Module IV
35
Example
Identify the clients relevant project management experience in executing new

strategies
Understand
managements attitude
toward previous
change programs.
Understand their
reasons for success and
failure
Analysis of past success and failure
New strategy
periods
Major changes
suggested in the
strategic plan
Breakthroughs
achieved
Problems during
implementation
Use strategic era

analysis as an input
Understand change
management programs
that have been
implemented
Understand
breakthroughs
Define concrete
problems encountered
during implementation
Module IV
36
Example
An actual engagement showed that the client had not considered the consequences
of its objectives
Show the
development required
to make the changes
As a consequence of the clients objective, the organization will lack

managers in the future
Number of managers
Indicate story
behind slide
100
Based on its growth

ambitions, the company
must double its
management resources
within 2 years
50
1997
Pose questions
that create a
reality check
Is this realistic?
Is the human
resource
department ready
to pursue such a
task?
1999E
Module IV
37
Methodology
Methodology for performing an organizational capacity analysis
Inputs
7S
Strategic era
analysis
Strategic planning
framework
Client
data/interviews
Expert interviews
Analyst reports
Annual reports
SEC filings*
Trade journals
Press clippings
Customer surveys
Outputs
Analyze the
organizational
structure
Clarify the formal and

informal organizational
routines
Assess organizational
capabilities:
Staff
Systems
Skills
Shared values
Style
Structure
Assess the
strengths and
weaknesses
Map current resources

and capabilities against
those that will be needed
to implement the strategy
Determine the strengths
and weaknesses of both
the organizational
structure and the skills
possessed by the
organization
Evaluate the
critical gaps to
be closed
Define the most critical gaps

and determine the measures
necessary to close them (e.g.
make versus buy decisions)
Strengths and
weaknesses of the
organizational
structure
Determination of
measures required to
raise the
organizational
capabilities up to the
level necessary to
implement the
strategy
* Reports filed by publicly held companies with the Securities and Exchange Commission: e.g., 10K, 10Q
Module IV
38
Conclusion
Conclusion
Key points
The purpose of the analysis is to understand the companys capacity or degrees of freedom to execute
strategies
Draws heavily upon the analyses taught in Module III
The 7S analysis in Module III provides insights on organizational strengths
Strengths
Helps the team develop strategies that are implementable and executable from an organizational
perspective
Weaknesses

Otherwise sound and logical strategy may be rendered useless
Performance measurement systems may be adversely affected
References
Module IV
39
Introduction

Module IV
40
Description
Information technology analysis is essential whether the company is initiating a

strategic change or only evaluating the implementation of its existing strategy
Definition
Information technology execution capacity is defined by the
extent to which the clients information technology system
provides a basis for executing strategy. Accordingly, it
concerns the degree to which the information technology

resources and capabilities can be a lever for implementing
change. This entails not only understanding the clients
present capabilities, but also evaluating new technologies
available on the market and their potential to support new

strategic options.
Module IV
41
Description
Information technology execution capacity is the third dimension of the assessment
Key questions
Operations
100%
100%
100%
Organization
How can information technology help the company in

implementing the strategy?
Can new technical solutions allow for strategic options
previously not open to us?
Does the client have sufficient degrees of strategic
freedom to execute the required information technology
changes?
What are the IT resources and capabilities available to
the company?
How does the clients present IT system reflect the
current needs of the organization?
To what extent can the present IT system undertake
change?
Are the necessary systems and skills in place?
What alternatives exist to improve the companys

information technology execution capacity?
Note:
A.T. Kearneys Strategic Information Technology Practice (and Jupiter) can in many instances be helpful to determine key areas of focus
Module IV
42
Description
In addition to considering a companys IT potential we must rethink the

relationship between strategy and technology, and thereby ask how IT can impact
strategy
Strategy
Traditionally we have
been asking:
In our new thinking we

must also ask:
How will IT support

our business strategy?
How will IT impact our

business strategy?
Technology
Module IV
43
Description
This entails helping clients to understand and exploit new technologies in order to
develop new business capabilities that will create competitive advantage
Understanding the
new Business Context
New Technologies and

Key Concepts
Digitalization
- Virtualization
Network Connectivity
- Interactive reach
Eliminating Barriers
Form (Ticketless travel)

Time (E-mail)
Place (Video conferencing)
Developing new
Business Capabilities
Module IV
44
Description
The companys IT capability should be analyzed by leveraging SITP skills and

employing the Jupiter the framework in our work. Jupiter has aligned its
competencies and deliverables along 5 phases
How does IT
impact my
business strategy
Foresight
I need insight
into my IT
challenge &
opportunity
I understand the
challenge, but I
need a plan and
an approach
Insight
Plan
I have an IT
plan, but I want
implementation
leadership
Implementation
I have
implemented
but, I want
assurance
Hindsight
Module IV
45
Description
The SITP core competencies are teams of people who are particularly skilled
within a certain area of expertise
Foresight
Insight
Plan
Implementation
Hindsight
Digital Economy
IT Alignment
Enterprise Modeling
Enterprise Implementation
Electronic Commerce
Business Intelligence Systems
Transforming the IT Organization
Large Scale Program Management
Module IV
46
Description
Key Jupiter deliverables in foresight and insight are relevant to strategy work
Module IV
47
Description
Information technology is a key enabler for management objectives
Increased sales
Competitive advantage
Market positioning
Partner integration/
virtual enterprise
Infrastructure
Integration
Flexibility
Lower IT costs
Standardization
Information
Increased control
Better information
Better integration
Improved quality
Transaction
Cut costs
Increase throughput
Strategic
Organizational Flatten organization

changes
Responsiveness
Flexibility
Performance breakthrough
Knowledge management
Skills management
Module IV
48
Usage
Information technology can be used to create value throughout the value chain
An generic value chain with example areas that can be improved via IT developments
Company
infrastructure
Planning modes
Human resource
management
Automated personnel scheduling
Technological
development
CAD - electronic market research
Procurement
On-line procurement of parts
Automated
warehouse
Inbound
logistics
Flexible
manufacturing
Operation
Automated
order
processing
Telemarketing
remote
terminals for
sales persons
Outbound
logistics
Marketing
and sales
Remote service of
equipment
Computer
scheduling of
repair trucks
Service
Module IV
49
Usage
The companys information technology resources and capabilities play an integral

part of the strategic planning process
Strategic information
technology planning
Strategic analysis
Company resources
and capabilities
Strategic choice
Information
technology priorities
Management must assess the opportunities created by information

technology (benefits/risks and sustainability of advantage)
Management must align business unit strategy and information
technology strategy
Management must assess how technology might impact existing
competencies and methods of doing business
Module IV
50
Usage
The company's IT capability should be analyzed by looking at the following

elements
The corporate/business unit IT-organization
Computing
Applications
Network
Data
What are the technical

standards comprising
the companys
information processor?

standards for the main
application system?

standards defining the
network?
What are the standards

defining how data is
collected, stored and
retrieved?
External technological environment
Module IV
51
Usage
IT can have a major influence on the companys ability to implement strategy

The IT function
The IT department
Is the IT function centralized at corporate level?

Bureaucratic?
Efficient?
Flexible?
Responsive to local needs?
Are the users responsible for directing, developing
and implementing it?
Is the local IT department able to support the

strategy?
Service focused?
Multiple technologies?
Support units?
Change flexibility?
Development backlog?
Maintenance backlog?
Communication between technological experts
and user?
Strategy
The IT management
The IT culture
Does IT management respond to user challenges?

Technical manager vs. functional executive
Planning and control vs. strategic and political
Structure vs. conceptual and visionary
Reactive vs. proactive external posture
Hands-on internal style vs. hands-off
Does the organization see IT as a key element in

building competitive advantage?
Do a majority of employees have free access to
customer product or financial information?
Does the organization protect information?
Module IV
52
Usage
An analysis of the company's relevant IT project management experience might

provide interesting insights
Questions
What major IT projects have been
implemented during the past 5 years?
Where and why were the projects
initiated?
Who managed the projects?
What was the failure and/or success of
these projects?
What were the major problems in

implementing change?
Module IV
53
Example
The information technology infrastructure stages of change readiness
The stages of
change readiness
A.T. Kearneys information infrastructure stages of changes readiness

model provides a checklist to assess the company's information technology
capabilities
Capability
In order to assess
client strengths
and weaknesses,
IT capabilities
should be
evaluated with
respect to the four
stages of change
readiness
Stage 1
Innocence
Stage 2
Awakening
Stage 3
Commitment
Stage 4
World class
Information
technology systems
linkages with the
business
Information
technology
alignment
Stand-alone
information technology strategy
Linked to work
processes
Linked to agenda
for todays
business
Linked to agenda
for tomorrows
business
Around the
transaction
Around line
organizations
Around line
organizations and
product lines
Around customerdriven processes
Orientation of
information
system
Process
transactions
Data exists, but not
readily available
Support period
accounting
Fragmented
departmental
data
Support planning
with operational
data
Shared data
Support process
flow, internal and
external
Concurrent
visibility of data
Technology base
High dependence
on mainframes and
mini-computers
PCs/workstations
used in significant
numbers
PCs/workstations
are interconnected
PCs/workstations
access information
globally (internal
external sources)
User base
Technicians only
A few initiatives
Broad based users

are computer
literate
Users are trained

to develop own
inquiry/tools
Module IV
54
Example
Map the IT organization
The IT organization and its areas of responsibility in company X
The overview gives

a good picture of the
hierarchical
structure and activity
areas of the client
Areas of
responsibility
IT director
Program/application
Manager - financial
Program/application
Manager - sales
Responsible for all

financial
applications
Responsible for all

sales information
Micro systems
Manager
Responsible for
store-level-systems
(PCs and software)
Operations
Manager
Responsible for
Monitoring daily
workloads of
system
Administration
phonemail system
Set-up and repair
corporate PCs
Description of
area
Module IV
55
Example
Map the clients IT architecture
Identify the clients application base starting with its architecture
Identify the key

components of the
clients IT structure
Understand
processes, strengths
and weaknesses
External user
Provision of
data adjustment
transformation
External user
User interface
Routing/
switching/
converting
Booking
Data warehouse
CIS/MIS/reporting
Authorizing
Billing
Provision of
data adjustment
transformation
Administration of
document
Internal
administration
Module IV
56
Example
Analyze the IT organizations ability to develop applications
Company X spends most of its resources on maintenance
Understand the
performance of
the MIS
department
Look at factors
such as MIS
expenditure
The users
satisfaction with
applications is a
key indication of
MISs ability to
develop
competitive
solutions
MIS resources spent on

development vs. maintenance
Quality assessment of MIS

development application
Percent
Percent
41
59
Develop
Rated by user (functional quality)

Rated by MIS (technical quality)
80
70
61
86
85
70
60
59
Maintain
39
1995
41
1996
1997
1995
1996
1997
Module IV
57
Example
Assess users perception of the companys IT capabilities at a high level
Department Y must improve some of its IT capabilities
Define the key

IT performance
indicators for
the client
Key indicator
Very good
Good
Satisfactory
Department X
Department Y
Not good
Quality of current
applications
Do the applications
match the requirements
Software performance
Availability of IT
solutions
Responsiveness of IT
service
Technical assistance
Map the
execution
capabilities of
the client
Consulting of users
Module IV
58
Methodology
Methodology for performing an information technology capacity assessment can be

extracted from the Jupiter framework
Inputs
Outputs
Technology
trends
Client
data/interviews
Expert interviews
Analyst reports
Trade journals
Clients IT
execution capacity
detailed by the
strength of
individual IT
resources and
capabilities
Employ the
Study the Current
Perform the IT
Perform the IT
Application value
framework
baseline
organization
change readiness
assessment
portfolio
investment/value
analysis
A qualitative framework
that maps each major
application system
against business value on
one axis and
functional/technical
adequacy on the other
Business value may be
based on one or more
considerations, such as:
Support for KSF
Support for new
business direction
Critical information
needs
Customer satisfaction
This describes the

current state of
information technology
within an organization,
with respect to:
Strategy
Organization and
management
Policies and processes
Systems (applications
and data)
Infrastructure
(technology and
communications)
IT costs
This assesses the

potential impact on the
IT organization as a
result of any change
initiative
The following are
typically assessed:
Management
Structure
People
Workflow and
procedures
This provides a
qualitative assessment of
the investment and
subsequent value of the
current IT portfolio with
respect to it being able to
address the needs of the
business. The intent is to
show a causal link
between business
objectives and IT
investment
Module IV
59
Conclusion
Conclusion
Key points
Understand the companys capacity or degrees of freedom to execute certain strategies
Can be related to the technology portion of the value chain
Strengths
An identification of the current IT and capabilities resources will outline the key areas of concern
Key IT drivers
IT as an enabler or constraint
Weaknesses
References

Otherwise sound and logical strategy may be rendered useless
Performance measurement systems may be adversely affected
A.T. Kearney Strategic Information Technology Practice

Jupiter
Module IV
60

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Module IV

Execution capacity of the

Assessment of execution capacity

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Positioning of Module IV in the overall training context

The intention of Module IV is to assess the clients execution capacity

To determine the degrees of strategic

making should be tailored to the specific

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Deliverable and techniques in Module IV

Assessment of execution capacity

Operational capacity assessment

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

What is execution capacity?

Execution capacity of a company refers to the

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

A.T. Kearneys distinguishing characteristic in strategy is the assessment of the

Assessment of execution capacity

Execution capacity analysis focuses on identifying the resources and capabilities

The clients degree of

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

Why focus on execution capacity?

Does the client have the

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

An execution capacity assessment helps to identify resource and capability

Current resource and

An assessment of a clients degrees of strategic

Which specific gaps are critical hurdles for

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

Tangible or intangible factors that are owned or

The companys capacity for undertaking a particular

They are developed over time through complex

Capabilities, unlike resources, are based on

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

Operational capacity assessment

Defining operational execution capacity

Operational execution capacity is the extent to which

the client can employ its operational resources and

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Assessment of execution capacity

Operational capacity assessment

Operational execution capacity is the first dimension of the assessment