IS Strategic Planning

[ Organizational Attributes that Influence Plan: | Phase of Technology Use | Strategic Impact ]

[ Planning Methods | Plan Outline ]

[ Tools: | Critical Success Factors | Value Chain | Pareto Principle | Porfolio Risk ]

[ Example IS Strategy ]

Overview

Narrow sense

Goal

Purpose is to get away from individual project approach and integrate several projects.

• Reduce inconsistency and redundancy between projects
• Reduce cost
• Develop shared strategy

Basic method

1. Identify Business Objectives and Environment
2. Determine project ranking method
3. Understand operations of business
4. Detemine data requirements
5. Identify system projects
6. Evaluate system projects
7. Organize development effort

Broader sense

• Develop vision, mission and goals that are consistent with organization goals. Should we be traditional data processing, major improvements, radical change?
• Determine Role & Place of IS dept. Development role or supportive role (Information center)? Organize dept. by project, IS function, organizational function?
• Degree of technology centralization.
• Plan development environment (e.g., languages, CASE tools)
• Determine Project characteristics.
• Create project teams, project goals, commit resources, schedule, software quality assurance standards, documentation standards.

Definition of a strategic IS plan

An explicit or implicit plan that supports the development, implementation and use of IS in an organization for the next 3 to 5 years.

The Importance of an IS strategic plan

Reasons for strategic planning

• The Scope of Integrated Systems Have social, environmental and technological component. They affect the nature of the organization. Effects must be anticipated so changes can be made to the various components to achieve "maximum" organizational performance.
  
• The Costs of the Technology. Costs are high.
  
• Protecting the Corporate Investment. Technology is constantly changing. Various groups need the technology. A plan is required whereby purchases will position the organization to evolve towards integrated systems.
  
• The Complexity of the Technology. Plan so various pieces of technology can come together (integrate) to obtain the greatest organizational impact.
  
• The Issue of Responsibility. Helps indicates what departments are responsible for what aspects of the evolving system.
  
• The Problem of Differing Perspectives. Planning process is important. Requires various people to come together and create a common vision. Helps resolve disputes.
  
• The Issue of Managing Change. Help create an environment where new systems will be accepted by the user. Plan training programs and methods of system implementation.
  
• The Growing Demands of Technology. Everyone wants some of the latest technology. Without planning everyone goes in a different direction. Planning also helps manage user expectations.
  
• Opportunity Management. IS planning can influence business objectives. Provide a strategic advantage.

Reasons for not developing an IS strategic plan

• Planning is exclusionary and undemocratic. In the past, end-users, line management and non-technical senior managers have not participated in the process.
  
• Planning is often used by data processing managers to bring the use of all technology under their control.
  
• Planning represents the view that systems should be imposed from above by a central systems authority.
  
• Planning is unrealistic. Technology is too complex to plan the details. It is also changing too fast to predict how it should be used in the future.
  
• Planning costs money and frequently is unsuccessful.
  
• Corporate wide integrated systems cost money and may retard "local" implementation and productivity improvements.

Organizational attributes that influence the desirability of planning

• Phase of technology use (Cash, McFarlan, McKenny, 1983). An organization may be in alll of the phases.

  Phase 1-Technology Identification and Investment Phase.

  Planning is technology oriented and human resource oriented. Key planning problems include identification of an appropriate technology for study, site preparation, development of staff skills, and managing development of the first pilot applications. Short term technical problems dominate. Long term planning is difficult.

  Phase 2-Technological Learning and Adaption Phase

  Focus of planning is on developing user consciousness of the new technology's existence and communicating a sense of the type of problems it can help solve, sequencing projects, and providing coordination. Initiate series of user supported pilot projects.

  Phase 3-Rationalization/Management Control.

  Planning has a strong efficiency focus. Planning is one to two year efficiency and organization considerations. Draw appropriate limits on types of applications. Budgets etc. control applications.

  Phase 4-Maturity/Widespread Technology Transfer

  Look further in future. Determine long term trends.

• Strategic Impact of IS activities.

  Categories of Strategic Relevance

  		Strategic Impact of Applications Development Portfolio
  		Low	High
  Strategic Impact of Existing Operating Systems	High	Factory: Strategic goal setting for IS not critical. Detailed year-to-year operational planning and capacity planning is important.	Strategic: Companies are critically dependent on smooth functioning IS. IS planning needs to be integrated with corporate planning.
  	Low	Support: Strategic goal setting for IS and linkage to long-term corporate strategy not as important. Support existing IS.	Turnaround: Substantial IS planning effort, linked to corporate planning. Long term performance can be impacted by shortfalls in IS performance.

  It is important that the company understand their position in the grid. IS may think it is strategic and management may consider it factory.

Methods for Planning

Desirable characteristics

• Should have some method. Not totally ad hoc. Methods should incorporate business goals.
• Process should involve many types of people. The process requires top management support, line management participation, user participation, IS group participation.
• Implementation. The plan should lead to some implementable systems.

Planning Processes

Business-led approach

Current business plans lead the way. IS plans can be built from current business plans. Business plans are analyzed to determine where information systems are most required.

Method-driven approach

Must use a formal technique or method. Frequently performed by consultants.

Administrative approaches

Emphasize resource planning. Provide a budget and a policy to exam projects. Proposals for projects go through a hierarchical approval process.

Technological approach

Based on an information systems oriented model of the business (ER model, DFD). Very demanding. Focuses on information integration.

Organizational approach

The strategic IS plan is not a neat, separate endeavor. The applications etc. are identified in a more subtle fashion. Every type of planning meeting from corporate strategic planning to lower level planning is aware of the possible importance and implications of IS. Special studies can be done to facilitate integration and the derivation of an IS theme.

A General Method and Plan Outline

1. Strategic Framework. Current and Future Context.
   • Environmental Scan. External trends, critical issues.
   • Business/Organization Assessment. Comparative analysis. Review organizations major strengths and weaknesses, obstacles. Review industry, competition and organization.
   • Technology Forecast
2. Strategic Direction
   • Provide basic indication of organization-wide opportunities for using new technology to improve productivity and achieve the business objectives. Do an "Opportunity analysis". Raise awareness in organization of technology opportunities. May interview managers etc. Areas to look at include: Organizational communication approaches, information resource management approaches, decision support, function needs, quality or work life.
     
   • Global Cost-Benefit: A Forecast.
     
   • Set IS Objectives for next three to five years.

     Ask some of these questions: "If we stay the way we are, where are we going?" "If we change, where are we going?" "Why are we going there?" "How will we get there?" "What is the cost of getting there?" "What is the benefit of getting there?" "Which parts of the organization need to get there first?"

   • State Strategic Assumptions
     
   • Objectives may be willing to "pilot" some projects.
     
3. The Functional Description and Tool Diffusion Plan. This is part of the strategy for developing a coherent technical infrastructure for the organization.
   • A functional description indicates the major IS needs of various parts of the organization and perhaps allocates responsibility for their support (e.g., corporate or departmental). This could include access to databases, decision support, meeting scheduling, communication, text processing, departmental applications. Out of this might come some standards that serve to integrate the IS through out the organization.
     
   • Tool diffusion plan. Indicate the allocation of tools to meet function and the order of implementation. Does not indicate exact hardware or software choices.
4. Global Technology Architecture. Indicates some of the hardware and software choices at least generically that will be used to integrate the organization. Considers type of computer (mainframe, mini, pc), degree of centralization/decentralization, type of database, LAN.
   
5. Information Architecture. Describes in more detail how information will be distributed throughout the organization. Also indicates what information is needed. What information will be managed at what level. May do ER models, information engineering. Try to reduce data redundancy.
   
6. Communications Architecture for Open Systems. Develop a strategy that now and in the future allows the pieces of the IS architecture to communicate with each other and the outside world. Decide on communication protocols. Need to worry about across vendor communication (getting better). Also decide on network topology.
   
7. Technology Policy. Could provide information, informal technology recommendations, formal guidelines, or formal policies that must be obeyed. Could provide, technical standards (hardware, operating systems, generic office systems, end user applications), security, documentation, back up, vendor selection, methods for cost/benefit analysis, development methods.
   
8. Implications for human resource management. Consider social factors of technical plan. Does organization need to be redesigned? Will informal methods of communication be changed? Will there be political problems in implementing plan (changing power relations)? Possible job design implications? Training?
   
9. A Strategy for the Work Environment. Environment of worker. (e.g., location of computer room, electrical outlet locations, ability to cable the offices, noise problems, ergonomic standards, chairs, desks). Environmental implications at corporate (e.g., interior design), departmental and individual level (e.g., desk design).
   
10. A Strategy for Leading Change. How to do we move to future system (i.e., a transitioning strategy). Choose appropriate time, motivate, create learning environment.

Some specific tools

Critical Success Factors

Def: "The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization."(Rockart, 1979). Support obtainment of organizational goals.

Examples

Supermarket Industry: Product mix, inventory, sales promotion, price.

Governmental hospital: Integrate health care with other hospitals, efficient use of scare resources, improved cost accounting.

Sources of CSFs

Procedure

Example measures: Image in financial markets-- price/earnings ration, company morale--turnover and informal feedback.

Value Chain

Organizations consist of primary and support activities. Want to add activities that increase value (i.e., increase in amount customers will pay - cost of activity).

--------------------------------------------------------------\\\
                         Firm Infrastructure                
Support                  Human Resource Management
Value                    Technology Development                M
Activities               Procurement                           A
-------------------------------------------------------------- R 
          Inbound     Operations  Outbound   Sales &   Service G
          Logistics               Logistics  Marketing         I
                                                               N
-------------------->Primary Activities---------------------->///

Method

Pareto Principle

Procedure

1. Determine the objective that needs to be attacked (e.g., market share, profit, revenue, quality, time).
2. Determine measures of this objective
3. Determine items that influence this objective and their corresponding measures.
4. Rank the items in descending order based on their contribution to the measure.
5. Identify ways to influence the activities that account for roughly 80% of the measure.

Project portfolio based on risk

Dimensions influencing risk

• Project size
• Experience with the Technology
• Project Structure (easy or complex)

Factors that influence portfolio risk

• Stability of IS group
• Perceived quality of IS group by insiders
• IS critical to delivery of current corporate services.
• IS important decision support aid
• Experienced IS development group
• Major IS problems in last two years.
• New IS management team.
• IS perceived as critical to future services.
• IS perceived as critical to future decision support aids.
• Company perceived as backward in use of IS.

Example of Strategic Planning