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Lecture 10

BIS4430IS Planning

(Unit 5)

Laudon & Laudon, 10th Ed., Chapter 14

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What is a Business Plan?

Starts with some kind of statement, general or explicit, stating where an organisation would like to be

A strategic business plan contains:• Organisation’s mission and future direction• Performance targets• Strategy

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What is an IS Plan?A road map indicating

• the direction of systems development (the purpose of the plan),

• the rationale,

• the current systems/situation,

• new developments to consider,

• the management strategy,

• the implementation plan, and

• the budget. (Laudon & Laudon)

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What is an IS Plan?

An IS plan includes:

• activities that help to achieve the goals

• a program of measure

• means of implementing changes

A statement how management see ISs in the future Effy Oz

See page 497 of Laudon and Laudon

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Need for a Plan

• IS which are complex and/or which aim for distinct competitive edge require long-range

planning.

• Decisions on future IS have organisation-wide impact, affecting turnover, and staff motivation, and therefore, IS planning should be carried out within the larger framework of corporate planning.

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Need for Planning

• Investment in IS has increased significantly because of the influx of products and support based on new computer and telecommunication technology. Such commitments require careful and systematic

planning.

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Need for a method

• to provide a structured and systematic approach

• provide basis for development of IS that reflect more accurately the needs of the organisation

• provide IS group with direct link into corporate planning

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Variety of terms used:

• Information Systems Planning (ISP)

• Information Systems Strategic Planning (ISSP)

• Strategic Planning for Information Systems (SPIS)

• Strategic Information Systems Planning (SISP)

• Corporate Information Technology Planning (CITP)

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In this unit we are looking at:

• Planning undertaken by an organisation in order to

determine its information systems requirements so that it

can meet its short term and long term needs

• The process of identifying the application portfolio that

will help the organisation in executing its business plans

and consequently realise its business goals and /or

the process of developing an application portfolio

with a high impact and the ability to create an advantage

over competitors.

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Information Systems Planning

.. The planning of information systems used to support or shape an organisation’s competitive strategy, its plan for gaining and/or maintaining advantage’

(Rackoff, 1985 in Fitzgerald)

Two broad approached to SISP:

• IMPACT approach:

• ALIGN approach:

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identification of a small number of IS applications that can give the organisation a competitive edge

the development of organisation-wide information architecture of applications to guide the creation of large databases and computer systems to support current business strategies

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IMPACT approach

ALIGN approach Business goals

Competitive advantage

Value chain analysis

•Helps to identify critical points of inter-departmental collaboration•Concentrate on value adding activities and is independent of organisational structure•Pitches IS right into the realm of value adding rather than cost cutting

Weaknesses include:

• Only provides a high level information model – development and implementation issues are not addressed

• The focus is on operations not on data – does not provide suitable data structures

• Difficult to apply to organisations where the product is intangible, and where there are no obvious raw materials

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(Pant and Hsu, 1995)

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Approaches to Business IS planning

• Bottom-up planning

• Top-down planning

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Bottom-up planning

• approach to planning is based on an organisation’s response to needs/problems

• mainly driven by middle managers

• does not allow a broad view of organisational needs and opportunities

• reactive rather than proactive

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Bottom-up planning

Top management

Business units

IS will serve specific units well

Usually not conducive to enterprise-wide integration of systems

The process starts with individual concerns

Adapted from Effy Oz, 2000

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Top-down planning

• also considered as goal-driven

• driven by senior managers

• proactive rather than reactive

• effective in creating strategies for overall business

• results in highly integrated Information Systems spanning the entire organisation.

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Prerequisites for effective IS planning

• recognise IT as a indispensable resource

• understand that IT is a complex resource

• regard IT as owned by the entire organisation

• regard IS as a source for gaining strategic goals

• view IS as a tool to control power

The top management must:

Corporate mission

IS mission

The role of the IS in the corporation IS vision

The ideal technology (hardware, software, communications) for the corporation

IS strategic plan

Goals to be achieved IS tactical plan

Objectives and ways to achieve them

Plan for operations

Projects priorities staffing purchases fundingBudget

The steps of IS planning

(Effy Oz, 2006:386)

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IS planning

• Critical Success Factor (CSF) planning

• Business Systems Planning (BSP) or Enterprise Analysis

• SISP

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Strategic Analysis or Critical Success Factor (CSF) Planning

A small number of easily identifiable operational goals shaped by the industry, the firm, the manager, and the broader environment that are believed to ensure the success of the organisation.

L&L

Used to determine the information requirements of the organisation

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Success factors – McKinsey and Company, by D. Ronald Daniel in 1961 ‘Management Information Crisis’, Harvard Business Review, Sept-Oct, 1961.

Critical Success factors – Jack F Rockart in 1979‘Chief Executives Define Their own Data Needs’, Harvard Business Review, March-April 1979, p81

Published later in 1986 in the book, ‘A Primer on Critical Success Factors’.

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Measures that indicate the performance or efficiency of different parts of an organisation and its processes.

Bocij et al. (2006)

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Critical Success Factor (CSF) Planning

underlying concept is that the success of the organisation is the sum of the success of individual business units

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---------Business activities---------

CSF CSF CSF

Key Decisions

Key Decisions

Key Decisions

Information needs

Information needs

Information needs

Bocij et al. (2006),page 598

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According to Rockart there are 4 basic types of CSFs:

• Industry CSFs resulting from specific industry characteristics

• Strategy CSFs resulting from the chosen competitive strategy of the business

• Environmental CSFs resulting from economic or technological changes

• Temporal CSFs resulting from internal organisational needs and changes

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Industry CSFs

Organisational CSFs

Business Unit or Function CSFs

Manager’s CSFs

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Critical Success Factor (CSF) Planning

• Identify the firm’s primary mission and objectives

• Executives identify CSFs

• Identify measures of performance

• Decide which measures are most important

Steps:

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CSF Sources

• The structure of the industry

• Firm’s competitive strategy

• Firm’s industry position and/or geographic location

• Environmental factors surrounding the firm

• Temporary operating problems or opportunities

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CSF Examples

• Improving customer relationship

• Improving supplier relationship

• Making the best use of inventory

• using capital and human resources efficiently and effectively, etc.

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CSF Source of CSF Primary measures & Targets

Increase number of customers

Industry 95% customer retention rate; 15% new customers/year

Install customer service hot line

Strategy 90% customer queries answered in 1 hour

Increase number of customer service reps

Strategy 3 reps per 100 customers

Restructure capital structure

Environmental Lower cost of capital by 2%

Raise employee morale

Temporal Increase employee retention rate to 95%/year

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Consider the case of a mail order supplier of clothes:

Objective: To increase market share by 5% per annum

CSFs: Effective advertising,

faster customer order processing,

faster distribution service

IS Applications: market research database and analysis, web based order processing,

automated delivery scheduling

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Benefits of CSF Planning

• starts with a shared understandings of what is critical to the company help effective communication between executives

• influences in prioritising system development projects

• systems produces are more custom tailored

• takes into account the changing environment

• especially suitable for DSS and ESS

Weaknesses:

• Although useful and widely used, not enough to perform a comprehensive SISP on its own

• To be of value, need to be easily and directly related back to BU goals. According to Ward, generally looses its value when used below the 3rd level of hierarchy

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(Pant and Hsu, 1995)

Weaknesses:

• Focuses primarily on management control hence internally focused rather than creative

• Do not draw attention to the value added aspect of information systems. CSFs facilitate the identification of IS which meet the key information needs of a BU/organisation. Not much work carried out to assess the value derived from these systems

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(Pant and Hsu, 1995)

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The Business System Planning (BSP) or Enterprise Analysis

• Developed in the 1970s by IBM

• Business oriented - provide focus on data

• involves top-down planning with bottom-up implementation

• assist an organisation in developing and establishing an information architecture

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The Business System Planning (BSP)

- how they use information

- where they get information from

- what their environments are

- what their objectives are

- how they make decisions

- what their data needs are

Central method is to take a large example of managers and ask:

Subunits Functions Processes Data

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The Business System Planning (BSP)

- While recognising data as a corporate resource, it does not provide a direct interface to conceptual and logical data modelling activities.

- There is also a lack of adequate definition of data components or use of current data nomenclature

- Nothing in the original methodology helps an organisation if its computing resource has become decentralised.

Missing elements:

Strengths:• BSP combines top down analysis with

bottom up implementation strategy -represents an integrate methodology

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Weaknesses:• Considerable time and effort is required for

its successful implementation

• Requires a high degree of IT experience within the planning team

Business Systems Planning

BSP, in addition to its value for I/S planning, also made two other important intellectual contributions:

1. It helped introduce the process view of the firm. The popular Business Process Re-engineering of the 1990s was built on this concept.

2. It pointed out the need to de-couple data from the applications that use these data, i.e., data independence. This supported the database approach to systems development.

Computer Information Systems • Robinson College of Business • Georgia State University

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Ward et al.s’ Approach

aims to align IS development with current business needs and goals and to seek competitive advantage from them

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The SISP Approach

‘the process of deciding the objectives for organisational computing and identifying potential computer applications which the organisation should implement’

Earl defines SISP as:

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Ward et al.s’ SISP Approach

Pre-planning stage

Planning

Two main stages:

Project Plan

IS Strategy

IT Strategy

IM Strategy

Terms of reference

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Pre-Planning or Planning for planning

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Pre-Planning or Planning for planning

Terms of reference

scope (business areas and time limits)

objectives (reflect organisational emphasis)

allocation of resources to the project

end-users to be consulted

project manager

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Pre-Planning or Planning for planning

project plan

stages or activities to be carried out

techniques that will be used

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Planning

Planning

•Organisation Modelling

•Mission/Goals & Objectives

•CSFs

•Business activity analysis

•Information needs analysis

Internal Business environment

External Business environment

External IS/IT environment

Internal IS/IT environment

Planning approaches, models, techniques

TOR/ Project Plan

IS strategy

IT strategy

IM strategy

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Planning

Internal business environment

the Information Architecture

techniques that will be used

(desired or required activities and their information needs)

mission statement, high-level objectives or targets and Critical Success Factors

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Planning

External business environment

threats

opportunitiessocial or economic pressure, legislation

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The Information Engineering Methodology (IEM)

• aims to align hardware and software resources to the corporate plan

• a continuous process of planning, implementation and management

• compares the formal business strategy with the actual

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The Information Engineering Methodology

Analyse requirements

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The Information Engineering Methodology

Helps to identify the

•goals (where you are headed)

•route (how to reach that goal)

•monitor the progress (milestones)

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The Information Engineering

Methodology

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The Information Engineering Methodology

Another important element of IEM is the method of presentation and communication of the plan

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Earl's Multiple Method

Acknowledges that there is a diversity of reasons why organisations undertake ISSP.

suggests the use of a three level model as an aid to thinking about ISS

top-down

bottom-up

lateral