Information Systems Planning

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Information Systems Planning

Paradox of IS Planning

Most organization's survival now depends on IT Planning of its effective use is a matter of

organizational life and death IT is changing so fast

Is it useless to do IS planning?

A variety of approaches, tools and mechanisms available for IS planning No best way to do it.

Mindset for Planning

Traditional view Determining what decisions to make in the future

A better view Developing a view of the future that guides

decision making today

Difference : strategy making instead of planning Strategy: stating the direction in which you want to

go and how you intend to get there

Types of Planning

Horizon Focus Issues Primary Responsibility

3 - 5 years

Strategic Vision, architecture, business goals

Senior management, CIO

1 - 2 years

Tactical Resource allocation, project selection

Middle management, IS line partners, Steering committees

6 month -1 year

Operational Project management, meeting time and budget targets

IS professionals, Line managers, partners

Why Planning Is So Difficult? (1) Business goals and systems plans need to align

Strategic systems plans need to align with business goals and support those objectives

Will be difficult if CIO is not part of senior management

Technologies are rapidly changing Continuous planning based on monitoring and

experimenting new technologies Advanced technology groups

Why Planning Is So Difficult? (2) Companies need portfolios rather than projects

Evaluation on more than their individual merit How they fit into other projects and how they balance

the portfolio of projects

Infrastructure development is difficult to fund Often done under the auspices of a large application

project Challenge: develop improved applications and

improve infrastructure over time Mainframe C/S ERP Web application Web Services

Why Planning Is So Difficult? (3) Responsibility Needs to be Joint

Systems planning has become business planning, not just a technology issue

It is better done by a full partnership of C-level officers

Other planning issues Top-down Vs. bottom-up

Radical change Vs. continuous Planning culture in which the systems planning must

fit

Tradition Strategy Making

Assumptions: The future can be

predicted Time is available to

do these 3 parts IS supports and

follows the business Top management

knows best (broadest view of firm)

Company: like an "Army"

Business Strategy

•Business decision•Objectives and direction•Change

System Strategy

•Business-based•Demand-oriented•Application-focused

IT Strategy

•Activity-based•Supply-oriented•Technology-focused

Supportsbusiness

DirectionFor IS

Infrastructure and services

Needs and priorities

Step 1Where is the business going and why?

Step 2What is required?

Step 3How can it be delivered?

A World of Rapid Change (1)

Today, due to the Internet and other technological advances, these assumptions no longer hold true: The future cannot be predicted

Discontinuous change Who predicted Internet, Amazon, eBay etc.?

Time is not available for the sequence Never enough time in Internet Age IT implementation planning needs to go ahead of

business strategizing

A World of Rapid Change (2)

IS does not JUST support the business anymore

Top management may not know best Inside out Vs. outside

in approach

An organization is not like an army Industrial era metaphor

no longer always applies Core

Front LineSuppliers Partners

and

Customer

Today's Sense-and-Response Approach (1)

Let strategies unfold rather than plan them: A sense-and-respond

approach when predictions are risky Sense a new opportunity

and immediately respond by testing it

Myriad of small experiments

Time

TimeStrategic envelop

Old-era strategyOne big choice, long commitment

New-era strategyMany small choices, short commitments

Case Example: Microsoft

Abandoned proprietary network despite big investment when it did not capture enough customers

Moved on to buying Internet companies as well as aligning with Sun to promote Java

Over time, they moved into a variety of technologies: Web, Cable news, Digital movies, Cable modems, Handheld

OS, Video server, Music, Xbox, .Net, Search engines... Not all strategies came from top management

e.g. first server came from a rebel's unofficial project Getting its fingers into every pie that might become

important

Today's Sense-and-Response Approach (2) Formulate strategy closest to the action:

Close contact with the market Employees who interact daily with customers, suppliers

and partners (organizational edges) Employees who are closest to the future should

become prime strategists. In the Internet Age, this means younger employees

Today's Sense-and-Response Approach (3) Guide strategy-making with a “strategic

envelope": Having a myriad of potential corporate strategies

being tested in parallel could lead to anarchy without a central guiding mechanism

Top management set the parameters for the experiments, and then continually manage that context Experiment by territory (as Microsoft did) Strategic conversation Meet regularly with the experimenters

Today's Sense-and-Response Approach (4) Be at the Table

IS executives should be actively involved in business strategizing

The IS function needs to be strategy-oriented CIO need to make their departments credible and

outsource most operational work Test the Future

Need to test potential futures before the business is ready for them (thinking ahead of the business) Provide funding for experiments Work with research organizations Have an emerging technologies group

Today's Sense-and-Response Approach (5) Put the Infrastructure in Place:

Moving quickly in Internet commerce means having the right IT infrastructure in place.

IT experiments are recommended to include those that test painful infrastructure issues Create and maintain common, consistent data

definitions Create and instill mobile commercial standards among

handheld devices Implement e-commerce security and privacy measures Determine operational platforms (ERP, Supply Chain

Management …)

Stages of Growth (1)

Richard Nolan et al observed four stages in the introduction and assimilations of a new technology Early Successes

Increased interest and experimentation Contagion

Interest grows rapidly; growth is uncontrolled; learning period for the field

Control Efforts begun toward cost reduction and standardization

Integration Dominant design mastered; setting the stage for newer

technology

Stages of Growth (2)O

rgan

izat

iona

l Lea

rnin

g

Time1960 1980 1995 2010

DP Era

Micro Era

Network Era

Technological discontinuity

Stage 1:Initiation

Stage 2:Contagion

Stage 3:Control

Stage 4:Integration and Stage 1 of Micro Era

Stage 2:Contagion

Stage 3:Control

Stage 4:Integration and Stage 1 of Network Era

Stage 2:Contagion

Stage 3:Control

Stage 4:Integration

Stages of Growth (3)

The importance of the theory is understanding where a technology or company resides on the organizational learning curve e.g. Web Service is currently in Stage 2, too much

control at the learning and experimentation stage can kill off new uses of technology

Management principles differ from stage to stage

Different technologies are in different stages at any point in time

Competitive Forces Model (1) Michael Porter's Five Forces Model

A model that determines the relative attractiveness (competition) of an industry.

Five forces Bargaining power of customers and buyers

High when buyers have many choices of whom to buy from, and low when the choices are few.

Bargaining power of suppliers High when buyers have few choices of whom to buy

from, and low when there are many choices.

Competitive Forces Model (2)

Threat of substitute products or services Low if there are very few alternatives to replace the

product or service. Switching costs

Costs that can make customers reluctant to switch to another product or service.

Threat of new entrants High when it is easy for competitors to enter the market

The intensity of rivalry among competitors High when the industry is less attractive.

Competitive Forces Model (3)

Industry Industry CompetitorsCompetitors

Rivalry among Rivalry among existing firmsexisting firms

SuppliersSuppliersSuppliersSuppliers Customers and Customers and BuyersBuyersCustomers and Customers and BuyersBuyers

Potential Potential EntrantsEntrantsPotential Potential EntrantsEntrants

SubstitutesSubstitutesSubstitutesSubstitutes

Bargaining power of buyersBargaining power of buyers

Threat of substitute products or Threat of substitute products or servicesservices

Bargaining power of Bargaining power of supplierssuppliers

Threat of new entrantsThreat of new entrants

How will the business react How will the business react to threats (and to threats (and opportunities)?opportunities)?

Competitive Forces Model (4)

Industry Industry CompetitorsCompetitors

Rivalry among Rivalry among existing firmsexisting firms

SuppliersSuppliersSuppliersSuppliers

Potential Potential EntrantsEntrantsPotential Potential EntrantsEntrants

SubstitutesSubstitutesSubstitutesSubstitutes

Bargaining power of buyersBargaining power of buyers

Threat of substitute products or Threat of substitute products or servicesservices

Bargaining power of Bargaining power of supplierssuppliers

Threat of new entrantsThreat of new entrants

Customers and Customers and BuyersBuyersCustomers and Customers and BuyersBuyers

The strategy and actions an organization adopts The strategy and actions an organization adopts dependdepend upon its upon its perceptions of itself and these threats.perceptions of itself and these threats.The strategy and actions an organization adopts The strategy and actions an organization adopts dependdepend upon its upon its perceptions of itself and these threats.perceptions of itself and these threats.

Porter’s strategies:Porter’s strategies:• Product differentiation (non-duplicable product or service)Product differentiation (non-duplicable product or service)• Low-cost producer Low-cost producer • Market niche (market segment or geographical market)Market niche (market segment or geographical market)

Porter’s strategies:Porter’s strategies:• Product differentiation (non-duplicable product or service)Product differentiation (non-duplicable product or service)• Low-cost producer Low-cost producer • Market niche (market segment or geographical market)Market niche (market segment or geographical market)

Five Forces Analysis of the Internet The Internet tends to dampen the profitability of

industries Increases the bargaining power of buyers Decreases barriers to entry Increases the bargaining power of suppliers Increases the threat of substitute products and

services Intensifies rivalry among competitors

Success depends on offering distinct value Firms should focus on their strategic position in an

industry and how they will maintain profitability

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Information Systems Planning

Definition: IT Architecture VS. IT

Infrastructure An IT architecture is a blueprint showing how the parts will interact and interrelate. System, information, departments... Multiplicity of structures and views

An IT infrastructure is the implementation of an architecture. processors, software, databases, electronic links, data

centers, standards, skills, electronic processes... We now tend to divide computing into applications and

infrastructures

The Evolution of Distributed Systems Mainframes: with dumb terminals Minicomputers moved computing into

departments The master-slave computing model persisted and

processing was mainly centralized Microcomputer moved processing power into

desktop, briefcase and handhelds Client/server computing

Internet: a globally distributed system Interesting twist: power returning to a type of

centralized processing with networks of servers

Four Attributes of Distributed Systems The degree to which a system is distributed

can be determined by answering four questions:

1. Where is the processing done?

2. How are the processors and other devices interconnected?

3. Where is the information stored?

4. What rules or standards are used?

Distributed Processing

Limited processing power of a single node VS. increasing application demands Balance the load and improve overall performance Let machines handle the work they do best

Interoperability: information exchange between heterogeneous computing platforms Protocols Two-way message passing between user applications

Connectivity Among Processors Data exchanges through electronic

communication links TCP/IP Ethernet, ATM, FDDI, Frame relay...

Planned Redundancy for reliability Two or more independent paths between two

nodes to provide automatic alternate routing Topology and reliability of the Internet

Distributed Databases

Two distributed database schemes Divide a database and distribute its portions

throughout a system without duplicating the data Transparent user access

Store the same data at several different locations, with one site containing the master file Synchronization issue E.g. edge servers

System-wide Rules

Rules governing communication between nodes, security, data accessibility, program and file transfers, and common operating procedures Open standards after 1990s

OSI Reference Model SQL API: standardized interface TCP/IP Open source

Internet---A Scale-free Network (1) Internet is not designed, but evolved Internet is a scale-free network

Scale-free networks are very common and a very important category of real networks.

Scale-free networks are the direct result of self-organized growth Growth: networks continuously expand by the addition of

new nodes Special type of growth called preferential attachment

Preferential Attachment : The attachment is NOT uniform A node is linked with higher probability to a node that already

has a large number of links

Internet---A Scale-free Network (2)

Five nodes with most linksFirst neighbors of red nodes

27% reach

60% reach

Random/

Internet---A Scale-free Network (3)Poisson distribution

Exponential Network

Power-law distribution

Scale-free Network

P(k)~k-γ

Internet---Topological Robustness Topological robustness: the Internet is robust

in the presence of random failures. At any given time hundreds of routers are down

but the performance is not impacted It will function even if we remove randomly 80% of

the nodes.

Theoretical and experimental investigations show that scale-free networks are topologically robust

Internet---Vulnerability to Targeted Attacks Scale-free networks such as Internet are

vulnerable to attacks. If a malicious attack could simultaneously remove

5% of hubs (the highly connected nodes) the network would disintegrate

Internet---Virus

Scale-free networks like internet are vulnerable to spreading viruses Hubs are passing them massively to the

connected multiple nodes.

This suggests immunizing hubs.

When to Distribute Computing Responsibilities (1) The decision of distributing computing

responsibilities is rather managerial than technical People deciding how their portion of business

operates should also decide how they use IT

When to Distribute Computing Responsibilities (2) Systems responsibilities can be distributed

unless the following are true: Are the operations interdependent?

For interdependent, their planning, development, resources, and operations must be centrally coordinated

Are the businesses really homogenous? Processing may be distributed, but planning and hardware

selection should be centralized Does the corporate culture support decentralization?

Corporate culture might centralize finance, HR, and systems planning

An Organizational Framework

Systems may be needed for all 7 levels

Inter-organizational links can occur at all six internal levels

The current hot levels Level1: inter-enterprise

computing Leve5: where business

processes resideIndividualIndividual

Work Group or TeamWork Group or Team

Department or ProcessDepartment or Process

Plant or SitePlant or Site

Country or RegionCountry or Region

EnterpriseEnterprise

Business EcosystemBusiness Ecosystem1

2

3

4

5

6

7

A Technical Framework (1)

The SUMURU architecture developed in 1982, has stood the test of time. It provides a clear conceptual framework for

understanding various components of a distributed architecture.

A Technical Framework (2)

A Technical Framework (3)

Processors Services

Single-user systems (SU) Terminal access

Multiple-user systems (MU) File transfer

Remote utility systems (RU) Computer mail

Networks Standards

Local network (LN) Operating system

Remote network (RN) Communications protocols

Database systems