Remaining Course ScheduleRemaining Course Schedule

Feb. 25 – Chapter 16 – rewrite of chapter.

Mar. 1 – Chapter 17 and course summary.

Mar. 3 – Student ATP presentations.

Mar. 8 -- Final ATP Due Date (not Mar. 3)

I will do a final exam clinic on that day.

Come prepared to ask questions.

Mar. 10 -- No class scheduled.

Final Exam – March 18 at 8 to 11 AM. Will return papers on the day of the final exam.

ATP Presentations on March 3ATP Presentations on March 3

Apple – Chris Johnson

Cisco – Rashi Sinha

Dell – Cyrus Semnani

IBM Global Services– William Pease

Intel – Max Gutman

Knight-Ridder – Rebecca Sherrill

Oracle – Jonathan Gregorio

Plantronics – Tan Nguyen

ATP PresentationsATP Presentations

Duration – 10 minutes on March 1

Cannot present the entire paper.

Can use several different approaches:

Company and industry overview

Redefine and/or define

Success Factor Profile

Company Strengths and Weaknesses

Summary

Chapter 14Chapter 14

Information Systems Value Information Systems Value

and and

Financial StrategyFinancial Strategy

• Logical to Address• Necessary to Articulate• Controversial Because “It Can’t Be Measured.”• A Management Process--Not Techniques or Methodologies.• The Reason for Significant Management Consulting.

Information Systems ValueInformation Systems Value

The IT Value IssueThe IT Value Issue

1. The applications development process costs too much and takes too long.

2. Integrated systems connectivity and compatibility have major cost implications.

3. A lack of ease of use negatively impacts user productivity.

4. All of the above impact the ability to articulate IT value.

Organization

DP Planning

FinancialStrategy

Motivation

ApplicationSupport

Initiation Expansion Control Maturity

I II III IV

BudgetBusiness

CasePost Install

Audit

Charge OutSystem

ManagementProcess

Single Area Proliferation Containment Organization Strategy

PeopleDisplacement

Cost Avoidance

DP Efficiency CompetitiveAdvantage

Little Reactive Directed Proactive

Single Dept. Multiple Dept. Centralized

CentralizedDecentralizedDistributed

Figure 14-2

Evolution of IS StrategyEvolution of IS Strategy

Charge-Out System ObjectivesCharge-Out System Objectives

1. Maximize worthwhile information systems usage.

2. Minimize frivolous use.

3. Encourage information systems efficiency.

4. Spark interest and participation by users to develop innovative applications.

A Management ProcessA Management Process

Application Support Prioritized by a Business Strategy.

A Major Focus on Using Information Systems to Compete.

A Proactive Role by the Information Systems Organization in the Business Planning Process.

Costs

By User

By Application

BenefitsMacro: Business Function and Unit

Micro: Project

Justification (The initial investment decision)

Confirmation (Measuring the results of the investment)

Management Processes:

Methodologies

Major Factors to Be AddressedMajor Factors to Be Addressed

IS as a Business within a BusinessIS as a Business within a Business

1. Must communicate effectively with customers

regarding products and services.

2. Need to shift the focus of IT from operations to

strategically important business activities.

3. Must build an accepted cost base to assess the

value of IT.

To move up the curve. . .To move up the curve. . .

Exploiting

IT

Cost effective IT operations

Securing return on

investment

Enabling change &innovation

Exploiting

the knowledge

base

Each step requires a different approach build on a sound foundation.

IS Financial Strategy IS Financial Strategy ConclusionsConclusions

Even the most supportive senior executives have “a pain threshold” regarding IS spending.

The financial management strategies for information systems are evolutionary and tend to trail the need for them.

They are additive as shown by the stages model.

Possible Exam QuestionsPossible Exam Questions

1.1. Explain the challenges faced when trying Explain the challenges faced when trying to quantitatively evaluate the business to quantitatively evaluate the business value of information systems.value of information systems.

2.2. Discuss the four stages involved in the Discuss the four stages involved in the evolution of an IS financial strategy.evolution of an IS financial strategy.

Chapter 15Chapter 15

Business and

Information Systems

Planning

““If you fail to plan, If you fail to plan,

you plan to fail!you plan to fail!

• How important is planning?• What is its purpose (Objective)?• Who needs to do what?• What is the impact on the organization?• How can the process be kept dynamic?• What is the relationship with information systems?• Is there a right planning methodology?• Are there consistent planning success factors?

Questions that the Topic of Questions that the Topic of Planning RaisesPlanning Raises

Nothing seems more logical, more

reasonable or more appropriate than

planning.

Importance of Planning?Importance of Planning?

A Planning Job?A Planning Job?

How many of you would like a job where your primary responsibility deals with planning?

PlanningPlanning

Plans are nothing.

Planning is everything!

Dwight D. Eisenhower

D-Day: June 6, 1944D-Day: June 6, 1944

5,000 ships A total of one million personnel were involved in

various capacities. 30,000 aircraft. 1,000 transports dropped paratroops. 130,000 troops in the initial assault. 29,000 Americans, 11,000 British and 5,000

Canadians were killed in the beach landings.

The Normandy beaches were chosen because they lay within range of air cover and were less heavily defended than the obvious objective of Pas de Calais.

Logistical and organizational difficulties were enormous. Problems getting troops loaded onto a ship and then getting them from the ships onto the beaches.

There was a lack of suitable port making initial landing difficult and creating an even bigger problems regarding supplies.

D-Day: June 6, 1944D-Day: June 6, 1944

Disorganization, confusion, incomplete or faulty implementation of plans characterized the initial phases of the landings.

Most of the troops were able to adapt to the disorganization

but at some point they had to stop and reorganize to continue effective operations.

D-Day: June 6, 1944D-Day: June 6, 1944

WW II CasualtiesWW II Casualties

Military Civilians Total

Soviet Union 13,600,000 7,700,000 21,300,000

China 1,324,000 10,000,000 11,324,000

Germany 3,250,000 3,810,000 7,060,000

Poland 850,000 6,000,000 6,850,000

Japan 1,506,000 300,000 1,806,000

Great Britain 326,000 62,000 388,000

United States 295,000 0 295,000

1. Is information systems a legitimate high priority

consideration in the development of business strategic plans?

2. Who needs to play a key role in integrating the role of information systems with the business strategy?

3. Why is this even an issue?

4. What are major barriers to linking information systems with the business strategies?

Business and IS PlanningBusiness and IS Planning

Business and IS PlanningBusiness and IS Planning

5. What would be an ideal role for an information systems executive to play relative to business strategies?

6. What planning methodologies really work? Why?

Integrating IS into the Business PlanIntegrating IS into the Business Plan

It all starts with business planning, so answers

are needed to the following questions:

1. Why plan?

2. What to plan?

3. How to plan? (Best methodology?)

PlanningPlanning

Doing things today to make us better

tomorrow.

Because the future belongs to those who

make the hard decisions today.

Business PlanningBusiness Planning

An effort that tells people within the

organization where to put their emphasis,

priorities and resources.

The issue is not methodologies but one of

priorities--where the people running the

business spend their time.

Business and IS PlanningBusiness and IS Planning• Doesn’t the unpredictability of the future preclude the

planning and implementation of computer systems that will be appropriate and responsive to a company’s needs?

• Can a company really innovate and computerize at the same time?

• With so much happening with technology how can a company stay current?

Strategic planning is the systematic examination ofopportunities and threats in the business environment so that you are in the position to identify those opportunities that should be exploited and the threatsthat should be avoided.

George Steiner

To create opportunity that can be leveraged to createdifferential advantage in the marketplace.

N. Les Clark

Strategic PlanningStrategic Planning

OrganizationalOrganizationalResponse to Response to

Business DriversBusiness Drivers

Organization• Decentralization• Downsizing• Outsourcing• Business Partnering• Corp. Alliances

Process• Reengineering

• Redefining• TQM

Time, Flexibility andResponsivenessas Competitive FactorsProduct Customization

• Value-added Services• Markets• Customers• Global Standards

New Markets,Opportunities

and Competitors

Employees• Skills• Empowerment• Quality Circles• Teams

Figure 15-1

The objective of business planning is not to control but to guide and direct.

The same is true for IS planning but this needs to be directed by plans for the business.

Strategy Versus PlanningStrategy Versus Planning

Strategy is thinking through a company’s

basis for competitive advantage.

Planning is a means of establishing a strategy but it also focuses on making the strategy work.

Planning FocusPlanning Focus

Performance Control

Objectives

Budgets

Action Planning

Strategies

Tactics

Do people rely on data or market

instincts to make judgments?

Criticism of PlanningCriticism of Planning Control Politics Conservatism Conformity Inflexibility Non-responsive to Market Demands Leads to Generic Change

Business planning becomes

meaningful when accompanied

by prompt execution.

Worth Remembering!Worth Remembering!

Planning MyopiaPlanning Myopia

Be careful not to develop planning

myopia where the plan becomes

more important than execution.

Strategic PlanningStrategic Planning

Vision

Strategies

Tactics

Actions

Budgets

Formulation

Implementation

Traditional Approach in IS PlanningTraditional Approach in IS Planning

Traditional I/S Role

Tactics

Strategy

Figure 15-2

Vision

Strategic Planning ModelStrategic Planning Model

BusinessPlan

TacticalPlan

StrategicPlan

Environment(External)

Opportunities

Threats

Strengths

Weaknesses

Enterprise(Internal)

Goals

Objectives

Strategic Positioning

Culture(Explicit/Implicit)

Business Unit

Functional Programs

MajorProjects

DetailedProjects

Resources:Headcount,Capital andExpenseBudgets

Figure 15-3

MissionVision

SWOT Analysis

StrengthsWeaknesses

OpportunitiesTreats

SuggestStrategies

That ShouldBe TestedAgainst

Vision and GoalsCompany ValuesCurrent StrategiesFinancial StatusCash PositionROI PotentialCustomer ValuesCompetitionSocietal DemandsCore CompetenciesPeople SkillsOverall Resources

What to Plan?What to Plan?

Strategic EnterprisePlanning

Strategic InformationPlanning

Architecture Planning

Tactical Planning

Implementation Planning

Enterprise Strategies

Information Strategies

Architecture

Time Oriented Objectives

Project Plans

Figure 15-4

Business - IS PlanningBusiness - IS Planning

I/S Strategy

Determines

InformationTechnology

Benefits

BusinessStrategy

Dictates

Figure 15-6

Business - IS PlanningBusiness - IS Planning

Technology Environment

Opportunities

I/S Strategy

Determines

InformationTechnology

Benefits

BusinessStrategy

Dictates

CorporateStrategy

1) Strategic Capability

2) Technology Driven Business Change

Figure 15-7

Marion Merrell DowMarion Merrell Dow

1. An unusual ability to execute plans.

2. Management of risks.

Plan ProcessPlan Process

Not a plan but a plan process:

Work at it.

Change it.

All of the time!

Barriers to Aligning IS with Business ObjectivesBarriers to Aligning IS with Business Objectives

I/S Track Recordand Credibility?

Senior ManagementPerception of I/S?

Communication ofBusiness Plan?

Executive Skillsof I/S Executive?

Business Plan?

Clear I/S Role?

Effective I/S Management?

I/S Organization?

A Problem withI/S Capacity?

I/S Policies?

Does the I/SOrganization Have a

User/Business Focus?

Managing I/S toBusiness Objectives?

Is keeping I/S alignedwith the businessobjectives someones high priority objective?

Figure 15-5

I/S Skills andCapabilities?

Business Domain Information Technology Domain

Information Technology Opportunities

Strategic Plan

Information SystemsArchitecture and

Organization

Business Processesand Organization

Alignment

Impact

Org

aniz

atio

n

Opp

ortu

nity

Enterprise-Wide Information Systems Strategic Planning Process

Parker/Trainor/Benson, INFORMATION STRATEGY AND ECONOMICS, (c)1989, p.5. Adapted by permission of Prentice Hall, Upper Saddle River, New Jersey

Figure 15-8

Strategic PlanStrategic PlanVision – Do we have a clear vision of where the organization is going?

Decisions – Do we make major decisions based on our vision and strategies?

Innovations – Do the values and goals of the organization call for innovation?

Risk Taking – Does the reward system support employees and management risk taking?

Change – Do we respond quickly to changes that affect our organization?

Competitors – Are our strategies based on market intelligence and competitive information?

Strategic PlanStrategic Plan

External Factors – Do we regularly review the economic, social and demographic trends that can affect our performance?

Management Teamwork – Are our interactions characterized by openness, candor and teamwork?

Quality – Do we emphasize and measure quality throughout the organization?

Fundamental Strategic Planning Fundamental Strategic Planning IssuesIssues

Can the strategy formulation be reduced to a consistent process?

How stable is the context for the strategy? How close to the actual situation should the

planners be? How much hard data is available to assist in formatting the right strategy? What are the consequences of an incorrect

strategy?

Planning MethodologiesPlanning Methodologies

There are many planning methodologies. Methodologies are seldom the reason for

planning success or failure. Planning methodologies are like systems

with input, processing and output all being key elements.

Key to planning is communicating the intended direction through practice.

Planning MethodsPlanning Methods

• Planning sessions

• Critical success factors

• Vision process

• Business Systems Planning

• Reengineering

• Linkage analysis

• Etc.

Planning SessionPlanning Session

• Facilitator

• Sponsor (top executive)

• 6-8 people

• Off premise and casual clothes

• 3-5 days

• Schedule discipline

• Question set is a key factor

Competitive Analysis Question SetCompetitive Analysis Question Set1. What is the fundamental nature of our products and services,

our dealings with our customers and the way they make their purchasing decisions?

2. How do our customers measure the value of our products and services?

3. How does our business systems serve our customers?

4. What key activities or decisions significantly affect the cost of serving our customers and how they place a value on this?

5. To what extent could these decisions or activities be changed in a way that would improve services or reduce total costs through the availability or more, better or more timely information?

6. Would such changes involve one part of a current business process, cut across multiple processes or require direct linkages with groups outside of our own organization?

7. How quickly and easily could such initiatives be duplicated by a competitor as an assessment of the durability of the competitive advantage?

8. How would the extent and durability of the competitive advantage be affected by decisions about following a proprietary or non-proprietary approach to building the information systems?

9. How would we spend $10 million to improve our competitive position?

10. How would our primary competitor spend $10 million with the same objective?

11. Would the answer to the last two questions be any different if computers and networks were free?

Planning Session ApproachPlanning Session Approach

• Commitment

• Consensus

• Conflict

• Creativity

• Communication

Critical Success Factors (CSF)

• “The few key areas of the job that must go right in order for an organization to flourish.”

• Focuses on individual managers and their current informational needs.

• Can be used as part of a planning methodology to identify information systems that are needed to run the business.

• Includes keeping abreast of ongoing operations (monitoring) and tracking change progress (building).

• Vary from organization to organization, from time period to time period and from manager to manager.

Source: Rockart and Crescenzi

Critical Success Factor SourcesCritical Success Factor Sources

1. The business environment.

2. The industry.

3. The company’s situation within the industry.

4. Organizational activity that is currently unacceptable and needs attention.

The True Benefactors The True Benefactors of IS Planningof IS Planning

• Those who are shaping the future of the business.

• Those with profit and loss responsibilities.

Why IS Planning FailsWhy IS Planning Fails

Management Authority and Responsibility1. A lack of support of the planning process.

2. A failure to support the final plan through actual implementation.

3. The unexpected happens that was not anticipated by the plan. The key here is systems flexibility.

4. Too much time is spent on “turf battles” or other political issues and not enough on the desired results.

5. Impatience by senior management for results.

Why IS Planning FailsWhy IS Planning Fails

IS and General Business-related Issues1. Its outcome is stated in terms of technology and not business results.2. A lack of user understanding of how IS relates to the business

objective or a failure to accept or support the proposed approach.3. Tends to place blame on today’s environment rather than project a new

and better way of doing things.4. A lack of risk taking leads to an incremental approach that fails to

motivate people.

Final Thoughts on IS PlaningFinal Thoughts on IS Planing

Planning is a tool. There is an organizational learning curve regarding methodologies.

A good plan with no execution borders on a waste of the entire effort.

A relatively weak plan with a few strong thoughts followed by tenacious implementation can provide major business benefits.