strategic mg of info sys lecture 3

7/29/2019 Strategic Mg of Info Sys Lecture 3

1/47

BIS 3201| Dept: Information Systems| By

Asio E.P.K

STRATEGIC MANAGEMENTOF INFORMATION SYSTEMS


2/47

Strategic Information

Systems Planning Process


3/47

Strategic Information Systems

Planning Information Strategy - the process of deciding

the objectives for organizational computing and

identifying potential computer applications which

the organization should implement (Lederer and

Sethi,1988)

Earl (1989) sees SISP as a combination of

information systems strategy (aligning IS withbusiness goals, and exploiting IT for competitive

advantage), IM strategy and IT strategy

3


4/47

Todays Lecture

Introduction

Why is planning so difficult?

The Changing World of Planning Traditional Strategy-Making

Todays Sense-and-Respond Approach

Planning techniques

4


5/47

Definition / Levels of IS Planning

What is IS planning?

Information systems planning should be an

integral part of business planning

Business planningthe process of identifying

the firms goals, objectives, and priorities +

developing action plans for accomplishing

them.

Information systems planningthe part of

business planning concerned with developing

the firms information systems resources5


6/47

Definition / Levels of IS Planning

6


7/47

14-7

Organizational Strategy: Concepts and

Overview

Strategic Information Systems

Planning (SISP)

A process for developing a strategy andplans for aligning information systems

(including e-commerce applications)

with the business strategies of anorganization


8/47

8

Components of an Information Systems

Strategic Plan


9/47

Information Systems Strategic Planning* Why plan?

To obtain resources Financial

FacilitiesCapacity planning

Staff

To align IS with the business To identify needed applications

To establish goals, schedules, and milestones in order to trackprogress

To provide an opportunity for communication with top

management and user management Strategic planning improves performance

To counter excessive inward and short-term thinking

To solve major issues at a macro level

To communicate to everyone what is most important9


10/47

Information Systems Strategic Planning*

Reactive vs. proactive?

Reactive means dealing with an issue because it hashappened.

Proactive means preparing early to either prevent anissue from happening, or having a solution at hand

when it does happen. Planning vs. forecasting?

Forecasting is predicting the future

Planning is being prepared for that future

If you fail to plan, then you plan to failbe

proactive about the future

10


11/47

What is Strategic Planning?

Process of establishing priorities on what

you will accomplish in the future Forces you to make choices on what you

will do and what you will not do

Pulls the entire organization togetheraround a single game plan for execution

Gives a Broad outline on where resources

will get allocated

11


12/47

A Good Strategic Plan should . . .

Address critical performance issues

Creates the right balance between what the

organization is capable of doing vs. what the

organization would like to do

Cover a sufficient time period to close theperformance gap

Visionary convey a desired future end state

Flexible allow and accommodate change

Guide decision making at lower levels

operational, tactical, individual

12


13/47

Information Systems Strategic Planning

Process

Establish a mission statement

Assess the environment

Set goals and objectives Derive strategies and policies

Develop long-, medium-, and short-range

plans Implement plans and monitor results

13


14/47


Process

1. Establish a mission statement

These are the services that you are

responsible for; it is your place in theorganization

It is notwhat you are supposed to achieve,

it is who you are and what you do in the

company

14


15/47

Mission Statement

Captures the essence of why the organizationexistsWho we are, what we do

Explains the basic needs that you fulfill

Expresses the core values of the

organization

Should be brief and to the point

Easy to understand

If possible, try to convey the unique natureof your organization and the role it plays that

differentiates it from others

15


16/47

ExamplesGood and Bad

Mission Statements

To Make People Happy

To Explore the Universe

and Search for Life

and to Inspire the

Next Generation ofExplorers

NASA

Walt Disney

Does a good job of expressing the core values

of the organization. Also conveys unique

qualities about the organization.

Too vague and and unclear. Need more

descriptive information about what makes the

organization special.

16


17/47

Vision

How the organization wants to be perceived

in the

future what success looks like

An expression of the desired end state Challenges everyone to reach for something

significant inspires a compelling future

Provides a long-term focus for the entire

organization

17


18/47


2. Assess the environment(s) . . .

1. The capabilities of the IT department

2. The readiness of the company to use IT

3. The status of our customers, our industry

4. The status of the economy, governmentregulations, environment, society, etc.

5. Technology

This is similar to a SWOT analysis Strengths and Weaknessitems no. 1 & 2; and

Opportunities and Threatsitems no. 3, 4, & 5

18


19/47

Assessment Model: S W O T

External Assessment: Marketplace,competitors, social trends,

technology, regulatory environment,

economic cycles .

Internal Assessment: Organizational

assets, resources, people, culture,systems, partnerships, suppliers, . .

.

Easy to Understand

Apply at any

organizational level

Needs to be Analytical

and Specific

Be honest about your

weaknesses

Good Points Possible Pitfalls

SWOT SWOT

19


20/47

Strengths

StrengthsThose things that you do well,

the high value or performance points Tangible Strengths: Loyal customers,

efficient distribution channels, very high

quality products, excellent financial condition Intangible Strengths: Good leadership,

strategic insights, customer intelligence, solid

reputation, high skilled workforce

Often considered Core Competencies

Best leverage points for growth without

draining your resources

20


21/47

Weaknesses

WeaknessesThose things that prevent you

from doing what you really need to do Since weaknesses are internal, they are

within your control

Weaknesses include: Bad leadership,unskilled workforce, insufficient resources,

poor product quality, slow distribution and

delivery channels, outdated technologies,lack of planning, . . .

21


22/47

Opportunities

OpportunitiesPotential areas for growthand higher performance

External in naturemarketplace,

unhappy customers with competitors,

better economic conditions, more open

trading policies, . .

Internal opportunities should be

classified as Strengths Timing may be important for capitalizing

on opportunities

22


23/47

Threats

ThreatsChallenges confronting the

organization,

external in nature - Threats can take a wide

rangebad press coverage, shifts in consumer

behavior, substitute products, new regulations,. . .

May be useful to classify or assign

probabilities to threats The more accurate you are in identifying

threats, the better position you are for dealing

with the sudden ripples of change23


24/47


3. Goals and Objectives

Set goalswhat do you want to

achieve? Set objectiveswhat are your specific,

measurable targets?

24


25/47

Goals

Describes a future end-statedesired outcome

that is supportive of the mission and vision. Shapes the way ahead in actionable terms.

Best applied where there are clear choices

about the future.

Puts strategic focus into the organization

specific ownership of the goal should be

assigned to someone within the organization.

May not work well where things are changingfastgoals tend to be long-term for

environments that have limited choices about

the future. 25


26/47

Developing Goals

Cascade from the top of the Strategic Plan -

Mission, Vision, Guiding Principles. Look at your strategic analysisSWOT,

Environmental Scan, Past Performance, Gaps . .

Limit to a critical fewsuch as five to eight

goals.

Broad participation in the development of

goals:

Consensus from abovebuy-in at theexecution level.

Should drive higher levels of performance

and close a critical performance gap. 26


27/47

Examples of Goals

Reorganize the entire organization for better responsiveness to customers

We will partner with other businesses, industry leaders, and government agencies in order to

better meet the needs of stakeholders across the entire value stream.

Manage our resources with fiscal responsibility and efficiency through a single comprehensive

process that is aligned to our strategic plan.

Improve the quality and accuracy of service support information provided to our internal

customers.

Establish a means by which our decision making process is market and customer focus.

Maintain and enhance the physical conditions of our public facilities.

27


28/47

Objectives

Relevant - directly supports the goal

Compels the organization into action

Specific enough so we can quantify and

measure the results

Simple and easy to understand

Realistic and attainable

Conveys responsibility and ownership Acceptable to those who must execute

May need several objectives to meet a goal

28


29/47

Goals vs. Objectives

GOALS OBJECTIVES

Very short statement,few words

Longer statement, moredescriptive

Broad in scope Narrow in scope

Directly relates to theMission Statement

Indirectly relates to theMission Statement

Covers long timeperiod (such as 10years)

Covers short time period(such 1 year budgetcycle)

29


30/47

Examples of Objectives

Develop a customer intelligence database system to capture and analyze patterns inpurchasing behavior across our product line.

Launch at least three value stream pilot projects to kick-off our transformation to a leaner

organization.

Centralize the procurement process for improvements in enterprise-wide purchasing power.

Consolidate payable processing through a P-Card System over the next two years.

Monitor and address employee morale issues through an annual employee satisfaction

survey across all business functions.

30


31/47


4. Derive strategies and policies

Strategies for

Technology focus

Personnel and career development

Aligning with the company

Others . . . Policies for

Funding criteria; how much to spend on IT?

Allocation criteria; priority setting

Organizational arrangements Use of outside IT services, outsourcing

Selling IT services to outside organizations

Others . . .31


32/47


5. Short-, medium-, and long-range plans

Short-rangethe next year, the next budget period;developing and operating current systems

Medium-rangecommitting to development effortsfor applications that will take more than one year to

complete; meeting managements current informationneeds, projected into the future for as many years asneeded to complete them. This is what mostorganizations call Long-Range Planning.

Long-range planningpreparing for managementsfuture information needs. These are not applicationspecific; they are investments in infrastructure; it iscreating an information architecture.

32


33/47


6. And finally, implement plans and

monitor results (Evaluation)

The development of detailed, short-term and long term plans for carrying

out the projects agreed on in strategy

formulation

33


34/47

Continuous Feedback through the Balanced

Scorecard

Cascade and align from the top to create aStrategic Management System.

Use the Balanced Scorecard framework to organizeand report actionable components.

Use the Scorecard for managing the execution ofyour strategy.

Scorecard forces you to look at differentperspectives and take into account cause-effect

relationships (lead and lag indicators)

Improves how you communicate your strategycritical to execution.

34


35/47

Build the Balanced Scorecard

Performance Management

Establish a regular review cycle using your balanced

scorecard. Analyze and compare trends using graphs for rapid

communication of performance.

Dont be afraid to change your metricslife cycle(inputs to outputs to outcomes)

Work back upstream to revise your plans: ActionPlans > Operating Plans > Strategic Plans

Planning is very dynamicmust be flexible tochange.

Recognize and reward good performance results

Brainstorm and changetake corrective action on

poor performance results. 35


36/47

Link Budgets to Strategic Plan

The worlds best Strategic Plan will fail if it is notadequately resourced through the budgeting process

Strategic Plans cannot succeed without people,time, money, and other key resources

Aligning resources validates that initiatives andaction plans comprising the strategic plan support

the strategic objectives

36


37/47

Every Action Plan should identify the following:

The people resources needed to succeed The time resources needed to succeed

The money resources needed to succeed

The physical resources (facilities, technology, etc.) needed to

succeed Resource information is gathered by Objective Owners which

is provided to the Budget Coordinators for each Business Unit.

Resources identified for each Action Plan are used to establish

the total cost of the Initiative. Cost-bundling of Initiatives at the Objective level is used by

our Business Unit Budget Coordinators to create the Operating

Plan Budget

What Resources? How to Link?

37


38/47

Some Final Thoughts

Integrate all components from the top to the

bottom: Vision > Mission > Goals >Objectives > Measures > Targets >Initiatives > Action Plans > Budgets.

Get Early Wins (Quick Kills) to createsome momentum

Seek external expertise (where possible andpermissible)

Articulate your requirements to seniorleadership if they are really serious aboutstrategic execution

38

C k f IS l i h d l i


39/47

39

Common weakness of IS planning methodologies

Poor integration of business and IS planning

Lack of planning for IS ongoing maintenancerequirements

Focus on tools and techniques instead of on real

business needs

Inability to handle change or uncertainty

Vision or architecture is too narrow and short-ranged

Obscure or complex planning processes

Problems without solutions in any current planning

approach

39


40/47

40

Other Common weakness of IS planning

methodologies

Failure to deal effectively with applicationsintegration;

Insufficient evaluation of applications

package options and tradeoffs; Lack of effective risk assessment and

management; and

Failure to make use of existing best

practices already proven and public

knowledge from other firms in the industry.

40


41/47

41

The Analysts Role in Strategic Planning

Special projects affecting executives

designing an executive information system

Business process managementredesign and improvements to

existing processes Strategic planning process (5 or more years in the future)

Information systems strategic planning

One of the key components of the strategic plan

Application architecture plan (business focus)

Technology architecture plan (infrastructure focus)


42/47

Why Planning Is So Difficult

Alignment of strategic business goals

and systems plans

Technologies are rapidly changing

Is strategic planning even relevant?

42


43/47


Companies need IT portfolios rather than projects

Portfolio planning is sophisticated

Projects must be evaluated beyond individual

merits Fitting with other projects is crucial

Infrastructure development is difficult to fund

IT investments are grossly expensive Constant pressure to keep up with industry?

43


44/47


Responsibility needs to be joint

Commitment from multiple stakeholders

Consensus?

Involvement of external stakeholders?

Other planning issues

Organizational culture

Top-down versus bottom-up

44


45/47

3-45

Managerial Issues in implementing SIS

Implementing strategic information

systems can be risky

Strategic information systems requireplanning

Sustaining competitive advantage is

challenging

Ethical issues


46/47

Thanks foryour participation!

46


47/47

NEXT CLASS: ---

IS Strategy Formulation

THE END. THANKS

strategic mg of info sys lecture 3

Documents