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STRATEGIC MANAGEMENT OF INFORMATION SYSTEMS

BIS 3201| Dept: Information Systems| By Asio E.P.K

Strategic Information Systems Planning Process

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 with business goals, and exploiting IT for competitive advantage), IM strategy and IT strategy
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Strategic Information Systems Planning

Todays Lecture
Introduction Why is planning so difficult? The Changing World of Planning Traditional Strategy-Making Todays Sense-and-Respond Approach Planning techniques

Definition / Levels of IS Planning


What is IS planning? Information systems planning should be an integral part of business planning Business planning the process of identifying the firms goals, objectives, and priorities + developing action plans for accomplishing them. Information systems planning the part of business planning concerned with developing the firms information systems resources
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Definition / Levels of IS Planning

Organizational Strategy: Concepts and Overview

Strategic Information Systems Planning (SISP) A process for developing a strategy and plans for aligning information systems (including e-commerce applications) with the business strategies of an organization
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Components of an Information Systems Strategic Plan

Information Systems Strategic Planning*


Why plan? To obtain resources Financial Facilities Capacity planning Staff To align IS with the business To identify needed applications To establish goals, schedules, and milestones in order to track progress 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 important
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Information Systems Strategic Planning*


Reactive vs. proactive? Reactive means dealing with an issue because it has happened. Proactive means preparing early to either prevent an issue 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 fail be proactive about the future
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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 together around a single game plan for execution Gives a Broad outline on where resources will get allocated

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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 the performance gap Visionary convey a desired future end state Flexible allow and accommodate change Guide decision making at lower levels operational, tactical, individual

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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
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Information Systems Strategic Planning Process


1. Establish a mission statement These are the services that you are responsible for; it is your place in the organization It is not what you are supposed to achieve, it is who you are and what you do in the company

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Mission Statement
Captures the essence of why the organization exists Who 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 nature of your organization and the role it plays that differentiates it from others
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Examples Good and Bad Mission Statements


NASA To Explore the Universe and Search for Life and to Inspire the Next Generation of Explorers

Does a good job of expressing the core values of the organization. Also conveys unique qualities about the organization.

Walt Disney To Make People Happy

Too vague and and unclear. Need more descriptive information about what makes the organization special.
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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

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Information Systems Strategic Planning


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, government regulations, environment, society, etc. 5. Technology This is similar to a SWOT analysis Strengths and Weakness items no. 1 & 2; and Opportunities and Threats items no. 3, 4, & 5
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Assessment Model: S W O T
Internal Assessment: Organizational assets, resources, people, culture, systems, partnerships, suppliers, . . .

External Assessment: Marketplace, competitors, social trends, technology, regulatory environment, economic cycles .
SWOT SWOT

Good Points
Easy to Understand Apply at any organizational level

Possible Pitfalls
Needs to be Analytical and Specific Be honest about your weaknesses
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Strengths
Strengths Those 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
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Weaknesses
Weaknesses Those 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, . . .
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Opportunities
Opportunities Potential areas for growth and higher performance External in nature marketplace, 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
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Threats
Threats Challenges confronting the organization, external in nature - Threats can take a wide range bad 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 change 23

Information Systems Strategic Planning

3. Goals and Objectives Set goals what do you want to achieve? Set objectives what are your specific, measurable targets?

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Goals
Describes a future end-state desired 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 changing fast goals tend to be long-term for environments that have limited choices about 25 the future.

Developing Goals
Cascade from the top of the Strategic Plan Mission, Vision, Guiding Principles. Look at your strategic analysis SWOT, Environmental Scan, Past Performance, Gaps . . Limit to a critical few such as five to eight goals. Broad participation in the development of goals: Consensus from above buy-in at the execution level. Should drive higher levels of performance 26 and close a critical performance gap.

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.


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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
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Goals vs. Objectives


GOALS Very short statement, few words Broad in scope Directly relates to the Mission Statement Covers long time period (such as 10 years) OBJECTIVES Longer statement, more descriptive Narrow in scope Indirectly relates to the Mission Statement Covers short time period (such 1 year budget cycle)
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Examples of Objectives
Develop a customer intelligence database system to capture and analyze patterns in purchasing 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.

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Information Systems Strategic Planning


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 . . .
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Information Systems Strategic Planning


5. Short-, medium-, and long-range plans Short-range the next year, the next budget period; developing and operating current systems Medium-range committing to development efforts for applications that will take more than one year to complete; meeting managements current information needs, projected into the future for as many years as needed to complete them. This is what most organizations call Long-Range Planning. Long-range planning preparing for managements future information needs. These are not application specific; they are investments in infrastructure; it is creating an information architecture.
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Information Systems Strategic Planning 6. And finally, implement plans and monitor results (Evaluation) The development of detailed, shortterm and long term plans for carrying out the projects agreed on in strategy formulation

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Continuous Feedback through the Balanced Scorecard

Cascade and align from the top to create a Strategic Management System. Use the Balanced Scorecard framework to organize and report actionable components. Use the Scorecard for managing the execution of your strategy. Scorecard forces you to look at different perspectives and take into account cause-effect relationships (lead and lag indicators) Improves how you communicate your strategy critical to execution.
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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 metrics life cycle (inputs to outputs to outcomes) Work back upstream to revise your plans: Action Plans > Operating Plans > Strategic Plans Planning is very dynamic must be flexible to change. Recognize and reward good performance results Brainstorm and change take corrective action on 35 poor performance results.

Link Budgets to Strategic Plan


The worlds best Strategic Plan will fail if it is not adequately resourced through the budgeting process Strategic Plans cannot succeed without people, time, money, and other key resources Aligning resources validates that initiatives and action plans comprising the strategic plan support the strategic objectives

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What Resources? How to Link?


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
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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 create some momentum Seek external expertise (where possible and permissible) Articulate your requirements to senior leadership if they are really serious about strategic execution
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Common weakness of IS planning methodologies

Poor integration of business and IS planning Lack of planning for IS ongoing maintenance requirements 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
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Other Common weakness of IS planning methodologies

Failure to deal effectively with applications integration; 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.
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The Analysts Role in Strategic Planning


Special projects affecting executives
designing an executive information system
Business process management redesign 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)
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Why Planning Is So Difficult Alignment of strategic business goals and systems plans Technologies are rapidly changing Is strategic planning even relevant?

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Why Planning Is So Difficult


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?

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Why Planning Is So Difficult


Responsibility needs to be joint Commitment from multiple stakeholders Consensus? Involvement of external stakeholders? Other planning issues Organizational culture Top-down versus bottom-up

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Managerial Issues in implementing SIS Implementing strategic information systems can be risky Strategic information systems require planning Sustaining competitive advantage is challenging Ethical issues
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Thanks for your participation!

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THE END. THANKS NEXT CLASS: --IS Strategy Formulation

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