Strategic Information Systems Planning College of Information Technology CISB444 Strategic Information Systems Planning 1

Course Overview Strategic Planning for Information Systems explores the impact that information systems (IS) and information technology (IT) have on business performance and the contribution that they make to the strategic options of organisations. It describes tools, techniques and management frameworks to both align strategies for IS and IT with business strategy, as well as seek out new opportunities through innovative deployment of technology.

Course Overview This course demonstrates why strategic planning for information systems is essential to organisational success, especially in times of increasingly rapid change. Over the long term any organisation will get the information systems it deserves, according to the approach adopted to the use and management of IS/IT. To obtain the whole range of benefits available from IS/IT and avoid the potential pitfalls, every organisation must establish the means to manage IS/IT as an integral part of its approach to strategic management.

Course Objectives To provide an understanding that strategic planning for information systems is both essential and feasible. To demonstrate that organisation must establish a way of managing IS/IT strategically as part of the business development process in order to deliver the benefits available from IS/IT and to avoid the potential pitfalls in IS/IT implementation. To assess alternative approaches to developing information systems (IS) strategies. To highlight the importance of information as one of the organisation’s strategic resources

Managing the Applications Portfolio Chapter 7 Managing the Applications Portfolio

Chapter 7: Overview Chapter 7 describes ways in which the current and future applications of IT can be assessed in terms of their business contribution, both individually and as an overall portfolio of IS/IT investments. The appropriate means of managing each element of the portfolio and the overall set of applications can then be selected.

Chapter 7: Main Topics Classifying the applications in the portfolio Generic application management strategies Portfolio management principles applied to the application portfolio

Introduction The applications portfolio concept, introduced in Chapter 1, is a means of bringing together existing, planned and potential information systems and assessing their business contribution. The main purpose in classifying applications is to ensure that they are managed successfully and that the expected contribution is delivered. Based on the issues relevant to each segment, appropriate implementation strategies can be adopted. The application portfolio provide relevant guidance to enlighten and support management decision making.

Conclusions from Various Matrices and Models A number of matrices have been produced to help management decision making with respect to IS/IT planning, utilisation, and resourcing. Figure 7.1 represent a composite matrix, including some key ideas which are based on a number of main models: The Sullivan matrix The Information Technology Assessment and Adoption (ITAA) Two matrices developed by Ives and Learmonth and Galliers e-Business value matrix

Conclusions from Various Matrices and Models Figure 7.2 suggest a number of cause-and-effect relationships, which are generally borne out by observation in many organisations: Organisations that have a traditional, low impact view of the role of IS/IT with highly centralised IT decision making will tend to have a predominance of support applications. Those with devolved IT decision making, because it is not seen as particularly critical to overall business success, will also produce a profusion of support systems, solving local problem plus a number of high potential ideas and some key operational systems with poor integration. Where the impact of IS/IT has increased, probably due to external pressures, but IT is kept highly centralised, both key operational and support systems will be developed and continually improved, but more innovative uses of IS/IT will not be instigated, because of the limited knowledge in the business of what is possible.

Classifying the Applications in the Portfolio Classifying existing and future applications in the portfolio helps the task of obtaining a consensus among executive management, line managers, and the IT management on the content of the IS strategy. Once the portfolio is understood and agreed, decisions on how best to manage each application, both existing and future, can be made, along with overall decisions on the use of resources across the portfolio and the selection of the most effective sources for supply Which aspects should be managed in-house and which can and should be outsourced.

Classifying the Applications in the Portfolio It is important to understand the role of and value to the organisation of the existing application set : Some applications may be obsolete and no longer required Others may need significant investment to avoid future business problems Some may be underexploited Others may be consuming undue amounts of resource in relation to their business value

Classifying the Applications in the Portfolio: Questions Is the application delivering benefits that: Result in a clear competitive advantage for the business? Is it clear what the business benefits are and how they can be obtained? Enable the achievement of specific business objectives and/or critical success factors? Overcome known business disadvantages in relation to competitors? Avoid foreseeable business risks becoming major problems in the near future? Improve the productivity of the business and reduce long-term costs? Enable the organisation to meet statutory requirements? Will failure to comply lead to significant business risks? Provide benefits not yet known, but may result in 1 or 2 above?

Classifying the Applications in the Portfolio: Interpretation Strategic High Potential Key Operational Support 1. Yes 2. Yes No 3. Yes 4. 5. 6. 7.

Figure 7.3 Example Portfolio for a Manufacturing Company Direct Marketing and Telesales System Advertising and Promotion-Campaign Management Sales forecasting/Market analysis Customer Relationship Management STRATEGIC E-Procurement (general items) On-line customer specification system Product tracking/traceability Product profitability analysis Data warehouse-customer analysis HIGH POTENTIAL Payroll and Personnel systems Ledgers – Receivables, Payables General Ledger and Budgeting Office systems Purchasing-general Samples Management Etc. SUPPORT Product database/Intentory Management, Manufacturing Requirements Planning Order processing, Dispatch, Invoicing, etc. Production control Purchasing-materials Costing systems (activity and product) Sales analysis Warehouse Management Wholesaler EDI (ordering, etc.) etc. KEY OPERATIONAL

Generic Application Management Strategies Parsons (1983), described 5 strategies that are prevalent as the means by which organisations link the management of IS/IT to the corporate or business management processes. These ‘linking strategies’ are general frameworks/generic strategies which guide: the opportunities for IT which are identified, the IT resources which are developed, the rate at which new technologies are adopted, the level of impact for IT within the firm, etc.

Generic Application Management Strategies Centrally Planned Leading Edge Free Market Monopoly Scarce Resource Management Rationale Central coordination of all requirements will produce better decision making Technology can create business advantages and risks are worth taking Market makes the best decisions and users are responsible for business results. Integration is not critical Information is a corporate good and an integrated resource for users to employ Information is a limited resource and its development must be clearly justified Organisational Requirements Knowledgeable and involved senior management. Integrated planning of IS/IT within the business planning process Commitment of funds and resources. Innovative IS/IT management. Strong technical skills Knowledgeable users. Accountability for IS/IT at business or functional level. Willingness to duplicate effort. Loose IT budget control User acceptance of the philosophy. Policies to force through single sourcing. Good forecasting of resource usage Tight budgetary control of all IS/IT expenses Policies for controlling IS/IT and users IT Role Provide services to match the business demands by working closely with business managers Push forward boundaries of technology use on all fronts Competitive and probably profit centre – intended to achieve a return on its resources To satisfy users’ requirements as they arise, but non-directive in terms of the uses of IS/IT Make best use of a limited resource by tight cost control of expenses and projects. Justify capital investment projects Line Managers and Users Role Identify the potential of IS/IT to meet business needs at all levels of the organisation Use the technology and identify the advantages it offers Identify, source and control IS/IT developments Understand needs and present them to central utility to obtain resources Identify and cost-justify projects. Passive unless benefits are identified

Relationship of Applications Portfolio and Generic IS Strategies Centrally Planned STRATEGIC Leading Edge Free Market HIGH POTENTIAL Scarce Resource SUPPORT Monopoly KEY OPERATIONAL Demand Supply Centralised Decentralised

Portfolios, Planning, and Generic Strategies Evolution STRATEGIC HIGH POTENTIAL SUPPORT KEY OPERATIONAL 5. ORGANISATIONAL and Central Planning 4.BUSINESS LED and Free Market (or Leading Edge technology) 3 ADMINISTRATION LED Monopoly and Scarce Resource 2.METHOD LED and Monopoly 1.TECHNOLOGY LED and Scarce Resource (Free Market) or even Monopoly

Portfolio Management Principles Applied to the Applications Portfolio The main reason the product portfolio model offers useful input to the application portfolio is that it reflects the competitive business environment. The model was developed to assist in managing and planning in an uncertain, market-driven environment, where management decisions are made within a total environment that can only be influenced, not determined. IS/IT is also subject to the forces of the marketplace – external parameters now define the effectiveness of an organisation’s IS/IT management.

The Business/Systems Portfolio Matrix Continuous innovation Vertical integration High value-added STRATEGIC (STARS) Process research and design Minimal integration Cost control HIGH POTENTIAL (WILDCATS) Disinvest/Rationalise Efficiency Sustained quality SUPPORT (DOGS) Defensive innovation Effective resource utilisation High quality KEY OPERATIONAL (CASH COWS)

Key Issues in Managing the Evolution of an Application Over Time Gain: Senior management ownership : IT involvement : Project management STRATEGIC Lose: Individual ownership and freedom HIGH POTENTIAL Evaluate lower-cost options to meet core needs SUPPORT Fully integrated with other applications for effectiveness KEY OPERATIONAL Re-engineer for long-term use Re-evaluate benefits and costs Return to standards

Management Styles DEVELOPER Organisation goal seeker Risk accommodating ‘Central Planner’ STRATEGIC ENTREPRENEUR Personal achieve Risk take ‘Free Marketeer’ HIGH POTENTIAL CARETAKER Immediate/Efficient solutions Risk avoiding ‘Scarce resource’ SUPPORT CONTROLLER Long term/quality solutions, stability Risk reducing ‘Monopolist’ KEY OPERATIONAL

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