Information Systems Planning Lecture 9

Today Lecture Case examples include Microsoft Introduction  Types of planning  Why is planning so difficult?

Today Lecture.. The Changing World of Planning  Traditional Strategy-Making  Today’s Sense-and-Respond Approach

Introduction Systems planning, especially strategic systems planning, is becoming more difficult and more important at the same time. Technology is changing so fast that it is seems futile to plan for it, yet the dependence on this technology makes planning its effective use a matter of organizational life and death This lecture / chapter contrasts the traditional view of planning with the sense-and-respond approach of strategy-making, presenting seven IS planning techniques

Introduction IS management is becoming more difficult and more important at the same time:  Technology changing so fast: “Why bother?” Vs. Most organizations’ survival is dependant on technology  How to resolve this apparent paradox? Good News = variety of approaches, tools and mechanisms available Bad News = no ‘best’ way to go about it

Planning..Good and Bad News!

Introduction cont. It is important to establish the appropriate mindset for planning:  Some managers believe = “determining what decisions to make in the future”  Better view = developing a view of the future that guides decision making today  Subtle difference = ‘strategy making’ Strategy = stating the direction in which you want to go and how you intend to get there  The result of strategy-making is a plan

4-8 Why Planning Is So Difficult Types of Planning: Planning is usually defined in three forms, which correspond to the three planning ‘horizons’. (Figure 4-1)  Strategic = 3-5 years  Tactical = 1-2 years  Operational 6 months – 1 year

Why Planning Is So Difficult Types of Planning: Planning is usually defined in three forms, which correspond to the three planning ‘horizons’. (Figure 4-1)  Strategic = 3-5 years  Tactical = 1-2 years  Operational 6 months – 1 year

Types of Planning

Introduction cont. Why Planning Is So Difficult?:  Business Goals and Systems Plans Need to Align  Strategic systems plans need to align with business goals and support those objectives  Some believe = “too sensitive” = PROBLEMS  Fortunately = trend for CIOs to be part of senior management

Introduction cont.  Technologies Are Rapidly Changing  How can you plan when information technologies are changing so rapidly  Continuous planning?  Old days of planning at ‘start of year’ = gone  Advanced technology groups

Introduction cont. Why Planning Is So Difficult...  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  Despite everyone “knowing infrastructure development is crucial”, it is extremely difficult to get funding just to develop or improve infrastructure

Introduction cont.  Often done under the auspices of a large application project  Challenge = develop improved applications and improve infrastructure over time  Responsibility Needs to be Joint  Business planning, not just a technology issue  Other planning issues  Top-down Vs. bottom-up; radical change Vs. continuous  Planning culture

Business Goals and Systems Plans Strategic systems plans need to align with business goals and support them. If top management believes the firm’s business goals are extremely sensitive, the CIO is often excluded in major strategic meetings by top management.

Business Goals and Systems Plans conti Systems planning is becoming a shared responsibility among the CIO, CTO, and other members of senior management. The emergence of e-commerce and globalization caused CEOs and CFOs to realize they need to be involved in systems planning

Technologies Are Rapidly Changing How can executives plan when IT is changing so rapidly:  Continuous monitoring and planning the changes of technologies and how the industry would adopt this technology  The planning process first needs to form a best-available vision of the future on which to base current decisions.

Technologies Are Rapidly Changing Conti The technology needs to be monitored to see whether that future vision needs alteration. Some organizations have an advanced technology group charged with watching and evaluating new technologies. It is important for organizations to pay particular attention to the impact of disruptive technologies or disruptive innovation

Technologies Are Rapidly Changing Conti Sometimes, an emerging and inexpensive technology emerges and swiftly displaces incumbent technologies. A classic example is the Linux Operating System (OS). When it was introduced, its capability was inferior to other existing OSs like Unix and Windows NT. Linux was inexpensive, and thanks to continuous improvements, it has earned a significant market share for computer servers

Technologies Are Rapidly Changing Conti. In 2007, IBM announced it would use Linux with its new servers. The USB memory stick is another instance of disruptive technologies. This inexpensive storage medium has changed the way people share files, displacing disk storage. Many forecasters have predicted that Voice-over-IP will replace decades-old land-based telephony

Technologies Are Rapidly Changing Conti The planning issue here is for management to foresee the upcoming of innovation with superior technology potential and viable business applications. These new technologies can be a cost-effective addition to the existing technological infrastructure. Or, they can be a potential replacement that needs a carefully migration strategy

Companies Need Portfolios Rather Than Projects Another planning issue is the shift in emphasis from project selection to portfolio development. Businesses need a set of integrated and seamless technologies that work together. Project developments have had a history of building “stove-pipe” systems that result in applications that are not compatible with each other.

Companies Need Portfolios Rather Than Projects.. A portfolio approach requires a more sophisticated form of planning because projects must be evaluated on more than their individual merits. How they fit with other projects and how they balance the portfolio of projects become important. The Internet Value Matrix described later is an example of this approach

People understand intuitively that developing an infrastructure is crucial. However, it is extremely difficult to determine how much funding is needed to develop or improve infrastructure. Often, such funding must be done under the auspices of large application projects. The challenge then is to develop improved applications over time so that the infrastructure improves over time Infrastructure Development Is Difficult to Fund

Infrastructure Development Is Difficult to Fund conti Since the mid-1980s, companies have faced a continual succession of large infrastructure investments. First, they needed to convert from a mainframe to a client-server architecture to share corporate and desktop computing. Then they implemented ERP to centralize and standardize data so that everyone had the same information.

Infrastructure Development Is Difficult to Fund.. Then they needed to create a Web presence and give users access to back-end systems. Now they are under pressure to implement Web Services–oriented architectures to work inter-company and draw on best-of-breed processes. Boards of directors have realized that they have to fund these huge multiyear projects just to remain competitive. Making these large-stakes bets increases the difficulty of systems planning.

Responsibilities Needs to Be Joint It used to be easier to do something yourself than gather a coalition to do it. This is no longer the case. Systems planning initiated by and driven by the CIO has not proven as effective as systems planning done by a full partnership among C- level officers (CEO, CFO, CIO, COO) and other top executives.

IT Planning ! IT Planning is not like This one!

Responsibilities Needs to Be Joint …. Systems planning has become business planning; it is no longer just a technology issue. Many large organizations set up an Information Systems Council (ISC) or committee to periodically review the effectiveness of the current strategic plan, assess the current technological environment, and develop an IT strategy based on the institution’s mission and goals.

Planning Issues Several other characteristics of planning make strategic systems planning difficult. There is always tension between top-down and bottom- up approaches, thus the planning process must strike a balance between radical change and continuous improvement. Furthermore, systems planning does not exist in a vacuum. Most organizations have a planning culture into which systems planning must fit. This sampling of issues illustrates why systems planning is a difficult but crucial task.

The Changing World of Planning Internet etc. = ‘introduced’ speed into the business environment and transformed how people think about time, how much time they have to plan, react to competitors etc. Traditional Strategy-Making: 1. Business executives created a strategic business plan = where the business wanted to go 2. IS executives created an IS strategic plan = how IT would support the business plan 3. IT implementation plan created = describe exactly how the IS strategic plan would be implemented

The Changing World of Planning 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’

The Changing World of Planning

The Changing World of Planning cont. Today, due to the Internet and other technological advances, these assumptions no longer hold true:  The future cannot be predicted Who predicted Internet, Amazon, eBay etc.?  Time is not available for the sequence  IS does not JUST support the business anymore Figure 2-8  Top management may not know best Inside out Vs. outside in approach (Figure 4-3)  An organization is not like an army Industrial era metaphor no longer always applies

Today’s Sense-and-Response Approach If yesterday’s assumptions no longer hold true, what is taking the ‘old’ approach’s place?:  Let Strategies Unfold Rather Than Plan Them: In times of fast paced change (like today!) this is risky When predictions are ‘risky’, the way to move into the future is step by step using a sense-and- respond approach  Sense a new opportunity and immediately respond via testing it via an experiment  Myriad of small experiments (Figure 4-6)

Today’s Sense-and-Response Approach....  Formulate strategy closest to the action: Close contact with the market Employees who interact daily with customers, suppliers and partners Employees who are closest to the future should become prime strategists. In the ‘Internet Age’ = younger employees

The Changing World of Planning

  Microsoft, the software giant in Redmond, Washington, has taken a sense-and-respond approach to creating its Internet strategy.   Throughout its history, Microsoft has been slow to embrace some of the computer industry’s most significant technology shifts and business chances.   To adopt innovation, the company has often succeeded in using its financial might to acquire successful leaders (e.g., Lotus Development Corp. for office automation and Netscape Communications Corps for Web browsers).   Microsoft moved on to buying Internet companies, aligning with Sun to promote Java (and create a proprietary version of Java), and even forging an alliance with AOL.   This catch-up-and-strive approach has worked rather successfully for Microsoft. MICROSOFT Case example: Sense and Respond Strategy-Making

MICROSOFT Case example: Sense and Respond Strategy-Making software giant moved into a variety of technologies: BASIC programming language for PC MS-DOS (Microsoft Disk Operating System) MS Mouse

MICROSOFT Case example: Sense and Respond Strategy-Making.. MSN Web Portal and ISP (Internet Service Provider) Visual BASIC MS Windows XP MS Business Solutions (Financial Management, CRM, SCM) Tablet PC

MICROSOFT Case example: Sense and Respond Strategy-Making.. Windows Mobile OS Visual Studio.Net Enterprise Developer Xbox 360 and the multiplayer broadband gaming service, Xbox Live Vista Operating System

MICROSOFT Case example: Sense and Respond Strategy-Making.. MS Word Internet Explorer MS Windows MS Office

MICROSOFT Case example: Sense and Respond Strategy-Making.. Microsoft diversifies in a number of related sectors, to include: Web-only magazine, Slate, Web News site with NBC, Cable news channel with NBA, digital movie production via Dreamworks, mobile application,.NET platform for Web Services, and search engines to compete with Google. As the company celebrates its 30 th year anniversary, it is moving even more to applications areas (e.g., healthcare) while continuing to explore new software technologies (e.g., multi-core programming technology called “F-Sharp” to manage massive server computers).

MICROSOFT Case example: Sense and Respond Strategy-Making.. Bill Gates has made defining announcements, to be sure, focusing the company on the Internet, security, and Web Services. The strategies have not always come from top management. The company’s first server came from a rebel working on an unofficial project. In addition, management mistakenly passed up some cheap acquisitions that later cost them much more via licensing agreements

MICROSOFT Case example: Sense and Respond Strategy-Making.. In short, Microsoft has been sensing and responding to the moves in several industries, getting its fingers into every pie that might become important. Craig Mundle, Microsoft’s chief research-and-strategy officer, is designated to replace Bill Gates, who relinquishes his chairmanship in 2008, as the new long- term strategic thinker.

MICROSOFT Case example: Sense and Respond Strategy-Making.. In a report to the Wall Street Journal (July 30, 2007), Mr. Mundle wants Microsoft units to constantly search for innovation: “This is something that should be stuck in the face of the people who still think this is science fiction.”

MICROSOFT Case example: Sense and Respond Strategy-Making.. Formulate Strategy Closest to the Action: The major change introduced by the Internet is faster communication, not only within organizations but, more importantly, with others—customers, suppliers, and partners.

MICROSOFT Case example: Sense and Respond Strategy-Making.. Aligning corporate strategy with the marketplace in fast- paced times requires staying in close contact with that marketplace. Hence, strategy development needs to take place at these organizational edges, with the people who interact daily with outsiders.

MICROSOFT Case example: Sense and Respond Strategy-Making.. Today, this means including younger employees because they have grown up in an era of the Internet, PDAS, and cell phones. They take all three for granted; they wear them like clothing. One company that is taking this premise of downside-up strategizing to heart is Skandia Future Centers.

Different Microsoft Products

Summary Case examples include Microsoft Introduction  Types of planning  Why is planning so difficult? The Changing World of Planning  Traditional Strategy-Making  Today’s Sense-and-Respond Approach