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

2. 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.

3. 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.

4. 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

5. Managing Investments in Information Systems and Technology
Chapter 9
Managing Investments in Information Systems and Technology

6. Chapter 9: Overview
Chapter 9 presents approaches to managing IS/IT investments, setting priorities to gain the best overall return from those investments and defining and realising the business benefits that IT-enabled changes can produce.

7. Chapter 9: Main Topics Investment and priority-setting policies
Evaluating IS/IT investments
Setting priorities for applications
Benefits management
Assessing and Managing Investment Risks

8. Introduction
The applications portfolio will include a range of different IS/IT investments that have been identified as new developments or significant enhancements to existing systems.
Before resources are assigned and development begins, several other steps need to be taken including:
Establishing the expected benefits of the investments
Justifying the cost of the systems, technology and business changes involved
Allocating priorities to individual developments across the portfolio

9. Investment and Priority Setting Policies
IS/IT investments have traditionally been evaluated like capital projects such as plant and equipment assuming a fixed cost offset against net revenue over the life of the application.
However, many modern applications are more like ‘new business ventures’ or business initiatives where the financial aspects of the outcome can only be guessed and the technology is only one component of a major change program.

10. Evaluating IS/IT Investments
Parker et al.(1992) assess in detail the ways in which information and systems benefits accrue and how they can be quantified to help in justifying investments. They consider 3 main types of application:
Substitutive – technology replacing people with economics being the main driving force, to improve efficiency
Complementary – improving organisational productivity and employee effectiveness by enabling work to be performed in new ways
Innovative – achieving a competitive edge by changing trading practice, creating new markets, etc.

11. Evaluating IS/IT Investments
They suggest ways in which each of the different types of application should be justified and define 5 basic techniques for evaluating benefits:
Traditional cost-benefit analysis
Value linking
Value acceleration
Value restructuring
Innovation evaluation

12. Evaluating IS/IT Investments
Traditional cost-benefit analysis
Allows for efficiency improvements in organisational processes resulting from automation
Value linking
Estimates the improvement in business performance, not just savings made, from improving the linkages between processes or activities or interactive component design with suppliers via a shared Computer-Aided Design system

13. Evaluating IS/IT Investments
Value acceleration
Considers time dependence of benefits and costs in other departments of system improvements. Benefits can occur in other parts of the business, not just where the system is actually implemented
Value restructuring
Considers the productivity resulting from processes and organisational change and change of job roles
Innovation evaluation
Attempts to estimate the value to the business of new business or new business practices levered from IS/IT (e.g. the launch of an online banking service may change the company image and attract new types of customers).

14. Relationship Between Benefit Types and the Application Portfolio
Substitutive
(efficiency)
Complementary
(effectiveness)
Innovative
(competitive)
Cost/Benefit
Value linking
Value acceleration
Value restructuring
Innovation evaluation            
Support
High Potential
Key Operational
Strategic

15. Evaluating IS/IT Investments
Enable the achievement of
business objectives via explicit
critical success factors
STRATEGIC
R&D project to explore potential
value and cost-fund from R&D
budget
Risk money
HIGH POTENTIAL
Net cost reduction through
quantified savings
SUPPORT
Disadvantage/Risk if it is not done
(critical failure factors)
and/or quantified performance
improvement
KEY OPERATIONAL RM RM RM RM
RM extent to which benefits can be justified financially

16. Setting Priorities for Applications
3 factors need to be included in the assessment of priorities:
What is most important to do, based on the benefits identified
What is capable of being done, based on the resources available
What is likely to succeed, based on the risks of failure of each investment

17. Benefits Management Definition:
The process of organising and managing such that potential benefits arising from the use of IT are actually realised
The ability to achieve benefits from a particular investment will depend largely on the organisation’s experience and knowledge of what type of benefit IS/IT investment can or cannot deliver and how they can be obtained.
Based on the different objectives and rationale for the applications in each segment of the application portfolio, it can be seen that the mix of activities and their criticality to success will vary.

18. Generic Sources of Benefit for Different Applications
Business innovation and change
Business process restructuring
STRATEGIC
(R&D projects)
HIGH POTENTIAL
Business efficiency
Process elimination and
cost reduction
SUPPORT
Business effectiveness
Business rationalisation
and integration
KEY OPERATIONAL

19. Benefits Management Context
drivers
Types of
benefits
Organisational
context
Benefits
IT process
and products
management
process
changes

20. Assessing and Managing Investment Risks
As part of the appraisal of investment viability, it is essential to assess the potential risks:
The risks of failing to deliver anything at all
The risks of failing to deliver some or all the benefits

21. Assessing and Managing Investment Risks
Failure can occur in 5 domains:
Technical failure
Data failure
User failure
Organisational failure
Failure in the business environment

22. Chapter 9 Complete 15