1. 1 Lecture 10 BIS4430 IS Planning (Unit 5) Laudon & Laudon, 10 th Ed., Chapter 14

2. 2 What is a Business Plan? Starts with some kind of statement, general or explicit, stating where an organisation would like to be A strategic business plan contains: Organisation’s mission and future direction Performance targets Strategy

3. 3 What is an IS Plan? A road map indicating the direction of systems development (the purpose of the plan), the rationale, the current systems/situation, new developments to consider, the management strategy, the implementation plan, and the budget. (Laudon & Laudon)

4. 4 What is an IS Plan? An IS plan includes: activities that help to achieve the goals a program of measure means of implementing changes A statement how management see ISs in the future Effy Oz See page 497 of Laudon and Laudon

5. 5 Need for a Plan IS which are complex and/or which aim for distinct competitive edge require long-range planning. Decisions on future IS have organisation-wide impact, affecting turnover, and staff motivation, and therefore, IS planning should be carried out within the larger framework of corporate planning.

6. 6 Need for Planning Investment in IS has increased significantly because of the influx of products and support based on new computer and telecommunication technology. Such commitments require careful and systematic planning.

7. 7 Need for a method to provide a structured and systematic approach provide basis for development of IS that reflect more accurately the needs of the organisation provide IS group with direct link into corporate planning

8. 8 Variety of terms used: Information Systems Planning (ISP) Information Systems Strategic Planning (ISSP) Strategic Planning for Information Systems (SPIS) Strategic Information Systems Planning (SISP) Corporate Information Technology Planning (CITP)

9. 9 In this unit we are looking at: Planning undertaken by an organisation in order to determine its information systems requirements so that it can meet its short term and long term needs The process of identifying the application portfolio that will help the organisation in executing its business plans and consequently realise its business goals and /or the process of developing an application portfolio with a high impact and the ability to create an advantage over competitors.

10. 10 Information Systems Planning.. The planning of information systems used to support or shape an organisation’s competitive strategy, its plan for gaining and/or maintaining advantage’ (Rackoff, 1985 in Fitzgerald)

11. Two broad approached to SISP: IMPACT approach: ALIGN approach: 11 identification of a small number of IS applications that can give the organisation a competitive edge the development of organisation- wide information architecture of applications to guide the creation of large databases and computer systems to support current business strategies

12. 12 IMPACT approach ALIGN approachBusiness goals Competitive advantage Value chain analysis Helps to identify critical points of inter-departmental collaboration Concentrate on value adding activities and is independent of organisational structure Pitches IS right into the realm of value adding rather than cost cutting

13. Weaknesses include: Only provides a high level information model – development and implementation issues are not addressed The focus is on operations not on data – does not provide suitable data structures Difficult to apply to organisations where the product is intangible, and where there are no obvious raw materials 13 (Pant and Hsu, 1995)

14. 14 Approaches to Business IS planning Bottom-up planning Top-down planning

15. 15 Bottom-upplanning approach to planning is based on an organisation’s response to needs/problems mainly driven by middle managers does not allow a broad view of organisational needs and opportunities reactive rather than proactive

16. 16 Bottom-upplanning Top management Business units IS will serve specific units well Usually not conducive to enterprise-wide integration of systems The process starts with individual concerns Adapted from Effy Oz, 2000

17. 17 Top-downplanning also considered as goal-driven driven by senior managers proactive rather than reactive effective in creating strategies for overall business results in highly integrated Information Systems spanning the entire organisation.

18. 18 Prerequisites for effective IS planning recognise IT as a indispensable resource understand that IT is a complex resource regard IT as owned by the entire organisation regard IS as a source for gaining strategic goals view IS as a tool to control power The top management must:

19. Corporate mission IS mission The role of the IS in the corporation IS vision The ideal technology (hardware, software, communications) for the corporation IS strategic plan Goals to be achieved IS tactical plan Objectives and ways to achieve them Plan for operations Projects priorities staffing purchases funding Budget The steps of IS planning (Effy Oz, 2006:386)

20. 20 IS planning Critical Success Factor (CSF) planning Business Systems Planning (BSP) or Enterprise Analysis SISP

21. 21 Strategic Analysis or Critical Success Factor (CSF) Planning A small number of easily identifiable operational goals shaped by the industry, the firm, the manager, and the broader environment that are believed to ensure the success of the organisation. L&L Used to determine the information requirements of the organisation

22. 22 Success factors – McKinsey and Company, by D. Ronald Daniel in 1961 ‘Management Information Crisis’, Harvard Business Review, Sept-Oct, 1961. Critical Success factors – Jack F Rockart in 1979 ‘Chief Executives Define Their own Data Needs’, Harvard Business Review, March-April 1979, p81 Published later in 1986 in the book, ‘A Primer on Critical Success Factors’.

23. 23 Measures that indicate the performance or efficiency of different parts of an organisation and its processes. Bocij et al. (2006)

24. 24 Critical Success Factor (CSF) Planning underlying concept is that the success of the organisation is the sum of the success of individual business units

25. 25 ---------Business activities--------- CSF Key Decisions Information needs Bocij et al. (2006),page 598

26. 26 According to Rockart there are 4 basic types of CSFs: Industry CSFs resulting from specific industry characteristics Strategy CSFs resulting from the chosen competitive strategy of the business Environmental CSFs resulting from economic or technological changes Temporal CSFs resulting from internal organisational needs and changes

27. 27 Industry CSFs Organisational CSFs Business Unit or Function CSFs Manager’s CSFs

28. 28 Critical Success Factor (CSF) Planning Identify the firm’s primary mission and objectives Executives identify CSFs Identify measures of performance Decide which measures are most important Steps:

29. 29 CSF Sources The structure of the industry Firm’s competitive strategy Firm’s industry position and/or geographic location Environmental factors surrounding the firm Temporary operating problems or opportunities

30. 30 CSF Examples Improving customer relationship Improving supplier relationship Making the best use of inventory using capital and human resources efficiently and effectively, etc.

31. 31 CSFSource of CSFPrimary measures & Targets Increase number of customers Industry95% customer retention rate; 15% new customers/year Install customer service hot line Strategy90% customer queries answered in 1 hour Increase number of customer service reps Strategy3 reps per 100 customers Restructure capital structure EnvironmentalLower cost of capital by 2% Raise employee morale TemporalIncrease employee retention rate to 95%/year

32. 32 Consider the case of a mail order supplier of clothes: Objective: To increase market share by 5% per annum CSFs: Effective advertising, faster customer order processing, faster distribution service IS Applications: market research database and analysis, web based order processing, automated delivery scheduling

33. 33 Benefits of CSF Planning starts with a shared understandings of what is critical to the company help effective communication between executives influences in prioritising system development projects systems produces are more custom tailored takes into account the changing environment especially suitable for DSS and ESS

34. Weaknesses: Although useful and widely used, not enough to perform a comprehensive SISP on its own To be of value, need to be easily and directly related back to BU goals. According to Ward, generally looses its value when used below the 3 rd level of hierarchy 34 (Pant and Hsu, 1995)

35. Weaknesses: Focuses primarily on management control hence internally focused rather than creative Do not draw attention to the value added aspect of information systems. CSFs facilitate the identification of IS which meet the key information needs of a BU/organisation. Not much work carried out to assess the value derived from these systems 35 (Pant and Hsu, 1995)

36. 36 The Business System Planning (BSP) or Enterprise Analysis Developed in the 1970s by IBM Business oriented - provide focus on data involves top-down planning with bottom-up implementation assist an organisation in developing and establishing an information architecture

37. 37 The Business System Planning (BSP) -how they use information -where they get information from -what their environments are -what their objectives are -how they make decisions -what their data needs are Central method is to take a large example of managers and ask: Subunits Functions Processes Data

38. 38 The Business System Planning (BSP) -While recognising data as a corporate resource, it does not provide a direct interface to conceptual and logical data modelling activities. -There is also a lack of adequate definition of data components or use of current data nomenclature -Nothing in the original methodology helps an organisation if its computing resource has become decentralised. Missing elements:

39. Strengths: BSP combines top down analysis with bottom up implementation strategy - represents an integrate methodology 39 Weaknesses: Considerable time and effort is required for its successful implementation Requires a high degree of IT experience within the planning team

40. Business Systems Planning BSP, in addition to its value for I/S planning, also made two other important intellectual contributions: 1.It helped introduce the process view of the firm. The popular Business Process Re-engineering of the 1990s was built on this concept. 2.It pointed out the need to de-couple data from the applications that use these data, i.e., data independence. This supported the database approach to systems development. Computer Information Systems Robinson College of Business Georgia State University

41. 41 Ward et al.s’ Approach aims to align IS development with current business needs and goals and to seek competitive advantage from them

42. 42 The SISP Approach ‘the process of deciding the objectives for organisational computing and identifying potential computer applications which the organisation should implement’ Earl defines SISP as:

43. 43 Ward et al.s’ SISP Approach l Pre-planning stage l Planning Two main stages: Project Plan IS Strategy IT Strategy IM Strategy Terms of reference

44. 44 Pre-Planning or Planning for planning

45. 45 Pre-Planning or Planning for planning Terms of reference scope (business areas and time limits) objectives (reflect organisational emphasis) allocation of resources to the project end-users to be consulted project manager

46. 46 Pre-Planning or Planning for planning project plan stages or activities to be carried out techniques that will be used

47. 47 Planning Organisation Modelling Mission/Goals & Objectives CSFs Business activity analysis Information needs analysis Internal Business environment External Business environment External IS/IT environment Internal IS/IT environment Planning approaches, models, techniques TOR/ Project Plan IS strategy IT strategy IM strategy

48. 48 Planning Internal business environment the Information Architecture techniques that will be used (desired or required activities and their information needs) mission statement, high-level objectives or targets and Critical Success Factors

49. 49 Planning External business environment threats opportunities social or economic pressure, legislation

50. 50 The Information Engineering Methodology (IEM) aims to align hardware and software resources to the corporate plan a continuous process of planning, implementation and management compares the formal business strategy with the actual

51. 51 The Information Engineering Methodology Analyse requirements

52. 52 The Information Engineering Methodology Helps to identify the goals (where you are headed) route (how to reach that goal) monitor the progress (milestones)

53. 53 The Information Engineering Methodology

54. 54 The Information Engineering Methodology Another important element of IEM is the method of presentation and communication of the plan

55. 55 Earl's Multiple Method Acknowledges that there is a diversity of reasons why organisations undertake ISSP. suggests the use of a three level model as an aid to thinking about ISS top-down bottom-up lateral