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Information System PlanningInformation System Planning

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IS management is becoming more difficult and IS management is becoming more difficult and more important too, especially strategic more important too, especially strategic systems planningsystems planning

On one hand, technology is changing very fast On one hand, technology is changing very fast – Why bother?– Why bother?

On the other hand, most organizations’ survival On the other hand, most organizations’ survival depends on IT. So, planning effective use of IT depends on IT. So, planning effective use of IT is a matter of organizational life and deathis a matter of organizational life and death

How do we resolve this apparent paradox?How do we resolve this apparent paradox?

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Good news – a variety of tools and approaches Good news – a variety of tools and approaches have been developed to assist in systems have been developed to assist in systems planningplanningBad news – Bad news – no best wayno best way has been devised has been devisedMost organizations use more than one Most organizations use more than one approachapproachAppropriate mindset for planning has to be Appropriate mindset for planning has to be establishedestablishedPlanning – developing a view of the future that Planning – developing a view of the future that guides decision making todayguides decision making todayIn the present day turbulent times, many In the present day turbulent times, many executives now think of “strategy-making” executives now think of “strategy-making” rather than planningrather than planning

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It is important to establish the appropriate It is important to establish the appropriate mindset for planningmindset for planning::

Some managers believe = “determining what Some managers believe = “determining what decisions to make in the future”decisions to make in the future”

Better view = developing a view of the future Better view = developing a view of the future that guides decision making todaythat guides decision making today

Subtle difference = ‘strategy making’Subtle difference = ‘strategy making’• Strategy = stating the direction in which you want to Strategy = stating the direction in which you want to

go and how you intend to get therego and how you intend to get there

The result of strategy-making is a planThe result of strategy-making is a plan

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Why Planning Is So DifficultWhy Planning Is So Difficult

Types of PlanningTypes of Planning::

Planning is usually defined in three forms, Planning is usually defined in three forms, which correspond to the three planning which correspond to the three planning ‘horizons’. ‘horizons’. – Strategic = 3-5 yearsStrategic = 3-5 years– Tactical = 1-2 yearsTactical = 1-2 years– Operational = 6 months – 1 yearOperational = 6 months – 1 year

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Types of PlanningTypes of PlanningHorizonHorizon FocusFocus IssuesIssues Primary Primary

ResponsibilityResponsibility

3-5 years3-5 years StrategicStrategic Vision, Vision, Architecture, Architecture, business goalsbusiness goals

Sr. Mngt, CIOSr. Mngt, CIO

1-2 years1-2 years TacticalTactical Resource Resource allocation, allocation, project selectionproject selection

Middle mngrs, IS Middle mngrs, IS Line partners, Line partners, Steering Steering CommitteeCommittee

6 months-6 months-1year1year

OperationalOperational Project Mngt, Project Mngt, budgets, targetsbudgets, targets

IS professionals, IS professionals, Line managersLine managers

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WhyWhy P Planning Ilanning Is So Ds So Difficultifficult??

Business Goals and Systems Plans Need to Business Goals and Systems Plans Need to AlignAlign Strategic systems plans need to align with business Strategic systems plans need to align with business

goals and support those objectivesgoals and support those objectives Some believe = “too sensitive” = PROBLEMSSome believe = “too sensitive” = PROBLEMS Fortunately = trend for CIOs to be part of senior Fortunately = trend for CIOs to be part of senior

managementmanagement

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Technologies Are Rapidly ChangingTechnologies Are Rapidly Changing How can you plan when information How can you plan when information

technologies are changing so rapidlytechnologies are changing so rapidly– Continuous planning?Continuous planning?– Old days of planning at ‘start of year’ = goneOld days of planning at ‘start of year’ = gone– Advanced technology groupsAdvanced technology groups

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Companies Need Portfolios Rather Than Companies Need Portfolios Rather Than ProjectsProjects Evaluation Evaluation on on more more than theirthan their individual merit individual merit– How they fit into other projects and how they How they fit into other projects and how they

balance the portfolio of projectsbalance the portfolio of projects

Infrastructure Development is Difficult to FundInfrastructure Development is Difficult to Fund Despite everyone “knowing infrastructure Despite everyone “knowing infrastructure

development is crucial”, it is extremely difficult to development is crucial”, it is extremely difficult to get funding just to develop or improve infrastructureget funding just to develop or improve infrastructure

Often done under the auspices of a large Often done under the auspices of a large application projectapplication project

– Challenge = develop improved applications and Challenge = develop improved applications and improve infrastructure over timeimprove infrastructure over time

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Responsibility Needs to be JointResponsibility Needs to be Joint Business planning, not just a technology issueBusiness planning, not just a technology issue

Other planning issuesOther planning issues Top-down Vs. bottom-up;Top-down Vs. bottom-up; radical change Vs. continuousradical change Vs. continuous Planning culturePlanning culture

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The Changing World of PlanningThe Changing World of Planning

Internet etc. = ‘introduced’ speed into the Internet etc. = ‘introduced’ speed into the business environment business environment

And transformed how people think about time, And transformed how people think about time,

How much time they have to plan, and to react How much time they have to plan, and to react to competitors etc.to competitors etc.

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Traditional Strategy-MakingTraditional Strategy-Making

1.1.Business executives created a strategic Business executives created a strategic business plan = where the business wanted business plan = where the business wanted to goto go

2.2.IS executives created an IS strategic plan = IS executives created an IS strategic plan = how IT would support the business planhow IT would support the business plan

3.3.IT implementation plan created = describe IT implementation plan created = describe exactly how the IS strategic plan would be exactly how the IS strategic plan would be implementedimplemented

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Assumptions:Assumptions:

The future can be predictedThe future can be predicted

Time is available to do these 3 partsTime is available to do these 3 parts

IS supports and follows the businessIS supports and follows the business

Top management knows best (broadest Top management knows best (broadest view of firm)view of firm)

Company = like an ‘Army’Company = like an ‘Army’

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Traditional Strategy-MakingTraditional Strategy-Making

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The Changing World of PlanningThe Changing World of PlanningToday, due to the Internet and other Today, due to the Internet and other technological advances, these assumptions no technological advances, these assumptions no longer hold truelonger hold true::The future cannot be predictedThe future cannot be predicted– Internet caused “discontinuous change”Internet caused “discontinuous change”– Who predicted Internet, Amazon, eBay etc.?Who predicted Internet, Amazon, eBay etc.?

Time is not available for the sequenceTime is not available for the sequence– The sequence of planning events (IT) no longer The sequence of planning events (IT) no longer

supports the Internet-based timesupports the Internet-based time– IT implementation planning actually needs to be out IT implementation planning actually needs to be out

ahead of business strategizing, and needs to be ahead of business strategizing, and needs to be fastfast

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IS does not JUST support the business IS does not JUST support the business anymoreanymore– IT has become the platform of businessIT has become the platform of business– Benson, Parker & Trainor have pointed that IT can Benson, Parker & Trainor have pointed that IT can

serve lines of business in two waysserve lines of business in two ways– One, by supporting current and planned operations, One, by supporting current and planned operations,

called “alignment”called “alignment”– Second, by using systems to influence future ways Second, by using systems to influence future ways

of working – “impact”of working – “impact”– To fulfil the second role, IS needs to get ahead of To fulfil the second role, IS needs to get ahead of

the business to demonstrate IT-based possibilitiesthe business to demonstrate IT-based possibilities– At the very least, IS and business need to At the very least, IS and business need to

strategize together, not follow the old model of strategize together, not follow the old model of business first, IS secondbusiness first, IS second

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Enterprise-wide Information Management ModelEnterprise-wide Information Management Model

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Top management may not know bestTop management may not know best– When change occurs rapidly, the top management When change occurs rapidly, the top management

is typically distant from the “front lines” of the is typically distant from the “front lines” of the businessbusiness

– Having strategy formulated by top management Having strategy formulated by top management limits it to what these few have distilledlimits it to what these few have distilled

– Today’s trend of customizing products and services Today’s trend of customizing products and services to smaller niche markets requires diversity in to smaller niche markets requires diversity in strategy-makingstrategy-making

– Best performed by those closest to customersBest performed by those closest to customers– Hence, former “inside-out” strategy-making needs Hence, former “inside-out” strategy-making needs

to be shifted to an “outside-in” approachto be shifted to an “outside-in” approach

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Outside-In Strategy DevelopmentOutside-In Strategy Development

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An organization is not like an armyAn organization is not like an army– Industrial era planning mind set dictated that Industrial era planning mind set dictated that – Top management edicts ripple down through the Top management edicts ripple down through the

organizationorganization– Implemented by troops on the front line who deal Implemented by troops on the front line who deal

with customerswith customers• Industrial era metaphor is no longer holding trueIndustrial era metaphor is no longer holding true• Major lessons from BPR failures of the early ’90sMajor lessons from BPR failures of the early ’90s• Executives learned that their mandates to institute Executives learned that their mandates to institute

major changes, imposed from the top, often ended major changes, imposed from the top, often ended in disaster, destroyed valuable company assetsin disaster, destroyed valuable company assets

• A new and controversial view to see organizations A new and controversial view to see organizations as living entities evolved. Need to be nurtured and as living entities evolved. Need to be nurtured and tended, requiring a different kind of leadershiptended, requiring a different kind of leadership

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Today’s Sense-and-Response ApproachToday’s Sense-and-Response Approach

If yesterday’s assumptions no longer hold true, what is If yesterday’s assumptions no longer hold true, what is taking the ‘old’ approach’s place?taking the ‘old’ approach’s place?Sense-and-respond strategy-making, reported in Sense-and-respond strategy-making, reported in Gartner’s Gartner’s Tactical StrategyTactical Strategy report reportLet Strategies Unfold Rather Than Plan Them:Let Strategies Unfold Rather Than Plan Them:• In times of fast paced change (like today!) In times of fast paced change (like today!)

articulating one enterprise-wide strategy is risky articulating one enterprise-wide strategy is risky • When predictions are ‘risky’, the way to move into When predictions are ‘risky’, the way to move into

the future is step by step using a sense-and-the future is step by step using a sense-and-respond approachrespond approach

– Sense a new opportunity and immediately respond Sense a new opportunity and immediately respond via testing it via an experimentvia testing it via an experiment

– Myriad of small experimentsMyriad of small experiments

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Sense-and-Respond Strategy-makingSense-and-Respond Strategy-making

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Formulate strategy closest to the action:Formulate strategy closest to the action:• Major change is happening w.r.t. communication Major change is happening w.r.t. communication

with customers, suppliers, and partners, rather than with customers, suppliers, and partners, rather than within the organizationwithin the organization

• Aligning corporate strategy with the marketplace Aligning corporate strategy with the marketplace requires staying in close contact with the requires staying in close contact with the marketplacemarketplace

• Employees who interact daily with customers, Employees who interact daily with customers, suppliers and partnerssuppliers and partners

• Development of strategy needs to happen at these Development of strategy needs to happen at these “edges”“edges”

• Employees who are closest to the future should Employees who are closest to the future should become prime strategists. In the ‘Internet Age’ = become prime strategists. In the ‘Internet Age’ = younger employeesyounger employees

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MICROSOFTMICROSOFTCase example: Case example: Sense and Respond Strategy-Sense and Respond Strategy-MakingMaking– Abandoned proprietary network despite big $ when Abandoned proprietary network despite big $ when

it did not capture enough customersit did not capture enough customers– Moved on to buying Internet Companies as well as Moved on to buying Internet Companies as well as

aligning with Sun to promote Javaaligning with Sun to promote Java– Over time = moved into a variety of technologies:Over time = moved into a variety of technologies:

Web, Cable news, Digital movies, Cable modems, Web, Cable news, Digital movies, Cable modems, Handheld OS, Video server, Music, Multiplayer gamingHandheld OS, Video server, Music, Multiplayer gaming

– Not all came from ‘top management’ e.g. first server Not all came from ‘top management’ e.g. first server came from a ‘rebel’ projectcame from a ‘rebel’ project

– Getting its fingers into every pie that might become Getting its fingers into every pie that might become importantimportant

Missed some – paid $$$ laterMissed some – paid $$$ later

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SKANDIA FUTURE CENTERSSKANDIA FUTURE CENTERSCase example: Case example: Formulate Strategy Closest to Formulate Strategy Closest to the Actionthe Action– Incubator for testing ideas on IT, social Incubator for testing ideas on IT, social

relationships, and networking for Skandia, the large relationships, and networking for Skandia, the large Swedish insurance companySwedish insurance company

– Different generations (3G: 25+, 35+, 45+) Different generations (3G: 25+, 35+, 45+) collaborate on ‘on-the-edge’ projectscollaborate on ‘on-the-edge’ projects

In order to talk = focus on questions (= dialog) In order to talk = focus on questions (= dialog) rather than answers (= debate)rather than answers (= debate)Presented as ‘plays’ (Vs. Report)Presented as ‘plays’ (Vs. Report)

– ““Garden” = some of the projects are growing; others Garden” = some of the projects are growing; others = not= not

– Combining senior wisdom with young people’s Combining senior wisdom with young people’s entrepreneurship leads to a real powerhouseentrepreneurship leads to a real powerhouse

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If yesterday’s assumptions no longer hold true, If yesterday’s assumptions no longer hold true, what is taking the ‘old’ approach’s place?what is taking the ‘old’ approach’s place?Guide Strategy-Making with a ‘Strategic Guide Strategy-Making with a ‘Strategic Envelope’:Envelope’:– Having a myriad of potential corporate strategies Having a myriad of potential corporate strategies

being tested in parallel could lead to anarchy being tested in parallel could lead to anarchy without a central guiding mechanismwithout a central guiding mechanism

– Top management set the parameters for the Top management set the parameters for the experiments (= a ‘strategic envelope’), and then experiments (= a ‘strategic envelope’), and then continually manage that contextcontinually manage that context

– Need to meet often to discuss:Need to meet often to discuss:• Shifts in the marketplaceShifts in the marketplace• How well each of the experiments is proceedingHow well each of the experiments is proceeding• Gaining ‘followership’ or showing waning Gaining ‘followership’ or showing waning

interest?interest?

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Be at the Table :Be at the Table :– IS executives have not always been involved in IS executives have not always been involved in

business strategisingbusiness strategising– This situation is untenable in today’s ‘Internet-This situation is untenable in today’s ‘Internet-

driven’ world.driven’ world.– Note: first = need to make department credibleNote: first = need to make department credible

Test the Future:Test the Future:– Need to test potential futures before the business is Need to test potential futures before the business is

ready for them (thinking ahead of the business)ready for them (thinking ahead of the business)– Provide funding for experimentsProvide funding for experiments– Have an emerging technologies groupHave an emerging technologies group

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Put the Infrastructure in Place:Put the Infrastructure in Place:

Moving quickly in Internet commerce means having Moving quickly in Internet commerce means having the right IT infrastructure in place.the right IT infrastructure in place.

The most critical IT decisions are infrastructure.The most critical IT decisions are infrastructure.

Recommended that IT ‘experiments’ include those that Recommended that IT ‘experiments’ include those that test ‘painful’ infrastructure issues such as how to:test ‘painful’ infrastructure issues such as how to: Create and maintain common, consistent data Create and maintain common, consistent data

definitionsdefinitions Create and instil mobile commercial standards Create and instil mobile commercial standards

among handheld devicesamong handheld devices Implement e-commerce security and privacy Implement e-commerce security and privacy

measuresmeasures Determine operational platforms (ERP, Supply Determine operational platforms (ERP, Supply

Chain Management …)Chain Management …)

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Seven Planning TechniquesSeven Planning Techniques

1.1. Stages of Stages of GGrowthrowth

2.2. Critical Critical SSuccess uccess FFactorsactors

3.3. Competitive Competitive FForces orces MModel odel

4.4. Value Value CChain hain AAnalysisnalysis

5.5. E-business E-business VValue alue MMatrixatrix

6.6. Linkage Linkage AAnalysis Planningnalysis Planning

7.7. Scenario PlanningScenario Planning

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1. Stages of Growth1. Stages of Growth

Stage One: Early Successes: Increased Stage One: Early Successes: Increased interest and experimentationinterest and experimentationStage Two: Contagion: Interest grows rapidly; Stage Two: Contagion: Interest grows rapidly; learning period for the fieldlearning period for the fieldStage Three: Control: Efforts begin toward Stage Three: Control: Efforts begin toward standardizationstandardizationStage Four: Integration: Pattern is repeatedStage Four: Integration: Pattern is repeated

ExampleExample::

– DP EraDP Era 1960 – early ’80s1960 – early ’80s– Micro eraMicro era early ’80s – late ’90searly ’80s – late ’90s– Network eraNetwork era late’90s – 2010?late’90s – 2010?

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2. Critical Success Factors2. Critical Success FactorsPopular planning approach that can be used to help Popular planning approach that can be used to help companies identify information systems they need to companies identify information systems they need to develop / improvedevelop / improveFor each executive, CSFs are the few key areas of the For each executive, CSFs are the few key areas of the job where things must go right for the organization to job where things must go right for the organization to flourishflourishSuggested fSuggested fewer than 10 per executiveewer than 10 per executiveTime dependent (must be re-examined)Time dependent (must be re-examined)Four sources: Four sources: – industry the business is in, industry the business is in, – company itself company itself and situation and situation within industry, within industry, – environment (consumer trends), and environment (consumer trends), and – temporal organizational factors (inventory)temporal organizational factors (inventory)

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Additionally, two more types of CSFsAdditionally, two more types of CSFs

Monitoring – keeping abreast of ongoing Monitoring – keeping abreast of ongoing operationsoperations

Building - tracking the progress of “programs of Building - tracking the progress of “programs of change” initiated by an executive; depends on change” initiated by an executive; depends on the level of the executivethe level of the executive

Used to determine factors critical to accomplish Used to determine factors critical to accomplish corporate objectives and corresponding corporate objectives and corresponding measures – hard and soft issuesmeasures – hard and soft issues

Can be used to identify IS Can be used to identify IS plans plans that need to be that need to be developeddeveloped

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3. Competitive Forces Model3. Competitive Forces Model

Companies must contend with five competitive Companies must contend with five competitive forcesforces which you need to analyse which you need to analyse::

1 Threat of new entrantsThreat of new entrants

2 Bargaining power of customers and buyersBargaining power of customers and buyers

3 Bargaining power of suppliersBargaining power of suppliers

4 Substitute products or servicesSubstitute products or services

5 The intensity of rivalry among competitorsThe intensity of rivalry among competitors

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Three strategies for dealing with these Three strategies for dealing with these competitive forces:competitive forces:1.1.Differentiate product and services - make them Differentiate product and services - make them

““betterbetter” in the eyes of the consumer” in the eyes of the consumer Probably the most popular of the 3 strategiesProbably the most popular of the 3 strategies

2.2.BeBe thethe lowest-cost producer - not just lowest-cost producer - not just aa low-cost low-cost producerproducer

3.3.Find a Find a nicheniche - e.g.: geographical market - e.g.: geographical market

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4. Value Chain Analysis4. Value Chain AnalysisFive primary activities that form the sequence Five primary activities that form the sequence of the value chain:of the value chain:1 Inbound logistics: receiving and handling inputsInbound logistics: receiving and handling inputs2 Operations: converting inputs to the product/serviceOperations: converting inputs to the product/service3 Outbound logistics: collect, store, and distribute the Outbound logistics: collect, store, and distribute the

product/service to buyersproduct/service to buyers4 Marketing and sales: the means/incentives for Marketing and sales: the means/incentives for

buyers to buy the product/servicebuyers to buy the product/service5 Service: enhancements/maintenance of the value of Service: enhancements/maintenance of the value of

the product/servicethe product/service

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Four supporting activities that underlie the Four supporting activities that underlie the entire value chain:entire value chain:1 Organizational infrastructureOrganizational infrastructure2 Human resources managementHuman resources management3 Technology developmentTechnology development4 ProcurementProcurement

Virtual Value Chains?Virtual Value Chains?–Marketspaces where information substitutes for Marketspaces where information substitutes for

physicalphysicalCan also use Porter’s Value chain analysisCan also use Porter’s Value chain analysis

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5. E-Business Value Matrix5. E-Business Value Matrix

It can be difficult for executives to prioritise It can be difficult for executives to prioritise projects, therefore a ‘portfolio’ management projects, therefore a ‘portfolio’ management approach is valuable. approach is valuable.

Tool used by Cisco to ensure they are Tool used by Cisco to ensure they are developing a well-rounded portfolio of IT developing a well-rounded portfolio of IT projects.projects.

Every IT project is meant to be placed into one Every IT project is meant to be placed into one of four categories to assess its value to the of four categories to assess its value to the companycompany

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– New fundamentalsNew fundamentals: : Low-LowLow-Low=provide a =provide a fundamentally fundamentally new way of workingnew way of working in overhead in overhead areas, not areas, not businessbusiness--criticalcritical areas areas

– Operational excellenceOperational excellence: : HighHigh in criticality to in criticality to business-business-LowLow in newness of idea=medium risk in newness of idea=medium risk because they may involve reengineering work because they may involve reengineering work processesprocesses

– Rational experimentationRational experimentation: : LowLow in criticality to in criticality to business-business-HighHigh in newness of idea=test new in newness of idea=test new technologies and ideastechnologies and ideas

– Breakthrough strategyBreakthrough strategy: : High-HighHigh-High=potentially =potentially have a huge impact on the companyhave a huge impact on the company

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6. Linkage Analysis Planning6. Linkage Analysis PlanningExamines the links organizations have with one Examines the links organizations have with one another with the goal of creating a strategy for another with the goal of creating a strategy for utilizing electronic channelsutilizing electronic channels

Methodology includes the following steps:Methodology includes the following steps:

– Define power relationships among the Define power relationships among the various players and stakeholders:various players and stakeholders:– Identify who has the powerIdentify who has the power–Determine future threats and opportunities Determine future threats and opportunities

for the companyfor the company

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• Map out your extended enterprise to include Map out your extended enterprise to include suppliers, buyers, and strategic partnerssuppliers, buyers, and strategic partners

The enterprise’s success depends on the The enterprise’s success depends on the relationships among everyone involvedrelationships among everyone involved

Some 70% of the final cost of goods and services Some 70% of the final cost of goods and services is in their information contentis in their information content

• Plan your electronic channels to deliver the Plan your electronic channels to deliver the information component of products and servicesinformation component of products and services– Create, distribute, and present information and Create, distribute, and present information and

knowledge as part of a product or service or as knowledge as part of a product or service or as anan ancillary goodancillary good

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7. Scenario Planning7. Scenario Planning

Scenarios are stories about the way the world Scenarios are stories about the way the world might be in the futuremight be in the future

The goal of scenario planning is not to predict The goal of scenario planning is not to predict the future (= hard to do!), but to explore the the future (= hard to do!), but to explore the forces that could cause different futures to take forces that could cause different futures to take placeplace

Then decide on actions to take if those forces Then decide on actions to take if those forces begin to materialize begin to materialize

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Long-term planning has traditionally Long-term planning has traditionally extrapolated from the past and has not factored extrapolated from the past and has not factored in low-probability events that could significantly in low-probability events that could significantly alter trendsalter trends– Straight-line projections have provided Straight-line projections have provided

little help!little help!

Four steps in Scenario Planning:Four steps in Scenario Planning:1.1.Define a decision problem and time frame to bound Define a decision problem and time frame to bound

the analysisthe analysis2.2. Identify the major known trends that will affect the Identify the major known trends that will affect the

decision problemdecision problem3.3. Identify just a few driving uncertaintiesIdentify just a few driving uncertainties4.4.Construct the scenariosConstruct the scenarios

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ConclusionConclusionBased on the successes and failures of past Based on the successes and failures of past information systems planning efforts, we see two information systems planning efforts, we see two necessary ingredients to a good strategic planning necessary ingredients to a good strategic planning effort:effort:

1.1.IS plans must look towards the futureIS plans must look towards the future Future is not likely to be an extrapolation of the Future is not likely to be an extrapolation of the

pastpast Successful planning needs to support “peering Successful planning needs to support “peering

into the future” – most likely in a sense-and-into the future” – most likely in a sense-and-respond fashionrespond fashion

2.2.IS planning must be intrinsic to business planningIS planning must be intrinsic to business planning

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IS plans typically use a combination of IS plans typically use a combination of planning techniques presentedplanning techniques presented– No single technique is best and no single one is the No single technique is best and no single one is the

most widely used in businessmost widely used in business

Sense-and-respond is the new strategy-making Sense-and-respond is the new strategy-making modemode– Creating an overall strategic envelope and Creating an overall strategic envelope and

conducting short experiments within that envelope, conducting short experiments within that envelope, moving quickly to broaden an experiment that moving quickly to broaden an experiment that proves successfulproves successful

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““Peering into an Peering into an

unknown future !!”unknown future !!”