Strategic Information Systems CBSM 4203 TOPIC 5 INFORMATION

Strategic Information Systems CBSM 4203 TOPIC 5: INFORMATION SYSTEM STRATEGIC PLANNING 1

Introduction Improved strategic IS planning is one of the critical issues facing IS executives today. Effective strategic IS planning can help organisations use IT to reach business goals. It can also enable organisations to use IT to significantly impact their strategies. 2

IS strategic planning The essential requirement for effective IS planning is that the needs of the business should drive the planning for IS development and deployment. Business planning is the process of identifying the goals, objectives and priorities for the firm and of developing action plans for achieving these goals, objectives and priorities. IS planning is a part of business planning and focuses on deploying the firm’s IT resources and capabilities to facilitate the overall business plans for the firm. 3

Why strategic planning fails Failure to tie technology to institutional mission and priorities Failure to get the right people on board Excessive focus on technical details Lack of suitable leadership 4

Critical Success Factor (CSF) analysis Critical success factors are the limited number of areas in which satisfactory results will ensure competitive performance for the individual, department or organisation. CSFs include issues vital to an organisation’s current operating activities and to its future success. 5

What is CSF? Critical Success Factor (CSF) is the term for an element that is necessary for an organization or project to achieve its mission It is a critical factor or activity required for ensuring the success of your business. The term was initially used in the world of data analysis, and business analysis. For example, a CSF for a successful IT project is user involvement. 6

Following CSF should be considered Intellectual capital: Create assets from the tools you make to run your business. Strategic relationships: New sources of business, products and outside revenue. Employee attraction and retention: Your ability to find, train, and keep employees and to let go employees that are not a good fit. Sustainability: Your personal ability to keep it all going. 7

Following CSF should be considered Intellectual capital: Create assets from the tools you make to run your business. Strategic relationships: New sources of business, products and outside revenue. Employee attraction and retention: Your ability to find, train, and keep employees and to let go employees that are not a good fit. Sustainability: Your personal ability to keep it all going. 8

Importance of CSF Critical success factors are those few things that must go well to ensure success for a manager or an organization, and, therefore, they represent those managerial or enterprise area, that must be given special and continual attention to bring about high performance 9

Critical success factor analysis 10

Characteristics of CSFs are quite different from “Key performance indicators” which have been used in the past for IS planning. They are not a standard set of measures that can be applied to all organisations. Rather, they are specific to a particular situation at a particular time. CSFs can also be categorised as monitoring and building. Monitoring CSFs involves the scrutiny of existing situations, such as monitoring the percentage of defective parts. 11

Characteristics of CSF Building CSFs is related to changes in the organisation for future planning, such as improving product mix. Managers who spend most of their time in control functions are concerned mostly with monitoring CSFs, whereas those who are concerned primarily with planning are concerned mostly with building CSFs. 12

Sources of CSF Industry-based factors - Each industry has a set of CSFs that are determined by the characteristics of the industry itself. Each organisation in the industry must pay attention to these factors. Competitive strategy, industry position, and geographic location – Each organisation in an industry is in an individual situation, determined by its history and current competitive strategy. Differences in industry position, geographic location and strategies can lead to different CSFs from one company to another in an industry. 13

Sources of CSF Environmental factors - Environmental factors are those areas over which an organisation has little control GDP Temporal factors - They areas of activity that are significant for an organisation because they are below the threshold of acceptability at that time. For example, inventory control is generally not a CSF for a chief executive but may become a very high level CSF under the circumstances of either very little or too much stock. 14

Sources of CSF Managerial position – Each functional managerial position has a generic set of CSFs associated with it. For example, almost all manufacturing managers are concerned with product quality, inventory control and cash control. 15

Hierarchical nature of CSF’s 16

Measuring CSF To measure is to know. CSFs must be measured in order to track the progress in achieving them. Such measures are only rarely provided by the traditional financial accounting systems; and may be provided only sometimes by cost accounting systems (often with some additional improvements in them). 17

Measuring CSF A small proportion of CSFs require subjective assessment rather than being easily quantifiable. Some CSFs can have only soft measures. However, usually there is some means of creating numeric measures. Senior management is used to such situations and spends much time with subjective judgements and measurements. Therefore, they might not have problems with subjective measures. 18

Measuring CSF 19

CSF analysis There are three major uses of the CSF concept (Boynton and Zmud, 1984): To help an individual manager determine his or her information needs. To aid an organisation in its IS planning process. To aid an organisation in its organisational strategic planning process. 20

CSF analysis The CSF analysis process involves a series of interviews conducted in two or three sessions. In the first session, the manager is asked his or her goals and the CSFs that underlie these goals. The second session focuses primarily on identifying specific measures and possible reports. 21

CSF analysis has been widely used. Its purpose is to identify the most important ingredients for the IS strategy since they define the most important ingredients of the business success. CSFs keep a firm focus upon strategic issues but obviously their weakness is that it needs very skilled and very perceptive interviewers to determine CSFs from senior managers. 22

CSF analysis The main strengths of CSF analysis are that it provides effective support to planning since the consideration of critical activities develops management insights and CSF analysis may serve as the effective top level for a subsequent structured analysis. 23

Extended CSF analysis CSFs are time dependent. Thus, even if the appropriate factors are identified, events may alter the criticality of these factors. For example, the rise of crude oil prices in the 1970 s caused major changes in various organisations. 24

Extended CSF analysis This extended CSF analysis method uses the CSF analysis to provide the planning context in three critical domains: information, decision and assumption. The Critical Information Set (CIS) defines those measures and associated data necessary to monitor, analyse and control the CSFs. This is the traditional product of a CSF analysis. 25

Extended CSF analysis The Critical Decision Set (CDS) defines those decision processes that will most affect the successful achievement of a CSF. For example, if the CSF is to retain highly skilled employees, the CDS might include the hire, promotion, merit, raise, job assignment or other decisions that directly affect a highly skilled employees decision to remain with the firm. 26

Extended CSF analysis 27

Business System Planning Business Systems Planning (BSP) is an IBM proprietary technique devised initially for IBM internal use; later, it was sold as a service to its customers in the mid-1970 s. BSP was perhaps the earliest formal IS planning method and is now the most widely known. 28

Business System Planning BSP offers a structured approach to IS planning via a number of fairly rigorously defined stages that lead from the identification of business processes to a definition of required data structures. Data are tracked as they flow throughout the organisation by the business activity support or from which they result. 29

Business System Planning 30

Major activities in BSP The BSP methodology consists of four major activities: Documenting the business activities Defining the business processes Defining the data necessary to support the business processes Defining the information architecture 31

BSP study step by step 32

BSP study step by step 33

Review Questions Discuss why top management commitment is required for the BSP study. 34

Review Questions - answer BSP study requires the diversion of staff and other scarce resources from more immediate tasks. Therefore, it is important to gain top management commitment and involvement. This support is needed not only to get things started but also to measure adherence to the plans. 35

Review Questions - answer Discipline and constraints are imposed by BSP on managers and high-level business executives, who often view these constraints as counterproductive to their short-term interests. This is why top management support is critical for the BSP study. 36

Earl’s multiple methodology 1. Clarification of the business needs and strategy in IS terms - What is the business strategy and what is the IS strategy; 2. Evaluation of current IS provision and use How to integrate legacy systems; and 3. Innovation of new strategic opportunities afforded by IT - What are the operational goals. 37

Earl’s multiple methodology Earl’s method is known as the “Multiple methodology” or „Three-pronged Methodology” as he tackles his three issues from different angles top-down, bottom-up and insideout. 38

Earl’s multiple methodology 39

Top down classification 40

Bottom-up evaluation 41

Common weakness of IS planning methodologies Poor integration of business and IS planning Lack of planning for IS ongoing maintenance requirements Focus on tools and techniques instead of on real business needs 42

Common weakness of IS planning methodologies Inability to handle change or uncertainty Vision or architecture is too narrow and shortranged Obscure or complex planning processes Problems without solutions in any current planning approach 43

Other Common weakness of IS planning methodologies Failure to deal effectively with applications integration; Insufficient evaluation of applications package options and tradeoffs; Lack of effective risk assessment and management; and Failure to make use of existing „Best practices‰ already proven and public knowledge from other firms in the industry. 44

HAVE A NICE DAY! 45