123952422010

8/13/2019 123952422010

1/30

Chapter 5

Modified by: Dr.HebaMohammad

8/13/2019 123952422010

2/30

Index Introduction

Types of planning Why is planning so difficult?

The World of Planning Traditional Strategy-Making Todays Sense-and-Respond Approach

Five Planning Techniques Stages of Growth

Critical Success Factors Value Chain Analysis Linkage Analysis Planning Business System Planning

4-2

8/13/2019 123952422010

3/30

Introduction

IS management is becoming more difficult and moreimportant 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 andmechanisms available

Bad News = no best way to go about it

4-3

8/13/2019 123952422010

4/30

Introduction cont.

It is important to establish the appropriate mindset forplanning: Some managers believe = determining what decisions to

make in the future Better view = developing a view of the future that guides

decision making today

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

4-4

8/13/2019 123952422010

5/30

Types of Planning

Types of Planning: Planning is usually defined in three forms, which

correspond to the three planning horizons.

Strategic = 3-5 years

Tactical = 1-2 years

Operational 6 months 1 year

4-5

8/13/2019 123952422010

6/30

Why Planning is 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 Technologies Are Rapidly Changing

How can you plan when information technologies are changing so rapidly

Disk storageUSB memories

Continuous planning?

Old days of planning at start of year = gone Advanced technology groups

4-6

8/13/2019 123952422010

7/30

Companies Need Portfolios Rather Than Projects Projects builds systems and application not compatible with each other

How they fit into other projects and how they balance the portfolio ofprojects

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

Mainframe Client ERPWeb service oriented architecture

Often done under large application project

Challenge = develop improved applications and improve infrastructure

over time

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

4-7

Why Planning is Difficult? Cont.

8/13/2019 123952422010

8/30

The Changing World of Planning

Traditional Strategy-Making:1. Business executives created a

strategic business plan = where

the business wanted to go2. IS executives created an IS

strategic plan = how IT wouldsupport the business plan

3. IT implementation plan created= describe exactly how the IS

strategic plan would beimplemented

4-8

8/13/2019 123952422010

9/30

Todays Sense-and-Response Approach

If yesterdays assumptions no longer hold true, what istaking the old approachs place?:

Let Strategies Unfold Rather Than Plan Them: In rapidly changing environment, it is risky to take long time in

strategy articulation. 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 in an

experiment

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

4-9

8/13/2019 123952422010

10/30

The Changing World of Planning

4-10

8/13/2019 123952422010

11/304-11

Moved on to buying Internet Companies as wellas aligning with Sun to promote Java

Over time = moved into a variety of technologies: Web, Cable news, Digital movies, Cable modems, HandheldOS, Video server, Music, Multiplayer gaming

Not all came from top management e.g. firstserver came from a rebel project

Getting its fingers into every pie that mightbecome important

MICROSOFT

Case example: Sense and Respond Strategy-Making

8/13/2019 123952422010

12/30

Todays Sense-and-Response Approach cont.

Guide Strategy-Making with a Strategic Envelope: Having a myriad of potential corporate strategies being tested in

parallel could lead to anarchy without a central guidingmechanism

Top management set the parameters for the experiments (= astrategic envelope), and then continually manage that context

Need to meet often to discuss: Shifts in the marketplace

How well each of the experiments is proceeding

Gaining followership or showing waning interest?

4-12

8/13/2019 123952422010

13/30

4-13

New GM believed change would only occur if he wentdirectly to his front lines (gas station employees). Set aside

50% of his time

Goal = not to drive strategy from Corporate (tried and faileddismally) but to interact directly with the grass roots andsupport their initiatives

Technique = use of action labs (6 to 8 people): Week long retailing boot camp, peer challenges, hot seats, 60 day

plan implementations, report back etc.

Projects spawned many more projects

Guidance and nurturing came from the top, so that therewas not complete chaos

SHELL OIL

Case example: Guide Strategy-Making with a Strategic Envelope

8/13/2019 123952422010

14/30


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

strategising

This situation is untenable in todays Internet-driven world.

Note: first = need to make department credible

Test the Future Need to test potential futures before the business is ready for

them (thinking ahead of the business)

Provide funding for experiments Have an emerging technologies group

4-14

8/13/2019 123952422010

15/30


Put the Infrastructure in Place: Moving quickly in Internet commerce means having the right IT

infrastructure in place.

The most critical IT decisions are infrastructure.

Recommended that IT experiments include those that testpainful infrastructure issues such as how to: Create and maintain common, consistent data definitions

Create and instil mobile commercial standards among handhelddevices

Implement e-commerce security and privacy measures

Determine operational platforms (ERP, Supply Chain Management)

4-15

8/13/2019 123952422010

16/30

Five Planning Techniques

1. Stages of Growth

2. Critical Success Factors

3. Value Chain Analysis

4. Linkage Analysis Planning

5. Business System Planning

4-16

8/13/2019 123952422010

17/30

4-17

Stage One: Early Successes: Increased interest and experimentation

Stage Two: Contagion: Interest grows rapidly; learning period for the field

Stage Three: Control: Efforts begun toward standardization

Stage Four: Integration: Pattern is repeated

1. Stages of Growth

8/13/2019 123952422010

18/30

1. Stages of Growth cont.

The eras overlap each other slightly at points of technologydiscontinuity Proponents of he proven old dominant design struggle with proponents

of the new and unproven designs Inevitably the new (proven) win out

Importance of the theory is understanding where a technology orcompany resides on the organizational learning curve e.g. too much control at the learning and experimentation stage can kill

of new uses of technology

Management principles differ from stage to stage Different technologies are in different stages at any point in time

4-18

8/13/2019 123952422010

19/30

2. Critical Success Factors

A method developed at MIT for defining executiveinformation needs = it focuses on individual managers andtheir current information needs.

Popular planning approach that can be used to help

companies identify information systems they need todevelop

For each executive, CSFs are the few key areas of the job

where things must go right for the organization to flourish Suggested fewer than 10 per executive

Time dependent (must be re-examined)

4-19

8/13/2019 123952422010

20/30

2. Critical Success Factors cont.

Four sources: Industry the business is in: each industry has CSFs relevant to

any company in it.

Company itself and situation within industry: actions by largecompanies usually provide CSFs for small companies in thatindustry.

Environment (consumer trends, the economy, political factors):ex. Few executives have listed leveraging the internet as CSF.Today must do

Temporal organizational factors (ex. too much or too littleinventory)

Two types: Monitoring Vs. building CSFs

Used to determine factors critical to accomplish corporate goalsand objectives and corresponding measures

CSFs can be used to identify IS plans that need to be developed

4-20

8/13/2019 123952422010

21/30

3. Value Chain Analysis

Five primary activities that form the sequence of thevalue chain and Four supporting activities that underliethe entire value chain

4-21

8/13/2019 123952422010

22/30

3. Value Chain Analysis cont.

Virtual Value Chains information substitutes for physicalproducts and physical location.Treat information as a source of value not only a support

element, ex. FedEx and UPS.

Using Information to add value:

1. Making operations visible: see physical operationsthrough information

Ex. Sales info, competitors promotions, new competitive products

better production to match demand, route trucks effectively, tailorpromotions

4-22

8/13/2019 123952422010

23/30

3. Value Chain Analysis cont.

2. Mirroring capabilities: substitute virtual activities forphysical ones

Ex. The rental car subsidiary turned to auctioning over the internet,dealers can view the cars (and their stats) to be auctioned and

then place bids during the online auctionThe auction saves them time and effort, and the cars areguaranteed

3. Space-based customer relationships: delivering valueto customers in a new way

Ex. Collecting information about the customer and making itavailable company-wideso that employees can answer to theirneeds, customize products, offer better service.

4-23

8/13/2019 123952422010

24/30

4. Linkage Analysis Planning

Examines the links organizations have with one anotherwith the goal of creating a strategy for utilizing electronicchannels

Methodology includes three steps:

1. Define power relationships among the variousplayers and stakeholders: Identify who has the power

Determine future threats and opportunities for the company

4-24

8/13/2019 123952422010

25/30

4. Linkage Analysis Planning cont.

2.Map out your extended enterprise to includesuppliers, buyers, and strategic partners The enterprises success depends on the relationships among

everyone involved

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

information content

4-25

In the extended enterprise eachrelationship will prosper only when itis a win-win relationship:

Ex. In return for maintaining a buyersparts inventory and providing just-in-timedelivery, a supplier should be paidelectronically upon delivery of goods.

8/13/2019 123952422010

26/30

4-26

3. Plan your electronic channels:Electronic link used to create, distribute, and present informationand knowledge as part of a product or service or as a secondarygood.

Organizations with the longest electronic reach into their extendedenterprise will have the advantage.

4. Linkage Analysis Planning cont.

8/13/2019 123952422010

27/30

Initial work on BSP began in the early 1970s. At first, it

was for IBM internal use only; later it was made availableto customers.

BSP is a method for analyzing, defining and designing an

information architecture of organizations. Designed to define an Information Architecturefor the

firm. The basic building blocks of the architecture are: Data Classes: Categories of logically related data that are

necessary to support the business

Business Processes: Groups of logically related decisions andactivities required to manage the resources of the business

4-27

5. Business System Planning (Enterprise Modeling)

8/13/2019 123952422010

28/30

4-28

Steps in the BSP process1. Obtain authorization for the study and assemble the study team.2. Define the data classes and the business processes.3. Using these data classes and business processes, define the

information architecture.

4. Compare this architecture with the present systems and identifymissing and/or needed systems.5. Establish priorities for each of the major systems contained in the

architecture6. Prepare the final study report and present it to top management7. Initiate the construction of the architecture

5. Business System Planning cont.

8/13/2019 123952422010

29/30

Conclusion

Based on the successes and failures of pastinformation systems planning efforts, we see twonecessary ingredients to a good strategic planningeffort:

1. IS plans must look towards the futuremost likelyin a sense-and-respond fashion

2. IS planning must be intrinsic to business planning

4-29

8/13/2019 123952422010

30/30

Conclusion cont.

IS plans typically use a combination ofplanning techniques presented No single technique is best and no single one is the

most widely used in business

Sense-and-respond is the new strategy-makingmode Creating an overall strategic envelope and

conducting short experiments within that envelope,

moving quickly to broaden an experiment thatproves successful

4 30

Documents

123952422010