R. Ching, Ph.D. • MIS • California State University, Sacramento

R. Ching, Ph.D. • MIS • California State University, Sacramento 1

Week 5Week 5Monday, September 26Monday, September 26

• IT PlanningIT Planning• Strategic IS AlignmentStrategic IS Alignment


Planning TechniquesPlanning Techniques

• Stages of Growth: Nolan's Stages TheoryStages of Growth: Nolan's Stages Theory

• Rockart's Critical Success Factors (CSF)Rockart's Critical Success Factors (CSF)

• Porter's Competitive Forces ModelPorter's Competitive Forces Model

• Porter's Value Chain AnalysisPorter's Value Chain Analysis

• e-Business value matrixe-Business value matrix

• Linkage analysis planningLinkage analysis planning

• Scenario planning Scenario planning


IT ResourceIT Resource

Nolan's Stages TheoryNolan's Stages Theory

IntroductionIntroduction

ContagionContagion

ControlControlIntegrationIntegration

TimeTime

Investment Investment in ITin IT

Stage 1Stage 1 Stage 2Stage 2 Stage 3Stage 3 Stage 4Stage 4

An organization’s experience with adopting ITAn organization’s experience with adopting IT

DiffusionDiffusion


Major Dimensions of CSFsMajor Dimensions of CSFs

ExternalExternal InternalInternal

Monitoring Monitoring (Control)(Control)

BuildingBuilding(Innovation)(Innovation)

SourcesSources

• IndustryIndustry

• StrategyStrategy

• EnvironmentEnvironment

• TemporalTemporal

• PositionPosition

Interest ratesInterest rates

New skill New skill acquisitionacquisition


Porter’s Five Forces ModelPorter’s Five Forces ModelForces that Shape StrategyForces that Shape Strategy

Industry Industry CompetitorsCompetitors

Rivalry among Rivalry among existing firmsexisting firms

SuppliersSuppliersSuppliersSuppliers Customers and Customers and BuyersBuyers

Customers and Customers and BuyersBuyers

Potential Potential EntrantsEntrantsPotential Potential EntrantsEntrants

SubstitutesSubstitutesSubstitutesSubstitutes

Bargaining power of buyersBargaining power of buyers

Threat of substitute products or Threat of substitute products or servicesservices

Bargaining power of Bargaining power of supplierssuppliers

Threat of new entrantsThreat of new entrants

How will the business How will the business react to threats (and react to threats (and

opportunities)?opportunities)?


Porter’s Five Forces ModelPorter’s Five Forces Model

Industry Industry CompetitorsCompetitors

Rivalry among Rivalry among existing firmsexisting firms

SuppliersSuppliersSuppliersSuppliers

Potential Potential EntrantsEntrantsPotential Potential EntrantsEntrants

SubstitutesSubstitutesSubstitutesSubstitutes

Bargaining power of buyersBargaining power of buyers

Threat of substitute products or Threat of substitute products or servicesservices

Bargaining power of Bargaining power of supplierssuppliers

Threat of new entrantsThreat of new entrants



The strategy and actions an organization adopts The strategy and actions an organization adopts dependdepend upon its perceptions of itself and these threats.upon its perceptions of itself and these threats.

The strategy and actions an organization adopts The strategy and actions an organization adopts dependdepend upon its perceptions of itself and these threats.upon its perceptions of itself and these threats.

Porter’s strategies:Porter’s strategies:• Product differentiation (non-duplicable product or service)Product differentiation (non-duplicable product or service)• Low-cost producer Low-cost producer • Market niche (market segment or geographical market)Market niche (market segment or geographical market)

Porter’s strategies:Porter’s strategies:• Product differentiation (non-duplicable product or service)Product differentiation (non-duplicable product or service)• Low-cost producer Low-cost producer • Market niche (market segment or geographical market)Market niche (market segment or geographical market)


Value Chain AnalysisValue Chain Analysis

Inbound Inbound logisticslogistics OperationsOperations

Outbound Outbound logisticslogistics

Marketing Marketing and salesand sales ServiceService

Firm infrastructureFirm infrastructure

Human resource managementHuman resource management

Technology developmentTechnology development

ProcurementProcurement

Margin

Margin

Mar

gin

Mar

gin

Support Support ActivitiesActivities

Primary ActivitiesPrimary Activities

CustomersCustomers

How can value be added at every activity?How can value be added at every activity?


e-Business Value Matrixe-Business Value Matrix

• Project categories:Project categories:

– New fundamentalsNew fundamentals

– Operational excellenceOperational excellence

– Rational experimentationRational experimentation

– Breakthrough strategyBreakthrough strategy

• Value of the project (low, high)Value of the project (low, high)

– Criticality to businessCriticality to business

– Newness of ideaNewness of idea


e-Business Value Matrixe-Business Value Matrix

Criticality to businessCriticality to business

Newne

ss of

Idea

Newne

ss of

Idea

New fundamentalsNew fundamentals

Operational Operational excellenceexcellence

Rational Rational experimentationexperimentation

Breakthrough Breakthrough strategystrategy

LowLow HighHighLowLow

HighHigh

Operational Operational excellence, high excellence, high criticality to business, criticality to business, high newness of ideahigh newness of idea


Linkage Analysis PlanningLinkage Analysis Planning

• StepsSteps

– Define power relationships among various players and Define power relationships among various players and stakeholders: Identify links between internal and external stakeholders: Identify links between internal and external entitiesentities

– Map out the extended enterprise to include suppliers, Map out the extended enterprise to include suppliers, buyers and strategic partners: Manage the linkagesbuyers and strategic partners: Manage the linkages

– Plan electronic channels to deliver the information Plan electronic channels to deliver the information component of products and services: Facilitate and enhance component of products and services: Facilitate and enhance the exchange of informationthe exchange of information


Linkage Analysis PlanningLinkage Analysis Planning

Electronic ChannelsElectronic Channels

Top managementTop management

Middle Middle managementmanagement

Operations Operations managementmanagement

Ret

aile

rsR

etai

lers

Dis

trib

utor

sD

istr

ibut

ors

Gov

ernm

ent

Gov

ernm

ent

Stoc

khol

ders

Stoc

khol

ders

Tra

diti

onal

T

radi

tion

al

com

peti

tors

com

peti

tors

New

N

ew

com

peti

tors

com

peti

tors

Supp

lier

sSu

ppli

ers


Scenario PlanningScenario Planning

• Steps:Steps:

– Define a decision problem and timeframe to bound the Define a decision problem and timeframe to bound the analysis (analysis (What if…What if…))

– Identify the major known trends that will affect the Identify the major known trends that will affect the decision problemdecision problem

– Identify just a few driving uncertaintiesIdentify just a few driving uncertainties

– Construct the scenarios based on uncertaintiesConstruct the scenarios based on uncertainties

• Trigger eventsTrigger events


Strategic Information Systems Planning Strategic Information Systems Planning (SISP)(SISP)

• DefinitionDefinition... a process conducted within the contexts of scope, ... a process conducted within the contexts of scope, perspective, time frame, and level of abstraction, with any or perspective, time frame, and level of abstraction, with any or all of the following agenda: (1) supporting and influencing all of the following agenda: (1) supporting and influencing the strategic direction of the firm through identification of the strategic direction of the firm through identification of value-adding computerized information systems, (2) value-adding computerized information systems, (2) integrating and coordinating various organizational integrating and coordinating various organizational technologies through development of holistic information technologies through development of holistic information architectures, and (3) developing general strategies for architectures, and (3) developing general strategies for successful systems implementation.successful systems implementation.

Segars, Grover and Teng.1998Segars, Grover and Teng.1998


Architectures forArchitectures for sharingsharing

organizational andorganizational and interorganizationalinterorganizational

data and data and integrationintegration

technologiestechnologies

Architectures forArchitectures for sharingsharing

organizational andorganizational and interorganizationalinterorganizational

data and data and integrationintegration

technologiestechnologies

SISP ProgressionSISP Progression

IS viewed as IS viewed as strategic strategic resourceresource

Enabling Enabling initiatives for initiatives for

gaining gaining competitive competitive advantageadvantage

Enabling Enabling initiatives for initiatives for

gaining gaining competitive competitive advantageadvantage

Alignment ofAlignment of IS strategyIS strategy

with corporate with corporate strategystrategy

Alignment ofAlignment of IS strategyIS strategy

with corporate with corporate strategystrategy


Context CharacteristicsContext Characteristics

Scope (broad)Scope (broad)Scope (broad)Scope (broad)

Perspective Perspective (upper management)(upper management)

Perspective Perspective (upper management)(upper management)

Time Frame Time Frame (long range)(long range)Time Frame Time Frame (long range)(long range)

Level of AbstractionLevel of Abstraction(conceptual)(conceptual)

Level of AbstractionLevel of Abstraction(conceptual)(conceptual)

Strategic Strategic Information Information

Systems Systems PlanningPlanning


PlanningPlanningEffectivenessEffectiveness

PlanningPlanningEffectivenessEffectivenessCoalignment*Coalignment*Coalignment*Coalignment*

Six Process DimensionsSix Process Dimensions

ComprehensivenessComprehensivenessComprehensivenessComprehensiveness

FormalizationFormalizationFormalizationFormalization

FocusFocusFocusFocus

FlowFlowFlowFlow

ParticipationParticipationParticipationParticipation

ConsistencyConsistencyConsistencyConsistency*Alignment of dimensions*Alignment of dimensions

Favorable coalignment will Favorable coalignment will lead to effective planninglead to effective planning


1. Comprehensiveness1. Comprehensiveness

• Thoroughly canvassing a wide range of alternativesThoroughly canvassing a wide range of alternatives• Surveying a full range of objectivesSurveying a full range of objectives• Carefully weighing the costs and risks of various consequencesCarefully weighing the costs and risks of various consequences• Intensively searching for information to evaluate alternative Intensively searching for information to evaluate alternative

actionsactions• Objectively evaluating information or expert judgment regarding Objectively evaluating information or expert judgment regarding

alternative actionsalternative actions• Re-examining the positive and negative consequences of all Re-examining the positive and negative consequences of all

known alternativesknown alternatives• Making detailed plans, including consideration of contingencies, Making detailed plans, including consideration of contingencies,

for implementing a chosen actionfor implementing a chosen action


2. Formalization2. Formalization

• Existence of structures, techniques, written procedures and Existence of structures, techniques, written procedures and policies that guide the planning processpolicies that guide the planning process

– Written policies that structure the process of planningWritten policies that structure the process of planning

– Formalized techniques adopted for the purpose of Formalized techniques adopted for the purpose of conducting strategic planningconducting strategic planning

– Known procedures for initiating the planning processKnown procedures for initiating the planning process

• Processes systemize information collection and disseminationProcesses systemize information collection and dissemination

Formalization vs. FlexibilityFormalization vs. Flexibility


3. Focus3. Focus

• The balance between creativity and control orientations The balance between creativity and control orientations inherent within the strategic planning systeminherent within the strategic planning system

Innovation vs. IntegrationInnovation vs. Integration

– Innovative orientation nurtures creativity (innovative, Innovative orientation nurtures creativity (innovative, novel solutions)novel solutions)

– Integrative orientation focuses more on control (budgetary, Integrative orientation focuses more on control (budgetary, cost performance, controlled diffusion of assets within the cost performance, controlled diffusion of assets within the organization)organization)


4. Flow4. Flow

• Locus of authority or devolution of responsibilities for Locus of authority or devolution of responsibilities for strategic planning strategic planning

– Roles played by corporate and divisional managers in the Roles played by corporate and divisional managers in the initiation of the planning process (vertical orientation)initiation of the planning process (vertical orientation)

Top-down vs. Bottom-upTop-down vs. Bottom-up

– Top-down: limited participation of lower level managers Top-down: limited participation of lower level managers in the initiation of the strategic planning processin the initiation of the strategic planning process

– Bottom-up: functional management involvement in the Bottom-up: functional management involvement in the initiation of strategic planninginitiation of strategic planning


5. Participation5. Participation

• Breadth of organizational involvement in strategic planningBreadth of organizational involvement in strategic planning

– Representation from the functional areasRepresentation from the functional areas

Narrow vs. BroadNarrow vs. Broad

– Narrow: fosters an isolated approach to plan formulation Narrow: fosters an isolated approach to plan formulation with little involvement or interaction among various with little involvement or interaction among various functional or operational managersfunctional or operational managers

– Broad: a variety of functional and operational areas help Broad: a variety of functional and operational areas help offset “bounded rationality” of top managersoffset “bounded rationality” of top managers


6. Consistency6. Consistency

• Concerned with the frequency of planning activities or cycles, Concerned with the frequency of planning activities or cycles, and evaluation /revision of strategic choicesand evaluation /revision of strategic choices

Frequent vs. InfrequentFrequent vs. Infrequent

– Infrequent: time frame longer, face-to-face meetings tend Infrequent: time frame longer, face-to-face meetings tend to be ad hoc or sporadic, planning cycles may be year-to-to be ad hoc or sporadic, planning cycles may be year-to-year (vs. continuous or consistent process)year (vs. continuous or consistent process)

– Frequent high levels on consistency characterized by Frequent high levels on consistency characterized by continuous planning process with frequent meetings, continuous planning process with frequent meetings, constant communication among planning participants, and constant communication among planning participants, and frequent assessment and revision of strategic directionfrequent assessment and revision of strategic direction


PropositionProposition

• Strategic IS planning systems that reflect a profile of rational Strategic IS planning systems that reflect a profile of rational adaptation will be positively associated with planning adaptation will be positively associated with planning effectiveness. The structure or internal coalignment of a effectiveness. The structure or internal coalignment of a rational adaptive planning system includes:rational adaptive planning system includes:

– higher levels of comprehensivenesshigher levels of comprehensiveness

– higher levels of formalizationhigher levels of formalization

– a focus on control vs. creativitya focus on control vs. creativity

– a top-down vs. bottom-up planning flowa top-down vs. bottom-up planning flow

– higher levels of participationhigher levels of participation

– higher levels on consistency higher levels on consistency

Segars, Grover and Teng.1998Segars, Grover and Teng.1998


CoalignmentCoalignment

• Coalignment strongly associated with planning effectivenessCoalignment strongly associated with planning effectiveness– If dimensions of strategic planning systems favorably If dimensions of strategic planning systems favorably

align, the planning system as a structure should be more align, the planning system as a structure should be more successful than its individual dimensionssuccessful than its individual dimensions

– Effectiveness may beyond performance measurement (e.g., Effectiveness may beyond performance measurement (e.g., ROI, ROE)ROI, ROE)

– Alternative: Alternative: value-addedvalue-added approach approach• Improved management makingImproved management making• Lower costs of developmentLower costs of development• Plans that are actionable and implementedPlans that are actionable and implemented


Planning effectivenessPlanning effectivenessPlanning effectivenessPlanning effectiveness

Internal Planning System CoalignmentInternal Planning System Coalignment

• The planning system should be structured process of The planning system should be structured process of opportunity search that “adapts” through consistent feedback opportunity search that “adapts” through consistent feedback and wide participationand wide participation

– Rational planning tendencies of extensive alternative Rational planning tendencies of extensive alternative generation and solution search, formalized procedures and generation and solution search, formalized procedures and policies for planning, a focus on control, and top-down policies for planning, a focus on control, and top-down planning flowplanning flow

– Adaptive tendencies of wide participation profiles and high Adaptive tendencies of wide participation profiles and high levels of planning consistencylevels of planning consistency

Rational adaptationRational adaptationRational adaptationRational adaptation


Implications for Strategic IS PlanningImplications for Strategic IS Planning

• Planning must be designed, evaluated, and refined such that Planning must be designed, evaluated, and refined such that the overall activity of planning does not become dysfunctionalthe overall activity of planning does not become dysfunctional

• Emergent systems of planning should reflect the Emergent systems of planning should reflect the environmental and organizational context within which they environmental and organizational context within which they functionfunction


Source: Source: “Strategic Information Systems Planning: Planning “Strategic Information Systems Planning: Planning System Dimensions, Internal Coalignment and Implications System Dimensions, Internal Coalignment and Implications for Planning Effectiveness,” Albert H. Segars, Varun Grover, for Planning Effectiveness,” Albert H. Segars, Varun Grover, and James T. Teng. and James T. Teng. Decision SciencesDecision Sciences (journal), vol. 29, no. 2 (journal), vol. 29, no. 2 (Spring 1998).(Spring 1998).


Architecture and InfrastructureArchitecture and Infrastructure

• Architecture – a blueprint that shows interrelationships of the Architecture – a blueprint that shows interrelationships of the components of a system components of a system – Emphasis on the Emphasis on the whatswhats– Based on the business modelBased on the business model

• IT Infrastructure – implementation of the architectureIT Infrastructure – implementation of the architecturePurpose: Purpose: To deliver the right information to the right people at To deliver the right information to the right people at the right timethe right time– Two parts:Two parts:

• Technical IT infrastructure (processors, Technical IT infrastructure (processors, telecommunication, database, etc.)telecommunication, database, etc.)

• Human IT infrastructure Human IT infrastructure – Emphasis on the Emphasis on the howshows


ArchitectureArchitecture

• Defines guidelines and standardsDefines guidelines and standards

• Service Oriented Architecture (SOA)Service Oriented Architecture (SOA)

– Emphases on accessibility of others systems to data and Emphases on accessibility of others systems to data and functions, and reusability of programming codefunctions, and reusability of programming code

– Supports the organization's agilitySupports the organization's agility


InfrastructureInfrastructure

• Delivering IT resources to support users throughout the Delivering IT resources to support users throughout the organizationorganization

• Four layer infrastructure (Four layer infrastructure (Weill and BroadbentWeill and Broadbent))

– IT componentsIT components

– Human IT infrastructureHuman IT infrastructure

– Shared IT services – services that users can draw upon and Shared IT services – services that users can draw upon and share to conduct businessshare to conduct business

– Shared and standard IT applications – stable applications Shared and standard IT applications – stable applications that change less frequently that change less frequently


Structure of the IT InfrastructureStructure of the IT Infrastructure

IT componentsIT components

Shared IT servicesShared IT services

Human IT infrastructureHuman IT infrastructure

Shared and standard Shared and standard IT applicationsIT applications

Local applicationsLocal applications

IT infrastructureIT infrastructure


Three Views of InfrastructureThree Views of Infrastructure

• Economies of scale (utility) – providing IT/IS as a service to Economies of scale (utility) – providing IT/IS as a service to the business to facilitate operationsthe business to facilitate operations

– Emphasis on reducing costsEmphasis on reducing costs

• Support for business programs (dependent) – IT tied to Support for business programs (dependent) – IT tied to business plan and value-added initiativesbusiness plan and value-added initiatives

• Flexibility to meet changes in the marketplace (enabling) – IT Flexibility to meet changes in the marketplace (enabling) – IT planning tied to business strategic planplanning tied to business strategic plan

– Co-alignment between business strategy and IT strategyCo-alignment between business strategy and IT strategy

– Strategic IT and strategic IT planningStrategic IT and strategic IT planning


Centralized vs. Distributed ProcessingCentralized vs. Distributed Processing

• Centralized processing: Processing centrally located usually at Centralized processing: Processing centrally located usually at a single site (at least logically centralized)a single site (at least logically centralized)

• Distributed process: Processing divided between (among) Distributed process: Processing divided between (among) different physically dispersed sitesdifferent physically dispersed sites

– Transparency – The user or customer is unaware where the Transparency – The user or customer is unaware where the processing is handledprocessing is handled

– Reduces network traffic to one locationReduces network traffic to one location

– Closely places the data to where they are needed or usedClosely places the data to where they are needed or used

– Follows a system-wide protocol Follows a system-wide protocol

Depends on the organizationDepends on the organizationDepends on the organizationDepends on the organization


Centralized ProcessingCentralized Processing

Single SiteSingle Site


Distributed ProcessingDistributed Processing

NetworkNetwork

Site 2Site 2

Geographically DistributedGeographically Distributed

TransparencyTransparency

Site 1Site 1

DatabaseDatabase

Local DBMSLocal DBMS

Global Data Global Data DictionaryDictionary


DDBMSDDBMSDDBMSDDBMS

Site 1Site 1

DatabaseDatabase





Site 1Site 1

Heterogeneous vs. HomogenousHeterogeneous vs. Homogenous

Site 3Site 3Site 1Site 1

DatabaseDatabase






Documents

R. Ching, Ph.D. • MIS • California State University, Sacramento