Remaining Course Schedule Feb. 25 – Chapter 16 – rewrite of chapter. Mar. 1 – Chapter 17 and course summary. Mar. 3 – Student ATP presentations. Mar. 8.
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Remaining Course ScheduleRemaining Course Schedule
Feb. 25 – Chapter 16 – rewrite of chapter.
Mar. 1 – Chapter 17 and course summary.
Mar. 3 – Student ATP presentations.
Mar. 8 -- Final ATP Due Date (not Mar. 3)
I will do a final exam clinic on that day.
Come prepared to ask questions.
Mar. 10 -- No class scheduled.
Final Exam – March 18 at 8 to 11 AM. Will return papers on the day of the final exam.
ATP Presentations on March 3ATP Presentations on March 3
Apple – Chris Johnson
Cisco – Rashi Sinha
Dell – Cyrus Semnani
IBM Global Services– William Pease
Intel – Max Gutman
Knight-Ridder – Rebecca Sherrill
Oracle – Jonathan Gregorio
Plantronics – Tan Nguyen
ATP PresentationsATP Presentations
Duration – 10 minutes on March 1
Cannot present the entire paper.
Can use several different approaches:
Company and industry overview
Redefine and/or define
Success Factor Profile
Company Strengths and Weaknesses
Summary
Chapter 14Chapter 14
Information Systems Value Information Systems Value
and and
Financial StrategyFinancial Strategy
• Logical to Address• Necessary to Articulate• Controversial Because “It Can’t Be Measured.”• A Management Process--Not Techniques or Methodologies.• The Reason for Significant Management Consulting.
Information Systems ValueInformation Systems Value
The IT Value IssueThe IT Value Issue
1. The applications development process costs too much and takes too long.
2. Integrated systems connectivity and compatibility have major cost implications.
3. A lack of ease of use negatively impacts user productivity.
4. All of the above impact the ability to articulate IT value.
Organization
DP Planning
FinancialStrategy
Motivation
ApplicationSupport
Initiation Expansion Control Maturity
I II III IV
BudgetBusiness
CasePost Install
Audit
Charge OutSystem
ManagementProcess
Single Area Proliferation Containment Organization Strategy
PeopleDisplacement
Cost Avoidance
DP Efficiency CompetitiveAdvantage
Little Reactive Directed Proactive
Single Dept. Multiple Dept. Centralized
CentralizedDecentralizedDistributed
Figure 14-2
Evolution of IS StrategyEvolution of IS Strategy
Charge-Out System ObjectivesCharge-Out System Objectives
1. Maximize worthwhile information systems usage.
2. Minimize frivolous use.
3. Encourage information systems efficiency.
4. Spark interest and participation by users to develop innovative applications.
A Management ProcessA Management Process
Application Support Prioritized by a Business Strategy.
A Major Focus on Using Information Systems to Compete.
A Proactive Role by the Information Systems Organization in the Business Planning Process.
Costs
By User
By Application
BenefitsMacro: Business Function and Unit
Micro: Project
Justification (The initial investment decision)
Confirmation (Measuring the results of the investment)
Management Processes:
Methodologies
Major Factors to Be AddressedMajor Factors to Be Addressed
IS as a Business within a BusinessIS as a Business within a Business
1. Must communicate effectively with customers
regarding products and services.
2. Need to shift the focus of IT from operations to
strategically important business activities.
3. Must build an accepted cost base to assess the
value of IT.
To move up the curve. . .To move up the curve. . .
Exploiting
IT
Cost effective IT operations
Securing return on
investment
Enabling change &innovation
Exploiting
the knowledge
base
Each step requires a different approach build on a sound foundation.
IS Financial Strategy IS Financial Strategy ConclusionsConclusions
Even the most supportive senior executives have “a pain threshold” regarding IS spending.
The financial management strategies for information systems are evolutionary and tend to trail the need for them.
They are additive as shown by the stages model.
Possible Exam QuestionsPossible Exam Questions
1.1. Explain the challenges faced when trying Explain the challenges faced when trying to quantitatively evaluate the business to quantitatively evaluate the business value of information systems.value of information systems.
2.2. Discuss the four stages involved in the Discuss the four stages involved in the evolution of an IS financial strategy.evolution of an IS financial strategy.
• How important is planning?• What is its purpose (Objective)?• Who needs to do what?• What is the impact on the organization?• How can the process be kept dynamic?• What is the relationship with information systems?• Is there a right planning methodology?• Are there consistent planning success factors?
Questions that the Topic of Questions that the Topic of Planning RaisesPlanning Raises
Nothing seems more logical, more
reasonable or more appropriate than
planning.
Importance of Planning?Importance of Planning?
A Planning Job?A Planning Job?
How many of you would like a job where your primary responsibility deals with planning?
D-Day: June 6, 1944D-Day: June 6, 1944
5,000 ships A total of one million personnel were involved in
various capacities. 30,000 aircraft. 1,000 transports dropped paratroops. 130,000 troops in the initial assault. 29,000 Americans, 11,000 British and 5,000
Canadians were killed in the beach landings.
The Normandy beaches were chosen because they lay within range of air cover and were less heavily defended than the obvious objective of Pas de Calais.
Logistical and organizational difficulties were enormous. Problems getting troops loaded onto a ship and then getting them from the ships onto the beaches.
There was a lack of suitable port making initial landing difficult and creating an even bigger problems regarding supplies.
D-Day: June 6, 1944D-Day: June 6, 1944
Disorganization, confusion, incomplete or faulty implementation of plans characterized the initial phases of the landings.
Most of the troops were able to adapt to the disorganization
but at some point they had to stop and reorganize to continue effective operations.
D-Day: June 6, 1944D-Day: June 6, 1944
WW II CasualtiesWW II Casualties
Military Civilians Total
Soviet Union 13,600,000 7,700,000 21,300,000
China 1,324,000 10,000,000 11,324,000
Germany 3,250,000 3,810,000 7,060,000
Poland 850,000 6,000,000 6,850,000
Japan 1,506,000 300,000 1,806,000
Great Britain 326,000 62,000 388,000
United States 295,000 0 295,000
1. Is information systems a legitimate high priority
consideration in the development of business strategic plans?
2. Who needs to play a key role in integrating the role of information systems with the business strategy?
3. Why is this even an issue?
4. What are major barriers to linking information systems with the business strategies?
Business and IS PlanningBusiness and IS Planning
Business and IS PlanningBusiness and IS Planning
5. What would be an ideal role for an information systems executive to play relative to business strategies?
6. What planning methodologies really work? Why?
Integrating IS into the Business PlanIntegrating IS into the Business Plan
It all starts with business planning, so answers
are needed to the following questions:
1. Why plan?
2. What to plan?
3. How to plan? (Best methodology?)
PlanningPlanning
Doing things today to make us better
tomorrow.
Because the future belongs to those who
make the hard decisions today.
Business PlanningBusiness Planning
An effort that tells people within the
organization where to put their emphasis,
priorities and resources.
The issue is not methodologies but one of
priorities--where the people running the
business spend their time.
Business and IS PlanningBusiness and IS Planning• Doesn’t the unpredictability of the future preclude the
planning and implementation of computer systems that will be appropriate and responsive to a company’s needs?
• Can a company really innovate and computerize at the same time?
• With so much happening with technology how can a company stay current?
Strategic planning is the systematic examination ofopportunities and threats in the business environment so that you are in the position to identify those opportunities that should be exploited and the threatsthat should be avoided.
George Steiner
To create opportunity that can be leveraged to createdifferential advantage in the marketplace.
N. Les Clark
Strategic PlanningStrategic Planning
OrganizationalOrganizationalResponse to Response to
Business DriversBusiness Drivers
Organization• Decentralization• Downsizing• Outsourcing• Business Partnering• Corp. Alliances
Process• Reengineering
• Redefining• TQM
Time, Flexibility andResponsivenessas Competitive FactorsProduct Customization
• Value-added Services• Markets• Customers• Global Standards
New Markets,Opportunities
and Competitors
Employees• Skills• Empowerment• Quality Circles• Teams
Figure 15-1
The objective of business planning is not to control but to guide and direct.
The same is true for IS planning but this needs to be directed by plans for the business.
Strategy Versus PlanningStrategy Versus Planning
Strategy is thinking through a company’s
basis for competitive advantage.
Planning is a means of establishing a strategy but it also focuses on making the strategy work.
Criticism of PlanningCriticism of Planning Control Politics Conservatism Conformity Inflexibility Non-responsive to Market Demands Leads to Generic Change
Business planning becomes
meaningful when accompanied
by prompt execution.
Worth Remembering!Worth Remembering!
Planning MyopiaPlanning Myopia
Be careful not to develop planning
myopia where the plan becomes
more important than execution.
Traditional Approach in IS PlanningTraditional Approach in IS Planning
Traditional I/S Role
Tactics
Strategy
Figure 15-2
Vision
Strategic Planning ModelStrategic Planning Model
BusinessPlan
TacticalPlan
StrategicPlan
Environment(External)
Opportunities
Threats
Strengths
Weaknesses
Enterprise(Internal)
Goals
Objectives
Strategic Positioning
Culture(Explicit/Implicit)
Business Unit
Functional Programs
MajorProjects
DetailedProjects
Resources:Headcount,Capital andExpenseBudgets
Figure 15-3
MissionVision
SWOT Analysis
StrengthsWeaknesses
OpportunitiesTreats
SuggestStrategies
That ShouldBe TestedAgainst
Vision and GoalsCompany ValuesCurrent StrategiesFinancial StatusCash PositionROI PotentialCustomer ValuesCompetitionSocietal DemandsCore CompetenciesPeople SkillsOverall Resources
What to Plan?What to Plan?
Strategic EnterprisePlanning
Strategic InformationPlanning
Architecture Planning
Tactical Planning
Implementation Planning
Enterprise Strategies
Information Strategies
Architecture
Time Oriented Objectives
Project Plans
Figure 15-4
Business - IS PlanningBusiness - IS Planning
I/S Strategy
Determines
InformationTechnology
Benefits
BusinessStrategy
Dictates
Figure 15-6
Business - IS PlanningBusiness - IS Planning
Technology Environment
Opportunities
I/S Strategy
Determines
InformationTechnology
Benefits
BusinessStrategy
Dictates
CorporateStrategy
1) Strategic Capability
2) Technology Driven Business Change
Figure 15-7
Barriers to Aligning IS with Business ObjectivesBarriers to Aligning IS with Business Objectives
I/S Track Recordand Credibility?
Senior ManagementPerception of I/S?
Communication ofBusiness Plan?
Executive Skillsof I/S Executive?
Business Plan?
Clear I/S Role?
Effective I/S Management?
I/S Organization?
A Problem withI/S Capacity?
I/S Policies?
Does the I/SOrganization Have a
User/Business Focus?
Managing I/S toBusiness Objectives?
Is keeping I/S alignedwith the businessobjectives someones high priority objective?
Figure 15-5
I/S Skills andCapabilities?
Business Domain Information Technology Domain
Information Technology Opportunities
Strategic Plan
Information SystemsArchitecture and
Organization
Business Processesand Organization
Alignment
Impact
Org
aniz
atio
n
Opp
ortu
nity
Enterprise-Wide Information Systems Strategic Planning Process
Parker/Trainor/Benson, INFORMATION STRATEGY AND ECONOMICS, (c)1989, p.5. Adapted by permission of Prentice Hall, Upper Saddle River, New Jersey
Figure 15-8
Strategic PlanStrategic PlanVision – Do we have a clear vision of where the organization is going?
Decisions – Do we make major decisions based on our vision and strategies?
Innovations – Do the values and goals of the organization call for innovation?
Risk Taking – Does the reward system support employees and management risk taking?
Change – Do we respond quickly to changes that affect our organization?
Competitors – Are our strategies based on market intelligence and competitive information?
Strategic PlanStrategic Plan
External Factors – Do we regularly review the economic, social and demographic trends that can affect our performance?
Management Teamwork – Are our interactions characterized by openness, candor and teamwork?
Quality – Do we emphasize and measure quality throughout the organization?
Fundamental Strategic Planning Fundamental Strategic Planning IssuesIssues
Can the strategy formulation be reduced to a consistent process?
How stable is the context for the strategy? How close to the actual situation should the
planners be? How much hard data is available to assist in formatting the right strategy? What are the consequences of an incorrect
strategy?
Planning MethodologiesPlanning Methodologies
There are many planning methodologies. Methodologies are seldom the reason for
planning success or failure. Planning methodologies are like systems
with input, processing and output all being key elements.
Key to planning is communicating the intended direction through practice.
Planning MethodsPlanning Methods
• Planning sessions
• Critical success factors
• Vision process
• Business Systems Planning
• Reengineering
• Linkage analysis
• Etc.
Planning SessionPlanning Session
• Facilitator
• Sponsor (top executive)
• 6-8 people
• Off premise and casual clothes
• 3-5 days
• Schedule discipline
• Question set is a key factor
Competitive Analysis Question SetCompetitive Analysis Question Set1. What is the fundamental nature of our products and services,
our dealings with our customers and the way they make their purchasing decisions?
2. How do our customers measure the value of our products and services?
3. How does our business systems serve our customers?
4. What key activities or decisions significantly affect the cost of serving our customers and how they place a value on this?
5. To what extent could these decisions or activities be changed in a way that would improve services or reduce total costs through the availability or more, better or more timely information?
6. Would such changes involve one part of a current business process, cut across multiple processes or require direct linkages with groups outside of our own organization?
7. How quickly and easily could such initiatives be duplicated by a competitor as an assessment of the durability of the competitive advantage?
8. How would the extent and durability of the competitive advantage be affected by decisions about following a proprietary or non-proprietary approach to building the information systems?
9. How would we spend $10 million to improve our competitive position?
10. How would our primary competitor spend $10 million with the same objective?
11. Would the answer to the last two questions be any different if computers and networks were free?
Planning Session ApproachPlanning Session Approach
• Commitment
• Consensus
• Conflict
• Creativity
• Communication
Critical Success Factors (CSF)
• “The few key areas of the job that must go right in order for an organization to flourish.”
• Focuses on individual managers and their current informational needs.
• Can be used as part of a planning methodology to identify information systems that are needed to run the business.
• Includes keeping abreast of ongoing operations (monitoring) and tracking change progress (building).
• Vary from organization to organization, from time period to time period and from manager to manager.
Source: Rockart and Crescenzi
Critical Success Factor SourcesCritical Success Factor Sources
1. The business environment.
2. The industry.
3. The company’s situation within the industry.
4. Organizational activity that is currently unacceptable and needs attention.
The True Benefactors The True Benefactors of IS Planningof IS Planning
• Those who are shaping the future of the business.
• Those with profit and loss responsibilities.
Why IS Planning FailsWhy IS Planning Fails
Management Authority and Responsibility1. A lack of support of the planning process.
2. A failure to support the final plan through actual implementation.
3. The unexpected happens that was not anticipated by the plan. The key here is systems flexibility.
4. Too much time is spent on “turf battles” or other political issues and not enough on the desired results.
5. Impatience by senior management for results.
Why IS Planning FailsWhy IS Planning Fails
IS and General Business-related Issues1. Its outcome is stated in terms of technology and not business results.2. A lack of user understanding of how IS relates to the business
objective or a failure to accept or support the proposed approach.3. Tends to place blame on today’s environment rather than project a new
and better way of doing things.4. A lack of risk taking leads to an incremental approach that fails to
motivate people.
Final Thoughts on IS PlaningFinal Thoughts on IS Planing
Planning is a tool. There is an organizational learning curve regarding methodologies.
A good plan with no execution borders on a waste of the entire effort.
A relatively weak plan with a few strong thoughts followed by tenacious implementation can provide major business benefits.
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