Strategic Use of Information Systems

Transcription

1 Strategic Use of Information Systems Enterprise & Project Management Please note that these slides are not intended as a substitute to reading the recommended text for this course. 0

2 Strategic Use of Information Systems Understand the role of IS within the context of the business organization Explain the various evolutionary stages of IS within an organization Note the objectives of strategic planning for information systems 1

3 Definitions An information system (IS) is an arrangement of people, data, processes, and information technology that interact to collect, process, store, and provide as output the information needed to support an organization. 2

4 Management Information System A management information system (MIS) is an information system that provides for management-oriented reporting based on transaction processing and operations of the organization. 3

5 Early Views and Models of IS/IT in Organisations CAN YOU GUESS What this is? 4

6 Early Views and Models of IS/IT in Organisations Its a hard disk in The Volume and Size of 5MB memory storage in In September 1956 IBM launched the 305 RAMAC, the first computer with a hard disk drive (HDD). The HDD weighed over a ton and stored 5MB of data. 5

7 The relationship between IS and the Business Business Strategy short & long range plans Marketing Strategy marketing plans Finance Strategy financial plans Operations Strategy operational functions ORGANISATION IS Strategy -? 6

8 Technology for Competitive Advantage Technology has positive and negative potentials Positive Improve processes Maintain up-to-date standards Obtain competitive advantage Negative Costly Promotes dependency 7

9 Technology for Competitive Advantage Technology should Support competitive priorities Can require change to strategic plans Can require change to operations/ finance / marketing strategies Technology is an important strategic decision 8

10 Competitive Advantage IS strategy can offer competitive advantage Delivering better performance Charging less for superior products Responding to customers and suppliers in real time 9

11 Management & IT The Major Resources of Management Basic Management Functions 10

12 Breakdown of Functions Planning - Establishing organizational goals and deciding how to accomplish them Organizing - The grouping of resources and activities to accomplish some end result in an efficient and effective manner Leading and motivating (aka Directing) (L) - Influencing people to work toward a common goal. (M) - Providing reasons for people to work in the best interests of the organization. Controlling - Evaluating and regulating ongoing activities to ensure that goals are achieved 11

13 Breakdown of Functions - Graphically 12

14 Evolution - Stages in IT Development Nolan s 6 Stages how organizations have taken to IT Stage Description 1. Initiation Application development usually initiated by IS folks Applications developed to reduce costs Little to no user involvement Lax IS planning and control 2. Contagion Period of unbridled growth IS Dept requests nearly always approved 13

15 Evolution - Stages in IT Development Stage Description 3. Control Missed deadlines, cost overruns, unmet expectations IS managers asked to relate IS expenditures to business objectives Formalized planning and control 4. Integration New technologies -- databases, user languages, microcomputers, spreadsheet package Begin move toward integrating applications and data files IS Dept takes on more of a service role in organization 14

16 Evolution - Stages in IT Development Stage Description 5. Data Administration Toward shared data Few organizations today have moved past this stage 6. Maturity Integrated applications mirror the information flows in the organization Information resources are woven into the overall strategy of the organization 15

17 Nolan in Summary Stage Description 1 Early Use, low control, no planning 2 Experimental; Rising costs, no planning 3 Organising control, planning given importance 4 Use of databases and integration of applications 5 Lack of focus on strategic important systems 6 Application portfolio complete and matches organizational objectives 16

18 Strategic IT Planning Potential organizational impact Staffing numbers, skills New security IT Function move evolved and involved System Integration IT Investment Decisions Hardware / software / 3 rd Party / Bespoke / outsourced / in-house 17

19 Challenges How to leverage connectivity, speed, and accessibility created by Internet and associated technologies to extend/enhance/enable business vision? To be successful (viable) long term, must identify where profitability lies Must develop coherent strategies by which to exploit potentialities of IS/IT to deliver value to customers and shareholders 18

20 Example - Information System Architecture 19

21 Strategic IT Paln 1. IT Strategy Summary Objectives, duration, specific targets 2. Information Systems Architecture Relationships between systems 3. Development Programme Projects to implement strategies 4. Technical Strategy Standards to support IS 5. IT Function Resources required, org structure 6. Cost / Benefit Projections E.g. 3 years 20

22 How to produce a Strategic IT Plan Time Frame: The plan should cover three to five years, with the most focus on the next 12 to 18 months unless there is a longer-term project on the table. Executive Summary: The plan should begin with a summary targeted for the business audience. Scope: High-level goals and plans for all areas of information technology that affect the business, not just the infrastructure. A road map for IT is useful in illustrating overall strategy. Business Context: Lay out the specific business drivers, assumptions and plans that informed the IT strategic plan. (For example, the business is planning to acquire smaller companies so IT's plan is to focus on integration technologies.) IT Principles: Short statements of purpose that will guide IT decision making and implementation. Metrics: Put measurements of progress in place when you create the strategic plan instead of waiting for review time to figure it all out. The goal is not precision but the ability to measure appropriate progress toward goals. 21

23 How to produce a Strategic IT Plan IT Strategy Summary Information System Architecture Development Programme timelines etc Technical Strategy standards applied IT Function resource requirements Cost / Benefit Projections 22

24 How to produce a Strategic IT Plan Figure Page Analysis the current a) Aims & objectives b) Draft IS Architecture c) Examine workload / current projects / risks d) Agree scope 2. Specify the requirements 3. Produce strategy and plans (interdependent strategies) 23

25 Critical Success Factors is a business term for an element which is necessary for an organization or project to achieve its mission. Money: positive cash flow, revenue growth, and profit margins. The future: Acquiring new customers and/or distributors. Customer satisfaction: How happy are they? Quality: How good is the product and service? Intellectual capital: Increasing what you know that's profitable. Employee attraction and retention: Your ability to do extend your reach. Sustainability: Your personal ability to keep it all going. 24

26 IT Planning Projects Don t forget: Conducting Projects Directing Projects 25

27 Evolution and the move to Strategic Information Systems Lack of an IT strategy results in Business opportunities missed Lack of integration Rework and duplication Priorities not based on business needs Budget wasted Increased conflict between departments / staff 26

28 The evolving role of IS & IT in organizations - 3-ERA MODEL 27

29 The evolving role of IS & IT in organizations - 3-ERA MODEL Efficiency Effectiveness Competitiveness DP Era MIS Era SIS Era Nature of Technology computers fragmented (hardware limitations) distributed process interconnected software limitation networks integrated people / vision limitation) Nature of Operation remote from users controlled by DP regulated by management services available and supportive to users Issues in System Development technical issues (programming / project management) support business users needs (info management) related to business strategy Reasons for Using the Technology reducing costs (esp. administrative) (technology driven) supporting the business (manager) (user driven) enabling the business? (business driven) Characteristics of Systems regimented / operational (internal) accommodating / control flexible / strategic? (external?) Trends in the evolution of business IT Source: Ward / Griffiths, 1997, p

30 Stages Of Evolution Of IS/IT In Relation To Expenditure 29

31 Transition from DP to MIS Change in how IS/IT resources were managed Change in how the role of IS/IT is evaluated Strategy for management of IS/IT 30

32 The Three-era Model - DP and MIS Eras Three threads of evolution have enabled the development of the information systems during three eras: Hardware: reducing cost and size Software: increasing availability, more flexible OS, more quickly developed business application, and greater accuracy with less experience required from the users Methodology: improved ways of organizing, coordinating, and implementing multiples projects 31

33 The Three-era Model Strategic Information Systems Era Objectives of three eras: DP era: improve operational efficiency by automation of processes MIS: increase management efficiency SIS: improve competitiveness by changing the nature or conduct of business. SIS are systems whose unique functions or specific applications shape an organization s competitive strategy or it provide it with competitive advantage. 32

34 An Example Business Objectives * Raise earnings per share * Increase market share * Improve productivity * Develop new businesses * Develop internationally Critical Success Factors Create new markets Find new products Automate factories Focus on profit Develop an image worldwide Maintain corporate wide control Improve quality and customer response I S Needs Develop customer intelligence systems Install new products and patents database Investigate FMS Develop profit analysis systems Enhance financial controls Explore CAD links with customers Develop a worldwide products database 33

35 Success Factors in Strategic Information Systems External, not internal focus Adding value, not cost reduction Sharing benefits within the organisation, with suppliers, customers, consumers and even competitors Understanding customers and what they do with the product or service: how they obtain value from it. Business-driven innovation, not technology-driven Incremental development, not the total application vision turned into reality Using the information gained from the systems to develop the business 34

36 Why Have an IS/IT Strategy? Consequences of not having and IS/IT strategy are severe, which include: Systems investments are made that do not support business objectives Loss of control of IS/IT, leading to individuals often striving to achieve incompatible objectives through IS/IT Systems are not integrated. This can also lead to duplication of effort and data leading to inaccuracy and no coherent information resource No means of setting priorities for IS projects/resources and constantly changing plans leading to lower productivity, etc. No mechanisms for deciding optimum resource levels or the best means of supplying systems Poor management information; it is either not available, inconsistent, inaccurate or too slow 35

37 Business, IS, and IT strategies IT impact & potential Business Strategy Establish direction and objectives IS Strategy Demand oriented Application focused Articulate information requirements and systems needed to deliver that information IT Strategy Supply oriented Technology focused Identify technological infrastructure required (Ward & Peppard 2002) 36

38 Problems of NOT planning competitors gain competitive advantage business goals unachievable due to systems limitations organisational information resource not adequately exploited systems not integrated duplication of effort inaccuracy poor management information lack of commitment from senior executives 37