Strategic Information Systems Planning

Transcription

1 Course Overview CISB444 Strategic Information Systems Planning Strategic Planning for Information Systems explores the impact that information systems (IS) and information technology (IT) have on business performance and the contribution that they make to the strategic options of organisations. It describes tools, techniques and management frameworks to both align strategies for IS and IT with business strategy, as well as seek out new opportunities through innovative deployment of technology. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 1 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 2 Course Overview This course demonstrates why strategic planning for information systems is essential to organisational success, especially in times of increasingly rapid change. Over the long term any organisation will get the information systems it deserves, according to the approach adopted to the use and management of IS/IT. To obtain the whole range of benefits available from IS/IT and avoid the potential pitfalls, every organisation must establish the means to manage IS/IT as an integral part of its approach to strategic management. Course Objectives To provide an understanding that strategic planning for information systems is both essential and feasible. To demonstrate that organisation must establish a way of managing IS/IT strategically as part of the business development process in order to deliver the benefits available from IS/IT and to avoid the potential pitfalls in IS/IT implementation. To assess alternative approaches to developing information systems (IS) strategies. To highlight the importance of information as one of the organisation s strategic resources the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 3 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 4

2 Chapter 1 A Strategic Perspective of the Evolving Role of Information Systems and Technology in Organisations Chapter 1: Overview Chapter 1 sets the strategic context for IS/IT. It traces the historical development of IS/IT in organisations, bringing it up to date both in terms of e- Commerce and e-business development and the latest thinking on the strategic role of IS/IT in organisations It provides an appraisal of the general evolution of IS/IT in major organisations, against which any organisation can chart its progress and from which lessons can be learned for its future management. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 5 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 6 Chapter 1: Main Topics Information Systems (IS) and Information Technology (IT) Early Views and Models of IS/IT in Organisations i Success Factors in Strategic Information Systems What is an IS/IT Strategy? Introduction Most organisations in all sectors of industry, commerce and government are fundamentally dependent on their information systems. In industries such as telecommunications, media, entertainment, and financial services, where the product is already or is being increasingly digitised, the existence of an organisation crucially depends on the effective application of IT. The use of technology is becoming an expected way of conducting business: e-commerce, e-business the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 7 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 8

3 Introduction Consequently, organisations are increasingly looking toward the application of technology not only to underpin existing business operations but also to create new opportunities that provide them with a source of competitive advantage. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 9 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 10 Introduction In order to manage IS and IT strategically, it is helpful to understand how the role of technology-based information systems has evolved in organisations. Previously: various short-term tactical decisions regarding IS/IT Legacy systems Learning from experience, the successes and failures of the past, is one of the most important aspects of strategic management. Learning about the capability of IT is experiential: Organisations tend to learn to manage IS/IT by doing, not appreciating the challenges until they have faced them. Introduction Factors affecting the pace and effectiveness of progress in using IS/IT and in delivering business benefits: The capabilities of the technology; The economics of deploying the technology; The applications that are feasible; The skills and abilities available, either in-house or from external sources, to develop the applications; The skills and abilities within the organisation to use the applications; The pressures on the particular organisation or its industry to improve performance the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 11 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 12

4 Information Systems (IS) and Information Technology (IT) It is important that there is a clear understanding of the distinction between the terms information systems (IS) and information technology (IT): Business and IS staff understand each other To develop successful IS/IT strategies Note: IS existed in organisations long before the advent of information technology and, even today, there are still many information systems present in organisations without using technology. Information Technology (IT) IT refers specifically to technology, essentially hardware, software, and telecommunications networks. It is both tangible (e.g with servers, PCs, routers, and network cables) and intangible (e.g. with software of all types). IT facilitates the acquisition, processing, storing, delivery, and sharing of information and other digital it content. t In the European Union, the term Information and Communication Technologies or ICT is generally used instead of IT to recognised the convergence of traditional information technology and telecommunications, which were once seen as distinct t areas. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 13 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 14 Information Systems (IS) General definition: A combination of resources that satisfy a set of information handling needs in an enterprise. The UK Academy of Information Systems (UKAIS) defines information systems (IS) as the means by which h people and organisations, utilising technology, gather, process, store, use and disseminate information. It is concerned with the purposeful utilisation of information technology. The domain of study of IS, as defined by UKAIS, involves the study of theories and practices related to the social and technological phenomena, which determine the development, use and effects of information systems stems in organisations and society. Information Systems (IS) Although technology is the immediate enabler of IS, IS actually is part of the much wider domain of human language and communication. IS will remain in a state of continual development and change in response both to technological innovation and to its mutual interaction with human society as a whole. Some IS are totally automated by IT E.g: Dell Computers: no human intervention is required from taking customer orders, to delivery of components to the Dell factory for assembly, to shipment to customers. With this build-to-order d model, perfect information and tight linkages match supply and demand in real time. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 15 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 16

5 Applications Another term that is frequently used along with IS and IT is application. Essentially, an application refers to the use of IT to address a business activity or process. There are essentially two types of application: General uses of IT hardware and software to carry out particular tasks such as word processing, electronic mail or preparing p presentation materials; Uses of technology to perform specific business activities or processes such as general accounting, production scheduling or order processing. Applications These applications can be carried out using pre-packaged packaged, pre- written software programs for a particular business activity or be developed to provide particular functionality. Some business-application software packages can be tailored or customised to the specific requirements of an organisation. One of the key selling points of large enterprise resource planning (ERP) packages from vendors like SAP, PeopleSoft, Baan, Oracle, JD Edwards is that they can be configured, to some extent, to meet the specific way in which an organisation operates. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 17 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 18 Importance of Distinguishing IT and IS In order to create a system that effectively supports users, it is first necessary to conceptualise that which is to be supported (the IS), since the way it is described will dictate what would be necessary to serve or support it (the IT). Some organisations may fail to realise any benefits from their investments in IT: Investment are often made in technology without understanding or analysing the nature of the activities the technology is to support either strategically or operationally in the organisation It is important to remember that IT has no inherent value, the mere purchase of IT does not confer any benefits to the organisation. e-business and e-commerce e-commerce refers to the conduct of commerce or business electronically Commercial transactions over the Internet only buying and selling via the Internet. All electronically mediated information exchanges between an organisation and its external stakeholders In the 1980s electronic commerce was already a reality, in this instance referring to inter-company trading, specifically the exchange of business documents, using electronic data interchange (EDI). With the opening up of the Internet for commercial activity in 1991, a vast new medium was emerging for the conduct of business transactions. Networks of networks Open standards WAP M-Commerce, T-Commerce the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 19 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 20

6 e-business and e-commerce e-business refers to the automation of an organisation s internal business processes using Internet and browser technologies. All electronically mediated information exchanges, both within an organisation and with external stakeholders supporting the range of business processes A holistic business culture, structure and mindset, which is not just about buying and selling on the Internet or implementing new technology but integrates core business processes electronically using network technologies to create added value such as enhanced customer services and increased efficiency e-business and e-commerce e-business refers to the automation of an organisation s internal business processes using Internet and browser technologies. pure play dot-coms Totally web- or Internet-enabled, enabled often reaching out directly to customers bricks and clicks Integrate Internet with their mainstream operations web-enabled selected business processes using Internet technologies the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 21 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 22 e-business, e-commerce and IS/IT What we are essentially looking at is another technology, in this instance, the Internet, including wireless technologies, to add to the range of technologies that already exist. The fundamental challenge for any organisation is still to identify opportunities to deploy this new technology, as with any other. Organisations need to realise that Internet is an enabling technology, a powerful set of tools that t can be used, wisely or unwisely, in almost any industry and as part of almost any strategy. It should also be noted that IT is not the business strategy Regardless of the industry that a firm operates in, it can achieve and sustain profitable growth to the extent that it grasps and delivers on 2 strategy fundamentals: product advantage and production advantage. it is the power of i (information, innovation, imagination) rather than e (electronic) that separates the winners from the losers in the 21 st century economy Distinctive Features of the Internet 3 aspects that make the Internet distinct from other technologies: Pervasive For example, it directly reaches end consumers, facilitating the conduct of business directly with consumers in new ways. Interactive This interactive element is of crucial importance since much business activity consists of interactions (human and technical communication, data gathering, collaborative problem solving, negotiation). Virtual nature A new medium that has different characteristics from the physical world marketspace information-defined transaction space. All this implies that t IS/IT strategy t has to be even more tightly aligned to other strategies. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 23 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 24

7 Early Views and Models of IS/IT in Organisations Early Views and Models of IS/IT in Organisations CAN YOU GUESS What this is? 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. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 25 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 26 Mega Giga Tera Peta Exa Zetta Yotta Data Trend as at May 2008 Early Views and Models of IS/IT in Organisations The use of computers in business began in the early 1950s but really became significant in the mid- to late 1960s with the development of multi-purpose p mainframe computers. During the 1970s, minicomputers of increasing power and sophistication were used for a variety of business applications that were either not feasible or economic in a mainframe environment. However, the views developed of the role of information systems and their expected evolution were based strongly on a centralised, integrated concept derived from mainframe origins. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 27 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 28

8 Early Views and Models of IS/IT in Organisations The most well known of these models, capturing the evolution of IS/IT in an organisation, was developed by Gibson and Nolan during the 1970s. This model, in turn, used a hierarchical application portfolio model described by Anthony (1965), who defined a structure for information systems in an organisation, based on a stratification of management activity into: Strategic planning Management control Operational control Different applications were built to support the different levels of management activity, hence, it provided an early way of classifying applications. Typical Planning, Control, And Operational Systems Planning systems examples Control systems examples Operational systems examples Sales forecasting operating plans capacity planning, profit/earnings forecasts, business mix analysis, manpower planning, financial i modelling Sales analysis budgetary control, management accounting, inventory management, quality analysis, expense reporting, market research/statistics, WIP control, requirements planning, supplier analysis, etc. Order entry, processing, tracking shipping documents, vehicle scheduling/loading, Invoicing, sales and purchase ledgers, cost accounting, stock control, shop-floor scheduling, bill of materials, purchase orders, receiving, employee records, payroll, word processing Figure 1.1: Typical planning, control, and operational systems the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 29 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 30 Stages Of Evolution Of IS/IT In Relation To Expenditure Nolan s stages of growth model Level of IS/IT Expense Computer (DP) management Transition point Information (Systems) management Initiation Contagion Control Integration Data Management Maturity Stages of increasing sophistication and maturity Box 1.1 Stages of evolution of IS/IT in relation to expenditure the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 31 Source: Galliers and Sutherland (1991) the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 32

9 Characteristics ti of stages of growth model 1. Initiation. The first use of applications within an organisation. Characterised by lack of senior management interest, operational or simple office systems and transactional systems to reduce costs. 2. Contagion. Widespread use of applications as benefits are sought from automation at o and information o management. age e Characterised acte by rapid growth in use of application with enthusiasm from departmental managers, overall control is limited. 3 Control. This stage is a reaction against excessive and uncontrolled expenditures of time and money on computer systems from the contagion stage. It is characterised by introduction of plans, methodologies and expenditure controls, often resulting in an applications backlog. 4 Integration. This is a reaction against the use of departmental applications and data silos arising from earlier poor control. Traditionally characterised by use of databases, today the use of middleware and enterprise resource planning systems. Control continues to improve at this stage. 5 Data administration. A change of emphasis to information management rather than focus on technology and applications. Databases and document / content management systems introduced to help achieve this. 6 Maturity. Information systems are put in place that reflect the real information needs of the organisation. Characterised by planning and development of IS closely linked to business strategy. Stages in adoption of different models Source: Galliers and Sutherland (1991) the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 33 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 34 Early Views and Models of IS/IT in Organisations The Nolan model is a useful starting point in understanding the evolving role of IS/IT in organisations but it only described events up to the 1980s and since then much has changed. The 6 stages of the model divide into 2 large eras, separated by a transition point between Stages 3 and 4 (Control and Integration) It can be summarised as a transition from computer (DP) management to information (systems) management, during which major changes occur in who managed what for whom, and how It was a fundamental change in how IS/IT resources were managed, and how the role of IS/IT in the organisation should be evaluated Early Views and Models of IS/IT in Organisations During the early stages of computerisation, the preoccupation was with managing the activities operations, programming, g data collection, etc. Later, a separate organisational unit was established that could cope with a variety of types of application, over an extended life cycle, during which the technology changed significantly. The main driving i force had been managing computer resources and activities, focusing on the technical and application difficulties, without much regard for the value to the business of the applications. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 35 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 36

10 Early Views and Models of IS/IT in Organisations To achieve effective Information (Systems) Management, a new top-down approach was required, a strategy for the management of IS/IT, associated activities and resources throughout the organisation. This should be based on a defined role for IS in the enterprise, but that, in turn, depends on the role of IS in relation to the outside world. Early Views and Models of IS/IT in Organisations The evolving issues associated with IS/IT management in organisations can also be described in terms of a threestage model (Hirscheim et.al, 1988): Delivery: IS issues are mainly internal improving the ability to deliver and support the systems and technology. Achieving top-management credibility as a valuable function is a prime objective. This means improving delivery performance, not necessarily providing users with what they really need. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 37 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 38 Early Views and Models of IS/IT in Organisations The evolving issues associated with IS/IT management in organisations can also be described in terms of a threestage model (Hirscheim et.al, 1988): Reorientation: Establishing good relationships with the main business functions, supporting business demands d through h the provision i of a variety of services as computing capability spreads through the business The issues focus is extended outside the DP department and a key objective is to provide a valued service to all business function management. Different areas will benefit differently without regard to business importance Early Views and Models of IS/IT in Organisations The evolving issues associated with IS/IT management in organisations can also be described in terms of a threestage model (Hirscheim et.al, 1988): Reorganisation: The high level of awareness created both locally in the business area and centrally in senior management creates the need for a reorganisation of responsibilities designed to achieve integration of the IS investment with business strategy and across business functions. A key objective becomes the best way of satisfying each of the differing business needs through a coalition of responsibilities for managing information and systems. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 39 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 40

11 Early Views and Models of IS/IT in Organisations It can be concluded that, from the 1960s to the early 1980s, IS/IT and its deployment in organisations passed through a major transition, which linked 2 eras: 1. Data processing from 1960s on wards the DP era; 2. Management information systems (MIS) from the 1970s onwards the MIS era Summary of Lessons from DP and MIS Eras Some of DP lessons: Need to understand the process of developing complete information systems, not just the programs to process data More thorough requirements and data analysis to improve systems linkages and a more engineered approach to designing system components More appropriate justification of investments by accessing the economics of efficiency gains and converting these to a return on investment t (See Table 1.2 for more lessons) the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 41 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 42 Summary of Lessons from DP and MIS Eras Some of MIS lessons: Justification of IS investments is not entirely a matter of return on investment/financial analysis Databases require large restructuring projects and heavy user involvement in data definition data integration had been weak based on the project by project DP approach The IS resource needs to move from a production to a service orientation to enable users to obtain their own information from the data resource the information centre concept. (See Table 1.2 for more lessons) the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 43 Strategic Information Systems Era During the late 1970s, a number of organisation had begun to use IS/IT in ways that fundamentally changed how their business was conducted, changing the balance of power in their industry with respect to competitors, customers, and/or suppliers. The use of IS/IT was thus directly influencing their competitive position and had become a new weapon to improve their competitiveness, implying a new relationship between IS/IT investment and strategic development. During the mid-1980s, a lot of examples were quoted in many journals and books on SIS under the generic title of how IS/IT provides competitive advantages. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 44

12 Strategic Uses of IT/IS: Classification, Factors for Success, and Management Implications The following classification can be shown to be helpful in considering the implications of strategic IS/IT use. The 4 main types of strategic system appear to be: 1. Those that share information via technology-based systems with customers/consumers and/or suppliers and change the nature of the relationship Linking to Customers and Suppliers 2. Those that produce more effective integration of the use of information in the organisation s value-adding processes Improved Integration of Internal Processes 3. Those that enable the organisation to develop, produce, market and deliver new or enhanced products or services based on information Information-based Products and Services 4. Those that provide executive management with information to support the development and implementation of strategy Executive Information Systems 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 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 45 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 46 The Management Implications The Management Implications Business Strategic Management Impact analysis IS/IT Strategic Management Information analysis Executive management Information Systems Management Systems design User management Project and Computer Management Figure 1.5 The relationship between the business, SIS, MIS, and DP User Operations the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 47 IS/IT Industry, business and organisational impact potential BUSINESS STRATEGY Business decisions Objectives and direction Change Support business IS STRATEGY Business based Demand oriented Application focused Infrastructure and services IT STRATEGY Activity it based Supply oriented Technology focused Direction for business Needs and priorities Where is the business going and why What is required How it can be delivered Figure 1.6 The relationship between business, IS, and IT strategies the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 48

13 An Applications Portfolio for the Combined Era The applications in the overall DP, MIS, and SIS portfolio need to be planned and managed according to their existing and future contribution to the business. Traditional portfolio models considered the relationship of systems to each other and the tasks being performed, rather than the relationship with business success. A portfolio model for the combined era can be derived from a matrix concept developed d by McFarlan and McKenney which considered the contribution of IS/IT to the business now and in the future, based on its industry impact. The McFarlan and McKenney Strategic IT/IS Grid The McFarlan and McKinney Model (1992) is a much quoted and typical example of a 2X2 business analysis matrix. The grid separates businesses and their applications by virtue of the different degree to which h the firm is dependent upon IS today and the degree to which IS are strategically important in the sector. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 49 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 50 The McFarlan and McKenney Strategic IT/IS Grid Businesses can be positioned with respect to the importance of IS for the business under review under the classifications of: Support Factory (Key Operational) Turnaround (High Potential) Strategic The McFarlan and McKenney Strategic IT/IS Grid Although the grid is a simple model it can be a powerful one since it enables us to reflect upon the impact of information technology on business operations both now and in the future. The implication of the grid is that t different information management approaches will be applicable to different quadrants. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 51 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 52

14 The McFarlan and McKenney Strategic IT/IS Grid The McFarlan and McKenney Strategic IT/IS Grid High Strategic importance of planned IS Low Turnaround Low Support Strategic importance of current IS Strategic Factory High Support: Applications that are valuable but not critical to success The impact of IS both in terms of existing operations and in terms of planned/future application development is low. IT/IS is used essentially for administrative systems to improve internal efficiency and on islands of specialist technology rather than on an integrated enterprise- wide basis. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 53 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 54 The McFarlan and McKenney Strategic IT/IS Grid Factory (Key Operational): Apllications on which the organisation currently depends d for success IT/IS is critical to current operations and management but is not at the heart of the company s strategic development. Reliable information systems are required both for administrative and process management, but future IT applications are not the critical factor for future business success. The McFarlan and McKenney Strategic IT/IS Grid Turnaround (High Potential): Applications that may be important in achieving future success IT is becoming more pervasive and is being recognised as a tool for transformation. The systems being planned and developed may be critical to the enterprise ss survival or growth. However, there is a degree of uncertainty as the capabilities of the company in terms of delivery and support are untested. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 55 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 56

15 The McFarlan and McKenney Strategic IT/IS Grid Strategic: Applications that are critical to sustaining future business strategy t Some enterprises will be operating in conditions where information technology is already central, and where their future too will be dependent upon and shaped by developments in information systems. Business operations are not possible without the use of advanced information systems and new products and services tend to be computer based. The McFarlan and McKenney Strategic IT/IS Grid Enterprise can move between quadrants on the grid over time The move is generally towards the top right It is possible that a company with diverse activities may have strategic business units operating in different sectors of the grid. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 57 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 58 The McFarlan and McKenney Strategic IT/IS Grid 3 factors that drive the position of the firm on the grid: The ability of management to match the potential of IT with the firm s operations and strategy. The strategic t choices that t management makes with respect to IT, for example is it used to cut costs, to improve quality or to develop new businesses. What is happening in the firm s competitive environment. What is an IS/IT Strategy? The IS strategy defines the organisation ss requirement or demand for information and systems to support the overall strategy of the business. It is firmly grounded in the business, taking into consideration both the competitive impact and alignment requirements of IS/IT Essentially it defines and prioritises the investments required to achieve the ideal applications portfolio, the nature of the benefits expected, and the changes required to deliver those benefits, within the constraints of resources and systems interdependencies. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 59 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 60

16 What is an IS/IT Strategy? The IT strategy is concerned with outlining the vision of how the organisation s demand for information and systems will be supported by technology, essentially, it is concerned with IT supply It addresses the provision of IT capabilities and resources (including hardware, software, and telecommunications) and services such as IT operations, systems development and user support. Earl s Model Earl s model lis important tin that tit articulates t the need for an enterprise-wide stance on information management. Earl (2000) identifies 4 key complementary information strategy components, which may exist within an enterprise: Information technology (IT) strategy Information systems (IS) strategy Information management (IM) strategy Information resource (IR) strategy the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 61 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 62 Earl s Model: Characteristics of IT and IS Strategy IS Strategy Business unit and corporate Demand oriented Business focused Business with IT Infrastructure IT Strategy Scope and architecture Supply oriented Technology focused IT and business Context Earl s Model: IT Strategy IT strategy is concerned primarily with technological issues such as architecture, standards, physical security, data integrity, service availability and maintenance, support and procurement. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 63 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 64

17 Earl s Model: IT Strategy It answers the how question: How will we deliver business requirements? This covers desk-top platforms, peripherals, networks, servers and other shared computer processing capability and repositories of data, operating systems and software tools. The key ygoal of the strategy is to ensure that there is a robust but flexible infrastructure which can support the range of applications required to satisfy organisational objectives. Earl s Model: IT Strategy In practice the IT manager will have to deal with: legacy issues, new technologies for which h standards d have not yet been agreed, purchases which take place outside procurement guidelines, and version drift. All of these contribute to higher costs associated with the management of IT (often referred to as total cost of ownership) and greater complexity in the IT strategy. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 65 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 66 Earl s Model: IS Strategy Earl views IS strategy as being concerned with ensuring that IS development is in tune with organisational needs and dhence with ithidentifying i and prioritising applications for development. This requires a focus on: business and process models, data definitions, information architectures, users needs. Earl s Model: IS Strategy It is therefore concerned with the what questions: What applications set is required to meet business objectives? Business modelling tools have 2 key roles to play in facilitating the IS strategy: They allow the development teams to visualise business processes in a way that t allow users, analysts and programmers to interact with a common and accessible representation of what an application is required to deliver They provide an opportunity to explore alternatives and identify areas for streamlining processes, an essential element of business process re-engineering engineering the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 67 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 68

18 Earl s Model: IS Strategy A corporate IS strategy will focus on enterprise-wide application needs and on systems which help to glue the various functions of the enterprise together. This is particularly important for ensuring that data captured by customer-facing applications (e.g. an order) can be instantly supported by data on for instance, stock levels (from inventory management systems), lead times (from manufacturing systems) and delivery times (from distribution systems). Earl s Model: IS Strategy IS strategy will also be formulated at the level of strategic business units or process owners and is therefore demand-oriented. d d An important decision that will have to be taken at this stage will be to establish who is the business owner of the application. Consequently there may be several linterdependent d t IS strategies which are owned and shaped by the relevant management teams. the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 69 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 70 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 id often striving i 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 Why Have an IS/IT Strategy? Consequences of not having and IS/IT strategy are severe, which include: Misunderstanding between users and IT specialists leading to conflict and dissatisfaction Technology strategy is incoherent and constraints options Inadequate infrastructure investments made All projects evaluated on financial basis only Problems caused by IS/IT investments can become a source of conflict between parts of the organisation Localised justification of investments can produce benefits that are actually counterproductive in the overall business context Systems, on average, have a shorter than expected business life and require, overall, considerably greater IS/IT spending to redevelop more frequently than should be necessary the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 71 the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 72

19 Chapter 1 Complete the Evolving Role of IS and IT in Organisations 2010, Siti Salbiah Mohamed Shariff 73