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Information Systems Planning


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Title: Information Systems Planning

Information Systems Planning
IS Planning
  • The Changing World of Planning
  • Why planning is so difficult
  • Traditional vs Sense-and-Respond Approach
  • Seven Planning Techniques
  • Stages of Growth
  • Critical Success Factors
  • Competitive Forces Model
  • Five Forces Analysis of the Internet
  • Value Chain Analysis
  • E-Business Value Matrix
  • Linkage Analysis Planning
  • Scenario Planning

  • IS planning is becoming more difficult and more
    important at the same time
  • Technology changing so fast Why bother?
  • YET
  • Most organizations survival is dependant on
  • Good News variety of approaches, tools and
    mechanisms available
  • Bad News no best way to go about it

What is IS Planning?
  • Some managers believe determining what
    decisions to make in the future
  • Turbulent environment developing a view of the
    future that guides decision making today
  • Subtle difference strategy making
  • Strategy stating the direction in which you
    want to go and how you intend to get there
  • The result of strategy-making is a plan

What is IS Planning?
  • Types of Planning
  • Planning is usually defined in three forms, which
    correspond to the three planning horizons.
  • Strategic 3-5 years
  • Tactical 1-2 years
  • Operational 6 months 1 year
  • Emphasis on strategy has undergone a definite
    shift in recent years
  • Basic trend move from a tactical midrange focus
    to a truly strategic effort

Types of Planning
Planning Shift
Why IS planning is so difficult?
  • Business Goals and Systems Plans Need to Align
  • Some believe too sensitive PROBLEMS
  • Fortunately trend for CIOs to be part of senior
  • Technologies Are Rapidly Changing
  • Continuous planning?
  • Old days of planning at start of year gone
  • Advanced technology groups to monitor changes
    adjustments in current decisions

Why IS planning is so difficult?
  • Companies Need Portfolios Rather Than Projects
  • Evaluation on more than their individual merit
  • How they fit into other projects and how they
    balance the portfolio of projects (Internet Value
  • Responsibility Needs to be Joint
  • IS planning by CIO no longer effective
  • Partnership among CEO, CIO, CFO, COO
  • IS PlanningBusiness planning, no longer just a
    technology issue

Why IS planning is so difficult?
  • Infrastructure Development is Difficult to Fund
  • Everyone knows infrastructure development is
    crucial, BUT difficult to get funding just to
    develop or improve infrastructure
  • Often done under the auspices of a large
    application project
  • Challenge develop improved applications over
    time, so that infrastructure improves over time
  • Mainframe-client server to share corporate and
    desktop computing
  • ERP to centralize and standardize data
  • Web presence to give users access to back-end
  • Web services architecture to work intercompany

Why IS planning is so difficult?
  • Other planning issues
  • Top-down Vs. bottom-up radical change Vs.
    continuous improvement
  • Most organizations have a planning culture into
    which the systems plan must fit

The Changing World of Planning
  • Technology (Internet etc.) introduced speed
    into the business environment and transformed how
    people think about time, how much time they have
    to plan, react to competitors etc.

The Changing World of Planning
  • Traditional Strategy-Making
  • Business executives created a strategic business
    plan where the business wanted to go
  • IS executives created an IS strategic plan how
    IT would support the business plan
  • IT implementation plan created to describe
    exactly how the IS strategic plan would be
  • Assumptions
  • The future can be predicted
  • Time is available to do these 3 parts in sequence
  • IS supports and follows the business
  • Top management knows best (broadest view of firm)
  • Company like an Army

The Changing World of Planning
  • The future cannot be predicted discontinuous
  • Who predicted Internet, Amazon, eBay etc.? New
    models will appear
  • Time is not available for the sequence
  • IT implementation plan means IS Dept. already
    late to support business plan it needs to be
    ahead of business strategizing
  • IS does not JUST support the business anymore it
    shows IT-based opportunities
  • No longer business first, IS second
  • At the very least together

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The Changing World of Planning
  • Top management may not know best
  • Front-line people (closest to customers,
    partners, suppliers) identify opportunities
  • Inside out Vs. outside in approach
  • An organization is not like an army
  • Industrial era metaphor (top-down) no longer
    always applies (e.g. failure of BPR)
  • Organizations are living entities do not
    command, but nurture and tender different type
    of leadership required (Semco)

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Todays Sense-and-Respond Approach
  • Let Strategies Unfold Rather Than Plan Them
  • In times of fast change long term enterprisewide
    strategy (predictions) are risky
  • the way to move into the future is step by step
    using a sense-and-respond approach
  • Sense a new opportunity and immediately respond
    via testing it
  • Myriad of small experiments in parallel
  • Formulate strategy closest to the action
  • IT (Internet) enabler of communication (inside as
    well as with customers, suppliers and partners)
    So, corporate strategy must be aligned with
  • Strategy development must take place at the
    organizational edges, with employees who
    interact with customers, suppliers and partners
  • Employees who are closest to the future (young)
    should become prime strategists. In the Internet
    Age younger employees

The Changing World of Planning
Figure 4-6
Todays Sense-and-Response Approach
  • Guide Strategy-Making with a Strategic
  • Having a myriad of potential corporate strategies
    being tested in parallel could lead to anarchy
    without a central guiding mechanism
  • That mechanism is the Strategic Envelope
  • Top management doesnt set strategies (as in
    traditional way), it defines the parameters for
    the experiments ( a strategic envelope), and
    then continually manage that context
  • Need to meet often to discuss
  • Shifts in the marketplace
  • How well each of the experiments is proceeding
  • Gaining followership or showing waning interest?

Todays Sense-and-Response Approach
  • Manage the strategic envelope by
  • Defining a territory
  • Holding strategic conversations
  • Regular meeting by executives to monitor
    environment and respond
  • COO reports on today (size of mobile workforce)
  • CIO reports on tomorrow (developments in Web
  • VP of HR reports on people issues
  • Helps to spot trends, launch new projects, add or
    cut funding to existing projects
  • Regular meetings with experimenters

Todays Sense-and-Response Approach
  • Be at the Table
  • IS executives must be involved in business
    strategising, NOT react to business strategies
    (which is tactical and operational)
  • Note first need to make department credible
  • Second need to outsource operational work to
    free IS staff for planning
  • Test the Future
  • IS Dept. needs to test potential futures before
    the business is ready for them (thinking ahead of
    the business), by
  • Providing funding for experiments
  • Working with research organizations
  • Having an emerging technologies group

Todays Sense-and-Response Approach
  • Put the Infrastructure in Place
  • Today, moving quickly means having the right IT
    infrastructure in place.
  • The most critical IT decisions are
  • IT experiments must include those that test
    painful infrastructure issues such as how to
  • Create and maintain common, consistent data
  • Create and instil mobile commercial standards
    among handheld devices
  • Implement e-commerce security and privacy
  • Determine operational platforms (ERP, Supply
    Chain Management )

Seven Planning Techniques
  • Stages of Growth
  • Critical Success Factors
  • Competitive Forces Model
  • Value Chain Analysis
  • E-business Value Matrix
  • Linkage Analysis Planning
  • Scenario Planning

Stages of Growth (Nolan and Gibson)
  • Stage One Initiation Early successes increase
    interest and experimentation
  • Stage Two Contagion Rapid proliferation, little
    planning, much spending learning period
  • Stage Three Control Management concerned about
    benefits, so introduces control IS Dept and
    users become accountable Efforts towards
  • Stage Four Integrationtake advantage of new
    technology to integrate existing systems.
  • (Stage Five Data Administration DP function
    created to plan and control use of organizations
  • (Stage Six Maturity IS part of managerial
    processes alignment with business plan.)

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1. Stages of Growth
  • The eras overlap each other slightly at points of
    technology discontinuity
  • Discontinuity happens when proponents of the
    proven struggle with proponents of the new and
    unproven designs
  • Inevitably the new win out
  • Importance of this conceptual framework is
    understanding at which stage the org. is a
    precursor of IS planning
  • e.g. if use of Web services is in Stage II, too
    much control can kill of new uses of technology
  • Management principles differ from stage to stage
  • Organization may be in different stages at any
    point in time (i.e. Stage II in terms of planning
    and control, but Stage III in terms of IS
    function organization)

Critical Success Factors(Rockart)
  • Used to identify the information systems that a
    company needs to develop / improve
  • Fewer than 10 CSF per executive to monitor
  • CSF are time dependent (must be re-examined)
  • Four sources
  • industry the business is in,
  • company itself and situation within industry,
  • environment (consumer trends, leveraging the
  • temporal organizational factors (too much/little

2. Critical Success Factors
  • Two types of CSFs
  • Monitoring CSFs to keep abreast of ongoing
  • Building CSFs to track progress of programs of
  • Steps to determine CSFs
  • Goals and objectives
  • Factors to accomplish these objectives
  • 2-3 measures for each factor (most difficult
  • Plan systems to support monitoring of these

3. Competitive Forces Model(Porter)
  • Threat of new entrants
  • Bargaining power of customers and buyers
  • Bargaining power of suppliers
  • Substitute products or services
  • The intensity of rivalry among competitors
  • Today, 5 forces and 3 strategies
    enabled/supported by IS.
  • Analysis of forces shows which systems to include
    in IS plan.

Value Chain Analysis(Porter)
  • Five primary activities, 4 support activities
  • Analyzing the value chain shows
  • how a firm can add value to each activity
  • determine where an other company can add more
    value and team up with that firm, outsourcing
    that activity to this partner

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4. Value Chain Analysis
  • Virtual Value Chains?
  • Marketplaces VS Marketspaces
  • Marketspaces where information substitutes for
    physical product and location
  • How can companies create value in a marketspace?
  • How can companies create value in a marketplace
    and marketspace concurrently leveraging off each
    other? (Delta)
  • Use Porters Value chain to find the answer

4. Virtual Value Chains
  • In traditional value chains, information is a
    support element, not a source of value in itself
  • To compete in the marketspace use information to
    create value for customers (UPS tracking system
    opened up for customers)
  • Creating value in the marketspace also involves a
    value chain but here activities are performed
    with information and through information.

4. Virtual Value Chains
  • At every step in the virtual chain value through
    information can be added by
  • Gathering information
  • Organizing information
  • Selecting information
  • Synthesising information
  • Distributing information

Virtual Value ChainsEvolution in virtual value
  • Making operations visible create ways to see
    physical operations through information. Usually
    visibility of production systems allowing
    employees to coordinate activities in the
    physical value chain, sometimes leading to
    competitive advantage
  • Frito-Lays store by store input of sales and
    competitor data to schedule production, local
    promotions. Fast reaction to marketplace changes.
  • Foundation for a virtual value chain

4. Virtual Value ChainsEvolution in virtual
value chains
  • 2. Mirroring capabilities
  • substitute virtual activities for physical ones
    (e.g. Purchasing through Web-based supply chains)
  • Vitual world-wide teams, no time and space
    limitations (e.g. Texas Instruments)

Virtual Value ChainsEvolution in virtual value
  • 3. Space-based customer relationships deliver
    value to the customer in new ways
  • Insurance company example
  • customer data collected by company made available
    to employees to give advice and quick answers
    (visibility stage)
  • Create customer risk profiles and customize
  • New product lines like insurance for boat owners
    (mirroring capabilities)
  • Expand to new areas like offering financing for
    boat purchases

Virtual Value ChainsRULES
  • Digital assets are not used up in consumption
    information can be reused in many forms at a low
  • New economies of scale small companies can
    compete against large ones due to lower overhead
    costs even in large geographic areas
  • New economies of scope allow companies to offer
    financing and discount programs
  • Transaction costs are lower in the marketspace,
    so companies can capture information they were
    not able to capture in the past (Frito-Lay)

4. Virtual Value Chains
  • Mindshift from
  • Supply-driven thinking to demand-driven thinking
  • So,
  • Sense and respond rather than make and sell
  • Significant strategic opportunity for companies
    IS should play a role in identifying it and help
    the company to take advantage of it.

5. E-Business Value Matrix(Alexander)
  • A portfolio planning technique to prioritize
  • Tool used by Cisco
  • Every IT project is assessed in two categories
  • Criticality to the business
  • Newness of idea
  • Each project is placed into one of four
    categories to assess its value to the company
  • New fundamentals Low-Lowprovide a
    fundamentally new way of working in overhead
    areas, not business-critical areas (3-6 months)
  • Operational excellence High-Lowmedium risk
    because they may involve reengineering work
    processes (no immediate returns rather increase
    corporate agility, customer satisfaction 12
  • Rational experimentation Low-Hightest new
    technologies and ideas (short time frame if
    successful become one of the other 3 types)
  • Breakthrough strategy High-Highpotentially have
    a huge impact on the company (eBay, extranets
    shared by partners)

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Linkage Analysis Planning(Primozic and Leben)
  • Examines the links organizations have with one
    another to create a strategy for utilizing
    electronic channels
  • Steps in the Methodology
  • Define power relationships among the various
    players and stakeholders
  • Identify who has the power
  • Determine future threats and opportunities for
    the company

6. Linkage Analysis Planning
  • Map out your extended enterprise to include
    suppliers, buyers, and strategic partners
  • The enterprises success depends on the
    relationships among everyone involved
  • Some 70 of the final cost of goods and services
    is in their information content
  • Win-win a supplier keeps buyers inventory and
    delivers just-in-time, but gets paid
    electronically upon delivery
  • Plan your electronic channels to deliver the
    information component of products and services
  • Create, distribute, and present information and
    knowledge as part of a product or service or as
    an ancillary good
  • Those who control the electronic channels will be
    the winners

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7. Scenario Planning(Schwartz)
  • Scenarios are stories about the way the world
    might be in the future
  • The goal of scenario planning is not to predict
    the future, but to explore the forces that could
    cause different futures to take place, and then
    decide on actions to take if those forces begin
    to materialize

7. Scenario Planning
  • Four steps in Scenario Planning
  • Define a decision problem and time frame to bound
    the analysis
  • How will IS be managed 10 years from now?
  • Identify the major known trends that will affect
    the decision problem. Categories are
  • Environment, government, regulations, society,
    technology, financial considerations...
  • Each trend is judged
  • What impact will it have on the decsion
  • What are the directions of each impact?
  • Trends with unknown or contradictory impacts are
    judged as uncertain

7. Scenario Planning
  • Identify just a few driving uncertainties
  • Most uncertainties cluster around a few driving
  • Choose two drivers, with two possible states for
    each 4 scenarios
  • Construct the scenarios
  • Each scenario is based on a driving uncertainty
  • Each scenario must be plausible
  • To make it plausible include a triggering event
    (9/11, Enron scandal, major court decision)
  • Scenarios show the end state and how we arrived
    at it.

7. Scenario Planning
  • When the scenarios are developed, planners decide
    how their current strategies would fit in each
  • Then they ask Is there a better strategy?
  • They also identify the factors they should
    monitor closely to spot changes in trends

CASE EXAMPLEScenarios on the Future of IS
  • Four potential futures are presented
  • The Firewall scenario could occur if companies
    use traditional forms of management and see their
    data as proprietary
  • The Worknet Enterprise scenario could occur if
    companies outsource management of their data and
    share it extensively with specific partners
  • The Body Electric scenario could occur if new
    organizational forms flower (such as people
    owning parts of work cells in which they work)
    and obtain all their IT from interconnected
    service providers
  • The Tecknowledgy scenario could occur if there
    is an open information society where any kind of
    information is available for a price. The main
    job of IS could be facilitation of knowledge
    processes across organizations

Scenario Planning
  • Based on the successes and failures of past
    information systems planning efforts, we see two
    necessary ingredients to a good strategic
    planning effort
  • IS plans must look towards the future
  • Future is not likely to be an extrapolation of
    the past
  • Successful planning needs to support peering
    into the future most likely in a
    sense-and-respond fashion
  • IS planning must be intrinsic to business planning

  • Sense-and-respond is the new strategy-making mode
  • Creating an overall strategic envelope and
    conducting short experiments within that
    envelope, moving quickly to broaden an experiment
    that proves successful
  • IS plans typically use a combination of planning
    techniques presented
  • No single technique is best and no single one is
    the most widely used in business

  • Peering into an unknown future

PART I Discussion Case
  • IT Strategy
  • for
  • Royal Dutch/Shell Group

MICROSOFT Case example Sense and Respond
  • Abandoned proprietary network despite big when
    it did not capture enough customers
  • Moved on to buying Internet Companies as well as
    aligning with Sun to promote Java
  • Over time moved into a variety of technologies
  • Web, Cable news, Digital movies, Cable modems,
    Handheld OS, Video server, Music, Multiplayer
  • Not all came from top management e.g. first
    server came from a rebel project
  • Getting its fingers into every pie that might
    become important
  • Missed some paid later

SKANDIA FUTURE CENTERS Case example Formulate
Strategy Closest to the Action
  • Incubator for testing ideas on IT, social
    relationships, and networking for Skandia, the
    large Swedish insurance company
  • Different generations (3G 25, 35, 45)
    collaborate on on-the-edge projects
  • In order to talk focus on questions ( dialog)
    rather than answers ( debate)
  • Presented as plays (Vs. Report)
  • Garden some of the projects are growing
    others not
  • Combining senior wisdom with young peoples
    entrepreneurship leads to a real powerhouse

SHELL OIL Case example Guide Strategy-Making
with a Strategic Envelope
  • New GM believed change would only occur if he
    went directly to his front lines (gas station
    employees). Set aside 50 of his time
  • Goal not to drive strategy from Corporate
    (tried and failed dismally) but to interact
    directly with the grass roots and support their
  • Technique use of action labs (6 to 8 people)
  • Week long retailing boot camp, peer challenges,
    hot seats, 60 day plan implementations, report
    back etc.
  • Projects spawned many more projects
  • Guidance and nurturing came from the top, so that
    there was not complete chaos

Framework Example Five Forces Analysis of the
  • The Internet tends to dampen the profitability of
    industries and reduce firms ability to create
    sustainable operational advantages because
  • It increases the bargaining power of buyers
  • Decreases barriers to entry
  • Increases the bargaining power of suppliers
  • Increases the threat of substitute products and
    services, and
  • Intensifies rivalry among competitors
  • Recommend focus on your strategic position in
    an industry and how you will maintain
  • Not growth, market share or revenue

Value Chain
  • The rental car subsidiary turned to auctioning
    off clean used cars to dealers to sell, via
  • Dealers can view the cars (and their stats) to be
    auctioned from a screen in their dealership, and
    then place bids during the online auction, held
    once or twice a month
  • The auction saves them time and effort, and the
    cars are guaranteed

CISCO SYSTEMSCase Example E-Business Value
  • Ciscos expense reporting system fits in its new
    fundamentals category
  • Its executive dashboards are an example of
    operational excellence projects
  • Multicast streaming video used for company
    meetings is a rational experiment, and
  • Its development of a virtual supply chain is seen
    as a breakthrough strategy

Electric Power Research Institute Case example
Linkage Analysis Planning
  • EPRIs challenge - compress information float -
    elapsed time from availability research findings
    to the use of those results in industry
  • Answer EPRINET - a natural language front end
    for accessing online information, expert
    system-based products, e-mail facilities, and
    video conferencing

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