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The Role of IT and IS in Organizations (A Strategic Perspective)

The Role of IT and IS in Organizations (A Strategic Perspective). Planning is A Guidance. “If you don’t know where you are going, any road will take you there.” The Cheshire Cat, Alice in Wonderland. Without Proper Plan. Higher costs Lack of coordination Confusion Internal Competition

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The Role of IT and IS in Organizations (A Strategic Perspective)

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  1. The Role of IT and IS in Organizations (A Strategic Perspective)

  2. Planning is A Guidance “If you don’t know where you are going, any road will take you there.” The Cheshire Cat, Alice in Wonderland

  3. Without Proper Plan • Higher costs • Lack of coordination • Confusion • Internal Competition • Duplication • Inefficiency • Budget battles • Lost opportunities

  4. Strategic Planning for An Organization • Strategic planning provides • A direction, a framework, a vision • Increases the way of success • Identifies upfront related functionality

  5. Why Do Strategic Planning for Information Systems? • Systems are costly; planning enables you to anticipate • One time costs • On-going costs • Identify your stakeholders at the outset – impact of a new system is felt by co-workers, your users, & your administration • Properly assessing expectations first can lead to success

  6. An Overview to Strategic Planning for Information System Decision Makers • Categories for a strategic plan can include: • Key business drivers and needs (e.g., what you need from your information system to deliver services that meet your mission and vision) • Identify what opportunities await a success implementation • Identify what challenges await a success implementation

  7. An Overview to Strategic Planning for Information System Decision Makers • Categories for a strategic plan, continued: • The role of a particular information system • Review of the current state & future state • Features and functionality • The anticipated return on investment (ROI); or the anticipated return on expectations (ROE) • Implementation plan: one-time & on-going costs; timeline

  8. Information Technology (IT) &Information Systems (IS) Definitions • IS and IT are often used interchangeably • IT (or ICT) is about technology for storing, processing, delivering, and sharing information in digital formats (H/W, S/W, telecommunications networks) • Tangible (Servers, PCs, Network cables, etc) • Intangible (software)

  9. Information Technology (IT) &Information Systems (IS) Definitions(Continued..) • IS is a system addressed to generate information for users to serve, help, or support them in taking actions • Without technology • With technology (especially IT) CBIS

  10. Information Systems

  11. Model Evolution of IS/IT Use

  12. Six Stages Of IT/IS Evolution(Nolan and Gibson) • Initiation  Automation of operational processes • Contagion Rapid growth of demands • Control Requirement from management: plans, return of investment, methodologies • Integration Need for integration of existing systems • Data administration Exploration of database after users understand values of information • Maturity Planning and development of systems is closely coordinated with business development

  13. Current Role of IS Strategic Planning Management Control Operational Control

  14. Three Eras of IS

  15. Prime Objective in the Three Eras

  16. Evolution of Business IS/IT

  17. Important Keys • MIS systems usually rely on DP systems • Functions of SIS are usually same as for DP/MIS application. The difference is its impact on the business due to the changes they enable or cause

  18. Characteristics of Strategic Systems • Share information via technology-based systems with customer and/or suppliers and change the nature of the relationship • Produce more effective integration of the use information in the organization’s value adding processes • Enable organization to develop, produce, market and deliver new or enhanced products or services base on information • Provide executive management with information to support he development and implementation of strategy

  19. Category of SIS • Internal systems: have direct benefit for the company • External systems: have direct benefits for the company’s customers

  20. Strategic Use of IT/IS • Linking to customers and/or suppliers • Walmart and its suppliers • American Hospital Supplies • Online reservation system (SABRE) by American Airlines • Amazon.com • Ryanair

  21. Web page of Ryan Air

  22. Strategic Use of IT/IS(continued..) • Improving integration of internal processes • Use of ERP • Implementation of CRM systems • Information-based product and services • Provide information-based services (online support, order tracking, order history, etc)

  23. Tracking a Package

  24. Strategic Use of IT/IS(continued..) • Executive information systems • Support top executives who need information (internal and external) and knowledge for strategic decision purposes.

  25. Success Factors in SIS(Ward and Peppard) • External, not internal, focus (by looking at customers, competitors, suppliers, and other industries) • Adding value, not cost reduction (doing better, not cheaper) • Sharing the benefits (even with competitors!)

  26. Success Factors in SIS(Continued..) • Understanding customers (ex: tracking system on FedEx or DHL) • Business-driven innovation, not technology driven (Success of Silicon Valley is not because of e, but of i – power of i – innovation and imagination) • Major failures of IT are often based on better technology but bad business vision

  27. Success Factors in SIS(Continued..) • Incremental development, not the total application • Prototyping of systems has a key role • Using information gained from the system to develop the business • To improve the products or services that match of marketplace or influence its development

  28. Relationship Between the Business,SIS, MIS, and DP

  29. Management Implications • Focused on the technology itself does not lead to its successful strategic application (Earl) • Effective way in achieving strategic benefits from IS/IT is to concentrate or rethinking business by analyzing: • Current business • Environmental change

  30. Management Implications • Research’s result by Earl: • Most of the IT strategies were STRONG on technology but WEAK on identifying application needs and business thinking

  31. Management Implications(continued..) • Suggestions by Earl: • Use WHAT QUESTION to achieve IS • Use HOW QUESTION related to the technology

  32. Relationship Between Business and IS/IT Strategies

  33. IS/IT Strategy • Consist of IS Strategy and IT Strategy • IS Strategy: defines the organizations requirement or demand for information and systems to support the overall strategy of business • IT Strategy: is focused on how the organization’s requirement or demand can be facilitated by technology

  34. Applications portfolio • In reality, an organization needs a combination of DP, MIS, and SIS or applications portfolio • In traditional portfolio models, the focus is not on business success, but is in relationship of systems to each other and the task being performed

  35. Applications portfolio(Continued) • New model of applications porotfolio developed by McFarlan defines 4 categories of application: • Strategic applications • High potential applications • Key operational applications • Support applications

  36. Applications portfolio(Continued)

  37. Applications portfolio(Continued..) • Each segment needs a different strategy • They fulfill different role in the business

  38. Strategic Alignment • It used to align between business and IT/IS Strategies • It can be used to make dynamic alignment

  39. Strategic Alignment • Business Strategy • Business scope (4P) • Distinctive competencies (brand, research, manufacturing, and product development, price and cost, sales and distribution channels) • Business governance (relationship between management, stakeholders, and the board of directors; also related to government regulations and alliances with strategic partners)

  40. Strategic Alignment • Organization infrastructure and processes • Administrative structure • Processes (related to value-added activities and process improvement) • Skills (related to HRD: recruitment, reward, motivation, training, culture)

  41. Strategic Alignment • IT Strategy • Technology scope • Systemic competencies (capabilities that distinguishes the IT services) • IT governance (policy and procedure related to IT operations)

  42. Strategic Alignment • IS Infrastructure and processes • Architecture (technology priorities, policies, and choices for integration) • Processes (related to development and maintenance applications) • Skills (IT HRD)

  43. Several Key Points in Strategic Alignment • Alignment is evolutionary and dynamic • Needs : • strong support from senior management, • good working relationship, • strong leadership, • appropriate prioritization, • effective communication, and • understanding of the business and technical environment

  44. Why Have an IS/IT Strategy? • If do not have an IS/IT Strategy: • Waste of system investment • Loss of control of IS/IT (Leading an individual strive to achieve unmatched objective) • System are not integrated • And many other problems

  45. Internal Context for IS/IT Stratey

  46. External Context • Duality of technology • Support the strategy of an organization • Define business

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