Strategic Planning for Information Systems

1. Strategic Planning for Information Systems Third Edition John Ward and Joe Peppard CHAPTER 6Determining the Business Information Systems Strategy

2. Learning Objectives • Objectives in determining the IS/IT strategy • Strategic planning techniques & their relationships • Main factors influencing balance of portfolio • Identifying how IS/IT could impact the strategy • Key business issues in IS/IT planning

3. Strategy: Review A strategy is ‘an integrated set of actions aimed at increasing the long-term well-being and strength of the enterprise.’ The set of decisions made to best ensure achievement of the desired objectives, based on an assessment of:... one's own current situation/position; capabilities & shortcoming; competitive position... options/alternatives -- risks ... timing

4. Determining the IS Strategy • Systems and information already exist and normally be deployed • Strategy MUST identify what is eventually required and what has already been achieved • IS plan must identify migration path that: • overcomes existing weaknesses, • exploits strengths and • enables new requirements to be achieved so that it can be resourced and managed appropriately

5. Determining the IS Strategy • IS/IT strategy MUST be integrated in terms of information, systems and technology via coherent set of actions and process of adaptation to meet changing needs of organisation as it evolves • Changing circumstances will mean the organisation will have to be capable of effective responses to unexpected problems and opportunities

6. Objective in Determining the IS Strategy • Identify required applications & their priority • Be able to deploy resources to achieve them successfully • One end product is the application portfolio Existing applications – in place or in development Required applications –Necessary to achieve business objectives & strategy within the planning horizon Potential applications –Might prove valuable in the future if feasible to deliver and can produce demonstrated benefit

7. Main Factors Influencing Balance Of Portfolio • External long term – external business environment • State of the industry in terms of profitability, growth and structure • Degree to which IS/IT is capable of changing the products, markets and interrelationships • External short term – external IS/IT environment • Actual use of IS/IT by competitors and other industry players to gain relative advantage • Opportunities created by IS/IT to change balance of competitive forces and influences

8. Main Factors Influencing Balance Of Portfolio • Internal long term - internal business environment • How new IS/IT applications could more effectively support or enhance business strategy • How new IS/IT applications could enable business to adopt more appropriate strategy to suit future business environment • Internal short term – current application portfolio • Degree to which existing systems support chosen strategy and criticality of systems avoiding business disadvantage and/or sustaining existing advantages • Existing approach to IS/IT management and appropriateness to business strategy • IS/IT resources and competencies the organisati0on has/or can easily acquire

9. Strategic Planning Techniques & Their Relationships • Internal and external factors considered in terms of influence in determining what could and should be done rather than how to do it is the focus of this stage in planning process

10. Continue… • The process for formulating the IS/IT strategy emphasize the need to determine requirements before deciding how to satisfy them. • Demand for IS/IT in a particular business unit can be described as a ‘business information systems strategy’ using the portfolio concept

11. Inputs To IS/IT Strategy Formulation & Techniques Used To Populate The Portfolio

12. Next stage involves HOW various techniques and approaches can be brought together to ensure that the products of analysis are consistent and can be reconciled in more detailed planning • Main objective of determining the IS strategy is to identify required applications and priorities and be able to deploy resources to achieve them successfully (see fig. 6.2 pg. 281 Framework for determining business IS Strategy)

13. Over All Framework for Determination of the Business IS Strategy

14. Parts of Application Portfolio • Portfolio divided into three components • Existing – currently in place & being developed to be installed in near future (6-12 months) • Required – those necessary to achieve business objectives and strategy within business planning horizon and shown to have specific contributions to make • Potential – those that might prove valuable in the future provided they prove feasible to deliver and can produce relevant benefits

15. Continue… • Products of each category needs to be interrelated and consolidated • iterative process – refers to • Need to continually reappraise how both external and internal environs are changing and role IS/IT is or should be fulfilling in business and its relationships (central column) • Need to identify and monitor new and emerging IS/IT-based opportunities to create potential advantages (or that might result in disadvantages if ignored) (right column) • Need to make decisions on HOW to best deploy available business and IS/IT resources in immediate future (left column)

16. Identifying How IS/IT Could Impact The Strategy • Understanding the industry and the potential impact of IS/IT on products and markets • Interpreting business objectives and strategy • Analyzing the industry (external) value chain and information flows • Determine critical success factors • Determine strategic potential

17. The Steps which Define the Strategic IS Potential & Options

18. Understanding the Industry & Potential Impact of IS/IT on Products & Markets Key Business Issues should be considered • Business units & relationships • Stage of maturity of the industry where the business compete • Product & customer portfolios of business units and the contributions to revenues and profits, and demands on resources • Competitive forces affecting business units and corporation - SWOT analysis • Key competencies required to succeed – status of competency in each dimension: customer, product & operation

19. Results of Examining Business Issues • Consideration of business strategy in established environment • Identification of ways IS/IT can impact products/services/economics and affect competitive forces • The understanding of the organization in term of business units, their relationships and the similarities and differences among them and the environments in which they operate.

20. Interpreting Business Objectives • Business objectives & strategies products of number of considerations • What the organization might dobased on environment it operates in or by moving into new environments • What the organization wants to dobased on the values and views of senior executives and stakeholders • What the organization must do if it is to survive in its environment, depending on the pressure groups and their influence. • What the organization can dobased on its resources and capabilities

21. Prioritizing Objectives • Objectives need to be prioritized into low medium and high and measurement criteria established • Another way of structuring objectives is to consider them at three levels • Permanent– reflect mission and overall company goals and long-term intentions=> why the company needs or intends to do things • Strategic– which the company wants to achieve in medium-term • Tactical - company and divisions can & must achieve in short-term to make strategic and permanent objectives achievable

22. Prioritizing Objectives • IS/IT may change objectives due to its potential impact on the business environment. • Bring together the potential impact of IS/IT on the industry and the objectives of the organization either to develop new objectives or qualify the priority given to existing objectives based on IS/IT threats and opportunities.

23. Analysing the Industry Value Chain and Information Flows • Industry value chain effectively a high-level information flow model • Demonstrates role information can play in determining overall performance of industry & how it can be used by suppliers, customers and competitors to effect potential achievement of strategy

24. Analysing the Industry Value Chain and Information Flows • The product of the analysis is an understanding of the information relationships and entities that all players in the industry need to manage well to achieve success.

25. Analysing the Industry Value Chain and Information Flows • External value chain and information models form a framework for more detailed considerations of internal implications • Data flow analysis and entity modelling can then be used to define detailed information involved – potential sources and uses

26. Determining Strategic Potential • Next stage to consider in more detail how key business processes (information & systems terms) relate to & are affected by other organizations’ systems in industry value chain

27. Determining Strategic Potential • Strategic potential of IS/IT & its effect on overall value chain can be identified • RLC analysis and SOG enable consideration of which other parties in industry, to what extent & for what purpose organization can & should extend information through external value chain & exert pressure to accommodate external changes in industry & processes

28. Determining Strategic Potential • Ability to take advantage of such opportunities depends on • Effectiveness of existing internal systems in linking chain together • Possibility of economics of obtaining additional information • Willingness of suppliers & customers to co-operate, based on benefits they perceive

29. Establishing Relative Priorities for IS/IT Investments • Analyzing the internal value chain and organizational relationships • Identify critical business process activities • Assessment of new options for investment • Determining the future application portfolio

30. Analyzing the Internal Value Chain and Organizational Relationships • Involves analysis of internal value chain to identify what business does and how it could be better carried out • Analysis of organization to show how it is structured to do it will most likely produce a ‘mismatch’

31. Analyzing the Internal Value Chain and Organizational Relationships • Equally inevitably existing systems and information resources will have been established more from organizational than value chain perspective • Value chain offers firmer foundation than current organisational structure or relationships model in terms of understanding and analysing key business processes and activities & identifying appropriate requirements

32. Menganalisis Rantai Nilai Internal dan Hubungan Organisasi • Penting untuk mengidentifikasi kegiatan utama • yang penting untuk nilai tambah proses & untuk menjelaskan persyaratan informasi kunci dari masing-masing & link di antara mereka • Akibatnya, rantai nilai yang ada dapat 'diperpanjang' atau didefinisikan kembali dalam hal hubungan eksternal

33. Menganalisis Rantai Nilai Internal dan Hubungan Organisasi • Proses yang paling membutuhkan perbaikan harus diidentifikasi dari analisis kompetensi • misalnya. Keintiman pelanggan - IS / IT harus ditargetkan pada inovasi atau perpanjangan menghadapi pelanggan kegiatan • Proses yang Bermasalah perlu ditargetkan untuk membawa kembali ke tingkat yang diperlukan

34. Menganalisis Rantai Nilai Internal dan Hubungan Organisasi • Peluang untuk mendapatkan keuntungan untuk IS / IT ada di kegiatan baik primer & dukungan seperti yang dilakukan 'kesempatan' untuk dikenakan 'kelemahan' • Kerugian yang terjadi lebih segera karena kegagalan kegiatan utama • Analisis rincian bagaimana dan seberapa efektif bisnis berhubungan dengan mitra dagang

35. Menganalisis Rantai Nilai Internal dan Hubungan Organisasi • Struktur organisasi dapat diperiksa untuk mengidentifikasi bagaimana kegiatan fungsi masing-masing menyumbangkan atau memenuhi peran utama. • Beberapa kegiatan dukungan akan ada hanya karena hubungan yang buruk dengan fungsi lain, keberadaan mereka merupakan hasil dari kegagalan di bagian lain organisasi. • Mendukung kegiatan yang lebihbergantung organisasional • membantu dalam perencanaan atau pengendalian kegiatan utama

36. Menganalisis Rantai Nilai Internal dan Hubungan Organisasi • Mendukung kegiatan memerlukan analisis dalam hal informasi yang mereka butuhkan dari fungsi utama, ditambah informasi tambahan, dan dalam hal bagaimana fungsi utama dapat memperoleh informasi dari mereka dalam rangka untuk mengelola kegiatan mereka berhasil. • IS dapat digunakan untuk: • meningkatkan efisiensi, • Meningkatkan kinerja manajemen atau • menambah nilai bisnis dalam hal hubungan eksternal dan persepsi

37. Menganalisis Rantai Nilai Internal dan Hubungan Organisasi • Sebuah langkah yang sangat berguna dalam analisis ke posisi masing-masing CSF dalam rantai nilai untuk mengidentifikasi kegiatan, atau set kegiatan yang berhubungan, paling membutuhkan perhatian untuk mempertahankan atau meningkatkan keberhasilan bisnis secara keseluruhan

38. Identifikasi Proses Bisnis Kritis dan Kegiatan • Sifat potensi untuk perbaikan bisnis akan bervariasi tergantung pada hubungan b / w nilai tambah, biaya dan CSF yang terkait dengan kegiatan dan proses • Sebuah biaya tinggi, rendah nilai tambah kegiatan dengan beberapa CSF jelas hanya menawarkan kemungkinan pengurangan biaya dari IS / investasi TI • Sebuah aktivitas bernilai tinggi menambahkan bisa dibuat efektif melalui investasi IS / IT, jika perbaikan yang berhubungan langsung dengan CSF bisnis yang telah disepakati. • Sebuah biaya tinggi serta tinggi-nilai tambah kegiatan, maka IS / IT masih dapat membantu untuk mengurangi biaya • Kegiatan yang terkait dengan CSF, maka mereka perlu dinilai dalam hal pilihan untuk meningkatkan nilai atau mengurangi biaya masing-masing, melalui IS / IT perkembangan • Jika suatu kegiatan nilai tambah kecil dan tidak terkait dengan CSF, itu lebih penting untuk mempertanyakan apakah diperlukan sama sekali daripada mempertimbangkan bagaimana untuk memperbaikinya melalui IS / IT.

39. Menilai Pilihan Baru untuk Pertanyaan Investasi • Apa yang bisa IS / IT lakukan untuk semua perusahaan dalam industri dalam hal mengubah parameter & hubungan? • Apa yang bisa IS / IT lakukan untuk organisasi berdasarkan posisi tertentu dalam industri? • Pilihan mana yang paling memberikan manfaat langsung dalam hal tujuan bisnis / strategi & cara bisnis beroperasi & dikelola?

40. Menentukan Masa Depan Aplikasi Portofolio • Perlu untuk mengkonsolidasikan aplikasi strategis dan berpotensi tinggi ditambah kebutuhan untuk mengatasi kelemahan yang ada sistem operasional dan dukungan kunci • Perlu menekankan bahwa lebih penting untuk berurusan dengan kelemahan serius pertama, terutama jika mereka segera bisa mengakibatkan ancaman nyata untuk bisnis • Beberapa peluang yang tidak tergantung pada hal lain harus dilakukan, khususnya di mana mereka membangun kekuatan yang ada, memberikan lebih banyak kesempatan sukses.

41. Menentukan Strategi BesarOrganisasi IS & Beberapa SBU • Jumlah faktor yang harus dipertimbangkan (lihat halaman 295) • Perusahaan secara keseluruhan perlu keuntungan dari sinergi dan ekonomi • Perlu untuk membandingkan hasil analisis dari setiap SBU dan berbagi ide • Mengungkapkan lintas unit peluang sehingga hasilnya bisa 'dikumpulkan' dan dibuat tersedia untuk orang lain untuk 'beradaptasi', mengadopsi atau bergabung dalam pembangunan jika sesuai