IT Management Planning Model and the Importance of Planning Horizon

1. Chapter 4 Information Technology Planning

2. Introduction • Strategy establishes the broad course of action for the firm • Establishes the destination and the general direction, but not the details • Planning encompasses the specific information to reach goals and accomplish objectives • These are the individual specific steps needed to reach the objective

3. Assignment #2 - Due June 24th • Discuss the IT Management Planning Model from Table 4.1 on page 100.  Briefly discuss each of the ingredients, and select 1 ingredient and illustrate its importance by way of real world application.

4. The Planning Horizon • There are three general types of plans • Strategic Plans – 5 yr • Tactical Plans – 2 yr • Operational Plans and Controls - < 1 yr • They are distinguished by their time span or planning horizon • The planning horizons of each type of plan added together equals the firm’s extended planning horizon

5. Strategic Plans • Attempt to convert strategies into plans • Take information found in the strategy statement and add detailed actions and resources necessary to attain the stated goal • They must convert assumptions in the strategy into reality • They must mitigate known risks to the fullest extent possible

6. Tactical Plans • Intermediate range plans covering the current year in detail and the following in less detail • These plans are used to help assess a manager’s performance • They link near-term actions and long range goals

7. Operational Plans • Broad based and very detailed • Attempt to deal with important activities occurring in the near-term • Attempt to bridge the gap from the present to the tactical time period • Contain detailed information used in the lower levels in an organization • Provide a basis for taking short-term action and measuring short-term results

8. The Extended Planning Horizon

9. Planning Schedules • Planning is a continual process, tied to the calendar • In organizations with well-established planning processes, the new tactical plan revises the second year of the previous plan and adds to it the first year of the previous strategic plan • Revisions reflect changes due to changes in the business environment

10. Rapid-Response Planning for Internet Applications • The leverage businesses obtain with Internet technologies are maximized when they are deployed quickly • In this climate, detailed plans quickly become dated • Wise managers respond to these changes quickly, with planning keeping up with the current business environment, rather than slavishly being tied to a calendar

11. Seven Considerations of IT Planning

12. 1. Application Considerations • An applications portfolio consists of a complete set of application programs a firm uses to conduct its automated business functions • Major difficulties surround project selection for the applications portfolio • Arise from competition for resources • Generally resolution requires intervention of senior executives

13. 2. System Operations • Running the firm’s applications according to defined processes • Processes may include online ERP systems, network e-commerce systems, scheduling systems, or a combination • IT managers must plan system operations and service levels to satisfy customers both within and outside the firm

14. 3. Resource Planning • IT resources consist of equipment, space, people, and finances • The IT plan describes the critical dependencies on available resources throughout the planning horizon • The plan must encompass all necessary obligations and expenses including leasing and finance costs, third party services, and capital equipment expenditures

15. 4. People Plans • The most crucial element of any plan • People management is a necessary condition for success but not sufficient by itself • Planning includes staffing, training and retraining costs, and time • The personnel plan identifies requirements for people according to skill level • At the level of line management, this includes formulation of individual development plans for employees

16. 5. Financial Plans • For an IT organization, this summarizes the costs of equipment, space, people, and miscellaneous items • Timing of expenditures reflect the rate at which the firm acquires or expends resources consistent with work product • Planning is iterative, with the figures changing due to negotiations and discussions • An IT manager’s performance is often judged against the financial plan

17. 6. Administrative Actions • The cooperation of managers in adjacent functions must occur to help coordinate the emerging plan • Bringing others in helps develop win-win strategies among the participants • Open lines of communication help to integrate participants across departments • Measurement and tracking mechanisms must be developed to monitor progress and help management assert control

18. 7. Technology Planning • The IT organization must stay informed about progress in the field • The rate of change in IT is enormous, with many enormous advances and technologic dead ends • In larger organizations, a small advanced technology group is useful to better quantify new technologies and their applicability to the current environment

19. Technology Areas

20. The Integrated Approach • Some planning strategies are more suited to certain situations than others • Two factors correlate with planning effectiveness • Infusion – the degree to which IT has penetrated the operation of the firm • Diffusion – the extent to which IT has disseminated throughout the firm

21. Critical Success Factors in Planning • CSFs are critical tools in creating effective plans • Improve planning by focusing on important managerial issues • Audit the results of the planning process • Four major categories • Long, intermediate, and short range issues • Business management issues

22. Business Systems Planning • Concentrates on a firm’s data resources and attempts to develop an information architecture that supports a coordinated view of the data needs of the firm’s major systems • Attempts to model the firm’s business through its information resources • Attention is shifted from the firm’s applications to the firm’s data

23. Forecast-Based • Forecast or extrapolation strategies work in firms in which the technology is limited in terms of its use, and does not have a high impact • These firms tend to use older generations of equipment in very circumscribed roles • Rapid advances in the state of the art can be ignored and as a late or limited adopter, risks and benefits can be well quantified

24. Eclectic Planning Strategies • Technological approach • Attempts to build an IS-oriented architecture • Administrative approach • Bottom-up resource allocation • Method-Driven approach • Use consultants to critique existing plans • Business-led • Assumes business plans will lead to IT plans

25. Management Feedback Mechanisms • Control consists of knowing who, what, why, where, and when for all essential activities • Control processes must be designed to compare the organization’s actual performance to plan predicted performance

26. Summary • Sound planning is critical for success • Planning is divided into time periods of differing lengths • Plans are only as good as their implementation and control mechanisms • Control is a fundamental management responsibility • Measurements are key to gauging planning success and deviation

27. Chapter 5 Hardware and Software Trends

28. Introduction • Four key areas have fueled the advances in telecommunications and computing • Semiconductor fabrication • Magnetic recording • Networking and communications systems • Software development

29. Exponential Growth • Gordon Moore (a founder of Intel) observed a trend in semiconductor growth in 1965 that has held firm for close to 40 years • Moore’s Law states that the number of transistors on an integrated circuit doubles every 18 months • Similar performance curves exist in the telecommunication and magnetic recording industries

30. Semiconductor Technology • The transistor was invented at Bell Labs in 1947 by John Bardeen, Walter Brattain, and William Shockley • Semiconductors form the foundation upon which much of the modern information industry is based • Advances in process have allowed system designers to pack more performance into more devices at decreased cost

31. Trends in Semiconductor Technology • Diminishing device size • Increasing density of devices on chips • Faster switching speeds • Expanded function per chip • Increased reliability • Rapidly declining unit cost

32. Semiconductor Performance • As device size shrinks, performance improves and capability increases (more logic elements in the same size package and those elements operate faster) • During the period from 1960 to 1990 density grew by 7 orders of magnitude • 3 circuits to 3 million • By 2020, chips will hold between 1 to 10 billion circuits

34. Roadblocks to Device Shrinkage • As the minimum feature size decreases, components are closer together and the number of components per unit area increases • Both these factors increase the amount of waste heat needed to be removed from a device • Effectively removing this heat is a big challenge

35. Industry Success • Success of the semiconductor industry is driven by huge budgets for scientific research, process design, and innovation • Since the semiconductor was invented, the industry has experienced a growth rate of 100 times per decade

36. Industry Innovation • Increases in device processing power comes not only from increased clock rates and decreased device sizes • Innovation in physical computer architecture also drives performance • Bus widths have increased from 8 to 16 to 32 and now are growing to 64-bit wide • With wider busses, more data can be transferred from place to place on the chip simultaneously, increasing performance

37. Industry Innovation • Cache Memory – Fast, high speed memory used to buffer program data near the processor to avoid data access delays • Super scalar designs – designs that allow more than one instruction to be executed at a time • Hyperthreading – adding a small amount of extra on-chip hardware that allows one processor to efficiently act as two, boosting performance by 25 %

39. Semiconductor Content • Microprocessors comprise less than 50% of total chip production • Memory, application-specific integrated circuits (ASICs), and custom silicon make up the bulk of production • The telecommunications industry is a huge driver worldwide as cell phone penetration increases

40. Summary • The invention and innovation of the semiconductor industry has been enormously important • Chip densities will continue to increase due to innovation in physics, metallurgy, chemistry, and manufacturing tools and processes • Semiconductors will continue to be cheaper, faster, and more capable

41. Recording Technologies • As dramatic as the progress in semiconductor development is, progress in recording technologies is even more rapid • Disk-based magnetic storage grew at a compounded rate of 25% through the 1980s but then accelerated to 60% in the early 1990s and further increased to in excess of 100% by the turn of the century

42. Exploding Demand • As personal computers have grown in computing power, storage demands have also accelerated • Operating systems and common application suites consume several gigabytes of storage to start with • The World Wide Web requires vast amounts of online storage of information • Disk storage is being integrated into consumer electronics

43. Recording Economics • At current rates of growth, disk capacities are doubling every six months • Growth rates are exceeding Moore’s Law kinetics by a factor of three • Price per megabyte has declined from 4 cents in 1998 to 0.07 cent in 2002

44. Hard Drive Anatomy • Data is stored on hard drives in concentric circles called “Tracks” • Each track is divided into segments called “Sectors” • A drive may contain multiple disks called “Platters” • Writing or reading data is done by small recording heads supported by a mobile arm

45. Hard Drive Performance • Drive performance is commonly measured by how quickly data can be retrieved and written • Two common measures are used • Seek Time • Rotational Delay

46. Hard Drive Performance • Seek Time is the amount of time it takes the heads to move from one track to another • This time is commonly measured in milliseconds (ms or thousandths of a second) • For a processor operating at 1 Ghz, 1 ms is enough time to execute one million instructions • Common seek times of inexpensive drives are from 7 to 9 ms

47. Rotational Delay • The delay imposed by waiting for the correct sector of data to move under the read / write heads • Current drives spin at 7200 RPM. • Faster rotational speeds decrease rotational delay • High end server drives spin at 15000 RPM, with surface speeds exceeding 100 MPH • Heads float on a cushion of air 3 millionths of an inch thick

48. Other Performance Issues • Data transfer interfaces are constantly evolving to keep pace with higher drive performance. • New standards include: • Firewire • USB 2 • InfiniBand

49. Fault-Tolerant Storage • Data has become a strategic asset of most businesses • Loss of data can cripple and sometimes kill an enterprise • Fault-tolerant storage systems have become more important as data availability has become more critical

50. RAID Storage • RAID is an acronym that stands for Redundant Array of Inexpensive Drives • RAIDs spread data across multiple drives to reduce the chance that the failure of one drive would result in data loss • RAID levels commonly range from 0 to 5 with some derivative cases