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Chapter 4

Strategic Planning for Information Systems. Third Edition. John Ward and Joe Peppard. Chapter 4. IS/IT Strategic Analysis: Assessing and Understanding the Current Situation. Learning Objectives. Business re-engineering and IS strategy Understanding the current situation

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Chapter 4

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  1. Strategic Planning for Information Systems Third Edition John Ward and Joe Peppard Chapter 4 IS/IT Strategic Analysis: Assessing and Understanding the Current Situation

  2. Learning Objectives • Business re-engineering and IS strategy • Understanding the current situation • Understanding IS/IT needs of the business strategy • Examining current IS/IT supply • Analysis techniques • Critical success factors (CSF) • Balance scorecard analysis (BSC) • Organizational model

  3. Business Re-engineering and IS Strategy • Re-engineering initiatives spring from business strategy • IS demand supports business strategy • Re-engineering needs IS/IT element • Re-engineering and IS strategy forms potential models of the business. • Move from traditional organizational model to process-oriented model. • Two key IT questions: • How can business processes be transformed using IT? • How can IT best support business processes?

  4. Relationship b/w IS/IT and BPR

  5. Reconciling IS/IT and BPR

  6. Understanding the Current Situation An in-depth understanding of : • the business strategy, • the business & technology environments and • the current status of IS/IT in the business. Possible to determine the opportunities, threats and requirements inherent in the business strategy. Recognize strengths & weaknesses of the business and its IS/IT opportunities. Current situation represents the starting point from which any change program begins!

  7. Determining the IS/IT Requirements: the IS Demand Absorb every written strategy statement & interpret them into relevant IS/IT principles & CSF, application requirements, and a set of supply criteria to deliver the services demanded by the business. Ask each area of the business what their requirements are. Best course for IS strategy to be developed in parallel with the business strategy, feeding trends, opportunities and idea into the business strategy process. Work closely with all areas of the business to build a set of achievable business & IS/IT initiatives that will deliver targeted performance. IT strategy can follow directly from this analysis.

  8. Determine the IS Demand

  9. Fact Finding and Analysis Tasks and Deliverables (Table 4-2) • Analysis of the business strategy • Identify its components and the associated information needs • Analysis of the current and expected future external business environment, and analysis of the current and future portfolio of the business, and its competitive strategy • Determine how IS/IT can contribute to strengthening the business’s competitive positioning

  10. Cont… • Analysis of the internal business environment • Understand the relevant organizational characteristics, SWOTs and other factors • Identification of the CSFs of the business • Crystallize the essential characteristics of success in meeting the objectives stated in the strategy

  11. Gathering Relevant Data • If information not available, some steps in Table 4.2 should be undertaken. • Key information is in the heads of employees at all levels & needs to be elicited through discussion. • Document review : Business strategy documents (stmt of objectives, KPI), annual plans, budgets & forecast.

  12. Interpreting the Business Strategy • A framework for developing IS/IT strategy. • Two inputs relate to: • Business perspective (internal & external) • IS/IT perspective (internal & external)

  13. Internal Business Environment Elements that need to be identified, analyzed and understood are: • Business strategy • Current business processes, activities, and main information entities & how they relate to other entities; • Organizational environment: structure, assets & skills, knowledge, competencies, values, style, culture, and relationship From these the information, systems and technology needs arise and can be prioritized. • The achievement of the business objectives • The measurement of the performance towards achieving the business objectives

  14. Activities that must be performed in order to contribute directly to achievement of business objectives, and their supporting information needs, have to be identified. Secondary activities that have to be performed to measure performance toward achieving those objectives, must be identified. Continue … Two types of activities driven by the business strategy

  15. The Business Strategy • Identify current strategy and any emergent new elements. • Interpret & analyze the strategy & describe it in a structured manner. • Compile & confirm the consequent IS requirements.

  16. Continue … Main constituents of the business strategy (see page 189, box 4.1) • Mission: an unambiguous statement of what the business does and its long-term purpose • Vision: an easy identify picture of what the business will be in the future, and how it will operate • Goals: the set of major achievements that will accomplish the vision • Objectives: the targets (unambiguous and measurable) for accomplish the business vision • Strategies: the methods to meet the business objectives • Critical success factors (CSFs): a few areas have to be right in order for the business to flourish

  17. Continue … • Business drivers: a set of critical forces for the business to change • Business area plans: the plan of the various areas of the business, which document the response or information needs to the business strategy • Identifying Strategy • Often, business strategies are not: • - Recorded formally • - Well constructed • - Well communicated • Identify through questioning, analysis & creative prompting (see some questions in additional slides) • May be no strategy at all and only bottom-line objectives

  18. Source of Requirements • The mission, vision, strategic and objectives and KPI • The strategies or initiatives are increasingly likely to have an IS/IT content that is often essential to achieving the desired result. • The business area plans usually have short-term IS/IT requirements • The CSF lead to 2 different type of IS/IT requirements: enable success and monitor progress

  19. Example: Architecture Model

  20. Business Processes, Activities & Key Entities • Business processes: the sets of interlinked activities to deliver specific outputs to customers • Activities: the elements of processes • To produce, promote and distribute products or services • To develop, support, and administer the infrastructure • To measure the performance against objectives • Key entities: important data and information associated with business processes • Models • Process flow models or process dependency charts • Hierarchical activity models or functional decomposition diagrams • Entity relationship models • Data flow diagrams (DFDs) • Activity/entity matrices • Class diagram

  21. Business Process Map(Cassidy)

  22. IS Models • the whole corporate body • SBU level • Major business function level • However, where there is a good deal of similarity b/w the units, or business synergy, then reconciliation b/w common entities becomes important

  23. Organizational Environment • Structure, relationships, culture, skills, resources and the people of which it is composed. • These are an important input into the planning process. • Become increasingly important when the magnitude and pace of change has implications for all aspects of the business.

  24. External Business Environment For the purpose of IS/IT strategy formulation, it is essential to understand and analyze the environments. • Opportunities for IS/IT to impact the business and contributing to the shaping of the business strategy • Threats Chapter 2 p. 70

  25. Examining the Current IS/IT Environments • To establish the gap b/w current and future targeted provisions • To determine whether the environment can sustain the changes required or itself needs changing • To enable the strategies to take account of trends and opportunities from emerging technologies • To investigate how competitive or complementary organizations are applying IT

  26. Examining the Current IS/IT Environments Assessment of the internal IS/IT environment: • Evaluation of the current application portfolio & the applications under development to determine their content, coverage & contribution. • Evaluation of current information resource. • Evaluation of current infrastructure & IT services and resources, accomplished through technology assessment.

  27. Current IS Situation-Internal • IS environment • Organizational structure • Expenditures • Backlog • Other locations

  28. What does Our Current Computing Environment Look like? Network Business Application Systems Desktop Computing Engineering

  29. Business Application Environment • On what hardware do your business applications operate? • What relative size is this H/W? • What business application modules do you utilize? • Are the applications vendor-supplied packages? • Is the company on the current release? • Have the packaged application been customized? • In what programming languages is the system written? • What is the size of the systems in terms of LOC • How many reports do the systems generate? • How many programs are in the systems • What is the average response time? • How many workstations, PC and printers are connected • Are there any special devices necessary to support future requirement?

  30. Computing Environment • How many PCs does the company have? • How many PCs by location and functional department? • What is the breakdown by class of PCs • Are PCs purchased or leased? • How many sever are there? • How many printer are there? • What standard PC software does the company utilize? • What e-mail system does the company utilize?

  31. Network • What is the current network operating system? • How many servers are there? • What is H/W platform? • What is the network topology? • What is the network backbone? • Are there any known concerns or growth area relative to the network? • What is the reliability of the network? • Obtain several levels of network diagrams

  32. Organizational Structure • What are the general areas of responsibilities and activities, or how is the group organized? • What are the responsibilities of each group? • Include an organizational chart with names and titles • How many people are in information systems organization? • How does the break-out by functions

  33. Expenditures • What is the total information systems expenditure? • What is the break-down by category • How do the expenses by category compare to the past three years? • How much capital money did the company spend each year on total information systems purchase? • What are the information systems expenditures as a percentage of sales? • How does it compare with the industry?

  34. Backlog Projects • Project name • Project description • Priority • Status • What are the total estimated hours to complete the project? • How many hours have been completed to date? • What is the estimated completed date? • Who is assigned to the project from information systems? • What are the total cost savings anticipated as a result of the project? • Who is the business person or area requesting the project? • What additional expenses are required for the project?

  35. Other Locations • What is the size of the locations’ information systems organization • How are the resource organized? • What business application systems does the locations utilize? • What computer H/W does the location utilize? • How many PCs the locations have?

  36. External IS/IT Environment • To gain a perspective on technology trends & opportunities for using IS/IT in new & innovative ways. • Looking at competitors and other comparable organizations on what they are doing. • Research on technology trends and information.

  37. Industry Trend: 4 Tiers • Obsolete or trailing edge • Unit cost may be too high to implement due to the age and support costs of the out-dated technology • Ready to implement • Existing technologies that are available and proven, have a defined cost saving, low risk implementation • Emerging technologies • Relative newer technologies, higher risk implementation, would not be cost effective • Need further review • Technologies that are more experimental than commercial, high cost and risk

  38. Competitor Profiles • How many employees does the company have in information systems and in the whole company? • What business application software is utilized? • When did the company implement it? • Do their various divisions or locations operate on a central or common information systems • What is the status of their PC environment and network? • Obtain any information regarding information systems expenditures • What functions does the company offer their customers • What particular technologies does the company utilize?

  39. Analysis Techniques Some techniques used in analyzing current situation and the business strategy. See Table 4.5 pg 205 • Business strategy analysis • CSF analysis • SWOT analysis • Balance Scorecard analysis (BSC) • Business portfolio and competitive strategic analysis • Value chain analysis • Process analysis / BPR • Organizational modelling • Business modeling-information analysis techniques • Current portfolio evaluation • Technology assessment and IS/IT infrastructure review

  40. Information Requirements • To meet the current business objectives : the use of CSF and BS. • DIKAR (Data, Information, Knowledge, Action, Result) Model. • See Figure 4.4 on page 207

  41. Information in Context the focus is on data processing and the provision of information to the business. the focus is on business results and actions and knowledge required to achieve those results.

  42. Balance Scorecard Analysis (BSC) Identifies the information required to measure performance against the business objectives. How do we look to shareholders? How do customers see us? What must we excel at? How can we continue toimprove & add value? Adapted from Ward & Peppard, Strategic Planning for Information Systems, John Wiley & Sons 2002

  43. Balanced Scorecard: An Example

  44. Balance Scorecard

  45. Critical Success Factors (CSF) • Once the Current Situation is Understood, it can then be analyzed. • Rockart (1997) Defines CSF’s as ..“the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organisation” • First developed at MIT in 1970’s CSF analysis – identifies what has to be done, or changed, in order to achieve the objectives, including new information and/or systems needed.

  46. Critical Success Factors (CSF) • The aim is to match IS with Business needs • A “top-down approach” and can be applied on different levels • Industry • Corporate • Business unit or function • Manager • Usages in management • IS opportunities to achieve Objectives • Information needed by executives

  47. CSF Benefits of CSF process are :- • Involves Senior Management • Provides an IS/IT Plan based on consensus • Acts as a Catalyst • Aligns IS projects to Business Strategy • Links IT investment to Business Strategy • Links Objectives to information requirements

  48. Critical Success Factors • Analysis process for IS requirements • Understand mission and objectives • Determine CSF for each objective • Conduct a SWOT on each CSF • Consolidate across objectives and identify information dependencies • Outline plan of IS requirements

  49. VISION MISSION • Objectives should be clearly identified • Organisation may typically have 6-10 objectives • Each objective may have 4-6 CSF’s “to provide every pupil with the best possible I.T. Facilities to support their studies” Objectives “by providing high quality software” Critical Success Factors Critical Success Factors A reasonable number of CSFs per objective is between 5 and 8 Too many CSF’s suggest the objective is unachievable Too few that it is not ambitious enough

  50. CSFs Basic Processes

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