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Lecture 8 (information systems and strategy planning)

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Information Systems and Strategy Planning

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Lecture 8 (information systems and strategy planning)

  1. 1. 1 Information Systems and Strategy Planning Lecture 8 Abdisalam Issa-Salwe Department of Computer Science Faculty of Information Science and Technology East Africa University Department of Computer Science, Faculty of Information Science and Technology, East Africa University 2 Topic list  Strategic planning  Vision and Business needs  Earl’s grid  McFarlan’s application portfolio  Business Process Reengineering (BPR)
  2. 2. 2 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 3 Strategic planning  Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives.  That's why a business review or preparation of a strategic plan is a virtual necessity.  This may not be a recipe for success, but without it a business is much more likely to fail. Department of Computer Science, Faculty of Information Science and Technology, East Africa University 4 Strategic planning (cont…)  A sound plan should:  Serve as a framework for decisions or for securing support/approval.  Provide a basis for more detailed planning.  Explain the business to others in order to inform, motivate & involve.  Assist benchmarking & performance monitoring. Stimulate change and become building block for next plan.
  3. 3. 3 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 5 Strategic planning (cont…)  A strategic plan should not be confused with a business plan.  The former is likely to be a (very) short document whereas a business plan is usually a much more substantial and detailed document.  A strategic plan can provide the foundation and frame work for a business plan. Department of Computer Science, Faculty of Information Science and Technology, East Africa University 6 Strategic planning (cont…)  A strategic plan is not the same thing as an operational plan.  The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable.  As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters).
  4. 4. 4 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 7 Strategic planning (cont…)  Basic Approach to Strategic Planning  A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition.  Some essential points which should to be observed during the review Department of Computer Science, Faculty of Information Science and Technology, East Africa University 8 The Vision  The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs.  The first step is to develop a realistic Vision for the business.  This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities etc.  Answer the question: "if someone from Mars visited the business, what would they see (or sense)?"
  5. 5. 5 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 9 McFarlan’s Application Portfolio  The Application Portfolio Matrix: The application portfolio concept means bringing together existing, planned and potential information systems and assessing their business contribution.  Applications need to be planned and managed according to their lifetime and future contribution to the business. 10 McFarlan’s Application Portfolio (cont…)  The earliest and most famous application portfolio model was developed by Gibson and Nolan (1974) during the 1970’s.  This model in turn used a hierarchical application portfolio model.  The model structured applications of three management activities:  planning  control  operational.
  6. 6. 6 11 McFarlan’s Application Portfolio (cont…)  In 1984, McFarlan and McKenneys developed a model that considered the relationship with business success.  The model proposes an analysis of all existing and planned information systems into four categories based on current and future business importance.  The model has two dimensions:  the strategic meaning of existing information systems  the strategic meaning of planned information systems Department of Computer Science, Faculty of Information Science and Technology, East Africa University 12 McFarlan’s Application Portfolio (cont…)  The model proposes an analysis of all existing, planned and potential applications into four categories based on assessment of the current and future business importance of applications.  Depending on its current or expected contribution to the business success, an application can be defined as  high potential,  strategic,  key operational or  support,
  7. 7. 7 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 13 McFarlan’s Application Portfolio (cont…) Department of Computer Science, Faculty of Information Science and Technology, East Africa University 14 McFarlan’s Application Portfolio (cont…)  High potential includes applications that can be very important to reach future success. These applications are characterised by a rapid prototyping development with a power to refuse failures before spending a lot of resources.  Strategic applications are critical for the activity and of highest potential value. These are applications that the company strategically trusts on to reach future success.
  8. 8. 8 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 15 McFarlan’s Application Portfolio (cont…)  The key operational applications are those the organisation is dependent on in the present-day situation to reach success. The key operational applications are important for the primary process and increase their value.  The support includes applications that support the activity but are not in strategically valuable. The support systems are not critical for the organisation’s future if they are not wasteful with valuable resources or if the market share is being changed. Department of Computer Science, Faculty of Information Science and Technology, East Africa University 16 McFarlan’s Application Portfolio (cont…)
  9. 9. 9 17 McFarlan’s Application Portfolio (cont…)  Organisation:  the organisation of the IS function including the processes for formulating and implementing IS policies. This does not include the broader organisational implications associated with the implementation of new systems. These are addressed in the Organisational issues beyond the IS function and Networked organisations in a post- industrial world modules;  Data:  the data architecture required to support the required applications;  Technology:  the technology architecture required to deliver the required applications; Department of Computer Science, Faculty of Information Science and Technology, East Africa University 18 Earl's Audit Grid  From an examination of McFarlan & McKenney’s Grid, it should be obvious why a company should have an IT strategy.  If a company is on either the turnaround or strategic quadrants of McFarlan’s Grid, then obviously a company should have the appropriate strategy to enable it to plan for future developments.  Even if it is in the factory quadrant, IT systems are mission critical and the company should have a strategy as to  (a) how to maximise the benefits arising from its deployment of IT, and  (b) how to cope in the event of a systems failure (i.e. have a back-up or recovery plan).
  10. 10. 10 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 19 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 20 Earl's Audit Grid (cont…)  Earl’s nine reasons:  IT involves high costs.  IT is critical to the success of many organisations.  IT is now used as part of the commercial strategy in the battle for competitive advantage.  IT is required by the economic context (from a macro-economic point of view).  IT affects all levels of management.  IT has meant a revolution in the way information is created and presented to management.  IT involves many stakeholders, not just management, and not just within the organisation.  The detailed technical issues in IT are important.  IT requires effective management, as this can make a real difference to successful IT use.
  11. 11. 11 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 21 Business Process Redesign  Business Process Redesign is "the analysis and design of workflows and processes within and between organisations" (Davenport & Short 1990).  Teng et al. (1994) define BPR as "the critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures." Department of Computer Science, Faculty of Information Science and Technology, East Africa University 22 Business Process Redesign (cont…)  Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. (Hammer & Champy, 1993)
  12. 12. 12 23 Business Process Redesign (cont…)  BPR generally approaches the problem from the point of view of the customer and of the process.  Customer views are required to ensure that the eventual design actually satisfies them.  Process views are required to try to remove the in-tray problem, and to focus activity within it on the goal of the process not the function, so that unneeded or irrelevant activity is removed. 24 BPR Versus Process Simplification Process Reengineering Radical Transformation Vision-Led Change Attitudes & Behaviors Director-Led Limited Number of Initiatives Process Simplification Incremental Change Process-Led Assume Attitudes & Behaviors Management-Led Various Simultaneous Projects
  13. 13. 13 25 Why Re-engineer?  Customers Demanding Sophistication Changing Needs  Competition Local Global  Change Technology Customer Preferences 26 Why Organisations Don’t Reengineer?  Complacency  Political Resistance  New Developments  Fear of Unknown and Failure
  14. 14. 14 27 Key Steps Select The Process & Appoint Process Team Understand The Current Process Develop & Communicate Vision Of Improved Process Identify Action Plan Execute Plan Department of Computer Science, Faculty of Information Science and Technology, East Africa University 28 Reference  Laudon, K. & Laudon, J. (2006): Management Information Systems:Managing the Digital Firm, 9th ed. Prentice Hall  Abdisalam Issa-Salwe, Lecture Notes, Thames Valley University, 2008.  Dave Chaffey, Paul Bocij, Andrew Greasley and Simon Hickies (eds) (2003): Business Information Systems: Technology, Development and Management, Pearson Education Limited, London.
  15. 15. 15 Department of Computer Science, Faculty of Information Science and Technology, East Africa University 29 Topic Questions 1. Group 1: Discuss Strategic planning, Vision and Business needs of an organization 2. Group 2: Discuss Earl’s grid and how applications are used strategically using McFarlan’s application portfolio 3. Group 3: Discuss Business Process Reengineering (BPR) what it means to a company when applied this concept

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