Information Systems Planning

© 2009 Pearson Education, Inc. Publishing as Prentice Hall

 Paradox: Strategic systems planning is becoming
more difficult and more important at the same
time.
 Traditional view of planning versus sense-and-
respond approach.
 Eight IS planning techniques
 Case examples include Microsoft, Skandia Future
Centers, Shell Oil, an automobile manufacturer,
Cisco Systems, and Electric Power Research
Institute.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-2
Important Terms:

 Planning – Developing a view of the future that

guides decision making today.

 Critical Success Factors (CSF) – The few key

areas of an executive’s job where things must go
right in order for the organization to flourish.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-3

Important Terms:
 Scenario – A way to manage planning
assumptions by creating a assumption of what the
future will be like drawing on trends, events,
environmental factors, and the relationships
among them.
 Sense-and-Respond Strategy Making – A
methodology for strategy making that keeps in
close contact with the business world, continually
sensing for important changes, and then
responding quickly to changes by conducting
experiments that test different possible futures –
as opposed to betting on one strategy for the
future.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-4
Important Terms:
 Stages of Growth – The four stages that many
organizations go through in the introduction and
assimilation of new technologies.
 early successes: leading to increased interest and
experimentation
 contagion : the learning period for the field
 Control: integration of systems is attempted but proves
difficult
 Integration: use of the particular new technology is mature
 An organization can be in several stages
simultaneously for different technologies.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-5

Important Terms:
 Strategic – Having a significant, long-term
impact on the growth rate, industry, and revenue
of an organization.
 Strategy – Stating the direction you want to go
and how you intend to get there.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-6

Introduction
 What is ‘planning’?
 Why do we need IS planning?
 We need IT in our modern organizations but yet we
“throw our hands up” because IT changes so fast!
 Can we keep up? Is it worth it?
 How to resolve this apparent paradox?

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-7

Introduction cont’d
 Planning means developing a view of the future that
guides decision making today.
 Strategy means stating the direction you want to go
and how you intend to get there.
 The result of strategy making is a plan.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-8

Introduction cont’d
 We need a plan!
 Stating the direction in which you want to go
and how you intend to get there
 Develop a view of the future that guides your
decision-making today

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-9

Why Planning Is So Difficult
 Obstacles include:
 the need to align systems plans with business goals
(which might not be clear)
 the rapidly changing IT arena
 the need for portfolios rather than projects
 the difficulty of infrastructure building
 the need for joint planning

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-10

Levels of Planning

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-11

Why Planning Is So Difficult
 Alignment of strategic business Goals and
systems plans
 CIO not in inner circle
 Attitudes have changed
 Technologies are rapidly changing
 Is planning even relevant?
 Continuous planning (monitoring, adjustments)
 “Built to Change” (Lawler III & Worley, 2006)

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-12

Why Planning Is So Difficult
 Companies need IT portfolios rather than projects
 Portfolio planning is sophisticated
 Projects must be evaluated beyond individual merits
 Fit with other projects is crucial
 Infrastructure development is difficult to fund
 IT investments grossly expensive
 Constant pressure to keep up with industry?

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-13

Why Planning Is So Difficult
 Responsibility needs to be joint
 Commitment from multiple stakeholders
 Can extend organizational boundaries
 Other planning issues
 Organizational culture
 Top-down versus bottom-up
 Piecemeal (fragmentary) versus Integrated change

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-14

The Changing World of Planning
 Evolution of strategic IS planning along with
rapid change of Internet-driven technologies. The
Internet has changed how people plan.
 Traditional style of planning no longer viable
 Command and control
 IS as a support function
 “Lifecycle” (static environment)
 Still need long-range vision but with flexibility
and creativity
© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-15
Traditional Strategy Making
 Strategic business plans have come first, followed by
strategic IS plans, followed by implementation plans.
 However, the underlying premises no longer hold true:
 the future cannot be predicted
 discontinuous change occurs
 time for that long sequence is not available
 IS does not just support the business anymore
 top management may not know best
 employees close to customers may have a better feel for the
market
 organizations are not like armies anymore (employees do not
always follow top-management laws)

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-16

Traditional IS Planning

Source: Adapted from and reprinted with permission from Roger Woolfe, Barbara
McNurlin, and Phil Taylor, Tactical Strategy, Wentworth Research Program (now part of
Gartner EXP, 56 Top Gallant, Stamford, CT 06904), November 1999.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-17
The Changing World of Planning
cont’d
 The future is less predictable
 Disruptive Internet-driven innovations (e.g. [Link] and
eBay)
 Time is running out
 Speed is of the essence. Companies no longer have the luxury of
taking a year to plan and several years to implement.
 IT implementation planning actually needs to ahead of business
strategizing. IT needs to be faster than it has been in the past.
 IS does not just support the business anymore
 How can IT influence new ways of working?
 IT has become the platform of business, it makes e-Business
possible.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-18

The Changing World of Planning
cont’d
 Top management may not know best
 Need a shift in planning approach from “inside-out” to
“outside-in” (Fig. 4-3)
 Start with the customers and front-line employees
 A business organization is not like an army
 Sense-and-respond approach (Fig. 4-4)
 Let strategies unfold (revealed) rather than plan
them
 Step by step; agility; heuristics

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-19

Outside-In versus Inside-out

FIGURE 4-3 Outside In

Strategy Development

Source: Adapted from and reprinted

with permission from Roger
Woolfe, Barbara McNurlin, and
Phil Taylor, Tactical Strategy,
Wentworth Research Program (now
part of Gartner EXP, 56 Top
Gallant, Stamford, CT 06904),
November 1999.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-20

Sense-and-Respond Approach
 In the past, top management took the time to put one
enterprise wide strategy. In times of rapid change and
uncertainty about the future, this approach is risky.
 The new approach that some are taking is to let strategy
unfold step by step, rather than be planned.
 Strategy is formulated closest to the action, and strategy
making is guided by a strategic envelope that defines the
realm. IS is at the table, the future is tested continually,
and the most important IS decision is the infrastructure
put in place.
 It means sensing a new opportunity or possibility and
quickly responding by testing it via an experiment. The
result is a many of small experiments going on in parallel,
each testing its own hypothesis of the future.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-21

Sense-and-Respond Approach

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-22

The Changing World of Planning
cont’d
 Formulate strategies closest to the action
 Strategic development should start from the
“organizational edges” (front line)
 Outside-in approach

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-23

The Changing World of Planning
cont’d
 Guide strategy making with a “strategic
envelope”
 Myriad of strategic options and opinions (especially
with outside-in approach)
 Need central guidelines from top management to
prevent anarchy
 Set parameters
 Open and regular communication

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-24

Eight Planning Techniques
 Useful to have a framework or methodology to
help in the complexities of IS planning
 Eight different techniques have been proposed
over the years

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-25

1. Stages of Growth
 Stage 1: Early successes (adoption)
 Success in initial use of new technology leads to increased
interest and experimentation
 Stage 2: Contagion (Infection)
 Proliferation (propagation) of technology stage of “learning” for
the field—what worked, what did not etc. (feedback)
 Stage 3: Control
 Efforts toward standardization after proliferation
 Stage 4: Integration (mature phase)
 Pattern is repeated for newer technologies

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-26

Stages of Growth

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-27

2. Critical Success Factors
 For each executive, critical success factors are the
few key areas of the job where things must go
right for the organization to flourish.
 Executives usually have fewer than 10 of these
factors. They can come from the company,
industry, environment, or temporary conditions,
and should receive constant attention.

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-28

2. Critical Success Factors
 What are the few key areas of the job where
things must go right for the organization to
thrive?
 Four sources for CSFs
 Industry business is in (specific)
 Company itself and situation within industry
 Environment (e.g. consumer trends)
 Temporal organizational factors

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-29

3. Competitive Forces Model
 Porter’s Five Forces (to determine suitability of
industry)
 Threat of new entrants
 Bargaining power of customers
 Bargaining power of suppliers
 Substitutes
 Competition (intensity)

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-30

3. Porter’s Five Forces

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-31

3. Competitive Forces Model
 Three strategies for dealing with these
competitive forces
 Product differentiation
 Price leadership (lowest cost)
 Niche market (could be geographical or segment)

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-32

3. Framework Example
 Internet tends to reduce firms’ profitability
 Five Forces analysis of the Internet (impact)
 Increases buyer power (lower search costs)
 Decreases barriers to entry
 Increases bargaining power of suppliers
 Increases the threat of substitute products
 Intensifies rivalry among competitors
 Internet Strategy: Focus on maintaining profitability (not
growth and market share)
 Discuss with regard to [Link] (“Get Big Fast”)

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-33

4. Three Emerging Forces
 Porter’s Five Forces model is rooted in industrial
organization, which reflects an era of rather
predictable developments
 Three “new” forces:
 Digitization (new business models)
 Globalization (telecommunications, transportation)
 Deregulation (many industries)
 Strategy planning in the “new economy” is less
stable

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-34

5. Porter’s Value Chain Analysis
 Five primary activities that form the sequence of
the value chain:
1. Inbound logistics
2. Operations
3. Outbound logistics
4. Marketing and sales
5. Service

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-35

5. Porter’s Value Chain Analysis
cont’d
 Four supporting activities that underlie the entire
value chain:
1. Organizational infrastructure
2. Human resources management
3. Technology development
4. Procurement

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-36

5. Porter’s Value Chain Analysis
cont’d

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-37

5. Porter’s Virtual Value Chain
Extended
 How can companies create value in the Internet
marketplace (e-commerce)?
 Information as a source of value itself, rather than
a support element. Five ways:
 Gather
 Organize
 Select
 Synthesize
 Distribute

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-38

6. E-Business Value Matrix
 Tool used at Cisco Systems to develop a well-
rounded portfolio of IT projects.
 Every IT project is placed into one of four
categories to assess its business value:
1. New fundamentals
2. Operational excellence
3. Rational experimentation
4. Breakthrough strategy

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-39

6. E-Business Value Matrix

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-40

7. Linkage Analysis Planning
 Examines the links between organizations in
order to create a strategy for utilizing electronic
channels
 Methodology involves three steps
1. Define power relationships among stakeholders
2. Map out the extended enterprise (suppliers, buyers,
strategic partners)
3. Plan electronic channels to deliver information
component of products and services

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-41

7. Linkage Analysis Planning
cont’d

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-42

8. Scenario Planning
 Goal is to 1) explore the forces that could cause
different “scenarios” of the future to happen; and 2) take
proactive actions against those scenarios
 Departs from traditional long-range planning based on
hindsight
 Four steps involved
1. Define a decision problem and time frame to bound the analysis
2. Identify the major known trends that will affect the decision
problem
3. Identify just a few driving uncertainties
4. Construct the scenarios

© 2009 Pearson Education, Inc. Publishing as Prentice Hall 4-43