MD 240 IT Planning and BPR

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MD 240IT Planning and BPR
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Overview

• Business Process Reengineering
• Evolution of IT Planning
• Operational Planning
• Managerial Planning
• Strategic Planning
• Modern Issues in IT Planning
• Models of IT Planning Process

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Case Study The VERIZON Phone Book Supply Chain

• Moved to MA in August, 2000
• Ordered service 10 days before moving here
• Got service 11 days after promised (strike)
• gt 30 days later still no phone books
• 40 days after telemarketer calls, suggests Im
  satisfied with VERIZON services, I blow up
• Nasty letter sent to feed.back_at_bellatlantic.com
• 48 hour turnaround guaranteed
• No response
• 60 days after I call customer service again,
  finally reach someone who UPSs me phone books
• No record of me ever having placed 3 orders for
  phone books

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Business Process Reengineering
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Business Process Reengineering (BPR)

• BPR is not a specific technique
• BPR is not a production planning concept
• BPR is
• An idea or belief that entrenched business
  processes can be changed and can be improved
• A process of questioning why things are done a
  certain way, and not accepting the answer Thats
  just the way we do it.
• Just because someone has always done it this
  way does not mean that it is the correct or best
  way

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Business Process Reengineering (BPR)

• Fundamentally rethinking business processes
• Radically redesigning business processes
• Objective is to achieve dramatic improvements in
• cost
• quality
• flexibility
• delivery speed
• service

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Business Process Reengineering (BPR)

• Identifying opportunities for BPR (Hammer and
  Champy 1993)
• Can several jobs be combined into one?
• save labor costs, greater simplicity in process,
  less time through process
• Can workers make decisions that were previously
  reserved for managers?
• faster response time, flatter organization, fewer
  employees, lower cost
• Can the steps in the process be performed in a
  more natural order?
• faster response times
• Can processes be designed to be more flexible,
  and thus to handle more contingencies?
• provide faster turnaround times for easier jobs
• Can work be performed where it makes the most
  sense?
• i.e., locally or distributed, instead of
  centralized, for faster turnaround times

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Business Process Reengineering (BPR)

• Why does BPR relate to IT?
• IT often codifies or fixes the way a business
  does business at one time
• Innovation in IT makes possible new ways to
  codify how the business does business
• Manufacturing/Service processes
• Strategy/Business management processes
• Business Process Reengineering is almost always
  enabled by information technology
• Conversely No new IT that can enable
  breakthrough business processes No BPR

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Issues Driving BPR
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Issues Driving BPREnvisioned Modern Information
Systems
Back Office (includes ERP Apps)
Front Office
CRM Apps
Customer
Web
Partners
Marketing and Fulfillment
e-Mail
Customer Service Billing
Purchases
Call Center
WWW email
Loyalty Retention Programs
Prospect or Customer
Sales Cross-sell Up-sell Telesales
History
Application Integration
SFA
Customer
Touch Points
Telephone
Field Sales and Service
Operations
POS
Marketing
Direct Mail
Contact Management
Technical Infrastructure
Billing
Wireless
(Source Kalakota and Robinson, e-Business 2.0,
p. 192)
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Issues Driving BPRCommon Internal Business
Problems

• Many customer touchpoints
• Many suppliers
• Many independent legacy applications within
  functional areas
• Little information about activities in supply
  chain
• Poor inventory management practices
• No/poor information provided to customer service
  reps or to other customer touchpoints

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Issues Driving BPRCommon External Business
Problems

• Three Cs
• Customers today know what they want, what they
  are willing to pay, and how to get products and
  services on their own terms.
• Competition is continuously increasing with
  respect to price, quality, selection, service,
  and promptness of delivery.
• Change continues to occur. Markets, products,
  services, technology, the business environment,
  and people keep changing, frequently in an
  unpredictable and significant manner.

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Issues Driving BPRCommon Problem Stovepipe

• The Stovepipe
• Stovepipe because of lack of cooperation
  between functional areas (vertical dimension)
• Business process reengineering (BPR), which
  undertakes a fundamental change in specific
  business processes, integrates information
  required for good decision making

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Integrated Information Flows Remove the Stovepipe
Effect
Vendors, Suppliers
Organization
Customers
Distribution
Logistics, Services
Purchasing
Finance
R D
Production
Sales
Distribution
Product development
Order fulfillment
Planning, resourcing, and control
Customer service
Business processes across functional areas
and organizational boundaries.
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Issues Driving BPRCycle Time Reduction

• Want to decrease the total time from order
  placement to final delivery
• IT allows the combination or elimination of
  steps, or of entire activities, in the business
  process
• Telecommunications, the Internet and intranets
  cut communications times
• through the use of e-mail and EDI
• allows collaboration in the design and operations
  of products and services

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Issues Driving BPRFrom Mass Production to Mass
Customization

• Mass production
• Produce large batches of same item to attain low
  unit costs
• Mass customization
• A company produces large volumes, yet customizes
  each product to the specifications of individual
  customers
• high volume economies of scale
• order size of one economies of scope product
  variety

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Issues Driving BPRPush-based vs. Pull-based
Supply Chains
PUSH
PULL
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Issues Driving BPRNetworked vs. Hierarchical
Organizations
Hierarchical Organization
Networked Organization
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Issues Driving BPRFrom an Hierarchy to a Network
Hierarchical Organization
Network Organization
Flattened Organization
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Issues Driving BPREmpowerment

• The vesting of decision-making or approval
  authority in employees
• Giving permission to the workforce to unleash,
  develop, and utilize their skills and knowledge
  to their fullest potential
• For the good of the organization as well as for
  themselves
• Company provides the framework in which this can
  be done

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Empowerments Relationship to Information
Technology

• Employees need information to make decisions
  about how to perform their jobs
• IT provides the right information
• at the right time and place
• at the right quality
• at the right cost
• IT provides tools to make decisions
• IT provides tools to monitor quality of their
  work
• IT provides online training to employees who need
  more skills and higher levels of skills

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Issues Driving BPRTeams

• Types of teams
• permanent or work group teams
• problem-solving teams
• quality circles, participating teams
• management teams
• virtual teams
• IT empowers team members and provides the
  necessary communication links among teams

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Issues Driving BPRVirtual Corporations

• An organization composed of several business
  partners sharing costs and resources for the
  purpose of producing a product or service
• Often temporary, with a one-time objective
• Major attributes
• excellence full utilization
• opportunism lack of borders
• trust adaptability to change
• technology

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Tools for BPR
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Tools for BPR

• Model the Existing Organizational Structure
• Flow diagrams
• Work analysis
• Workflow software
• Simulation and visual simulation tools
• Analyze the Organizational Performance
• Simulation and visual simulation tools
• Design, Test and Quickly Deploy a New
  Organizational Structure
• Unified Modeling Language (UML)
• Rapid application development tools
• CAD/CAM, imaging technologies, EDI,
  interorganizational systems, expert systems
• WWW

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Tools for BPR

• Modern IT infrastructure may be a required
  investment in order to undertake BPR
• Questions
• What is the current installed base of information
  systems applications, databases, networks,
  desktop computers, etc.?
• What IT architecture and infrastructure will the
  envisioned (post-BRP) systems require in order to
  operate successfully?
• Cost vs. benefits of the IT investment to
  facilitate the post-BPR system?

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Tools for BPR

• Top management must champion the approach
• Employees at every level have to buy into the
  approach
• Change management techniques
• Use appropriate planning tools
• Alleviate internal politics
• Otherwise, BRP could be a disruptive and costly
  failure

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IT Planning
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IT Planning

• IT Planning is the organized planning of IT
  infrastructure and applications portfolios done
  at various levels of the organization

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IT Planning

• Strategic Information Systems Plan
• Identifies a set of computer-based applications
  that will help the company reach its business
  goals

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Evolution of IT Planning
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Evolution of IT Planning
Operational Planning
Managerial Planning
Strategic Planning
1-3 yrs
Operational Planning
Managerial Planning
3 yrs
Operational Planning
1950s
Today
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Evolution of IT PlanningOperational Planning

• Operational Planning Activities
• Methods for developing new systems
• Project management methods for managing
  development of new applications
• Ex Waterfall Method SDLC
• Monitor systems to ensure efficient operation of
  completed systems

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Evolution of IT PlanningManagerial Planning

• Managerial Planning Activities
• 1960s/1970s
• Charge-back of costs incurred while operating
  system back to the departments using the system
• Today
• IT Steering Committee performs
• Identifies IS that might be beneficial for end
  user needs
• Cost-benefit analysis of systems
• Prioritizing IT investments based on needs and
  available resources
• Create a development schedule over which the
  applications will be implemented

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Evolution of IT PlanningStrategic Planning

• Strategic Planning Activities
• Long Term
• Develop a Strategic IT Plan for 5-10 years into
  the future
• Medium Term (Managerial Planning)
• Identify Applications Portfolio of approved
  projects consistent with Strategic IT Plan
• Short Term (Operational Planning)
• Tactical Plan identifies budgets and schedules
  for current-year projects

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Modern IT Planning Issues
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Modern IT Planning Issues

• Alignment
• Aligning IT Plan with the organizations business
  plan
• Aligning IT Plan with functional (e.g.,
  Marketing, Operations) plans
• Information Architecture
• Choosing and designing an appropriate information
  architecture for the organization
• Resource Allocation
• Allocating limited resources appropriately to
  competing IT projects
• SDLC Management
• Completing IT projects on time and within budget

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Modern IT Planning IssuesEx Aligning IT Plan
with Operations Plan

• IT Planning
• Strategic IT Plan (5-10 yrs)
• Long range hardware
• Infrastructure resource requirements
• Medium Term Plan (1 yrs)
• Development schedule
• Applications portfolio
• Tactical Plan (current year)
• Schedules for current projects/activities
• Short term responses to technology and
  environment changes

• Operations Plans
• Capacity Decisions (2 yrs)
• Facility planning, facility location
• Process choice
• Aggregate Planning (1 yr)
• Work force levels
• Overtime
• Subcontracting
• Overall inventory levels
• Scheduling (day-to-day)
• Allocate available resources to jobs, orders,
  activities, tasks

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Modern IT Planning Issues

• IT Planning for Inter-Organizational Systems
• Must be able to involve hundreds or thousands of
  trading partners
• IT Planning for Multi-National Corporations
• Decision whether to decentralize or centralize IT
  planning and operations
• IT Planning for Web-based Systems and E-Commerce
• Web applications replacing traditional IT
  applications
• Web applications need to be integrated to legacy
  systems, ERP, etc.
• Web-based applications should be designed to
  directly support IT strategy and goals

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Improving the IT Planning Process
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Basic IT Planning Stages

• Align the IT Plan with Business Plan
• Business Plan
• what you are selling (org./business mission)
• what your revenue model is (Acct./Finance)
• how it will be marketed (Marketing)
• how you will produce/execute (Operations)
• Design an IT architecture for the organization
• Allocate IT resources efficiently
• Complete IT projects on time and within budget

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Conceptual Models of the Strategic IT Planning
ProcessDefining IT Requirements
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MODEL 1Wetherbes Four IT Planning Stages

• Strategic IT Planning
• establish the relationship between (1)
  organizational plan and (2) the IT plan
• Information Requirements Analysis
• identify broad, organizational information
  requirements to establish a strategic information
  architecture
• architecture serves as a platform to direct
  specific application development projects
• Resource Allocation
• Allocating IT application development resources
  and operational resources
• Project Planning
• Managing resources assigned to specific IS
  development projects

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MODEL 2Nolans Stages of IS Growth

• A conceptual model of stages through which
  organizations IT Planning processes evolve
• Initiation
• Expansion
• Control
• Integration
• Data administration
• Maturity

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Nolans Stages of IS Growth Value of Nolans Model

• A set of typical evolution patterns of the ISD
  within the organization
• Six ideal stages of ISD experiences
• If your organization fits into a stage, it helps
  identify strategic issues/challenges
• Useful for understanding adoption/dispersion of
  technology
• Drawbacks
• 1979 view of ISD most modern big companies
  probably at stage 6 or beyond

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MODEL 3Ends / Means Analysis

• Work backwards from ends to means
• Ends specification
• Product of ISD goods, services, info
• Means specification
• Processes and inputs of ISD
• Ends/Means Analysis attempts to ensure both
  effectiveness and efficiency
• If we identify the correct Ends, we should be
  able to map backwards to the appropriate Means
  leading to effective systems (doing the right
  things)

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MODEL 4Critical Success Factors

• Interview managers
• What objectives are central to your organization?
• What are the critical factors that are essential
  to meeting these objectives?
• What decisions or actions are key to these
  critical factors?
• What variables underlie these decisions, and how
  are they measured?
• What information systems can supply these
  measures?
• Subsequently revise and refine the CSFs
• Base IT planning around CSFs identified

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MODEL 4Scenario Planning

• A form of What-If? Analysis
• Create a list of several envisioned future
  scenarios
• Create a list of possible future events that may
  influence the outcomes of each scenario
• Planners can then think about the likelihood of
  each of these events
• The likelihood of events should determine which
  scenario is likely to happen/the best decision

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Information Requirements AnalysisMatching
Potential Resource Capabilities to Requirements
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Information Requirements Analysis

• Objective
• to ensure that the various information systems,
  databases, and networks can be integrated to
  support decision making and operations.

Requirements
Resources Available to Potentially
Fill Requirements
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Conducting a Requirements Analysis

• Aligning/Linking Requirements to Systems
  Subsystems
• Define underlying organizational systems
• Develop subsystem matrix
• Define and evaluate information requirements for
  organizational subsystems
• Define major information categories and map
  interviews into them
• Develop information/subsystem matrix

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Using the Requirements Analysis for Planning

• Identify high payoff categories
• Managers perceived importance of categories
• 80/20 rule a few information categories (20)
  may solve most of managers problems (80)
• Provide an architecture
• Centralized system
• economies of scale, per transaction cost
  minimized, easier control
• Distributed system
• users have direct control over their computing,
  effective, system flexibility, system redundancy
• Blended system (Centralized Distributed)

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Resource Allocation

• Resource allocation
• must execute the master development plan as
  defined in the requirements analysis
• consists of developing hardware, software, data
  communications, facilities, personnel, and
  financial plans needed to execute

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Summary

• Various environmental/business pressures have
  driven Business Process Reengineering
• A structured approach for BPR is through IT
  Planning
• IT Planning has evolved from operational, to
  managerial, to strategic IT Plans
• Many conceptual models of the planning process
• some good
• some dated and more interesting as historical
  visions of IT planning