IT Planning

1
Chapter 8

• IT Planning
• BPR

2
Learning Objectives

• Discuss the major issues addressed by IS
  planning.
• Demonstrate the importance of aligning
  information systems plans with business plans.
• Explain the four-stage model of information
  systems planning.
• Describe several different methodologies for
  conducting strategic information systems
  planning.
• Identify the different types of IT architectures
  and outline the processes necessary to establish
  an information architecture.

3
Learning Objectives (cont.)

• Distinguish the major Web-related issues and
  understand application portfolio selection.
• Describe the need for processes redesign and BPR.
• Explain the IT support for BPR and for redesign.
• Describe organizational transformation and
  virtual corporations.

4
Case How TruServ planned its IT

• Problem
• The merger of Cotter Co. and TruServ in 1997
  required combining the information systems of the
  two companies.
• Solution
• A strategic IT plan was created and addressed
  issues such as
• the companys Intranet and extranet
• e-procurement
• EC applications
• Results
• The plan has remained fluid. It has been
  reevaluated and updated with new business goals
  every six months since its inception.

5
IT Planning

• IT planning is essential for both planners
  end-users
• for several reasons
• End-users do IT planning for their own units.
• End-users must participate in the corporate IT
  planning and therefore must understand the
  process.
• Corporate IT planning determines how the IT
  infrastructure will look. This in turn determines
  what applications end-users can deploy.

6
IT Planning (cont.)

• A Strategic information systems plan identifies a
  set of computer-based applications that will help
  a company reach its business goals.
• IT planning identifies the applications
  portfolio, a list of major, approved IS projects
  that are consistent with the long-range plan.

• Planning and control systems for IT started in
  the late 1950s and early 1960s.
• Initial mechanisms addressed operational
  planning, and eventually shifted to managerial
  planning.

7
IT Planning Issues

• Basic IT planning addresses the following four
  general issues

• Aligning the IT plan with the organizational
  business plan
• Designing an IT architecture for the organization
  in such a way that users, applications, and
  databases can be integrated and networked
  together.

• Efficiently allocating information systems
  development and operational resources among
  competing applications.
• 4. Planning information systems projects so that
  they are completed on time and within budget and
  include the specified functionalities.

8
Four-Stage Model of IT Planning
9
IT Planning Stages
10
Stage 1 Strategic Information Planning

• Strategic information planning (SIP) must be
  aligned with overall organizational planning and
  with e-business.
• To accomplish this alignment, the organization
  must execute the following
• Set the IT mission.
• Assess the environment.
• Assess existing systems availabilities and
  capabilities.
• Assess organizational objectives and strategies.
• Set IT objectives, strategies, and policies.
• Assess the potential impacts of IT.
• An organization would conduct the same six steps
  for e-business.

11
Business Systems Planning

• The Business systems planning (BSP) model,
  developed by IBM, is a top-down approach that
  starts with business strategies.
• It deals with two main building blocks as the
  basis of the information architecture
• Business processes
• Data classes
• The recognition that processes could be a more
  fundamental aspect of business than departments
  or other organizational arrangements broke new
  ground.

12
CSF Scenario Planning

• The critical success factors (CSF) approach was
  developed to help identify the information needs
  of managers.
• Sample questions asked in the CSF approach are
• 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?
• Scenario planning is a methodology used in
  planning situations that involve much
  uncertainty, like that of IT in general and
  e-commerce.
• In this approach planners create several
  scenarios.

13
Stage 2 Information Requirements Analysis

• Step 1 Define underlying organizational
  subsystems.
• Step 2 Develop subsystem matrix.
• Step 3 Define and evaluate information
  requirements for organizational subsystems.
• Step 4 Define major information categories and
  map interview results into them.
• Step 5 Develop information/subsystem matrix.

14
Stage 3 Resource Allocation

• Resource allocation consists of developing the
  hardware, software, data communications,
  facilities, personnel, and financial plans needed
  to execute the master development plan defined in
  Stage 2.
• This stage provides the framework for technology
  and labor procurement, and identifies the
  financial resources needed to provide appropriate
  service levels to users.
• Funding requests from the ISD fall into two
  categories
• Those necessary to stay in business
• Those for improving the information architecture

15
Stage 4 Project Planning

• Project Planning provides an overall framework
  within which specific applications can be
  planned, scheduled, and controlled.
• This stage is associated with systems development
  (to be covered in Chapter 14).

16
Infrastructure Considerations

• Broadbent et al. (1996) found the following four
  infrastructure relationships
• Industrymanufacturing firms use less IT
  infrastructure services than retail or financial
  firms.
• Market volatilityfirms that need to change
  products quickly use more IT infrastructure
  services.
• Business unit synergyfirms that emphasize
  synergies (e.g., cross-selling) use more IT
  infrastructure services.
• Strategy and planningfirms that integrate IT and
  organizational planning, use more IT
  infrastructure services.

17
IT Architecture Computing

• Centralized computing puts all processing and
  control authority within one computer and all
  other computing devices respond.
• Distributed Computing handles the choices for
  computing at the point of the computing need
  individual needs are met with individualized
  computing.
• A Blended approach combines the two models above.
  The mainframe (centralized resource) can operate
  as a peripheral device for other (distributed)
  computing resources.

18
Reengineering Legacy Systems

• Legacy Systems are holdovers of earlier
  architectures that are still in use after an
  organization migrates to a new architecture.
• The decisionto keep, improve, or replacecan
  present management with agonizing alternatives.
• Reverse engineering is the process of examining
  systems to determine their present status, and to
  identify what changes are necessary to allow the
  system to meet current and future business needs.
  

19
IT Planning E-Planning

• Some connections between IT planning and
  e-planning are
• Web applications may replace traditional IT
  applications for improving their operations.
• Web applications must be integrated with legacy
  systems, ERP, etc.
• The e-Commerce unit may report to the CIO.
• The ISD and the e-Commerce project may compete
  for limited resources.
• Some Web-based applications are designed to
  directly support the IT strategy and goals.

20
Applications Portfolio

• Tjans Portfolio Strategy. Tjan (2001) adopted a
  business project portfolio applications approach
  to create an Internet portfolio planning.
• The strategy is based on company fit, which can
  be either low or high, and the projects
  viability, which can also be low or high.
• The various initiatives are then mapped on the
  Internet portfolio matrix, based on the two
  average scores.
• If both viability and fit are low, the project is
  killed. If both are high, then the project is
  adopted, etc.

21
Issues in E-Planning

• Who and where? Should the EC initiatives be
  conducted in a completely independent division or
  even a separate company?
• Use of metrics. It is desirable to use industry
  standards, also known as metrics, for executing
  various steps of the planning process.
• Learn from failures. During 2000/2001 there were
  many EC failures, both major initiatives and
  whole companies.
• Use a different planning process. The Web
  environment requires a different planning
  process.
• Integration. Information systems strategic
  planning must integrate, in many cases,
  e-business and knowledge management.

22
Business Processes Across Functional Areas
23
Business Process Reengineering

• Business process reengineering (BPR) refers to a
  situation in which an organization fundamentally
  and radically redesigns its business process to
  achieve dramatic improvement.
• Initially, attention was given to a complete
  restructuring of organizations.
• Later, the concept was changed due to failures of
  BPR projects and the emergence of Web-based
  applications.
• Today, BPR can focus on anything from the
  complete restructuring of an organization to the
  redesigning of individual processes.
• Major objective of BPR Information Integration.

24
Case VW of Mexico uses e-Procurement

• Problem
• Facing strong competition and the North American
  Free Trade Agreement (NAFTA) environment,
  Volkswagen of Mexico turned to IT.
• Solution
• In 1996 VW implemented an enterprise resource
  planning system, using SAP R/3 software.
• By 1998, the company integrated its entire
  enterprise system.
• Results
• The company projects that its IT applications
  will result in 50 million in cost savings over
  three years for the dealers.

25
The Enabling Role of IT
26
Tools for BPR

• Simulation and visual simulation tools
• Flow diagrams
• Application development tools
• Integrated tool kits

• Work analysis
• Workflow software
• Business process design
• Comprehensive modeling tools
• Other tools

27
Mass Customization

• One of the most successful models of e-Commerce
  is mass customization.
• the production of large quantities of customized
  items.
• It supplements or even replaces one of the most
  innovative concepts of the Industrial Revolution,
  mass production.

• Mass customization can be facilitated by the Web
  in four different approaches
• Collaborative customizers
• Adaptive customizers
• Cosmetic customizers
• Transparent customizers

28
Mass Customization EC

• EC transforms the supply chain from a traditional
  push model to a pull model.
• Push model - the business process starts with
  manufacturing and ends with consumers buying the
  products or services.
• Pull model - the process starts with the consumer
  ordering the product (or service) and ends with
  the manufacturer making it.
• The pull model enables customization since orders
  are taken first.

29
Cycle Time Reduction

• IT helps to contribute to cycle time reduction.

• Cycle time refers to the time it takes to
  complete a process from beginning to end.
• Time is recognized as a major element that
  provides competitive advantage.

30
BPR Failures

• During the 1990s there were just as many cases of
  BPR failures as there were success stories.
• A survey conducted by the PROSCI organization
  (prosci.com) indicates a failure rate of 50 to
  80.
• Some of the reasons cited for failures are
• high risk
• inappropriate change management
• failure to plan for internal politics
• high cost of retooling
• lack of participation and leadership
• inflexible software
• lack of motivation

31
Networked Organizations

• Today some organizations are turning away from
  the hierarchical organization toward the
  networked organization.
• Networked organizations refer to organizational
  structures that resemble computer networks and
  are supported by information systems.
• In the information-based economy, most people do
  knowledge work, and the subordinate often has
  more expertise than the hierarchical
  supervisor.
• A flattened organization has fewer layers of
  management and a broader span of control than the
  hierarchical organization.

32
Networked Organizations (cont.)
33
Empowerment Using IT

• Empowerment is the vesting of decision-making or
  approval authority in employees where,
  traditionally, such authority was a managerial
  prerogative.
• Empowerment can be enhanced through IT.
• Empowered employees are expected to perform
  better.
• In addition to empowering employees, companies
  are empowering their customers, suppliers, and
  other business partners.
• E.g. Federal Express uses the Internet to empower
  its customers.

34
Virtual Corporations

• A Virtual Corporation (VC) is an organization
  composed of several business partners sharing
  costs and resources for the purpose of producing
  a product or service.
• According to Goldman et al. (1995), permanent
  virtual corporations are designed to do the
  following
• Create or assemble productive resources rapidly.
• Create or assemble productive resources
  frequently and concurrently.
• Create or assemble a broad range of productive
  resources.

35
Virtual Corporations (cont.)

• In a VC, the resources of the business partners
  remain in their original locations but are
  integrated.
• In order to function, VCs rely on the following
  forms of IT
• Communication/ collaboration among dispersed
  business partners
• e.g., e-mail, desktop videoconferencing,
  screen-sharing, etc.
• EDI and EFT
• Intelligent agents
• Modern database technologies and networking
• Intranet/Internet applications

36
Managerial Issues

• Importance. IT planning is one of the most
  challenging and difficult tasks facing all of
  management.
• Organizing for planning. What should be the role
  of the ISD? How should IT be organized? Staffed?
  Funded?

• Fitting the IT architecture to the organization
  is important.

37
Managerial Issues (cont.)

• IT architecture planning. IT specialists
  business users must jointly determine the present
  and future needs for the IT architecture.
• Ethical and legal issues.
• IT policy. IT architectures should be based on
  corporate guidelines.

• IT strategy. Leadership, listening and
  experimentation are important.
• Integration. The role of IT in redesign and BPR.
• Failures. Very big projects have a tendency to
  fail when expectations exceed real capabilities.