Week 5 Monday, September 26

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Week 5Monday, September 26

• IT Planning
• Strategic IS Alignment

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Planning Techniques

• Stages of Growth Nolan's Stages Theory
• Rockart's Critical Success Factors (CSF)
• Porter's Competitive Forces Model
• Porter's Value Chain Analysis
• e-Business value matrix
• Linkage analysis planning
• Scenario planning

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Nolan's Stages Theory
An organizations experience with adopting IT
Investment in IT
IT Resource
Integration
Control
Contagion
Introduction
Diffusion
Time
Stage 1
Stage 2
Stage 3
Stage 4
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Major Dimensions of CSFs

• Sources
• Industry
• Strategy
• Environment
• Temporal
• Position

Interest rates
New skill acquisition
Building (Innovation)
Monitoring (Control)
External
Internal
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Porters Five Forces ModelForces that Shape
Strategy
?
How will the business react to threats (and
opportunities)?
Potential Entrants
Threat of new entrants
Industry Competitors
Bargaining power of buyers
Bargaining power of suppliers
Customers and Buyers
Suppliers
?
?
?
Rivalry among existing firms
Threat of substitute products or services
?
Substitutes
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Porters Five Forces Model
Potential Entrants
?
Threat of new entrants
Industry Competitors
The strategy and actions an organization adopts
depend upon its perceptions of itself and these
threats.
Bargaining power of buyers
Bargaining power of suppliers
Customers and Buyers
Suppliers

• Porters strategies
• Product differentiation (non-duplicable product
  or service)
• Low-cost producer
• Market niche (market segment or geographical
  market)

?
?
?
Rivalry among existing firms
Threat of substitute products or services
?
Substitutes
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Value Chain Analysis
Firm infrastructure
Human resource management
Support Activities
Margin
Technology development
Procurement
Customers
Inbound logistics
Outbound logistics
Marketing and sales
Operations
Service
Margin
Primary Activities
How can value be added at every activity?
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e-Business Value Matrix

• Project categories
• New fundamentals
• Operational excellence
• Rational experimentation
• Breakthrough strategy
• Value of the project (low, high)
• Criticality to business
• Newness of idea

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e-Business Value Matrix
Operational excellence, high criticality to
business, high newness of idea
New fundamentals
Operational excellence
Rational experimentation
High
Breakthrough strategy
Newness of Idea
Low
Low
High
Criticality to business
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Linkage Analysis Planning

• Steps
• Define power relationships among various players
  and stakeholders Identify links between internal
  and external entities
• Map out the extended enterprise to include
  suppliers, buyers and strategic partners Manage
  the linkages
• Plan electronic channels to deliver the
  information component of products and services
  Facilitate and enhance the exchange of information

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Linkage Analysis Planning
Top management
Middle management
Operations management
Electronic Channels
Traditional competitors
New competitors
Retailers
Suppliers
Distributors
Government
Stockholders
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Scenario Planning

• Steps
• Define a decision problem and timeframe to bound
  the analysis (What if)
• Identify the major known trends that will affect
  the decision problem
• Identify just a few driving uncertainties
• Construct the scenarios based on uncertainties
• Trigger events

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Strategic Information Systems Planning (SISP)

• Definition... a process conducted within the
  contexts of scope, perspective, time frame, and
  level of abstraction, with any or all of the
  following agenda (1) supporting and influencing
  the strategic direction of the firm through
  identification of value-adding computerized
  information systems, (2) integrating and
  coordinating various organizational technologies
  through development of holistic information
  architectures, and (3) developing general
  strategies for successful systems
  implementation. Segars, Grover and Teng.1998

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SISP Progression
Architectures for sharing organizational and
interorganizational data and integration
technologies
Enabling initiatives for gaining competitive
advantage
Alignment of IS strategy with corporate
strategy
IS viewed as strategic resource
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Context Characteristics
Scope (broad)
Perspective (upper management)
Strategic Information Systems Planning
Time Frame (long range)
Level of Abstraction (conceptual)
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Six Process Dimensions
Comprehensiveness
Formalization
Focus
Planning Effectiveness
Coalignment
Flow
Participation
Favorable coalignment will lead to effective
planning
Consistency
Alignment of dimensions
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1. Comprehensiveness

• Thoroughly canvassing a wide range of
  alternatives
• Surveying a full range of objectives
• Carefully weighing the costs and risks of various
  consequences
• Intensively searching for information to evaluate
  alternative actions
• Objectively evaluating information or expert
  judgment regarding alternative actions
• Re-examining the positive and negative
  consequences of all known alternatives
• Making detailed plans, including consideration of
  contingencies, for implementing a chosen action

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2. Formalization

• Existence of structures, techniques, written
  procedures and policies that guide the planning
  process
• Written policies that structure the process of
  planning
• Formalized techniques adopted for the purpose of
  conducting strategic planning
• Known procedures for initiating the planning
  process
• Processes systemize information collection and
  dissemination
• Formalization vs. Flexibility

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3. Focus

• The balance between creativity and control
  orientations inherent within the strategic
  planning system
• Innovation vs. Integration
• Innovative orientation nurtures creativity
  (innovative, novel solutions)
• Integrative orientation focuses more on control
  (budgetary, cost performance, controlled
  diffusion of assets within the organization)

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4. Flow

• Locus of authority or devolution of
  responsibilities for strategic planning
• Roles played by corporate and divisional managers
  in the initiation of the planning process
  (vertical orientation)
• Top-down vs. Bottom-up
• Top-down limited participation of lower level
  managers in the initiation of the strategic
  planning process
• Bottom-up functional management involvement in
  the initiation of strategic planning

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5. Participation

• Breadth of organizational involvement in
  strategic planning
• Representation from the functional areas
• Narrow vs. Broad
• Narrow fosters an isolated approach to plan
  formulation with little involvement or
  interaction among various functional or
  operational managers
• Broad a variety of functional and operational
  areas help offset bounded rationality of top
  managers

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6. Consistency

• Concerned with the frequency of planning
  activities or cycles, and evaluation /revision of
  strategic choices
• Frequent vs. Infrequent
• Infrequent time frame longer, face-to-face
  meetings tend to be ad hoc or sporadic, planning
  cycles may be year-to-year (vs. continuous or
  consistent process)
• Frequent high levels on consistency
  characterized by continuous planning process with
  frequent meetings, constant communication among
  planning participants, and frequent assessment
  and revision of strategic direction

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Proposition

• Strategic IS planning systems that reflect a
  profile of rational adaptation will be positively
  associated with planning effectiveness. The
  structure or internal coalignment of a rational
  adaptive planning system includes
• higher levels of comprehensiveness
• higher levels of formalization
• a focus on control vs. creativity
• a top-down vs. bottom-up planning flow
• higher levels of participation
• higher levels on consistency

Segars, Grover and Teng.1998
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Coalignment

• Coalignment strongly associated with planning
  effectiveness
• If dimensions of strategic planning systems
  favorably align, the planning system as a
  structure should be more successful than its
  individual dimensions
• Effectiveness may beyond performance measurement
  (e.g., ROI, ROE)
• Alternative value-added approach
• Improved management making
• Lower costs of development
• Plans that are actionable and implemented

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Internal Planning System Coalignment

• The planning system should be structured process
  of opportunity search that adapts through
  consistent feedback and wide participation
• Rational planning tendencies of extensive
  alternative generation and solution search,
  formalized procedures and policies for planning,
  a focus on control, and top-down planning flow
• Adaptive tendencies of wide participation
  profiles and high levels of planning consistency

Planning effectiveness
Rational adaptation
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Implications for Strategic IS Planning

• Planning must be designed, evaluated, and refined
  such that the overall activity of planning does
  not become dysfunctional
• Emergent systems of planning should reflect the
  environmental and organizational context within
  which they function

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Source Strategic Information Systems Planning
Planning System Dimensions, Internal Coalignment
and Implications for Planning Effectiveness,
Albert H. Segars, Varun Grover, and James T.
Teng. Decision Sciences (journal), vol. 29, no. 2
(Spring 1998).
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Architecture and Infrastructure

• Architecture a blueprint that shows
  interrelationships of the components of a system
• Emphasis on the whats
• Based on the business model
• IT Infrastructure implementation of the
  architecturePurpose To deliver the right
  information to the right people at the right time
• Two parts
• Technical IT infrastructure (processors,
  telecommunication, database, etc.)
• Human IT infrastructure
• Emphasis on the hows

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Architecture

• Defines guidelines and standards
• Service Oriented Architecture (SOA)
• Emphases on accessibility of others systems to
  data and functions, and reusability of
  programming code
• Supports the organization's agility

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Infrastructure

• Delivering IT resources to support users
  throughout the organization
• Four layer infrastructure (Weill and Broadbent)
• IT components
• Human IT infrastructure
• Shared IT services services that users can draw
  upon and share to conduct business
• Shared and standard IT applications stable
  applications that change less frequently

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Structure of the IT Infrastructure
Local applications
IT infrastructure
Shared and standard IT applications
Shared IT services
Human IT infrastructure
IT components
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Three Views of Infrastructure

• Economies of scale (utility) providing IT/IS as
  a service to the business to facilitate
  operations
• Emphasis on reducing costs
• Support for business programs (dependent) IT
  tied to business plan and value-added initiatives
• Flexibility to meet changes in the marketplace
  (enabling) IT planning tied to business
  strategic plan
• Co-alignment between business strategy and IT
  strategy
• Strategic IT and strategic IT planning

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Centralized vs. Distributed Processing

• Centralized processing Processing centrally
  located usually at a single site (at least
  logically centralized)
• Distributed process Processing divided between
  (among) different physically dispersed sites
• Transparency The user or customer is unaware
  where the processing is handled
• Reduces network traffic to one location
• Closely places the data to where they are needed
  or used
• Follows a system-wide protocol

Depends on the organization
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Centralized Processing
Single Site
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Distributed Processing
Geographically Distributed
Network
Transparency
Site 1
Site 3
Site 2
Heterogeneous vs. Homogenous
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