Lecture Business management information system - Lecture 9: Information systems planning

In this chapter, the following content will be discussed: Case examples include microsoft, types of planning, why is planning so difficult? The changing world of planning, traditional strategy-making, today’s sense-and-respond approach.

Information Systems Planning

Lecture 9

Introduction

n Systems planning, especially strategic systems planning,

is becoming more difficult and more important at the same time Technology is changing so fast that it is seems futile

to plan for it, yet the dependence on this technology

makes planning its effective use a matter of organizational life and death

n This lecture / chapter contrasts the traditional view of

planning with the sense-and-respond approach of

strategy-making, presenting seven IS planning techniques

n IS management is becoming more difficult and more

important at the same time:

¨ Technology changing so fast: “Why bother?” Vs Most organizations’ survival is dependant on technology

¨ How to resolve this apparent paradox?

n Good News = variety of approaches, tools and

mechanisms available

n Bad News = no ‘best’ way to go about it

Planning Good and Bad News!

Introduction cont.

n It is important to establish the appropriate mindset for

planning:

¨ Some managers believe = “determining what

decisions to make in the future”

¨ Better view = developing a view of the future that

guides decision making today

¨ Subtle difference = ‘strategy making’

n Strategy = stating the direction in which you want to

go and how you intend to get there

¨ The result of strategy-making is a plan

Why Planning Is So Difficult

Types of Planning:

n Planning is usually defined in three forms, which

correspond to the three planning ‘horizons’ (Figure 4-1)

¨ Strategic = 3-5 years

¨ Tactical = 1-2 years

¨ Operational 6 months – 1 year

Types of Planning

Introduction cont.

n Why Planning Is So Difficult?:

¨ Business Goals and Systems Plans Need to Align

§ Strategic systems plans need to align with business goals and support those objectives

§ Some believe = “too sensitive” = PROBLEMS

§ Fortunately = trend for CIOs to be part of senior management

Introduction cont.

¨ Technologies Are Rapidly Changing

§ How can you plan when information technologies are changing so rapidly

¨Continuous planning?

¨Old days of planning at ‘start of year’ = gone

¨Advanced technology groups

Introduction cont.

n Why Planning Is So Difficult

¨ Companies Need Portfolios Rather Than Projects

§ Evaluation on more than their individual merit

¨How they fit into other projects and how they balance the portfolio of projects

¨ Infrastructure Development is Difficult to Fund

§ Despite everyone “knowing infrastructure development is crucial”, it is extremely difficult to get funding just to develop or improve

infrastructure

¨ Responsibility Needs to be Joint

§ Business planning, not just a technology issue

¨ Other planning issues

§ Top-down Vs bottom-up; radical change Vs

continuous

§ Planning culture

Business Goals and Systems Plans

n Strategic systems plans need to align with business

goals and support them

n If top management believes the firm’s business goals are extremely sensitive, the CIO is often excluded in major strategic meetings by top management

Business Goals and Systems Plans conti

n Systems planning is becoming a shared responsibility

among the CIO, CTO, and other members of senior

management

n The emergence of e-commerce and globalization caused CEOs and CFOs to realize they need to be involved in systems planning

Technologies Are Rapidly Changing

n How can executives plan when IT is changing so rapidly:

q Continuous monitoring and planning the changes of technologies and how the industry would adopt this

technology

q The planning process first needs to form a best-available vision of the future on which to base current decisions

Technologies Are Rapidly Changing

Conti

n The technology needs to be monitored to see whether that future vision needs alteration

n Some organizations have an advanced technology

group charged with watching and evaluating new

technologies

n It is important for organizations to pay particular attention

to the impact of disruptive technologies or disruptive

innovation

Technologies Are Rapidly Changing

other existing OSs like Unix and Windows NT

n Linux was inexpensive, and thanks to continuous

improvements, it has earned a significant market share for computer servers

Technologies Are Rapidly Changing

Technologies Are Rapidly Changing

Conti

n The planning issue here is for management to foresee the upcoming of innovation with superior technology

potential and viable business applications

n These new technologies can be a cost-effective addition

to the existing technological infrastructure

n Or, they can be a potential replacement that needs a carefully migration strategy

Companies Need Portfolios Rather Than

Projects

n Another planning issue is the shift in emphasis from

project selection to portfolio development

n Businesses need a set of integrated and seamless

technologies that work together

n Project developments have had a history of building

“stove-pipe” systems that result in applications that are not compatible with each other

Companies Need Portfolios Rather Than

Projects

n A portfolio approach requires a more sophisticated form

of planning because projects must be evaluated on more than their individual merits

n How they fit with other projects and how they balance the portfolio of projects become important

n The Internet Value Matrix described later is an example

of this approach

n People understand intuitively that developing an

Infrastructure Development Is Difficult to

Fund conti

n Since the mid-1980s, companies have faced a continual succession of large infrastructure investments

n First, they needed to convert from a mainframe to a

client-server architecture to share corporate and desktop computing

n Then they implemented ERP to centralize and

standardize data so that everyone had the same

information

Infrastructure Development Is Difficult to

Fund

n Then they needed to create a Web presence and give users access to back-end systems

n Now they are under pressure to implement Web

Services–oriented architectures to work inter-company and draw on best-of-breed processes

n Boards of directors have realized that they have to fund these huge multiyear projects just to remain competitive Making these large-stakes bets increases the difficulty of systems planning

Responsibilities Needs to Be Joint

n It used to be easier to do something yourself than gather

IT Planning !

IT Planning is not

like This one!

Responsibilities Needs to Be Joint

….

n Systems planning has become business planning; it is

no longer just a technology issue

n Many large organizations set up an Information Systems Council (ISC) or committee to periodically review the

effectiveness of the current strategic plan, assess the

current technological environment, and develop an IT

strategy based on the institution’s mission and goals

Planning Issues

n Several other characteristics of planning make strategic systems planning difficult

n There is always tension between top-down and

bottom-up approaches, thus the planning process must strike a balance between radical change and continuous

improvement

n Furthermore, systems planning does not exist in a

vacuum

n Most organizations have a planning culture into which

systems planning must fit

n This sampling of issues illustrates why systems planning

is a difficult but crucial task

The Changing World of Planning

n Internet etc = ‘introduced’ speed into the business environment

and transformed how people think about time, how much time they have to plan, react to competitors etc.

3 IT implementation plan created = describe exactly how the IS strategic

plan would be implemented

The Changing World of Planning

n Assumptions:

¨ The future can be predicted

¨ Time is available to do these 3 parts

¨ IS supports and follows the business

¨ Top management knows best (broadest view of firm)

¨ Company = like an ‘Army’

The Changing World of Planning

The Changing World of Planning cont.

n Today, due to the Internet and other technological

advances, these assumptions no longer hold true:

¨ The future cannot be predicted

n Who predicted Internet, Amazon, eBay etc.?

¨ Time is not available for the sequence

¨ IS does not JUST support the business anymore

n Figure 2-8

¨ Top management may not know best

n Inside out Vs outside in approach (Figure 4-3)

¨ An organization is not like an army

n Industrial era metaphor no longer always applies

Today’s Sense-and-Response Approach

n If yesterday’s assumptions no longer hold true, what is

taking the ‘old’ approach’s place?:

¨ Let Strategies Unfold Rather Than Plan Them:

n In times of fast paced change (like today!) this is risky

n When predictions are ‘risky’, the way to move into the future is step by step using a sense-and-

Today’s Sense-and-Response

Approach

¨ Formulate strategy closest to the action:

n Close contact with the market

n Employees who interact daily with customers, suppliers and partners

n Employees who are closest to the future should become prime strategists In the ‘Internet Age’ = younger employees

The Changing World of Planning

§ Microsoft, the software giant in Redmond, Washington, has taken a

sense-and-respond approach to creating its Internet strategy

§ Throughout its history, Microsoft has been slow to embrace some of

the computer industry’s most significant technology shifts and business chances

§ To adopt innovation, the company has often succeeded in using its

financial might to acquire successful leaders (e.g., Lotus Development Corp for office automation and Netscape Communications Corps for Web browsers)

§ Microsoft moved on to buying Internet companies, aligning with

Sun to promote Java (and create a proprietary version of Java), and even forging an alliance with AOL.

§ This catch-up-and-strive approach has worked rather successfully

for Microsoft.

MICROSOFT

Case example: Sense and Respond Strategy-Making

MICROSOFT Case example: Sense and Respond

Strategy-Making

n software giant moved into a variety of technologies:

n BASIC programming language for PC

n MS-DOS (Microsoft Disk Operating System)

MICROSOFT Case example: Sense and Respond

MICROSOFT Case example: Sense and Respond

Strategy-Making

n Windows Mobile OS

n Visual Studio Net Enterprise Developer

n Xbox 360 and the multiplayer broadband gaming service, Xbox Live

n Vista Operating System

MICROSOFT Case example: Sense and Respond

MICROSOFT Case example: Sense and Respond

Strategy-Making

n Microsoft diversifies in a number of related sectors, to

include:

n Web-only magazine, Slate, Web News site with NBC,

Cable news channel with NBA, digital movie production via Dreamworks, mobile application, NET platform for Web Services, and search engines to compete with

Google As the company celebrates its 30th year

anniversary, it is moving even more to applications areas (e.g., healthcare) while continuing to explore new

software technologies (e.g., multi-core programming

technology called “F-Sharp” to manage massive server computers).

MICROSOFT Case example: Sense and Respond

Strategy-Making

n Bill Gates has made defining announcements, to be

sure, focusing the company on the Internet, security, and Web Services

n The strategies have not always come from top

management

n The company’s first server came from a rebel working on

an unofficial project

n In addition, management mistakenly passed up some

cheap acquisitions that later cost them much more via licensing agreements

MICROSOFT Case example: Sense and Respond

Strategy-Making

n In short, Microsoft has been sensing and responding to the moves in several industries, getting its fingers into every pie that might become important

n Craig Mundle, Microsoft’s chief research-and-strategy officer, is designated to replace Bill Gates, who

relinquishes his chairmanship in 2008, as the new term strategic thinker

long-MICROSOFT Case example: Sense and Respond

Strategy-Making

n In a report to the Wall Street Journal (July 30, 2007), Mr

Mundle wants Microsoft units to constantly search for

innovation: “This is something that should be stuck in the face of the people who still think this is science fiction.”

MICROSOFT Case example: Sense and Respond

Strategy-Making

Formulate Strategy Closest to the Action:

n The major change introduced by the Internet is faster communication, not only within organizations but, more importantly, with others—customers, suppliers, and

partners

MICROSOFT Case example: Sense and Respond

Strategy-Making

n Aligning corporate strategy with the marketplace in paced times requires staying in close contact with that marketplace

fast-n Hence, strategy development needs to take place at

these organizational edges, with the people who interact daily with outsiders

MICROSOFT Case example: Sense and Respond

Strategy-Making

n Today, this means including younger employees because they have grown up in an era of the Internet, PDAS, and cell phones

n They take all three for granted; they wear them like

clothing

n One company that is taking this premise of downside-up strategizing to heart is Skandia Future Centers

Different Microsoft Products

http://www.microsoft.com/enable/products/default.aspx

Summary

n Case examples include Microsoft

n Introduction

¨ Types of planning

¨ Why is planning so difficult?

n The Changing World of Planning

¨Traditional Strategy-Making

¨Today’s Sense-and-Respond Approach