Abdisalam Issa-Salwe, Lecture Notes, Thames Valley University, 2008.

Lecture 6

Information Systems and Strategy Planning

Abdisalam Issa-Salwe

Taibah University Information Systems Faculty of Computer Science & Engineering Information Systemsof Computer Science Abdisalam Issa-Salwe, Faculty Department
& Engineering, Taibah University 1

Topic list
Strategic planning Vision and Business needs Earls grid McFarlans application portfolio Business Process Reengineering (BPR)

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

Strategic planning
Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail.
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 3

Strategic planning (cont)

A sound plan should:
Serve as a framework for decisions or for securing support/approval. Provide a basis for more detailed planning. Explain the business to others in order to inform, motivate & involve. Assist benchmarking & performance monitoring. Stimulate change and become building block for next plan.
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 4

Strategic planning (cont)

A strategic plan should not be confused with a business plan.
The former is likely to be a (very) short document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and frame work for a business plan.

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

Strategic planning (cont)

A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable.
As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters).

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

Strategic planning (cont)

Basic Approach to Strategic Planning
A critical review of past performance by the owners and management of a business and the preparation of a plan beyond normal budgetary horizons require a certain attitude of mind and predisposition. Some essential points which should to be observed during the review

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

The Vision
The preparation of a strategic plan is a multi-step process covering vision, mission, objectives, values, strategies, goals and programs. The first step is to develop a realistic Vision for the business.
This should be presented as a pen picture of the business in three or more years time in terms of its likely physical appearance, size, activities etc.

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

McFarlans Application Portfolio

The Application Portfolio Matrix: The application portfolio concept means bringing together existing, planned and potential information systems and assessing their business contribution. Applications need to be planned and managed according to their lifetime and future contribution to the business.
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 9

McFarlans Application Portfolio (cont)

The earliest and most famous application portfolio model was developed by Gibson and Nolan (1974) during the 1970s. This model in turn used a hierarchical application portfolio model. The model structured applications of three management activities: planning control operational.

1. 2. 3.

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

10

McFarlans Application Portfolio (cont)

In 1984, McFarlan and McKenneys developed a model that considered the relationship with business success. The model proposes an analysis of all existing and planned information systems into four categories based on current and future business importance. The model has two dimensions: 1. the strategic meaning of existing information systems 2. the strategic meaning of planned information systems
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 11

McFarlans Application Portfolio (cont)

The model proposes an analysis of all existing, planned and potential applications into four categories based on assessment of the current and future business importance of applications. Depending on its current or expected contribution to the business success, an application can be defined as
1. 2. 3. 4.

high potential, strategic, key operational or support,

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 12

McFarlans Application Portfolio (cont)

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

13

McFarlans Application Portfolio (cont)

High potential includes applications that can be very important to reach future success.
These applications are characterised by a rapid prototyping development with a power to refuse failures before spending a lot of resources.

Strategic applications are critical for the activity and of highest potential value. These are applications that the company strategically trusts on to reach future success.
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 14

McFarlans Application Portfolio (cont)

Key operational applications are those the organisation is dependent on in the present-day situation to reach success. The key operational applications are important for the primary process and increase their value. Support includes applications that support the activity but are not in strategically valuable. The support systems are not critical for the organisations future if they are not wasteful with valuable resources or if the market share is being changed.
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 15

McFarlans Application Portfolio (cont)

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

16

McFarlans Application Portfolio (cont)

Organisation:
the organisation of the IS function including the processes for formulating and implementing IS policies. This does not include the broader organisational implications associated with the implementation of new systems. These are addressed in the Organisational issues beyond the IS function and Networked organisations in a postindustrial world modules;

Data:
the data architecture required to support the required applications;

Technology:
the technology architecture required to deliver the required applications;

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

17

Earl's Audit Grid

From an examination of McFarlan & McKenneys Grid, it should be obvious why a company should have an IT strategy. If a company is on either the turnaround or strategic quadrants of McFarlans Grid, then obviously a company should have the appropriate strategy to enable it to plan for future developments. Even if it is in the factory quadrant, IT systems are mission critical and the company should have a strategy as to: (a) how to maximise the benefits arising from its deployment of IT, and (b) how to cope in the event of a systems failure (i.e. have a back-up or recovery plan).
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 18

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

19

Earl's Audit Grid (cont)

Earls nine reasons: 1. IT involves high costs. 2. IT is critical to the success of many organisations. 3. IT is now used as part of the commercial strategy in the battle for competitive advantage. 4. IT is required by the economic context (from a macroeconomic point of view). 5. IT affects all levels of management. 6. IT has meant a revolution in the way information is created and presented to management. 7. IT involves many stakeholders, not just management, and not just within the organisation. 8. The detailed technical issues in IT are important. 9. IT requires effective management, as this can make a real difference to successful IT use.
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 20

10

Business Process Redesign

Business Process Redesign is
"the analysis and design of workflows and processes within and between organisations" (Davenport & Short 1990).

Teng et al. (1994) define BPR as

"the critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures."

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

21

Business Process Redesign (cont)

Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. (Hammer & Champy, 1993)

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

22

11

Business Process Redesign (cont) BPR generally approaches the problem from the point of view of the customer and of the process.
Customer views are required to ensure that the eventual design actually satisfies them. Process views are required to try to remove the in-tray problem, and to focus activity within it on the goal of the process not the function, so that unneeded or irrelevant activity is removed.

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

23

BPR Versus Process Simplification

Process Simplification Process Reengineering

Incremental Change Radical Transformation Process-Led Vision-Led Assume Attitudes & Behaviors Change Attitudes & Behaviors Management-Led Director-Led Various Simultaneous Projects Limited Number of Initiatives

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

24

12

Why Re-engineer?
1.

Customers
1. 2. 3.

* Demanding * Sophistication * Changing Needs

2.

3.

Competition 1. * Local 2. * Global Change 1. * Technology 2. * Customer Preferences

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 25

Why Organisations Dont Reengineer?

Complacency Political Resistance New Developments Fear of Unknown and Failure

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

26

13

Key Steps
Select the Process & Appoint Process Team Understand the Current Process Develop & Communicate Vision of Improved Process Identify Action Plan Execute Plan

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

27

Reference
Laudon, K. & Laudon, J. (2006): Management Information Systems:Managing the Digital Firm, 9th ed. Prentice Hall Abdisalam Issa-Salwe, Lecture Notes, Thames Valley University, 2008. Dave Chaffey, Paul Bocij, Andrew Greasley and Simon Hickies (eds) (2003): Business Information Systems: Technology, Development and Management, Pearson Education Limited, London.

Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University

28

14

Tutorial Question
Getting approval to implement a reengineering project is often difficult. Management is more likely to approve your request if you present them with a cohesive justification. A complete business case contains all of the facts that justify the BPR effort. Discuss
Abdisalam Issa-Salwe, Faculty of Computer Science & Engineering, Taibah University 29

15