Final-Comprehensive Plan- Information Systems Strategic Planning

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Computer Science

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Following the four phases of the strategic planning process outlined in the course text (Visioning, analysis, direction, recommendation), develop a full strategic plan for your current business or one with which you are keenly familiar. Outline approaches to be taken at each step of the planning process. Summarize the plan with the next steps to be taken for implementation and ensuring success. Paper should be APA-formatted, 6-8 pages in length and include at least 3-4 external references in addition to the course text.

Note: Do not name individuals within the organization, but use position titles instead.

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AU5073 half title 9/6/05 12:34 PM Page 1 A Practical Guide to Information Systems Strategic Planning Second Edition OTHER AUERBACH PUBLICATIONS Agent-Based Manufacturing and Control Systems: New Agile Manufacturing Solutions for Achieving Peak Performance Massimo Paolucci and Roberto Sacile ISBN: 1574443364 Curing the Patch Management Headache Felicia M. Nicastro ISBN: 0849328543 Cyber Crime Investigator's Field Guide, Second Edition Bruce Middleton ISBN: 0849327687 Disassembly Modeling for Assembly, Maintenance, Reuse and Recycling A. J. D. Lambert and Surendra M. Gupta ISBN: 1574443348 The Ethical Hack: A Framework for Business Value Penetration Testing James S. 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Fung ISBN: 0849330270 Outsourcing Software Development Offshore: Making It Work Tandy Gold ISBN: 0849319439 The HIPAA Program Reference Handbook Ross Leo ISBN: 0849322111 Quality Management Systems: A Handbook for Product Development Organizations Vivek Nanda ISBN: 1574443526 Implementing the IT Balanced Scorecard: Aligning IT with Corporate Strategy Jessica Keyes ISBN: 0849326214 A Practical Guide to Security Assessments Sudhanshu Kairab ISBN: 0849317061 Information Security Fundamentals Thomas R. Peltier, Justin Peltier, and John A. Blackley ISBN: 0849319579 The Real-Time Enterprise Dimitris N. Chorafas ISBN: 0849327776 Information Security Management Handbook, Fifth Edition, Volume 2 Harold F. Tipton and Micki Krause ISBN: 0849332109 Software Testing and Continuous Quality Improvement, Second Edition William E. Lewis ISBN: 0849325242 Introduction to Management of Reverse Logistics and Closed Loop Supply Chain Processes Donald F. Blumberg ISBN: 1574443607 Supply Chain Architecture: A Blueprint for Networking the Flow of Material, Information, and Cash William T. Walker ISBN: 1574443577 Maximizing ROI on Software Development Vijay Sikka ISBN: 0849323126 The Windows Serial Port Programming Handbook Ying Bai ISBN: 0849322138 AUERBACH PUBLICATIONS www.auerbach-publications.com To Order Call: 1-800-272-7737 • Fax: 1-800-374-3401 E-mail: orders@crcpress.com AU5073 title page 9/6/05 12:32 PM Page 1 A Practical Guide to Information Systems Strategic Planning Second Edition By Anita Cassidy Boca Raton New York Published in 2006 by Auerbach Publications Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742 © 2006 by Taylor & Francis Group, LLC Auerbach is an imprint of Taylor & Francis Group No claim to original U.S. Government works Printed in the United States of America on acid-free paper 10 9 8 7 6 5 4 3 2 1 International Standard Book Number-10: 0-8493-5073-5 (Hardcover) International Standard Book Number-13: 978-0-8493-5073-3 (Hardcover) Library of Congress Card Number 2005050533 This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable efforts have been made to publish reliable data and information, but the author and the publisher cannot assume responsibility for the validity of all materials or for the consequences of their use. No part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers. For permission to photocopy or use material electronically from this work, please access www.copyright.com (http://www.copyright.com/) or contact the Copyright Clearance Center, Inc. (CCC) 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400. CCC is a not-for-profit organization that provides licenses and registration for a variety of users. For organizations that have been granted a photocopy license by the CCC, a separate system of payment has been arranged. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Cassidy, Anita. A practical guide to information systems strategic planning / Anita Cassidy.-- 2nd ed. p. cm. Includes bibliographical references and index. ISBN 0-8493-5073-5 (alk. paper) 1. Information technology--Management--Planning. 2. Strategic planning. I. Title. HD30.2.C395 2005 658.4'038--dc22 2005050533 Visit the Taylor & Francis Web site at http://www.taylorandfrancis.com Taylor & Francis Group is the Academic Division of T&F Informa plc. and the Auerbach Publications Web site at http://www.auerbach-publications.com Contents Pr eface ..................................................................................................................... xi Acknowledgments .............................................................................................. xv About the Author .............................................................................................. xvii 1 Purpose of Infor mation Systems Strategic Planning ................ 1 Benefits of IS Planning..................................................................................... 4 Effective Management of an Expensive and Critical Asset to the Organization ................................................................................................. 5 Improving Communication and the Relationship between the Business and IS Organization ..................................................................... 6 Aligning the IS Direction and Priorities to the Business Direction and Priorities ................................................................................................ 7 Operational Excellence ......................................................................... 10 Customer Intimacy ................................................................................ 11 Product Leadership ............................................................................... 12 Identifying Opportunities to Use Technology for a Competitive Advantage and Increase the Value to the Business................................ 14 Planning the Flow of Information and Processes................................... 15 Efficiently and Effectively Allocating IS Resources ................................. 16 Reducing the Effort and Money Required Throughout the Life Cycle of Systems ........................................................................................ 17 Planning Approach ......................................................................................... 19 Conclusion ....................................................................................................... 21 Notes for My IS Strategic Planning Project................................................... 22 References........................................................................................................ 22 2 IS Governance ............................................................................. 23 Definition of Governance............................................................................... 23 Importance of Governance ............................................................................ 24 Approaches to Governance ........................................................................... 27 Involvement of the Organization................................................................... 29 Executive Management................................................................................... 30 v vi  A Practical Guide to Information Systems Strategic Planning IS Steering Committee .................................................................................... 31 CIO................................................................................................................... 34 IS Organization................................................................................................ 35 Implementation Team..................................................................................... 36 Conclusion ....................................................................................................... 37 Notes for My IS Strategic Planning Project................................................... 38 References........................................................................................................ 38 3 The Planning Pr ocess ................................................................ 39 Planning Components..................................................................................... 39 Planning Process ............................................................................................. 41 Phase 1: Visioning...................................................................................... 41 Phase 2: Analysis........................................................................................ 44 Phase 3: Direction...................................................................................... 44 Phase 4: Recommendation ........................................................................ 46 Plan Contents .................................................................................................. 47 Plan Development .......................................................................................... 48 Conclusion ....................................................................................................... 51 Notes for My IS Strategic Planning Project................................................... 51 4 The Visioning Phase ................................................................... 53 Initiate and Manage the Project..................................................................... 53 Finalize Objectives, Goals, and Scope ..................................................... 54 Scope...................................................................................................... 59 Identify Resources, Roles, and Responsibilities; Interview Participants.................................................................................................. 63 Confirm Deliverables and Work Plan....................................................... 65 Draft Deliverable Templates...................................................................... 65 Announce the Project; Conduct Project Orientation............................... 65 Establish Ongoing Project Governance, Communications, and Status Report ....................................................................................... 66 Review and Confirm Project Plan (Milestone) ........................................ 66 Understand the Business Situation and Vision............................................. 67 Review Business Documentation.............................................................. 68 Develop Business Interview Questions, Surveys, and Workshop Structure ...................................................................................................... 70 Surveys ................................................................................................... 72 Schedule Business Interviews and Workshops........................................ 79 Conduct Business Interviews, Workshops, and Surveys......................... 80 Document Business Interviews, Workshops, and Surveys ..................... 80 Review and Confirm Business Input........................................................ 81 Document and Confirm the Business Analysis ............................................ 81 Document Current Business Description, Vision, Values, Goals, Strategies, Direction, Operating Vision, Business Projects, and Initiatives..................................................................................................... 81 Business Operating Vision.................................................................... 82 Contents  vii Global Requirements............................................................................. 84 Document Industry Business Trends, Business, and Customer Requirements .............................................................................................. 87 Environmental Business Requirements................................................ 87 External Business Requirements .......................................................... 88 Value Chain Analysis............................................................................. 90 Business Measures................................................................................. 91 Business Processes ................................................................................ 94 Business Requirements ................................................................................. 100 Document Business Strengths, Weaknesses, Opportunities, and Threats............................................................................................... 101 Document Business Impact on IS .......................................................... 102 Review and Confirm Business Situation Understanding....................... 119 Conclusion ..................................................................................................... 119 Notes for My IS Strategic Planning Project................................................. 120 5 The Analysis Phase ................................................................... 121 Understanding the Current IS Situation ...................................................... 121 Review IS Documentation ....................................................................... 121 Develop IS Interview Questions, Surveys, and Workshop Structure .................................................................................................... 130 Surveys ................................................................................................. 132 Schedule IS Interviews and Workshops................................................. 135 Conduct IS Interviews, Workshops, and Surveys.................................. 135 Document IS Interviews, Workshops, and Surveys .............................. 136 Document the Current IS Situation ........................................................ 136 Business Application Environment .................................................... 138 Desktop Environment ......................................................................... 144 Server Environment............................................................................. 153 Network Environment......................................................................... 160 Telecommunications Environment ..................................................... 160 Data Center Environment ................................................................... 161 IS Organization.................................................................................... 162 Project Workload (Current and Backlog) .......................................... 167 Processes.............................................................................................. 173 Budget and Metrics ............................................................................. 178 Review and Confirm IS Situation............................................................ 178 Analyzing the Current IS Situation .............................................................. 178 Conduct Industry Benchmarking ............................................................ 179 Identify IS Industry Trends and Competitor Profiles ............................ 179 Competitor Profiles ............................................................................. 185 Review Information Needs and Data Context Model ........................... 186 Review Business Processes and Use of Applications ........................... 187 Identify High-Level Functional Requirements and Gaps ...................... 187 Business Requirements Analysis ........................................................ 187 Business Operating Vision Analysis................................................... 191 viii  A Practical Guide to Information Systems Strategic Planning Environmental Business Requirements Analysis............................... 193 External Business Requirements Analysis ......................................... 194 Business Strengths, Weaknesses, Opportunities, and Threats Analysis ................................................................................................ 194 Develop IS Strengths, Weaknesses, Opportunities, Threats (SWOT), Risks, Technology Opportunities, Business Enablers............ 194 Develop IS Assessment Scorecards; Rate with Team ........................... 203 Review and Confirm IS Analysis ............................................................ 214 Developing Recommendations and Solution Alternatives......................... 214 Develop Business Application Options and Recommendations .......... 214 Develop Infrastructure Options and Recommendations....................... 215 Develop Organizational Options and Recommendations..................... 216 Develop IS Process Options and Recommendations............................ 217 Review and Confirm Recommendations ................................................ 218 Conclusion ..................................................................................................... 218 Notes for My IS Strategic Planning Project................................................. 219 References...................................................................................................... 220 6 The Direction Phase ................................................................. 221 Developing the IS Vision and Direction..................................................... 222 Developing the IS Vision and Mission................................................... 222 Vision ................................................................................................... 224 Mission ................................................................................................. 227 Values ................................................................................................... 230 Develop the IS Goals and Strategies...................................................... 230 Goals .................................................................................................... 230 Strategies .............................................................................................. 235 Determine the IS Balanced Scorecard and Metrics............................... 245 Review and Confirm the IS Vision and Direction ................................ 249 Developing the IS Plan ................................................................................ 249 Develop the Business Application Direction......................................... 249 Information Architecture..................................................................... 259 Develop the E-Business Direction.......................................................... 260 Develop the Technical Infrastructure Direction .................................... 266 Develop the Organizational Direction ................................................... 272 Develop IS Process Direction ................................................................. 283 Develop a Prioritization Process............................................................. 286 Prioritizing by Business Objective .......................................................... 288 Prioritizing by Forced Ranking .......................................................... 289 Prioritizing by Business Performance Impact Criteria...................... 290 Review and Confirm the IS Plan ............................................................ 290 Identifying IS Projects................................................................................... 290 Estimate IS Costs ...................................................................................... 293 Identify Business Benefits ....................................................................... 293 Prioritize IS Projects ................................................................................. 294 Review and Confirm the IS Projects and Prioritization ........................ 294 Conclusion ..................................................................................................... 295 Notes for My IS Strategic Planning Project................................................. 295 Contents  ix 7 The Recommendation Phase ................................................... 297 Develop a Road Map ................................................................................... 298 Document a Detailed Road Map ............................................................ 298 Summarize Costs ...................................................................................... 298 Summarize Organization Impact............................................................. 303 Identify Risks, Concerns, Risk Mitigation, and Readiness Assessment................................................................................................ 304 Review and Confirm Road Map ............................................................. 315 Develop a Business Case ............................................................................. 315 Summarize Business Benefits and a Business Case for Action ........... 315 Develop a Communication Plan and Presentation Summary .............. 321 Develop an Ongoing Planning Process and Steering Committee ....... 322 Review and Confirm the Business Case ................................................ 323 Communicate the Plan ................................................................................. 323 Finalize the Detailed Plan Document .................................................... 323 Develop the Summary Presentation ....................................................... 329 Present the Plan and Discuss It.............................................................. 330 Conclusion ..................................................................................................... 331 Notes for My IS Strategic Planning Project................................................. 332 8 Next Steps .................................................................................. 333 Marketing ....................................................................................................... 333 Executing ....................................................................................................... 335 Project Plan............................................................................................... 335 Project Kick-Off Meeting ......................................................................... 339 Request for Quote.................................................................................... 340 RFQ Response Review............................................................................. 344 Software Demonstrations......................................................................... 349 Vendor Selection ...................................................................................... 352 Managing ....................................................................................................... 352 Measuring ...................................................................................................... 357 Conclusion ..................................................................................................... 357 Notes for My IS Strategic Planning Project................................................. 358 Index .................................................................................................. 359 Preface The second revision of this book reflects the continual changes and advances in technology, and provides improvements and additional detail in the planning methodology. The process outlined in this book has been enhanced from lessons learned by using the methodology in various companies, cultures, and environments. Additional details, examples, and templates are included to help guide your planning process. Many organizations today continue to experience increasing information systems (IS) costs. In addition to increasing costs, organizations are finding their IS to be a bottleneck to business improvements and growth. These organizations are assessing their IS and asking basic yet tough questions, such as:  Are we obtaining true value from the investments in IS?  Are the current IS applications meeting the business needs?  Are we working on the right IS projects to provide the most value to the business?  Will our current applications meet business requirements in the future?  What IS mission, objectives, strategies and computing architectures are necessary to meet the business challenges of the future? Old business application software is hampering many companies’ ability to implement new technology. Many organizations are ready to invest in new technology to gain a competitive edge in the marketplace, or may even find improvements necessary to stay in business. Organizations will continue to invest more in new IS hardware and software than they have in the past. Today, there are more options, packages, and directions available to choose from than in the past, making a planned direction more important than ever. Many industry examples show that xi xii  A Practical Guide to Information Systems Strategic Planning companies that have gained a competitive edge have effectively invested in IS initiatives. A properly planned IS direction is a critical component for an organization’s success. Following the process outlined in this book will improve communication between business management and the IS function. Often, business management does not have a good understanding of the IS function and might have questions such as:  What is our current IS environment? What computers and software do we use to manage the business? What is the condition of our IS environment? What are the strengths, weaknesses, and areas of vulnerability of our IS environment? Do the IS and associated processes help us facilitate the delivery of services and products to our customers in the most cost-efficient and effective manner?  How can we make the best decisions about our IS investments? What should be our investment priorities?  What is our IS resources currently working on? How do the IS employees spend their time? How does the size of our IS organization compare with the industry?  How much money is the company spending on IS? How does our IS spending compare to the industry? How much has the spending grown over the past few years? We have been doing well without substantially increasing spending, so why do we need to spend more now? How can we decrease our spending on IS, or spend our money more wisely?  What are the industry technology trends, and how do the industry trends affect us?  What is the status of our competitors’ IS? Is our company behind or ahead of our competitors?  Do we have the internal skills necessary to take the environment where it needs to be? How much can we do with internal resources, and how much should we utilize external resources? Why does it take so long to get things done? Similarly, IS management may not have a thorough understanding of the business direction and might have questions such as:  What are the business mission, objectives, and strategies?  What type of business will the company be in during the next few years?  How does the business want to function in the future?  What are the true business requirements and priorities? Preface  xiii  What are the key information needs?  What are our customers and suppliers demanding of us?  Are there any IS issues constraining the business? An effective IS strategic planning process can answer all these questions and provide a communication vehicle between the IS function and business management. The foundation of the process outlined in this book is that the business direction and business requirements must drive the IS direction and computing architecture. Although this sounds like a basic concept, many organizations will actually reverse the concept and let the attractive new technology drive their direction. In actuality, these organizations end up looking for a business problem to solve with the technology they want to utilize. This book will outline a systematic approach to guide you through the process of developing a solid IS plan that is formulated from the business plan. Even if your organization lacks a defined business plan, the approach in this book steps you through a fact-gathering process to obtain the necessary information regarding the business direction. Although IS planning is critical, many organizations spend too much time and money in the planning process, complete the plan in isolation, or skip the planning process altogether. This can result in overanalysis, an inability to obtain approval of the plan, or the spending of millions of dollars solving the wrong problem. Many companies mistake a proper IS strategic planning process as something that must take many months (or even years) and thousands (or even millions) of dollars. However, with a solid process and methodology in place, you can complete the planning process with your own internal resources in a matter of weeks or a few months. This book will outline a quick and easy approach to completing a thorough plan. It will also provide a set of concepts, techniques, and templates for analyzing, organizing, and communicating the information in the IS strategic plan. The process described will assist the organization with a collaborative effort that will result in a solid direction that has the support of the entire organization. Through the process, you will have a plan that will sell itself to management and others who need to approve the necessary investment. The book provides a step-by-step process for developing a strategic plan. Modify the process to fit your particular needs, organization, and culture. The following explains the organization of the book:  The first chapter of the book provides background to the purpose of an IS strategic plan.  Chapter 2 discusses a framework for the governance process that must be the foundation of the strategic planning process. xiv  A Practical Guide to Information Systems Strategic Planning  The third chapter provides an overview of the four phases of the planning process.  Chapter 4 through 7 review each of the four phases of the planning process, including visioning, analysis, direction, and recommendation.  Chapter 8 outlines what to do next and how to make planning an ongoing process. This book is intended for both IS executives and consultants as well as business executives interested in improving their IS environment and utilizing IS as a competitive advantage. If your IS function is an integral part of the business and well connected with the business plans and direction, portions of this planning process will go quickly. For companies without a solid business plan or companies without aligned IS, the process will outline a systematic approach to determining and documenting the business direction so that it can be the foundation for the IS direction. Although this book presents developing an IS strategy as a formal project, CIOs may choose to handle much of what is included as part of their everyday organizational listening and ongoing planning process. This book references information systems (IS) as the name of the function that provides computer-based business applications and technology for the organization as well as the technology itself. In some companies, this organization may be referred to as information technology (IT), information services (IS), information resources (IR), or similar names. I sincerely hope this book helps you in your journey to world-class IS. Good luck on your planning process! Acknowledgments Without the support of my family and friends, this book would not have been possible. First, I would like to thank my husband Dan for his assistance on this book. With Dan’s 28 years of experience in IS, his insight and comments have been of tremendous value in writing this book. His continual support, understanding, patience, and encouragement are astounding. I would also like to thank my sons, Mike and Ryan, for giving me something to worry about, think about, and focus on besides this book. As they enter college and choose a profession, I hope that they are fortunate enough to land in a career that is their true passion. Of course, my mother, Randie Ekenberg, continues to be an inspiration, providing love and support. Thanks also goes to my friend Stephanie Renslow for keeping me on target by periodically asking “Are you done yet?” I would also like to thank all those with whom I have worked during the years from both the business and IS areas. They have given me continuous support and ideas as I have developed the strategic planning process presented in this book. In particular, I would like to thank several colleagues who have spent countless hours reviewing and providing input into this book, including Ruth Dessel, Barb Zimmerman, Bob Lewis, Dan Christian, and Keith Guggenberger. This book would not have been possible without their expert insight and input. I would also like to thank my clients the past eight years, because they have allowed me to do what I really love doing. xv About the Author Anita Cassidy has over 27 years of experience in IS. She has served as director, vice president, and CIO at worldwide manufacturing companies. For the past seven years, Cassidy has been founder and CEO of a consulting organization, Strategic Computing Directions Inc., in Minneapolis, Minnesota. Strategic Computing Directions (http:// www.strategiccomputing.com) specializes in executive IS management consulting in the areas of:       Strategic planning IS assessment E-business strategy Interim and advisory CIO IS process improvement Software selection Cassidy has personally completed over 40 IS strategic plans and assessments for companies of all sizes and in a variety of industries. She has published articles in national magazines, is a writer for a technology research company, and is a national speaker on IS strategic planning. In addition to A Practical Guide to Information Systems Strategic Planning, Cassidy has authored the following books, published by St. Lucie Press:  A Practical Guide to Information Systems Process Improvement (2000), with Keith Guggenberger  A Practical Guide to Planning for E-Business Success (2002) Cassidy has a BS degree from the University of Minnesota and also attended St. Cloud State University. She can be reached at: acassidy@strategiccomputing.com. xvii Chapter 1 Purpose of Information Systems Strategic Planning He who is outside his door already has a hard part of his journey behind him. — Dutch pr overb The word “strategy” is often misused. In some circles, it is synonymous with “important.” In this book, “strategy” refers to a global level of thinking about the information systems (IS) organization and its integration with the rest of the enterprise. A strategy must be coherent, consistent, and directional. Coherent means it is clear to both the business and IS organization. Consistent means that it is constructed to fit together. Directional means it directs changes of some kind. Strategies do not merely endorse the status quo. A strategic plan is more than a statement of strategy. Although it might seem obvious that merely stating strategy is not enough, many strategies stop with a statement of intent. This book is about the strategic planning process, about defining strategic intent and then developing a plan of 1 2  A Practical Guide to Information Systems Strategic Planning action for achieving the envisioned changes. Often, the strategic planning effort results in a book on the shelf. To be effective, implement strategic planning as an ongoing process to ensure it keeps current as business and technology changes. Why do we need to complete strategic planning for the IS function? What is the purpose of the planning process? The planning process enables IS to help the organization meet its business objectives. The IS strategic planning process may be initiated in an organization for a variety of reasons. Some examples include:  A recently acquired company initiated the planning process to determine how to meld the systems and processes of two previously separate organizations. Business management viewed the application systems and processes as critical vehicles for providing customers with a common face for the new organization. In addition, executive management wanted to obtain consistent information to manage the newly merged company as one organization. The new business also saw an opportunity to leverage synergies and reduce overhead costs of the previously separate organizations.  A small and growing company was experiencing severe quality problems and found that the company was losing its competitive edge in the marketplace. In the past, the company had very favorable statistics and key indicators (such as sales, inventory turns, days sales outstanding, and profits) relative to the competition. The company was gradually falling behind the industry as sales and profits were on a downward trend. Management viewed IS applications as a major roadblock to improving the quality, business processes, and key measurements. Executive management initiated the planning process to review the business application systems available on the market to determine the best direction.  A newly hired vice president of IS in a government agency initiated a strategic planning process to assess the current IS situation. The planning process gave the new leader an opportunity to provide input into the direction and create a vision of IS for the future.  In another company, the business departments were frustrated with the response of IS. The departments did not feel that the IS department was responsive to the business. Response for any changes requested by the business was extremely slow. The business applications simply could not keep pace with the changes in the business. Management initiated the strategic planning process to determine the cause of the problems, to link IS closer to the business direction, and to determine the proper solution. Purpose of Information Systems Strategic Planning  3  A manufacturing division of a large worldwide organization was under pressure to implement a particular vendor-supplied application package selected by the corporate division of the company. The manufacturing division was not directly involved in the selection of the software and felt the package would probably not be the best fit for the unique business requirements of the division. Divisional executive management initiated the IS strategic planning process to determine the best solution rather than simply following the desired corporate direction.  One company faced the common problem of a growing and endless backlog of IS projects. This company began the IS strategic planning process to prioritize the projects and align the IS priorities with the business priorities. The IS department also wanted to determine if it should continue to build upon and invest in the current systems or start over with a new set of business applications.  A company faced the unpleasant task of downsizing. Executive management initiated the IS strategic planning process to determine ways to reduce costs and gain efficiencies. Management wanted to evaluate the possibility of leveraging or consolidating multiple data centers and differing business applications to reduce costs while still meeting the business needs.  A high-growth company restructured its business to operate on a worldwide basis. Previously, the company functioned on a geographic basis from both a business accountability standpoint as well as having unique IS in each geographic area. Management began the IS planning process to determine how to bring the information together so that it could manage the new worldwide business.  An organization had completed a business planning process to determine and document its business vision, mission, and objectives. Management began the IS strategic planning process to develop an IS strategy and direction aligned with the organization’s newly stated business direction.  A company let its IS grow over time without a plan in place. After many years, the firm had high IS costs, redundant systems, and systems that were very slow and costly to change. It initiated the strategic planning process to obtain a complete inventory and understand its current environment. The company used the planning process to identify redundant systems, identify opportunities to reduce its total cost of ownership, and identify opportunities to improve its ability to respond to business changes in a timely manner. 4  A Practical Guide to Information Systems Strategic Planning Value to the Business • IS strategic planning • Prioritization • Portfolio management • Program management • Project management • Business process re-engineering • Analysis and design • Technical design • Systems development • Maintenance • Support • Testing • Operations Figure 1.1 IS responsibilities Benefits of IS Planning Although the reasons driving the development of an IS strategic plan may be different, there are similarities in the benefits of a plan. There is more value and benefit in the strategic planning function than many other IS responsibilities, as shown in Figure 1.1. The benefits of IS strategic plans include:  Effective management of an expensive and critical asset of the organization  Improving communication and the relationship between the business and IS organization  Aligning the IS direction and priorities to the business direction and priorities  Identifying opportunities to use technology for a competitive advantage and increase the value to the business  Planning the flow of information and processes  Efficiently and effectively allocating IS resources  Reducing the effort and money required throughout the life cycle of systems Each of these benefits is discussed in more detail below. Syste Infor siness Plan sG B u si es m o al s & Ob je ve s c ti n Bu on ati l an sP m Purpose of Information Systems Strategic Planning  5 Figure 1.2 IS plan critical for the business Effective Management of an Expensive and Critical Asset to the Organization A strategic plan is a key component to the success of any IS function and an important factor in assisting a company in meeting its business objectives, as shown in Figure 1.2. However, business management may view IS as a necessary evil rather than as a critical business function. Many times this is because business management does not understand the function and there is a lack of communication. IS may be slow to change, hampering the business, or out of line with the business direction. If this is happening in an organization, it may even be difficult for the IS department to schedule time with executive management for a presentation. Why should management take the time to understand IS if it is not in touch with the business? Management may not even realize the potential benefits and opportunities that IS can offer to help meet business objectives. For any company, IS are an expensive asset. If the company invested the same amount of money in a building, each member of management would know the location, age, and purpose of the building. Many companies spend more money on their IS, yet business management may not know as much about their systems as they do about their building! Similarly, a manufacturing company always knows the unit cost of the products manufactured and the drivers of the costs, and understands how to manage the costs. Does management know how much money the company is spending on IS? Do managers realize how much each business application is costing 6  A Practical Guide to Information Systems Strategic Planning Industry Forces Result The recession causes increased economic pressures on company and IS budgets IS must demonstrate how it adds value to the business. IS alignment with the business is critical as it increases the value of IS. Technology is an increasingly important tool for a competitive advantage in the market Businesses must use and choose technology wisely. IS can impact the bottom line. Increased IS demands increase the importance of aligned priorities. Figure 1.3 IS budget pressures and demand increases and if they are worth maintaining? Do they know the cost per e-mail, the cost per help desk call, and the cost per server? What is the company really getting for its investment, and will the systems meet the company’s needs in the future? Do managers know the level of service quality and responsiveness that IS delivers? Do they know how to manage IS costs through demand planning, capacity and resource planning, and monitoring as they would any other asset? Management must have a clear understanding of the IS environment to manage this asset as effectively as it would any other business asset. Budget pressures are common in many companies. Continually doing more with less money is a common challenge faced by IS management. However, as the IS budget is squeezed, the business appetite for new technology and improved business processes increases, as shown in Figure 1.3. The IS planning process is a tool to balance these conflicting forces. Through the planning process, the organization can proactively balance conflicting forces and manage the direction of IS rather than continually building upon the current IS investment in a reactionary mode. As a result, IS will be in a position to support the growing requirements and strategic direction of the business in the most cost-effective manner. Improving Communication and the Relationship between the Business and IS Organization Following this IS planning process will significantly improve communication between business management and the IS department. Business management will obtain an excellent understanding of current IS, as well Purpose of Information Systems Strategic Planning  7 as learn how to identify risks and opportunities. The IS organization will gain a greater understanding of the business direction and be able to identify how technology can assist with the company’s objectives. The mutual understanding that business management and IS will gain working through this process will help establish a solid direction for IS that is in alignment with the business goals, and it will assist in the approval process necessary to get the new direction sold throughout the organization. By improving communication and aligning IS, the environment can significantly improve so that the business perceives IS as a critical component to achieving company objectives. Aligning the IS Direction and Priorities to the Business Direction and Priorities Over the past few years, companies have felt increasing pressure to improve efficiency and effectiveness, decrease costs, and enhance competitive position. Companies can attain these goals through aligning the IS direction with the business direction. Proper alignment can have a considerable impact on a company’s financial performance. Although much is written about aligning IS with the business, companies still struggle to achieve effective alignment. In fact, in many surveys, alignment is often cited as the top management concern. What is alignment? How do you achieve alignment? When all IS activities provide optimal support for the business goals, objectives, and strategies, then IS and the business are in alignment. True alignment implies that the IS strategy and the business strategy are developed concurrently rather than sequentially so that technology enables the business strategy. It is important to embed the IS strategy within the business strategy, rather than developing it as an afterthought. Alignment is not just “lip service.” Companies should integrate IS with the business in a symbiotic relationship. As shown in Figure 1.4 and Figure 1.5, the IS strategy, organization, processes, infrastructure, applications, projects, budget, and metrics should reflect alignment with the business. As Figure 1.6 indicates, alignment and distinct correlations should be visible when reviewing each section of a company’s business plan and IS plan. All of the IS components should have the same objectives and direction as the business. It is easy to identify organizations that have not achieved alignment. Symptoms of poor alignment include:  Canceled projects  Redundant projects 8  A Practical Guide to Information Systems Strategic Planning Information Systems Business Strategy Organization Goals Processes Objectives Infrastructure Strategies Applications Projects Budget Metrics Figure 1.4 Alignment components Business Strategy IS Strategy Technology People Processes Metrics Business Value and Alignment!! Figure 1.5 Business value and alignment      Projects that do not deliver the intended value Lack of coordination between the business and IS Systems that do not meet the needs of the business Systems that cannot respond quickly to the demands of the business Business users unsatisfied with IS services Purpose of Information Systems Strategic Planning  9 Business Plan Components Drives IS Plan Components Drives IS vision, mission, objectives and strategies Business mission, vision, values, priorities Direction Industry structure, markets, relationships, finances Business strengths, weaknesses, opportunities, threats Business requirements, success factors, operating vision, key metrics Business objectives, strategies Finances Industry Analysis Identifies future IS requirements, competitive advantages for IS Situation Analysis Impacts ability to execute projects, identifies potential IS projects, impacts IS strengths, weaknesses, opportunities, and threats Success Criteria Drives IS metrics, identifies requirements Plans Identifies IS projects and priorities Financial Model Provides IS budget, project targets Figure 1.6 Business and IS plan alignment         Reactive, constant fire fighting Never enough resources; fighting for resources Churning of priorities; slow progress Uninvolved business management High IS costs with a sense of low value Systems and tools not fully utilized Lack of integration of systems IS decisions made as a result of emotion or opinions As shown in Figure 1.7, planning can align these organizations and totally transform them. In organizations where IS align with the business, different business strategies result in unique IS strategies and priorities, as shown by the examples in Figure 1.8. With alignment, IS can strengthen the business value proposition. In their book The Discipline of Market Leaders (AddisonWesley, 1995),1 Tracey and Wiersema outlined three alternative business value propositions. As shown in Figure 1.9, they contend that successful market leaders focus on one of the following value propositions: operational excellence, customer intimacy, or product leadership. Each of these value propositions results in very different IS focus and priorities, as outlined below. 10  A Practical Guide to Information Systems Strategic Planning With Planning, Companies Transform IS From This To This • Reactive, never enough resources, unpredictable results • “Squeaky wheel gets the oil” • Unhappy and uninvolved business management • High IS costs, sense of lack of value • Systems and tools not fully utilized, software bought and falls by the wayside, projects canceled • Lack of integration, islands of information, incomplete or inaccurate information • Few metrics, unknown value or progress • IS decisions made on opinions, may or may not be the best solution • IS used for efficiency • IS separate from the business • IS viewed as an expense to control • IS viewed as technical resources • Proactive, resources matched to business value, predictable results • IS priorities aligned with business priorities • Satisfied and involved users and business management • Costs matching value provided • Systems and tools planned in advance to meet the needs • Integrated accurate business information • Demonstrates, measures, and increases the value of IS • Planned IS architecture based on the business direction • IS used for business growth • IS inseparable from the business • IS viewed as an asset to manage • IS viewed as business problem solvers Figure 1.7 Planning transformation Business Strategy Low cost producer High customer satisfaction Operate globally High quality product Quick time to market IS Strategy Low cost technology Customer access Robust networks Quality modules, metrics Flexible systems IS Metric Total costs (business and IS) Customer satisfaction survey Worldwide average response time Number of incident reports Mean time to implement changes Figure 1.8 Different business and IS strategies Operational Excellence With a best total cost strategy, the business focus is on operating and business process efficiency, and on controlling costs. Companies with this strategy provide best price and overall value through standardized and automated processes. They focus on high quality, easy and quick customer service, quick delivery and purchasing, and products with limited choices. In operationally excellent companies, the IS strategy needs to focus on supporting business process improvement, increasing efficiencies, and Purpose of Information Systems Strategic Planning  11 Product Leadership “Best Product” Product Differentiation Operational Excellence “Best Total Cost” Operational Competence Customer Intimacy “Best Total Solution” Customer responsive “Successful market leaders must have one consistent driving niche as the basis for all company priorities and decisions” The Discipline of Market Leaders By Michael Treacy & Fred Wiersema Figure 1.9 Business strategies controlling costs. IS projects that receive high priority in this environment include cost reductions, business process improvements, financial analysis and reporting systems, quality systems, supplier performance delivery systems, logistics systems, mobile technology, and automation of the supply chain. A strong enterprise requirements planning (ERP) system is important to facilitate operational efficiency, including a strong forecasting and production planning system, to ensure that manufacturing meets and does not exceed demands. Customer service applications may also be important for efficiency. In these companies, IS organizations are often centralized to control costs and take advantage of specialized technical skills. IS processes need to be efficient, with focus on the operational processes such as problem management, change management, software distribution, performance, and availability management. IS metrics important in this environment are availability, reliability, and costs. An operationally excellent environment is depicted in Figure 1.10. Customer Intimacy A customer-intimate company supplies the best total solution for the customer, builds a strong relationship with the customer, and provides custom solutions at a reasonable cost. The business strategy focuses on customer satisfaction and customer needs. Similarly, the IS strategy should focus on both customer and business satisfaction and provide technology to improve the customer relationship. Flexible business applications must accommodate individual customer needs. Strong customer relationship 12  A Practical Guide to Information Systems Strategic Planning Operationally Excellent Environment – – – – Business Strategy Business process focus Standardized and automated processes Low prices Focus on costs, removing waste IS Strategy – Reduce IS costs – Focus on processes and efficiency – Support business process management Technology – ERP, Costing, Pricing, Supply Chain – Mobile technology – In general, conservative deployment IS Organization – Centralized – High technical skills – – – – IS Processes Performance and Availability Mgmt Change Mgmt Problem Mgmt Software Distribution Mgmt IS Metrics – IS costs – Availability, reliability, service levels – IS process improvements Figure 1.10 Operationally excellent environment management (CRM), customer IS, and order management systems are critical to forge and maintain a strong connection with the customer and maintain detailed information about each customer. A strong Internet site, support for customer surveys, and obtaining and acting on customer input is important. The business analyst role is a key IS role in this company. The IS organization in this type of company is typically more decentralized and organized by customer segment, in alignment with the organization. IS processes that are important include service-level management, external and internal customer satisfaction management, business analysis, and understanding requirements. Figure 1.11 depicts a customer-intimate environment. Product Leadership A product leader continually improves products and product offerings. Creativity, research and development, efficient engineering, and time to market are critical. The business strategy is future driven and focused on solving problems and anticipating customer needs. The culture is usually flexible, decisive, and used to taking risks. The IS strategy would include flexibility, providing technology that enables cooperation and creativity, and supporting product management. Critical applications include product data management (PDM), engineering and CAD systems, and a CAD interface to engineering, configurator, and project management. Knowledge management, conferencing, and product life cycle management (PLM) would be useful. The most effective IS organization is flexible, with Purpose of Information Systems Strategic Planning  13 Customer Intimate Environment Business Strategy – Driven by the customers – Customer satisfaction critical IS Strategy – Driven by customer needs – Support customer relationship mgmt Technology – CRM, Order Entry, Shipping, Marketing – Customer database is an asset – Internet functionality important IS Organization – Business Analysts critical role – Organized by customers – Decentralized IS Processes – Service Level Mgmt – Customer Satisfaction Mgmt – Business Analysis, Understanding Requirements IS Metrics – Customer satisfaction Figure 1.11 Customer-intimate environment Product Leadership Environment – – – – Business Strategy Future driven Decisive Risk taking Flexible organization IS Strategy – Technology enabling cooperation – Flexibility – Support product management IS Organization – Loose organization, flexible IS Processes – System Development Process IS Metrics – Time to implement projects Technology – Product Data Mgmt, Engineering systems, Document Mgmt, CAD to Mfg interface, Configurator, Project Mgmt – Knowledge mgmt, conferencing, PLM Figure 1.12 Product leadership environment some resources researching new technologies. Important IS processes include the systems development process to be able to implement new products and projects quickly. Figure 1.12 depicts a product leadership environment. Understanding the value proposition of the organization, be that of operational excellence, customer intimacy, or product leadership, helps 14  A Practical Guide to Information Systems Strategic Planning align technology strategies. Through the planning process, IS can be a part of the solution to business challenges and can significantly assist the business. IS can work in partnership with the business, with the business actually having ownership in the direction of IS. With the proper infrastructure, tools, and technology in place, IS can be responsive and proactive to changing business requirements. Identifying Opportunities to Use Technology for a Competitive Advantage and Increase the Value to the Business In the article titled “IT Doesn’t Matter,”2 published by the Harvard Business Review in 2003, Nicholas G. Carr created quite a controversy in both IS and business circles. Carr compares corporate computing to electrical generation or the steam engine: it is necessary to the corporation, but insufficient, to consider information technology (IT) anything but a utility function. Discussions and arguments continue to ensue as to whether IS can provide a company with a competitive advantage. Although I agree with Carr that the technical infrastructure portion of IS may have become a commodity, technical infrastructure is not the critical point of the discussion. How a company uses technology (i.e., business applications and automated business processes) can provide, has provided, and for the foreseeable future will continue to provide businesses with a competitive advantage. To ensure IS provides a competitive advantage, a robust planning process is required in which the IS department is a true business partner and identifies business opportunities using technology. Today, technology is integrated into every aspect of a business, business processes, and business interfaces. To obtain value and a competitive advantage, IS must partner with the business so they are one. Projects are not IS projects, but business projects. Technology by itself does not provide a competitive advantage, but redefining or aligning with the business strategy and optimizing business processes with the use of technology can provide a competitive advantage. As eloquently stated by Jim Collins in Good to Great, technology does not drive success, but it is an accelerator, or key enabler, of business success.3 As shown by Figure 1.13, the role of IS increases as the business increases the business process goals. To identify opportunities to utilize technology for a competitive advantage, it is important to understand the business strategy, because the technical opportunities are different depending on the business strategy. For example, an operationally excellent company achieves a competitive advantage by using technology to cut costs from its processes, improving profit margins, and allowing the company to reduce prices. As technology, Purpose of Information Systems Strategic Planning  15 Business Re-engineering Role of Information Systems High Business Process Improvement Business Support, Maintenance Low High Low Aggressiveness of Goal Figure 1.13 Role of IS in business process improvement systems, and improved business processes are implemented, business costs will decrease. For example, an insurance company found that the cost of a transaction handled in person by an agent could cost $5 to $13, and a fully automated transaction on the Web costs only three to six cents, which can provide a tremendous competitive advantage.4 Customer-intimate organizations may be able to achieve a competitive advantage by using technology for improved relationships with customers, proactively anticipating and addressing customers’ unique needs. Product leadership companies could use technology that accelerates the development cycle for a competitive advantage. With today’s economic and competitive landscape, all companies are looking for ways to execute more effectively, efficiently, and at a lower cost. IS are a very important lever that businesses can use to affect their profitability. IS can be used to improve business processes. As shown in Figure 1.14, companies that simplify, standardize, automate, integrate, leverage, and eliminate waste of both processes and technology realize an increased value and decreased cost to the business. The bottom line is that the IS plan can affect a company’s return on investment and profitability. Planning the Flow of Information and Processes Information is a valuable resource, and it is important to maximize its value for the corporation. Planning and managing the flow of information 16  A Practical Guide to Information Systems Strategic Planning Value • • • • • • Simplification Standardization Automation Integration Leveraging Waste elimination Business Processes = Of and Technology = ROI = Costs Figure 1.14 Increasing the value of the business throughout the organization can minimize labor, data redundancy, and inconsistency, in addition to increasing the quality and accuracy of the information. When systems grow haphazardly over time, islands of information can develop, resulting in additional labor to maintain the disparate systems. To improve the process flow, it is important to expand the IS planning process to look externally at the customer and all stakeholders that use the technology. The planning process will obtain input from all stakeholders, including customers, vendors, and partners. For each stakeholder, a company must identify and improve the process used to become aware of the business, engage in business, and complete business. Then, the company should review each step in its process to identify opportunities for technology to improve the process. Finally, a company should design systems and business processes so it is easy to do business with from the external customer perspective. Efficiently and Effectively Allocating Information Systems Resources In many businesses, IS allocates resources based on how much political influence different requestors have in the company, or even which executives become most vocal or angry when disappointed. Instead, the focus must be to develop systems that provide the largest business benefit and provide a competitive advantage. Planning will direct the effective allocation of IS resources and minimize the costs of redesign, rework, or correction of errors. The IS department must manage both tangible and intangible resources, design flexibility and sourcing skills into the plans, and become businessfocused consultants who help the company optimize all resources, not just computing resources. IS must utilize both computing and human resources to obtain the most value for the corporation. Figure 1.15 outlines the expectations of IS. Purpose of Information Systems Strategic Planning  17 Business Objectives Reduce Operating Costs Generate Money for the Company Information Systems Funding Build an Enabling Infrastructure Governance Coordination Transform the Business IS Staff Training Figure 1.15 Expectations of IS Typical Steps of an Information Systems Lifecycle Vendor Review Vendor Selection Project Approval Implementation Maintain, Enhance Figure 1.16 Typical steps in IS life cycle Reducing the Effort and Money Required Throughout the Life Cycle of Systems When a company has decided one of its systems no longer serves its needs and needs to be replaced, the company may jump right into a vendor review of business application packages. Typically, organizations will follow the steps outlined in Figure 1.16. Without proper planning, several steps of the traditional life cycle are inefficient and waste significant time and money. The vendor review and selection process takes a long time because it may be unclear exactly what the company is looking for, what is important, or what problems the company is trying to solve. The company may utilize manual methods of developing requirements and reviewing vendor packages on the market. Maintain/enhance Implementation Approval Vendor Select Vendor Review Level of effort/time 18  A Practical Guide to Information Systems Strategic Planning Figure 1.17 Time spent on typical life cycle The approval step also consumes a large amount of time, because costs are generally more than management anticipates. Management starts asking questions such as, “Do we really need it?” “Are there less expensive alternatives?” “What are the real benefits to be gained?” Implementation takes longer than anticipated because it is an inefficiently planned execution, business process changes, or priorities are not clear. Trying to make an incorrectly chosen package fit the business results in more effort expended in the maintenance years. Figure 1.17 shows the time and effort expended in the typical life cycle. Figure 1.18 outlines a more efficient process, including additional steps for strategic planning, implementation planning, and post implementation audit and planning. Adding time to the beginning of the process for strategic planning will significantly reduce the amount of time spent in vendor review, selection, and project approval. An automated vendor review process, tool, or methodology to identify the business objectives and issues will save a considerable amount of time and effort. The strategic planning step will also obtain management support throughout all levels of the organization, which significantly accelerates the approval process. Careful planning and prioritizing of the implementation can reduce the implementation time. Understanding and identifying the scope of business process reengineering can significantly improve the implementation time and success of the project. A post implementation audit and check against the strategic plan will align priorities for critical enhancements. Overall time expended on the process is significantly less, as depicted by Figure 1.19. Purpose of Information Systems Strategic Planning  19 Improved Information Systems Life Cycle Information Systems Strategic Plan Vendor Review Vendor Selection Project Approval Implementation Plan Implementation Audit and Plan Maintain, Enhance Maintain/enhance Audit & Plan Implementation Implementation Plan Approval Vendor Select Vendor Review Strategic Plan Level of effort/time Figure 1.18 Improved IS life cycle Figure 1.19 Time spent on improved life cycle Planning Approach The purpose of IS, like any other organization in the company, is to add value. The purpose of the planning process is to help the IS organization determine how to add optimum value to the company. How an IS organization adds value can be drastically different depending on the corporate or business unit strategies. The business unit strategy and 20  A Practical Guide to Information Systems Strategic Planning Corporate • Synergy • Portfolio Management Business Unit Department • Differentiation • Focus • Overall Cost Leadership • Add Value Figure 1.20 Corporate policy and business unit strategies corporate policy establishes the boundaries for the IS direction, as shown in Figure 1.20. A complex or large organization needs to consider the business direction and strategy of the corporation as well as the business unit strategy in its IS planning. For example, the corporation may have a stated strategy of synergy or a strategy of portfolio management. In a corporate environment of synergy, an IS planning process may be more closely aligned and bring business units together. The business units may even choose to leverage common systems across business units, where possible. A corporate environment of portfolio management would tend to drive the IS direction to be autonomous so that the business could be sold if necessary. Leveraging and sharing IS applications in a portfolio-managed company may not be easy or even encouraged. The business unit (division, company) strategy could be one of differentiation, focus, or overall cost leadership. Again, each of these business unit strategies would have very different IS approaches. If a business unit has a strategy of differentiation, it will be important to utilize IS to provide the company with a competitive advantage. Utilizing new technologies to beat competitors to the market with added service or functionality is important. This approach would be drastically different from an environment of overall cost leadership, where cost containment is the number one goal. Developing an IS strategic plan in a large corporate environment with multiple divisions or business units adds a level of complexity to consider before developing the approach and schedule for the IS planning process. Often, the planning effort may be constrained by politics, level of maturity, time, budget, or size of the various organizations involved. There are several different approaches to IS strategic planning in a large corporate environment with multiple divisions: Purpose of Information Systems Strategic Planning  21  Top-down approach: This is where the corporate unit completes the initial plan, establishes the areas of leverage, and recommends standards across business units. This planning approach works best in a company with a strong corporate entity with more autocratic power over the operating units.  Bottom-up approach: In this approach, the business units complete their strategic plans first. The corporate entity then completes its plan by identifying areas common across the business units. This planning approach works best in a company with autonomous divisions.  Combination: This is where the business unit plan is done jointly with a corporate entity, or initial high-level guidelines are developed as the basis for the business unit plans. The IS planning approach should mirror the business planning approach. If the business planning approach is more central, so should the IS planning approach be centralized. The remainder of this book assumes a business unit plan, but the same principles and philosophies would apply to a corporate plan. Conclusion  Recognizing the need for an IS strategic plan and beginning the process is the most difficult step in the journey.  Strategic planning will help establish IS as a key resource and enabler to meeting business goals.  Completing an IS strategic plan adds value to the organization. The plan can improve the management of the IS asset, improve communication between the business and IS department, align the IS direction with the business, provide business opportunities and increase the value to the business, and plan the flow of information and processes. A plan can also result in the proper allocation of resources and reduce the cost of the life cycle of systems. A company should think through what it hopes to accomplish with its strategic planning project.  The business strategies of operational excellence, customer intimacy, or product leadership require different IS strategies and priorities.  For a large complex organization, think about your planning approach from a corporate or divisional scope. 22  A Practical Guide to Information Systems Strategic Planning Notes for My IS Strategic Planning Project _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ _______________________________________________________________ References 1. Treacy, Michael and Wiersema, Fred, The Discipline of Market Leaders, Perseus Books, New York, 1995. 2. Carr, Nicholas G., “IT Doesn’t Matter,” Harvard Business Review, Harvard Business School Publishing Corporation, Product Number 3566, 2003. 3. Collins, Jim, Good to Great, Harper Business, New York, 2001. 4. O’Rourke, Shawn, “More than a Handshake: Integrating IT Is Key to Corporate Success,” DM Direct, October 2004, printed from DMReview.com. Chapter 2 IS Governance God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to distinguish the one from the other. — Reinhold Niebuhr (1892–1971) American Theologian Definition of Governance Governance is a fundamental framework that must be in place for an information systems (IS) strategic plan and strategic planning process to be successful. Governance provides a decision-making and accountability framework for effective management of IS. There may be many components to IS governance, but the basic purpose of governance is to identify what decisions will be made, and by whom, and to define how activities will be monitored against the plan. The IS strategic plan is a very important component to effective governance. Conversely, a good IS strategic plan will include a clearly documented process for IS governance. Governance ensures that IS delivers value to the business and that risks are sufficiently managed. Decisions may include areas such as the overall budget and allocation of resources; infrastructure; business applications, standards, policies, and priorities, IS guiding principles, and the IS strategic plan. Most often, the decisions are about time (schedule), money (budget), staffing levels, and allocations. However, other decisions also require governance, such as standards, policies, and desired behavior. One example of these decisions is setting a framework for when a company should utilize package software 23 24  A Practical Guide to Information Systems Strategic Planning What Who Executive IS Steering Committee CIO IS Operating Committee • • • • • • • • • Common Business Applications Operating Unit Business Applications IS Infrastructure IS Budget IS Standards IS Principles IS Strategic Plan Metrics Project Management Methodology IS Governance IS Business Liaisons How Project Request Process Project Prioritization Process Communication Process Change Mgmt Process, Systems Development Process, SLA, chargeback Project Management Office (PMO) Figure 2.1 IS governance and when custom software would be appropriate. The bottom line is that governance describes the process through which a company makes decisions. A variety of individuals or groups may be involved in these decisions and processes, such as an IS steering committee, executive management, board of directors, the CIO, IS management, business line management, or business liaisons. Although these groups or individuals may be slightly different from organization to organization, this chapter discusses the general roles and responsibilities of each relative to the IS planning process. Activities may be monitored through various established IS processes, such as the budgeting process, project request process, project prioritization process, change management process, systems development process, and service-level management process. It is through effective governance that strategic planning becomes a process rather than a singular event. Governance ensures effective and efficient implementation of the strategic plan. IS management and processes deal with present issues of IS, and governance deals with future issues. Figure 2.1 shows an example of the different IS governance components in a company. Table 2.1 shows an example of how a company documented its governance by outlining who would be responsible for what decision. Importance of Governance Governance is a common principle used to manage other company assets. For example, for human assets, or employees, governance may include Table 2.1 Decision-Making Matrix Common Business Applications Operating Unit Business Applications Executive IS Steering Committee Consulted Responsible Informed IS Operating Committees Consulted Consulted IS Business Liaison Informed CIO Responsible IS Standards, Processes IS Principles Responsible Consulted Consulted Responsible Responsible Informed Informed Informed Consulted Consulted Consulted Informed Informed Informed Consulted Consulted Consulted Consulted Responsible Responsible Consulted IS Budget IS Strategic Plan IS Governance  25 IS Infrastructure 26  A Practical Guide to Information Systems Strategic Planning a committee that does headcount planning, a human resources (HR) function that manages the performance review process, a committee that reviews the salary structures and determines increases, and a process to follow to hire an employee. Similarly, IS is a critical asset for a company and requires a set of committees or individuals and processes to manage the various aspects. The Sarbanes–Oxley Act of 2002 (SOX) r equires diligent management of company assets, and governance helps with the management of IS assets. If done properly, effective governance improves the efficiency of IS and simplifies life for the CIO as the function operates more smoothly on a day-to-day basis. If an organization is fighting about priorities, is slow in decision making, hears complaints about IS, feels that IS does not add value, or experiences disappointing returns on IS investments, there are probably opportunities to improve governance. Without governance, decision making may be slow and inconsistent because no one is sure who is responsible for the decision. In fact, IS governance issues are at the core of many reasons companies experience frustrations with their IS function. Some companies choose to outsource the IS function to relieve the frustrations. However, outsourcing requires even stronger governance and can actually make the problems more evident. Good, defined, and clear governance contributes to the success of the IS organization and the company as a whole. A study documented in the book IT Governance, by Peter Weill and Jeanne W. Ross (2004), reviewed IT governance in over 250 companies worldwide. Their research revealed that firms with above-average IT governance had more than 20% higher profits than firms with poor governance.1 The bottom line is that governance is a tool that implements the strategic planning pr ocess and improves IS efficiency, effectiveness, and overall success of the company. Through effective governance, a company can orchestrate its resources to execute a plan. Without clear and effective governance, a company will squander its efforts on a random assortment of unfocused actions. Individual strategies and projects may seem to make sense, but taken all together, they may not move the organization toward the overall strategic vision. Governance will manage the resources and initiatives at a crossfunctional level. Governance provides a systematic approach for reviewing, evaluating, prioritizing, sequencing, communicating, and managing initiatives so the entire organization stays focused. Clear IS governance is especially important because technology has become pervasive in companies. It is easy for any employee to go to his or her local technology store and purchase software or hardware to install. This software or hardware brought in through the “back door” can become critical to the functioning of the company. Without company agreement IS Governance  27 on processes and standards, it is difficult for the assets to be managed properly (i.e., data backed up, software that works properly in the environment, software that can be supported, protection against viruses). Standardizing technologies and processes whenever appropriate lowers a company’s cost of ownership, allows some leveraging of economies of scale, and provides architectural integrity. Governance makes the standardization possible and encourages desired behaviors. Governance is also critical because IS are expensive and limited by budgets. Any company has a limited bandwidth of resources and must manage how those resources are spent. More technologies and options are available today than ever in the past, and opportunities to utilize technology abound. Governance helps a company evaluate the opportunities and align projects with the business direction. Governance ensures that projects adding the most value to the business will be the projects initiated, therefore improving the ultimate value from IS. As business changes occur on a continuous basis, governance ensures that the IS plan and priorities change with the business. Clear, defined governance improves the relationship between the business and the IS organization, because there is structure and definition to the relationship. Regular and consistent processes improve communication. Clear decision making and governance helps build trust; everyone understands how decisions are made. Even if everyone doesn’t agree with every decision, people understand there was a defined process and reasons for a particular decision. Governance provides opportunities for IS and the CIO to consistently build credibility and trust with business management. Through governance, the IS organization can continually communicate how it is contributing business value. With proper governance, companies can transform into true business partners enabling new business opportunities. Approaches to Governance The following are examples of governance approaches that often occur without an intentional design: IS dictator: In this autocratic environment, the IS department makes all the decisions and keeps tight control over IS tools and assets. In this environment, the CIO and the IS organization are often criticized and disrespected. The business is often dissatisfied because it is not driving IS decisions. People have the power: In this environment, the individuals throughout the business may initially be satisfied because they can do what 28  A Practical Guide to Information Systems Strategic Planning they want, but dissatisfaction grows as pieces of the infrastructure do not work well together. This environment can be extremely wasteful and expensive, but the cost may not be visible — it may be hidden within individual department budgets. Democratic: In this environment, everything is a vote. It can be a timeconsuming and frustrating process. Often, the popular decision overrides the best decision. It can be political as opposing individuals vie for support. Business management monarchy: In this environment, senior business executives make all the IS decisions affecting the entire corporation. This could be good or bad depending on the skill and knowledge of management. Business unit power: It is common in a large company with unique divisions to have more power in the business units than centrally. Although this feudal method works well to achieve business unit objectives, it is difficult to leverage corporatewide strategic efforts across business units. This may also be more expensive because the business units may not use standards and common systems across business units. Corporate power: In a highly centralized environment, a central corporate entity often makes the decisions. Although this may have some efficiencies because synergies can be leveraged, it often results in unsatisfied business units that do not feel in control of their destiny. Indecisive: In this environment, no one makes decisions. There is a leadership void and unclear responsibilities on decision making. As shown in Figure 2.2, governance design develops decision-making structures and organizations that balance all the above interests. No single approach to governance design works for every company. The IS governance model must fit the company and management culture, the maturity and size of the organization, and the business strategy. A more structured, mature organization may have a strict governance process, many defined processes and metrics, and very formal IS steering committee meetings. A large company with many divisions may have a much different governance structure and approach than a very centralized corporate environment. Often, IS governance mirrors the power and decision-making structure in the business. Rather than fighting the inherent power, it is important to recognize the business decision-making structure and work within it. No matter how immature, informal, or small, the IS function requires some form of governance and involvement of the organization to be successful. In any size company, governance can be designed to make decisions quickly and be responsive. IS Governance  29 Information Systems Individuals IS Governance Balancing Act Management Corporate Business Units Figure 2.2 Governance balancing interests Involvement of the Organization How can a company ensure commitment to a strategic plan? Some IS organizations are very efficient in developing a strategic plan by taking their top computer technicians and outlining the technical architecture of the future. When these technicians complete their planning, they end up with a terrific technical plan, but one that business management hardly understands, let alone approves. These plans tend to accumulate dust on someone’s bookshelf and never really influence the direction of IS or the business. Where do these technical computing architecture plans go wrong? Their architects fail to involve the business and management throughout the process. It is through proper involvement of the business that a plan becomes executable and meaningful. Governance will monitor and provide ongoing management to the strategic plan. It is critical to have business management participation and ownership of the plan to ensure alignment with the business. The plan must reflect management ideas, styles, and objectives. To be successful, the entire organization must support the IS objectives. The single largest factor for a successful strategic plan that influences the organization is the involvement of the organization and ongoing governance. Communication and involvement are key aspects of the planning process. The planning process consists of 80% communicating and obtaining input, and 20% planning. So, how can an organization start developing an IS strategic plan? How is it possible to get this involvement and commitment, even if it is difficult to get management’s attention? How can an organization ensure ongoing 30  A Practical Guide to Information Systems Strategic Planning IS Steering Committee Executive Management CIO IS Strategic Planning Process Implementation Team IS Organization Figure 2.3 Involvement of the organization management to the plan and governance? An organization should start the strategic planning process by involving all levels of the business organization in the planning and governance process. There may be a need to form several planning groups to involve the various levels of the organization. The involvement of several groups and individuals in the initial plan development and ongoing governance is common in a typical organization, as shown in Figure 2.3: 1. 2. 3. 4. 5. Executive management IS steering committee CIO IS organization Implementation team Executive Management It is vital to involve executive management in the IS strategic planning process and the ongoing governance process. Ultimately, executive management will approve or reject the expenditure of funds. Managers’ involvement at the beginning and throughout the process will make the approval process significantly easier. It is important that executive management have direct input and understand the challenges and opportunities. The CIO, or top IS executive, typically reports to someone within the executive management level of the organization. Over the years, companies IS Governance  31 may have shifted the reporting relationship for the CIO to report to the CEO, the CFO, the COO, or other areas of executive management. Regardless of where the CIO reports, the CIO can be effective through leadership and by building strong relationships with the executive team. Although it is ideal if the CIO participates on the executive team and is at the table for business planning, a good IS planning process is still possible through interviews and informal relationships. Credibility and trust build influence, not organizational position. It is most helpful if the CIO has the commitment, involvement, and interest of the executive of the function and the CEO recognizes value in IS. If the CEO doesn’t initially recognize the value in IS, he or she should by the end of the planning process with the proper involvement and business connection. The role of the executive committee in the planning and governance process is to provide the IS organization with the strategic business direction and priorities. It is important to develop and maintain systems in accordance with the business objectives and direction. Typically, the executive committee addresses IS issues on an as-needed basis rather than having regularly scheduled meetings due to time constraints. The CIO, or top IS executive, initiates the presentations. It is extremely helpful to have a businessperson supporting large investments and projects make presentations to the executive committee. This involvement demonstrates business management’s ownership, support, and commitment to the recommendations because the projects are business projects, not IS projects. The business needs to sign up for and own the benefits that are anticipated from the investments. In summary, the responsibilities of executive management relative to the IS planning and governance process are:  To provide strategic business direction and priorities.  To provide input to and approve the IS strategic direction and plans: The group will ensure the IS plans are in agreement with the strategic business plans of the organization.  To approve all large project efforts and provide the final authority in the allocation of resources.  To approve the IS budget.  To provide direction relative to high-level business issues that affect IS. IS Steering Committee The IS steering committee is the most important group involved in the planning process and is instrumental in the success of the plan and ongoing governance. The steering committee provides the IS organization 32  A Practical Guide to Information Systems Strategic Planning with a voice from all areas of the business. This group will formulate recommendations regarding project priorities and resources and provides input to the strategic direction of IS. The business must commit to delivering the business benefits of projects. The committee typically consists of Directors, or individuals one level below the executive management. This level of the organization usually has a strong interest in IS and has a desire for changes because IS have an impact on their success as department leaders. Many companies have already formed IS steering committees. It is important to review the group to ensure it includes the correct composition of individuals to participate in the strategic planning process. The executive management team should select its representatives on the committee. It is in the best interests of these managers to ensure that they have the best person representing their interests and concerns. If an IS steering committee has not been previously formed, a company should look at the organizational structure to see if there already is a business team functioning one level below executive management. In the most effective organizations, steering IS is just one of the many responsibilities of the business management team, rather than a separate IS steering committee. To help integrate IS governance with the business, it would be best to have the IS executive become a part of this business committee and dedicate a portion of the meetings to IS activities and plans. One company referred to this critical group of management as the “shadow” strategy committee, while the executive management team was referred to as the “business unit” strategy group. Another company referred to this group of management as the operating committee, while executive management was referred to as the policy committee. Whatever title this group of management has, IS should be an integral responsibility and focus of the group. Although this book refers to the group as the IS steering committee, it would be best to integrate with the business team and refer to the group however it has been previously defined. It is important to include management from all the company’s business areas, as well as the various geographic areas, on the IS steering committee. The members must understand the strategic business direction as well as the business issues. Although it is critical to have the major business areas represented, it is difficult to manage a group larger than 12 individuals. Companies should keep the size of the group small enough to efficiently conduct meetings and make decisions, and should consider using video or teleconferencing for individuals physically located around the world. At a minimum, a company should send out-of-town members material and notes from the meetings and have them attend critical meetings. Also, the company should post the minutes and presentations in an electronic IS Governance  33 mail bulletin board for all employees to see. Getting as much visibility to the information as possible is critical. A company should not formally include individuals from the IS organization as voting members of the group. The top individual from IS (typically the CIO, Vice President, or Director) schedules, organizes, documents, and chairs the meetings. Additional members from IS can attend meetings as required to provide information or give presentations. The business representatives must see and feel they provide the direction to the committee, which is not the case if the committee includes many IS individuals. The responsibilities of the IS steering committee are:  To provide recommen...
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Running Head: STRATEGIC PLANNING

1

Strategic Planning

Name

Institutional Affiliation

STRATEGIC PLANNING

2

The adoption and development of a better strategic plan is important for the development
of the organizational information system. It is from this knowledge that the management of the
Woton Company has developed a strategic plan for the in guidance with the strategic planning
process. This would increase the capacity of the business in its service delivery system. This
would follow the four strategic planning process components which are visioning, analysis,
direction, and recommendation phase.

1. Visioning phase

In this phase, the management will come up with the best initiative in which will guide
the organization during this process. This will involve setting targets through which the
management will work to achieve. The information technology department will be responsible in
the planning and executing of all the phases with the assistance from the top management. Due
to the technical capability of the plan, the principal information personnel in the section will
oversee the whole process. He will report the steps and challenges met to the top management of
the organization. He will also present to the management the financial requirements for the
whole project.

Initiating the project

In the visioning phase, the department will come up with the final technological goals
and objectives which the management aims at achieving. It will then set the necessary resources
which will oversee the implementation of the process. The resources will involve the team which
will provide the necessary support in the process. With the IT department having qualified

STRATEGIC PLANNING

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personnel, this will be an easy task to accomplish. The team will establish the communication
channels, draft the deliverables, and finally confirm the anticipated plan (Cassidy, 2016).

Business analysis

The visioning phase will involve analyzing the current goals, and objectives of the
business in relation to the expected targets from the plan. This will involve aligning the current
goals, strategies, visions, and missions with the targeted strategic go...


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