The Direction Phase 245
IS Strategies
Business Drivers
• Minimize costs
Simplify
• High
availability
and reliability
Standardize
• Handle
growth,
acquisitions
Automate
Integrate
What it means to IS
• Use standard vendor packages when
possible
• Have common worldwide integrated
core set of applications
• Eliminate single points of failure,
security holes
• Sunset outdated technology, keep
technology up-to-date for vendor
support, not leading edge
• Open(not locked into one
technology)
• Best of breed
• Standards based
• Process focus
• Scaleable
• Manageable, maintainable
environment
• Secure
• Minimize total cost of ownership
• Lean organization
IS must balance these strategies as
they may be conflicting at times
Figure 6.7 IS strategies
Determine the IS Balanced Scorecard and Metrics
Measuring IS performance has been an area that has received much
attention and press. Determining the appropriate metrics to measure IS
performance has always been a challenge for management. Many companies spend countless hours gathering and reporting data to executives
who do not really care about the metrics IS continues to report. For
example, many IS organizations report how many calls they completed
or how many maintenance requests were completed. What do the numbers
actually mean? Although the metric may provide a relative performance
from month to month, that is arguable because one request may be simple
or very complex and there is no way to judge if the number reported
should be more or less. With too many metrics, people become confused
about what is important. The administrative burden in collecting and
reporting the data can be nonproductive. The key to success is selecting
a small number of metrics that are relevant to the business and that
represent the true leverage points.
One way to identify metrics is to ask members of executive management what is important to them and how they would measure the success
of IS. Another method is to benchmark against industry metrics, as
discussed in the industry benchmarking section in the previous chapter,
“Conduct Industry Benchmarking.” However, the best metrics are those
that tie back directly to the direction, because it is important to measure
246 A Practical Guide to Information Systems Strategic Planning
IS Goals
IS Strategies
Provide external customers
with easy access to services
and information
Improve access
to information
Provide departments with
easy access to information
Key Measures
Customer
satisfaction
survey results
Position IS as a valued
business partner
Improve efficiency and
effectiveness of business
processes
Partner with business
departments to leverage
technology for improved
business processes and
solutions
Manage results for
accountability and
improvement
Company
profitability
Ensure cost effective
service delivery
Maintain up-to-date and
supportable environment
Provide effective and
reliable information
services
Minimize redundant
applications and tools
through simplification and
standardization
IS Budget,
Service level
agreements
Ensure availability,
reliability, and security
Ensure scalability for
changing needs
Figure 6.8 IS goals, strategies, and key measures
progress to the direction, not just metrics for the sake of metrics. An
excellent method to determine metrics is to use the balanced-scorecard
approach. This provides a balanced measurement around four areas:
financial, customer, internal processes, and individual innovation or learning. The balanced scorecard emphasizes that no single measure provides
a clear picture of how an organization functions but that a set of key
indicators is required. This allows an organization to focus on what is
important to define the success of the organization over time. The following are questions within each balanced-scorecard area as it relates to IS:
Financial: How much money is the organization spending on IS? Where
is the money being spent? What was the budget and how did actual
The Direction Phase 247
spending compare? How much money is spent keeping the business
functioning (e.g., legacy systems support and maintenance) versus
moving the business forward (e.g., new development projects that
meet the business priorities)? How much revenue is generated from
IS initiatives, such as e-commerce? How does IS perform in the eyes
of senior management? Examples of financial metrics include IS costs
as a percent of revenue, percent of IS costs on development, IS
budget actual versus plan, and revenue related to e-commerce.
Customer: How does IS perform in the eyes of external and internal
customers? How satisfied are customers? How well is IS meeting
service-level agreements? How does IS address the customers’ concern about time, quality, performance, service, and cost? How many
business interviews and focus groups have been held? Examples of
customer metrics include annual customer satisfaction survey results,
customer satisfaction on random surveys of help desk requests, postproject customer satisfaction, and service-level agreement performance.
Internal process: How well are the IS processes formalized, documented, followed, and measured? How is time being spent within
the IS organization? How does IS impact the business processes?
How does your execution compare to industry standards? How many
joint IS and business planning meetings have been held? How many
IS steering committee meetings have been held? How many IS
projects are directly linked to a documented business goal? What is
the system availability? What is the system response time? How many
security breaches or outages have been experienced? Examples of
process metrics include number of function points or XP velocity
points delivered, availability, and percent of the organization
required to support and maintain systems.
Organizational learning and people: What is the ability of the IS
organization to learn and improve? How well does the group keep
pace with changing technology? Are career plans formalized? What
skills and training are required? What recruiting and retention programs are implemented? How satisfied are the employees? Is the
organization positioned to meet challenges of the future? Examples
of people metrics include IS employee satisfaction, IS turnover or
retention, and training hours per IS employee.
The following is one method of determining key metrics integrating
the IS direction with the balanced scorecard that has been very successful:
With a group of individuals such as IS management team or the
IS steering committee, review each statement within the IS vision,
248 A Practical Guide to Information Systems Strategic Planning
mission, goals, and strategies. Ask the group how to measure that,
or how you will know that you have achieved the objective. If
multiple measures are given, write down both. Move quickly and
do not dwell on each item; take the first response and move on.
You will end up with a long list of metrics. Review the list and
categorize each metric as high, medium, and low in terms of the
value the metric provides.
Take the metrics rated as high priority, review them to ensure the
metrics are measurable, and review them in relation to the vision,
mission, goals, and strategies. Discuss whether they make sense
or whether there is any need to add metrics or change them.
Review each metric to identify the appropriate category within the
balanced scorecard.
Narrow down the list of metrics to the key metrics. There should
be one or two metrics within each area of the balanced scorecard.
Identify the frequency with which each metric will be measured,
such as monthly, quarterly, or annually.
Identify the target for each metric.
You should have no more than about six or eight key measures to
measure the overall success of the IS organization. There may be many
more metrics that are measured within each work group. For example,
the help desk may have many detailed metrics, such as number of calls,
mean time to close requests, mean time to respond, percent answered on
the first call, and so forth. Operations may be another area with many
detailed metrics. However, it is critical to focus on the few key metrics
that measure the overall progress to the goals and direction. Following
are six critical metrics that should be considered for inclusion:
Percent of the IS budget spent on maintenance versus new development:
Typical organizations may spend 80% of IS costs on keeping systems
functioning and only 20% on new initiatives. World-class organizations strive for a 50%/50% balance between maintenance and new
development.
Customer satisfaction: Both annual surveys and random surveys after
service has been completed are excellent metrics of IS performance.
Percent of IS projects directly linked to a documented business goal:
This metric represents the alignment of the IS priorities and work
with the business plan.
Comparison of IS budget to plan: Meeting budget targets demonstrates
an environment that is predictable, planned, and under control.
Availability: In most environments, providing a reliable, secure, and
stable environment for business operations is critical.
The Direction Phase 249
Percent of IS staff exceeding average performance criteria on performance reviews: Some companies that are artificially driven to a
standard distribution of performance ratings may not be able to use
this metric effectively. However, it can be a good measurement of
the competence and accomplishments of the organization if done
properly.
Review and Confirm the IS Vision and Direction
This is an important milestone to review the high-level IS direction with
both the IS group and the IS steering committee. Update any areas that
may require changes or additions.
Developing the IS Plan
Develop the Business Application Direction
Next, identify the specific direction for the business application area. Begin
by identifying principles that will guide the business application area.
Principles are a reflection of the general culture and values. They provide
guidance for IS decisions and investments in the future. There should be
similar themes reflected through the IS mission, vision, strategies, and
principles.
One example of a business application principle that if not stated can
cause emotional arguments is the use of packaged versus custom software.
In the past, companies have tended to migrate to custom solutions as
both business users and the IS individuals claim they have unique requirements. Due to the high cost of custom solutions, and the incr eased
availability of packaged solutions, many companies are migrating away
from custom solutions. Yet, without a clear guiding principle, on a projectby-project basis it can be easy to fall into custom software claiming “We
are unique” or to spend hours arguing about custom versus packaged
solutions. Exhibit 6.31 and Exhibit 6.32 show how two companies
addressed the custom versus packaged issue with a guiding principle.
Exhibit 6.31
Custom versus Package Direction — Example 1
Custom versus Packaged Business Applications Direction
We will invest the majority of resources (people and money) in areas and systems
that are strategic and unique to the business. We will choose the lowest-cost
Purchase answer to see full
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