Managing Information Technology

(Frankie) #1

532 Part IV • The Information Management System


From a broader perspective, an organization’s value
chain is actually part of a larger system of value creation,
called a supply chain, that flows from suppliers, through
the firm, to other firms providing distribution, and ulti-
mately to the end customer. Opportunities for improve-
ment in the supply chain could thus be intercompany, such
as using the Internet to automate the automobile ordering
process from customers to dealers to manufacturers. Thus,
competitive advantage can result from improvements in
either the internal value chain or the interorganizational
supply chain.
A series of idea-generation and action-planning
sessions is often used to generate possible strategic appli-
cations of IT for the organization. The idea-generation
sessions typically include example strategic applications
from other organizations (to stimulate ideas by analogy)
and use selected tools as described earlier. Small groups
brainstorm about possible strategic opportunities that
address the competitive environment. Subsequent evalua-
tion and prioritization of these ideas involves the degree
of competitive advantage expected, cost to implement,
technical and resource feasibility, and risk.
The opportunity identification techniques discussed
here are nothing more than tools for creating a strategic IS
plan. Although tools and concepts help, the key to the devel-
opment of a viable strategic IS plan is clearly the ability of
the IS department and business managers to work together
in designing and executing an IS strategic plan.


Formulating Operational IS Plans


After the strategic IS plan has been developed, the initia-
tives identified in it must be translated into an action plan
incorporating a set of defined IS projects with precise
expected results, due dates, priorities, and responsibilities.
Operational planning differs from strategic planning in its
short-term horizon. It typically includes a list of projects
that will be implemented in order of priority as well as
projects that are in progress from prior operational plans.
Specific, measurable goals are established, and general
estimates of costs and benefits are prepared. New capital
expenditures are identified and justified. Responsibility
for achievement of the objectives, actions, and projects is
also specified in this plan. Specific details, responsibili-
ties, and dates of projects that move to the implementation
stage are identified. Once set in motion, the operational
plan is naturally less flexible than the strategic plan.
The criteria for evaluating and prioritizing projects
include availability of resources, degree of risk, and poten-
tial of the project to contribute value to the organization’s
objectives. Clearly, organizational politics often play more
than a minor role in the final project selection process, as


different business leaders argue for projects that they spon-
sor (see the sponsor role discussion in Chapter 11).
Many IS planners have taken a cue from financial
analysts by adopting a portfolio viewof the IS operational
plan. They select new systems to be developed or pur-
chased based on their association with and impact on
other projects in the current systems development portfo-
lio. Factors to consider include, but are not limited to, the
level of risk of the various projects in the portfolio, the
expected time until completion, their interrelation with
other projects, their nature (e.g., transaction processing
versus business intelligence), and the amount of resources
required. IS and business managers then seek to balance
the projects in the portfolio.
Firms that ignore portfolio balance and concentrate
solely on implementing low-risk transaction processing
systems, for example, might lose the opportunity to devel-
op higher-risk systems offering higher potential business
returns. Conversely, a project portfolio of nothing but risky
applications with unknown chances for success and uncer-
tain economic benefits might place the firm itself in finan-
cial jeopardy. Figure 12.11 shows a portion of the systems
project portfolio (both new systems and enhancements of
existing systems) developed for a company with its own
sales organization.
Each IS project in the portfolio must then be subjected
to a more detailed project planning process, in the form of a
budget review. Once the operational IS plan has been
approved, it should be shared to help instill a sense of com-
mitment on the part of the organization. As with all business
functions, a multiyear IS plan should be reviewed and
updated as necessary, at least annually.
Finally, the operational IS plan for a one-year time pe-
riod focuses on specific tasks to be completed on projects
that are currently underway or ready to be started. It is linked
to the firm’s business priorities by the annual budget.
Hardware, software, and staffing needs; scheduled mainte-
nance; and other operational factors are highlighted in detail.
As business and technology changes have become
more constant, the planning horizons have shortened and the
need for more frequent reviews and updating has increased.
Quarterly portfolio reviews are now increasingly being used
in today’s organizations.

Guidelines for Effective IS Planning


The first step in developing an organizational planning
focus, as opposed to only a project focus, is to change the
way in which the IS organization’s professionals view
their jobs. These changes include adoption of a service
orientation by the IS staff in order to be more responsive
to business partners. Change must also be viewed by IS
Free download pdf