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Chapter 8Chapter 8

IT Planning

& BPR

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Learning Objectives Discuss the major issues addressed by IS planning.

Demonstrate the importance of aligning information systems plans with business plans.

Explain the four-stage model of information systems planning.

Describe several different methodologies for conducting strategic information systems planning.

Identify the different types of IT architectures and outline the processes necessary to establish an information architecture.

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Learning Objectives (cont.)

Distinguish the major Web-related issues and understand application portfolio selection.

Describe the need for processes redesign and BPR.

Explain the IT support for BPR and for redesign.

Describe organizational transformation and virtual corporations.

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Case: How TruServ planned its ITProblem: The merger of Cotter & Co. and TruServ in 1997 required combining the

information systems of the two companies.

Solution: A strategic IT plan was created and addressed issues such as;

the company’s Intranet and extranet e-procurement EC applications

Results: The plan has remained fluid. It has been reevaluated and updated with

new business goals every six months since its inception.

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IT Planning

IT planning is essential for both planners & end-users for several reasons:

End-users do IT planning for their own units.

End-users must participate in the corporate IT planning and therefore must understand the process.

Corporate IT planning determines how the IT infrastructure will look. This in turn determines what applications end-users can deploy.

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IT Planning (cont.)

A Strategic information systems plan identifies a set of computer-based applications that will help a company reach its business goals.

IT planning identifies the applications portfolio, a list of major, approved IS projects that are consistent with the long-range plan.

Planning and control systems for IT started in the late 1950s and early 1960s.

Initial mechanisms addressed operational planning, and eventually shifted to managerial planning.

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IT Planning Issues

1. Aligning the IT plan with the organizational business plan

2. Designing an IT architecture for the organization in such a way that users, applications, and databases can be integrated and networked together.

1. Efficiently allocating information systems development and operational resources among competing applications.

4. Planning information systems projects so that they are completed on time and within budget and include the specified functionalities.

Basic IT planning addresses the following four general issues:

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Four-Stage Model of IT Planning

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IT Planning Stages

Major IT Planning Activity Description

Strategic IT planning Establishing the relationship between the overall organizational plan and the IT plan.

Information requirements analysis

Identifying broad, organizational information requirements to establish a strategic information architecture.

Resource allocation Allocating both IT application development resources and operational resources.

Project planning Developing a plan that expresses schedules and resource requirements for specific information systems projects.

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Stage 1: Strategic Information Planning

Strategic information planning (SIP) must be aligned with overall organizational planning and with e-business.

To accomplish this alignment, the organization must execute the following: Set the IT mission. Assess the environment. Assess existing systems’ availabilities and capabilities. Assess organizational objectives and strategies. Set IT objectives, strategies, and policies. Assess the potential impacts of IT.

An organization would conduct the same six steps for e-business.

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Business Systems Planning

The Business systems planning (BSP) model, developed by IBM, is a top-down approach that starts with business strategies.

It deals with two main building blocks as the basis of the information architecture;

Business processes Data classes

The recognition that processes could be a more fundamental aspect of business than departments or other organizational arrangements broke new ground.

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CSF & Scenario Planning

The critical success factors (CSF) approach was developed to help identify the information needs of managers.

Sample questions asked in the CSF approach are:• What objectives are central to your organization?• What are the critical factors that are essential to meeting these objectives?• What decisions or actions are key to these critical factors?• What variables underlie these decisions, and how are they measured?

Scenario planning is a methodology used in planning situations that involve much uncertainty, like that of IT in general and e-commerce. In this approach planners create several scenarios.

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Stage 2: Information Requirements Analysis

Step 1: Define underlying organizational subsystems.

Step 2: Develop subsystem matrix.

Step 3: Define and evaluate information requirements for organizational subsystems.

Step 4: Define major information categories and map interview results into them.

Step 5: Develop information/subsystem matrix.

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Stage 3: Resource Allocation

Resource allocation consists of developing the hardware, software, data communications, facilities, personnel, and financial plans needed to execute the master development plan defined in Stage 2.

This stage provides the framework for technology and labor procurement, and identifies the financial resources needed to provide appropriate service levels to users.

Funding requests from the ISD fall into two categories;

Those necessary to stay in business Those for improving the information architecture

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Stage 4: Project Planning

Project Planning provides an overall framework within which specific applications can be planned, scheduled, and controlled.

This stage is associated with systems development (to be covered in Chapter 14).

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Infrastructure Considerations

Broadbent et al. (1996) found the following four infrastructure relationships; Industry—manufacturing firms use less IT infrastructure services than

retail or financial firms.Market volatility—firms that need to change products quickly use

more IT infrastructure services.Business unit synergy—firms that emphasize synergies (e.g.,

cross-selling) use more IT infrastructure services.Strategy and planning—firms that integrate IT and organizational

planning, use more IT infrastructure services.

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IT Architecture Computing

Centralized computing puts all processing and control authority within one computer and all other computing devices respond.

Distributed Computing handles the choices for computing at the point of the computing need; individual needs are met with individualized computing.

A Blended approach combines the two models above. The mainframe (centralized resource) can operate as a peripheral device for other (distributed) computing resources.

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Reengineering Legacy Systems

Legacy Systems are holdovers of earlier architectures that are still in use after an organization migrates to a new architecture.

The decision—to keep, improve, or replace—can present management with agonizing alternatives.

Reverse engineering is the process of examining systems to determine their present status, and to identify what changes are necessary to allow the system to meet current and future business needs.

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IT Planning & E-PlanningSome connections between IT planning and e-planning are:

Web applications may replace traditional IT applications for improving their operations.

Web applications must be integrated with legacy systems, ERP, etc.

The e-Commerce unit may report to the CIO.

The ISD and the e-Commerce project may compete for limited resources.

Some Web-based applications are designed to directly support the IT strategy and goals.

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Applications Portfolio

Tjan’s Portfolio Strategy. Tjan (2001) adopted a business project portfolio applications approach to create an Internet portfolio planning.

The strategy is based on company fit, which can be either low or high, and the project’s viability, which can also be low or high.

The various initiatives are then mapped on the Internet portfolio matrix, based on the two average scores.

If both viability and fit are low, the project is killed. If both are high, then the project is adopted, etc.

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Issues in E-Planning Who and where? Should the EC initiatives be conducted in a completely

independent division or even a separate company?

Use of metrics. It is desirable to use industry standards, also known as metrics, for executing various steps of the planning process.

Learn from failures. During 2000/2001 there were many EC failures, both major initiatives and whole companies.

Use a different planning process. The Web environment requires a different planning process.

Integration. Information systems strategic planning must integrate, in many cases, e-business and knowledge management.

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Business Processes Across Functional Areas

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Business Process Reengineering

Business process reengineering (BPR) refers to a situation in which an organization fundamentally and radically redesigns its business process to achieve dramatic improvement.

Initially, attention was given to a complete restructuring of organizations.

Later, the concept was changed due to failures of BPR projects and the emergence of Web-based applications.

Today, BPR can focus on anything from the complete restructuring of an organization to the redesigning of individual processes.

Major objective of BPR = Information Integration.

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Case: VW of Mexico uses e-Procurement

Problem: Facing strong competition and the North American Free Trade

Agreement (NAFTA) environment, Volkswagen of Mexico turned to IT.

Solution: In 1996 VW implemented an enterprise resource planning system,

using SAP R/3 software. By 1998, the company integrated its entire enterprise system. Results: The company projects that its IT applications will result in $50 million in

cost savings over three years for the dealers.

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The Enabling Role of IT

Old Rule Intervening Technology New Rule

Information appears in only one place at one time.

Shared databases, client/server architecture, Internet, intranets

Information appears simultaneously wherever needed.

Only an expert can perform complex work.

Expert systems, neural computing

Novices can perform complex work.

Business must be either centralized or distributed.

Telecommunication and networks: client/server, intranet

Business can be both centralized and distributed.

Only managers make decisions.

Decision support systems, enterprise support systems, expert systems

Decision making is part of everyone’s job.

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Tools for BPR

Simulation and visual simulation tools

Flow diagrams

Application development tools

Integrated tool kits

Work analysis

Workflow software

Business process design

Comprehensive modeling tools

Other tools

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Mass Customization

One of the most successful models of e-Commerce is mass customization. the production of large

quantities of customized items.

It supplements or even replaces one of the most innovative concepts of the Industrial Revolution, mass production.

Mass customization can be facilitated by the Web in four different approaches;

Collaborative customizers

Adaptive customizers

Cosmetic customizers

Transparent customizers

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Mass Customization & EC

EC transforms the supply chain from a traditional push model to a pull model.

Push model - the business process starts with manufacturing and ends with consumers buying the products or services.

Pull model - the process starts with the consumer ordering the product (or service) and ends with the manufacturer making it.

The pull model enables customization since orders are taken first.

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Cycle Time Reduction

Cycle time refers to the time it takes to complete a process from beginning to end.

Time is recognized as a major element that provides competitive advantage.

IT helps to contribute to cycle time reduction.

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BPR Failures During the 1990s there were just as many cases of BPR failures as there

were success stories.

A survey conducted by the PROSCI organization (prosci.com) indicates a failure rate of 50 to 80%.

Some of the reasons cited for failures are: high risk inappropriate change management failure to plan for internal politics high cost of retooling lack of participation and leadership inflexible software lack of motivation

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Networked Organizations Today some organizations are turning away from the hierarchical

organization toward the networked organization.

Networked organizations refer to organizational structures that resemble computer networks and are supported by information systems.

In the information-based economy, most people do knowledge work, and the subordinate often has more expertise than the “hierarchical” supervisor.

A flattened organization has fewer layers of management and a broader span of control than the hierarchical organization.

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Networked Organizations (cont.)

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Empowerment Using IT

Empowerment is the vesting of decision-making or approval authority in employees where, traditionally, such authority was a managerial prerogative.

Empowerment can be enhanced through IT. Empowered employees are expected to perform better.

In addition to empowering employees, companies are empowering their customers, suppliers, and other business partners. E.g. Federal Express uses the Internet to empower its customers.

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Virtual Corporations

A Virtual Corporation (VC) is an organization composed of several business partners sharing costs and resources for the purpose of producing a product or service.

According to Goldman et al. (1995), permanent virtual corporations are designed to do the following:

1. Create or assemble productive resources rapidly.2. Create or assemble productive resources frequently and

concurrently.3. Create or assemble a broad range of productive resources.

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Virtual Corporations (cont.)

In a VC, the resources of the business partners remain in their original locations but are integrated.

In order to function, VCs rely on the following forms of IT; Communication/ collaboration among dispersed business partners

• e.g., e-mail, desktop videoconferencing, screen-sharing, etc. EDI and EFT Intelligent agents Modern database technologies and networking Intranet/Internet applications

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Managerial Issues

Fitting the IT architecture to the organization is important.

Importance. IT planning is one of the most challenging and difficult tasks facing all of management.

Organizing for planning. What should be the role of the ISD? How should IT be organized? Staffed? Funded?

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Managerial Issues (cont.)

IT architecture planning. IT specialists & business users must jointly determine the present and future needs for the IT architecture.

Ethical and legal issues.

IT policy. IT architectures should be based on corporate guidelines.

IT strategy. Leadership, listening and experimentation are important.

Integration. The role of IT in redesign and BPR.

Failures. Very big projects have a tendency to fail when expectations exceed real capabilities.