Lecture 8 (information systems and strategy planning)

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Information Systems and
Strategy Planning
Lecture 8
Abdisalam Issa-Salwe
Department of Computer Science
Faculty of Information Science and Technology
East Africa University
Department of Computer Science, Faculty of Information Science and Technology, East Africa University
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Topic list
 Strategic planning
 Vision and Business needs
 Earl’s grid
 McFarlan’s application portfolio
 Business Process Reengineering (BPR)

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Strategic planning
 Entrepreneurs and business managers are often
so preoccupied with immediate issues that they
lose sight of their ultimate objectives.
 That's why a business review or preparation of a
strategic plan is a virtual necessity.
 This may not be a recipe for success, but without
it a business is much more likely to fail.
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Strategic planning (cont…)
 A sound plan should:
 Serve as a framework for decisions or for
securing support/approval.
 Provide a basis for more detailed planning.
 Explain the business to others in order to
inform, motivate & involve.
 Assist benchmarking & performance
monitoring.
Stimulate change and become building block
for next plan.

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 A strategic plan should not be confused with a
business plan.
 The former is likely to be a (very) short
document whereas a business plan is usually a
much more substantial and detailed document.
 A strategic plan can provide the foundation
and frame work for a business plan.
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 A strategic plan is not the same thing as an operational
plan.
 The former should be visionary, conceptual and
directional in contrast to an operational plan which is
likely to be shorter term, tactical, focused,
implementable and measurable.
 As an example, compare the process of planning a vacation
(where, when, duration, budget, who goes, how travel are all
strategic issues) with the final preparations (tasks, deadlines,
funding, weather, packing, transport and so on are all
operational matters).

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 Basic Approach to Strategic Planning
 A critical review of past performance by the
owners and management of a business and the
preparation of a plan beyond normal budgetary
horizons require a certain attitude of mind and
predisposition.
 Some essential points which should to be
observed during the review
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The Vision
 The preparation of a strategic plan is a multi-step
process covering vision, mission, objectives,
values, strategies, goals and programs.
 The first step is to develop a realistic Vision for
the business.
 This should be presented as a pen picture of the
business in three or more years time in terms of its
likely physical appearance, size, activities etc.
 Answer the question: "if someone from Mars visited the
business, what would they see (or sense)?"

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McFarlan’s Application Portfolio
 The Application Portfolio Matrix: The
application portfolio concept means
bringing together existing, planned and
potential information systems and
assessing their business contribution.
 Applications need to be planned and
managed according to their lifetime and
future contribution to the business.
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McFarlan’s Application Portfolio (cont…)
 The earliest and most famous application portfolio
model was developed by Gibson and Nolan (1974)
during the 1970’s.
 This model in turn used a hierarchical application
portfolio model.
 The model structured applications of three
management activities:
 planning
 control
 operational.

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 In 1984, McFarlan and McKenneys developed a
model that considered the relationship with business
success.
 The model proposes an analysis of all existing and
planned information systems into four categories
based on current and future business importance.
 The model has two dimensions:
 the strategic meaning of existing information systems
 the strategic meaning of planned information systems
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 The model proposes an analysis of all existing, planned
and potential applications into four categories based on
assessment of the current and future business
importance of applications.
 Depending on its current or expected contribution to the
business success, an application can be defined as
 high potential,
 strategic,
 key operational or
 support,

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 High potential includes applications that can be very
important to reach future success. These applications
are characterised by a rapid prototyping development
with a power to refuse failures before spending a lot of
resources.
 Strategic applications are critical for the activity and of
highest potential value. These are applications that the
company strategically trusts on to reach future success.

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 The key operational applications are those the
organisation is dependent on in the present-day
situation to reach success. The key operational
applications are important for the primary process and
increase their value.
 The support includes applications that support the
activity but are not in strategically valuable. The support
systems are not critical for the organisation’s future if
they are not wasteful with valuable resources or if the
market share is being changed.
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 Organisation:
 the organisation of the IS function including the processes
for formulating and implementing IS policies. This does
not include the broader organisational implications
associated with the implementation of new systems.
These are addressed in the Organisational issues beyond
the IS function and Networked organisations in a post-
industrial world modules;
 Data:
 the data architecture required to support the required
applications;
 Technology:
 the technology architecture required to deliver the
required applications;
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Earl's Audit Grid
 From an examination of McFarlan & McKenney’s
Grid, it should be obvious why a company should
have an IT strategy.
 If a company is on either the turnaround or strategic
quadrants of McFarlan’s Grid, then obviously a
company should have the appropriate strategy to
enable it to plan for future developments.
 Even if it is in the factory quadrant, IT systems are
mission critical and the company should have a
strategy as to
 (a) how to maximise the benefits arising from its
deployment of IT, and
 (b) how to cope in the event of a systems failure
(i.e. have a back-up or recovery plan).

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Earl's Audit Grid (cont…)
 Earl’s nine reasons:
 IT involves high costs.
 IT is critical to the success of many organisations.
 IT is now used as part of the commercial strategy in the battle for
competitive advantage.
 IT is required by the economic context (from a macro-economic
point of view).
 IT affects all levels of management.
 IT has meant a revolution in the way information is created and
presented to management.
 IT involves many stakeholders, not just management, and not just
within the organisation.
 The detailed technical issues in IT are important.
 IT requires effective management, as this can make a real
difference to successful IT use.

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Business Process Redesign
 Business Process Redesign is
"the analysis and design of workflows and
processes within and between organisations"
(Davenport & Short 1990).
 Teng et al. (1994) define BPR as
"the critical analysis and radical redesign of
existing business processes to achieve
breakthrough improvements in performance
measures."
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Business Process Redesign (cont…)
 Reengineering is the fundamental rethinking and
redesign of business processes to achieve
dramatic improvements in critical, contemporary
measures of performance, such as cost, quality,
service and speed.
(Hammer & Champy, 1993)

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Business Process Redesign (cont…)
 BPR generally approaches the problem
from the point of view of the customer and
of the process.
 Customer views are required to ensure that the
eventual design actually satisfies them.
 Process views are required to try to remove the
in-tray problem, and to focus activity within it on
the goal of the process not the function, so that
unneeded or irrelevant activity is removed.
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BPR Versus Process Simplification
Process Reengineering
Radical Transformation
Vision-Led
Change Attitudes & Behaviors
Director-Led
Limited Number of Initiatives
Process Simplification
Incremental Change
Process-Led
Assume Attitudes & Behaviors
Management-Led
Various Simultaneous Projects

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Why Re-engineer?
 Customers
Demanding
Sophistication
Changing Needs
 Competition
Local
Global
 Change
Technology
Customer Preferences
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Why Organisations Don’t Reengineer?
 Complacency
 Political Resistance
 New Developments
 Fear of Unknown and Failure

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Key Steps
Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan
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Reference
 Laudon, K. & Laudon, J. (2006): Management Information
Systems:Managing the Digital Firm, 9th ed. Prentice Hall
 Abdisalam Issa-Salwe, Lecture Notes, Thames Valley
University, 2008.
 Dave Chaffey, Paul Bocij, Andrew Greasley and Simon
Hickies (eds) (2003): Business Information Systems:
Technology, Development and Management, Pearson
Education Limited, London.

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Topic Questions
1. Group 1: Discuss Strategic planning,
Vision and Business needs of an
organization
2. Group 2: Discuss Earl’s grid and how
applications are used strategically
using McFarlan’s application portfolio
3. Group 3: Discuss Business Process
Reengineering (BPR) what it means to
a company when applied this concept

Lecture 8 (information systems and strategy planning)

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