InformationTechnologyManagementLecture3Strategy,PlanningandebusinessInformationSystemsManagementInPractice5E(McNurlin&Sprague)Chapter3&4DRGavinFinnieINFT13-322/73-322Introduction“Strategicuse”ofITisdefinedas“havingasignificant,long-termimpactonafirm’sgrowthrate,industry,andrevenue.”Historically,thestrategicuseofIThasfollowedanevolutionfromimprovinginternalprocessesandstructuresofafirm,toimprovingtheproducts,services,andrelationshipswithitscustomers,andthenwithitspartners.Theseevolutionstagesarecharacterizedas:LookinginwardLookingoutwardLookingacrossDRGavinFinnieINFT13-322/73-322StrategicUsesofInformationSystemsInternalsystemstoimproveProcessesandStructureIT-BasedproductsandServicesLinkstootherorganisationsLookinginwardLookingforwardLookingacrossDRGavinFinnieINFT13-322/73-322IntroductionWhatise-business?Theuseoftelecommunicationsnetworks,particularlytheInternet,toconductbusinesstransactions.Threecategoriesofe-business(seeFigure3.2):Business-to-employee:Intranet-basedapplicationsinternaltoafirmBusiness-to-consumer:Internet-basedapplicationsforafirm’scustomersBusiness-to-business:Extranet-basedapplicationsforafirm’sbusinesspartnersDRGavinFinnieINFT13-322/73-322E-BusinessDriversKeyComponentsthathaveacceleratedtheacceptanceofe-business:WideaccesstoapublicnetworkStandardcommunicationprotocolStandarduserinterfaceE-businessapplicationsrunovertheInternet,drasticallyreducingaccessandcommunicationscosts.Withstandardizedcommunicationprotocolsanduserinterfaces,implementationandtrainingcostsarefarlower.Asaresult,amuchbroadersetofusersandfirmshasaccesstothesystems,allowingrapidgrowth.DRGavinFinnieINFT13-322/73-322LookingInward:

Business-to-EmployeeIntranetsIntranetsareprivatecompanynetworksthatuseInternettechnologiesandprotocols,andpossiblytheInternetitself.BenefitsofusingintranetsWideraccesstocompanyinformationMoreefficientandlessexpensivesystemsdevelopmentDecreasedtrainingDRGavinFinnieINFT13-322/73-322ManagingIntranetsManagerialconcernsHowtointegratelegacysystemsintotheintranetDecidinghowmuchcontrolofthesystemsshouldbedecentralizedProposedsolutionsCreateacorporateportaltoactasthegatewaytothefirm’sinternalresources,information,andInternetservices.Developseparatedepartmentalordivisionalportals,suchassales,HR,operations,andfinanceportals.DRGavinFinnieINFT13-322/73-322LookingOutward:

Business-to-ConsumerTheE-BusinessModelRedefiningCustomerValue“Demandingon-demand”:reducesthetimeittakestorespondtocustomerrequestsConvenience:allowsgatheringandmanagingcustomerinformationAccesstoawiderangeofcompetitivepricesandsellersforproductsDRGavinFinnieINFT13-322/73-322LookingOutward:

Business-to-ConsumerRedesigningRelationshipswithBusinessPartnersE-businessallows:“disintermediation”:bypassingintermediariesbydirectlylinkingcustomerstothemanufacturer.thedevelopmentof“virtualorganizations,”whereafirmdoesnotownpartsofthevaluechain,butrathercontrolsthecoordinationofotherfirmstoappearasasinglefirm.DRGavinFinnieINFT13-322/73-322LookingAcross:

Business-to-BusinessIThasbeenusedtoreducecostsandtimeofinterorganizationaltransactions,forexample:InterorganizationalSystems(IOS)Reservationsystems,electronicfundstransfersystems,ElectronicDataInterchangeSystems(EDI)ElectronicDataInterchangeSystems(EDI)Transmission,instandardsyntax,ofdataforbusinesstransactionsbetweencomputersofindependentorganizationDRGavinFinnieINFT13-322/73-322SupplyChainIntegrationSupplychainincludesprocessessuchas:logistics,procurement,production,anddistributionStrategicoptionsBuild-to-ordermodeofoperationEliminationofintermediariesRedesigntheprocurementprocessDRGavinFinnieINFT13-322/73-322IntegrationwithBack-EndSystemsChallengeVarietyofplatformsIncompatibleApproachDatabaseManagementSystems(DBMS)ERPSystemsExtranetDRGavinFinnieINFT13-322/73-322TechnicalConsiderationsEvolutionoftheInternet:QualityofServiceNextGenerationInternet(NGI)ResearchanddevelopadvancednetworktechnologiesDeployhigh-speedtestbednetworksDevelopanddemonstraterevolutionaryapplicationsthatdemandhigh-speednetworksnotcurrentlyavailableontoday’sinternetUniversityConsortiumforAdvancedInternet(UCAID)Internet2(advancedacademicnetwork)Abilene(supportthedemandsoftheadvancedresearchapplicationsoftheUCAID)DRGavinFinnieINFT13-322/73-322TechnicalConsiderationsSecurity-ranksasoneofthetopmanagementandconsumerconcernsDividedintothreecategories:

1. Sniffing:interceptionandreadingofelectronicmessagesastheytraveloverthecommunicationnetworks

Protection:Encryption(DES,RSA)2. Spoofing:assumptionofafalseidentityandtheexecutionoffraudulenttransactionsProtection:Authentication(RSA)3. Hacking:unauthorizedaccesstoahostcomputerProtection:FirewallDRGavinFinnieINFT13-322/73-322LegalandEthicalConsiderationsPrivacyIntellectualPropertyRightsCopyrightsPatentsTrademarksTradeSecretsLegalJurisdictionContentRegulationDRGavinFinnieINFT13-322/73-322ITStrategyITisastrategicassetthatcanbeusedto:LookoutwardtoincorporateproductsandservicesLookinwardtore-designandcreatenewbusinessprocessesLookacrosstolinkwithotherorganizationsmakepermanentchangesinthenatureofbusinesswithe-businessDRGavinFinnieINFT13-322/73-322WhyStrategicIssuesAreImportantAdvancesininformationaffectorganisationmorethananyothertechnicaladvancesInformationtechnologyshiftspowerandinfluencefromgovernmentstoindividualsIToffersgreatopportunityforinnovationinorganisationandbusinessoperationInformationtechnologyispervasiveinmostfirmsPrecedentsareabundantandobvious—organisationsmustnotfallbehindDRGavinFinnieINFT13-322/73-322TheChallengeistoImproveOrganisationalPerformance

TheoverallaimofSISPistodirectISresourcestothoseareasofferingthemostimportantcorporatebenefitsCorporateBodyOperationsInformationSystemsFinanceMarketingDistributionHumanResourcesCustomersSuppliersEmployeesRegulatoryAgenciesDRGavinFinnieINFT13-322/73-322InternalIS/ITenvironmentSISP-Inputs&OutputsSource:WardetalFigure3.8OUTPUTSINPUTSStrategicIS/ITplanningprocessCurrentapplicationsportfolioITstrategyApplicationsportfolioModels&matricesISmanagementstrategyBusinessISstrategyInternalbusinessenvironmentPlanning,approaches,tools&techniquesExternalbusinessenvironmentExternalIS/ITenvironmentDRGavinFinnieINFT13-322/73-322StrategicIssuesForSeniorExecutivesExecutiveswanttogainormaintaincompetitiveadvantageTheywanttolinkorganisationsinternallyandexternallyPermitdecentralisationyetmaintaincentralcontrolinformationExecutiveswantflexibleinfrastructurestorespondtochangingconditionsTheymustcapitaliseontransitoryinformationTheyhaveseenmanyexamplesofstrategicusesofinformationtechnologyDRGavinFinnieINFT13-322/73-322StrategicInformationSystemsDefinedStrategicsystemsprovidecompetitiveadvantagefortheirownersStrategicsystemscanhavemanyforms,e.g.:transactionprocessinganddecisionsupportsystemsmanagementinformationanddesignautomationsystemsweb-basedandotherInternetsystemsSISmaymodifytheinternalenvironmentTheymayalsoalterthemarketenvironmentDRGavinFinnieINFT13-322/73-322StrategicInformationSystemsDefined(2)ThefirmmayneedtoalteritsstructureinresponseTheprocessrepeatsasadjustmentsaremadeSomesystemsrepresentalargeinvestmentSomesystemsgeneraterevenueforthefirmLegalconsiderationmaybecomeimportantSomesystemsstartedverysmallbutgrewovertimeAllprovidevaluableadvantagesforthefirmDRGavinFinnieINFT13-322/73-322ISPlanningWhatmakesISplanningdifficult(vs.constructionplanning):AligningbusinessgoalsandsystemsplansMaterials(hard/software)continuouslychangeShiftfromprojectselectiontoportfoliodevelopment(evaluationmoreonindividualmerit)Jointresponsibility/approach:top-downvs.bottom-upDRGavinFinnieINFT13-322/73-322ThePlanningHorizonThelengthoftimeconsideredintheplan.Strategicplans:twotofiveyearsoflongerTacticalplans:severalmonthstotwoyearsorsoOperationalplans:nowtoseveralmonthsinthefutureTiedintothe3levelsoforganisationalstructure.Long-termplanshavelessdetailthannear-termplans.Detailedshort-termplanshelpmeasurenear-termresults.Aplanninghorizonisacontinuumofvariousplans.DRGavinFinnieINFT13-322/73-322TypesofTraditionalPlanning3mths2yrs5yrsTimeOperationalTacticalStrategicDRGavinFinnieINFT13-322/73-322StrategicPlanningConvertslong-rangestrategiesintolong-rangeplanstoachievethefirm’sstatedmission.AddsdetailsofresourcesandtechnicalcapabilityMustgenerateactionstoaccomplishgoalsFormsthebasisfortacticalplansandoperationalplans.DRGavinFinnieINFT13-322/73-322TacticalPlansGreatdetailthisyear,lessdetailfornextyearTacticalplansrepresentmanagementcommitmentTheyareusedtoassessperformanceofmanagersTheycanbeusedtoassessunitperformanceTheysupportandaugmentlonger-rangeplansTacticalplanslinknear-termplanstolong-rangeplansTacticalplansarethefoundationforoperationalplansDRGavinFinnieINFT13-322/73-322OperationalPlansandControlsTheyprovideessentialdetailtonear-termactionsTheygivedirectiontoday-to-dayactivityTheycontaincontrolelementssoresultsaremeasurableShort-termplansdevelopthroughfrequentregenerationDRGavinFinnieINFT13-322/73-322PlanningSchedulesUsuallyanannualaffairTacticalandstrategicplansoverlapcycle-to-cycleOperationalplanningfitsthenatureofthebusinessTherecanbemanyvariationsoftheabovedependingonbusinessvolatility,businessculture,accountingcycles,businesscycles,etc.Theplanningscheduleiscyclical&repetitive.DRGavinFinnieINFT13-322/73-322APlanningModelForITManagersITplanningmustfitthefirm'splanningsystemITmustconsiderfirm-widefactorsinitsplanningincludingorganisation,culture,maturity,etc.ITplanmustanticipateandrespondtochangeIT'splanningmustinclude:applicationsconsiderationscomputer(system)operationsresourceplansadministrativeactionstechnologyplanningDRGavinFinnieINFT13-322/73-322ApplicationsConsiderationsApplicationportfolioconsistsofalltheapplicationprogramsusedbytheorganisationSelectingapplicationsonwhichtospendresourcesScheduleofactivityforselectedworkPlansforacquisitionthroughpurchaseResourceallocationplansforapplicationsportfolio(detailedinpartIIIofthetext)DRGavinFinnieINFT13-322/73-322SystemsConsiderationsITmustplantooperateprogramstouser'ssatisfactionServicelevel,capacityandnetworkplanningisincludedPlansforproblems,changesandrecoveryarerequiredSystemsOperationsPlanningElements:Service-levelplanningProblemmanagementChangemanagementRecoveryManagementCapacityplanningNetworkplanningDRGavinFinnieINFT13-322/73-322ResourcePlanningItemstobeplannedResourceelementsEquipmentplansSpaceplansPeopleplansFinancialplansAdministrativeactionsDRGavinFinnieINFT13-322/73-322People(Resource)PlanningPeopleplanningisthemostcriticalelementinresourceplanningPlansmustincludestaffing,trainingandretrainingPlanningmustbedoneattheskillgrouplevelCriticalskillsmustbeidentifiedandplannedDRGavinFinnieINFT13-322/73-322FinancialPlansandAdminActionsFinancialplandescribesallITcostsSummationofallcapitalcostsandallexpensesTimingagreeswithworkschedulesandeventcompletionFinancialplanningisaniterativeprocessFirmtriestoachieveconvergencewithplangroundrulesHeadcountorstaffingandspacemaybeconstrainedbyfirmDRGavinFinnieINFT13-322/73-322TechnologyPlanningITisresponsibleforunderstandingthestate-of-the-artAnadvancedtechnologygroupisveryhelpfulTechnologyareasinclude:NewprocessordevelopmentAdvancesinstoragedevicesNetworkedsystemsOperatingsystemsCommunicationssoftwareProgrammingtoolsVendorapplicationsSystemsmanagementtoolsDRGavinFinnieINFT13-322/73-322TheChangingWorldofPlanningTheplanningapproachdiscussedabovecouldbeconsidereda“traditionalapproach”Basedontheassumptions:FuturecanbepredictedTimeisavailableISsupportsandfollowsthebusinessTOPmanagementknowsbestThecompanyisanarmy:leadersissuetheordersDRGavinFinnieINFT13-322/73-322TraditionalStrategy-makingStep1Whereisthebusinessgoingandwhy?Step2Whatisrequired?Step3Howcanitbedelivered?BusinessDecisionsObjectivesanddirectionChangeBusinessStrategySystemsStrategyITStrategyBusiness-basedDemand-orientedApplication-focusedActivity-basedSupply-orientedTechnologyfocusedITimpactandpotentialSupportsbusinessInfrastructureandservicesDirectionforISNeedsandprioritiesDRGavinFinnieINFT13-322/73-322TheNewRealitiesFutureismoredifficulttopredict–eraofdiscontinuouschangeTimeisnotavailable:traditionalplanningcycleassumesITimplementationattheendTopmanagementmaynoknowbest:nichemarketing,customizingofproducts,etcAnorganizationdoesnotoperateinanarmy-likehierarchyISistightlyintegratedwiththebusinessandwithitsstrategyDRGavinFinnieINFT13-322/73-322EnterprisewideInformationManagementStrategicplanoftheenterpriseBusinessorganizations(thatcarryoutplans)InformationTechnologyopportunitiesInformationSystemsarchitectureBusinessSectorTechnologySectorImpactAlignmentDRGavinFinnieINFT13-322/73-322Sense-and-RespondapproachLetthestrategyunfold:sensechangesandrespondastheyoccurFormulatestrategyclosesttotheaction–stayinclosecontactwiththemarketplaceGuideStrategy-makingwithastrategicenvelope:needacentralguidingstrategytomanagetheothers.TestthefuturePuttheinfrastructureinplaceDRGavinFinnieINFT13-322/73-322ApproachestoPlanningISStagesofgrowthCriticalsuccessfactorsCompetitiveforcesmodelValuechainanalysisE-businessvaluematrixLinkageanalysisplanningDRGavinFinnieINFT13-322/73-3221.StagesofGrowthStageOne:EarlySuccesses:IncreasedinterestandexperimentationStageTwo:Contagion:Interestgrowsrapidly;learningperiodforthefieldStageThree:Control:EffortsbeguntowardstandardizationStageFour:Integration:PatternisrepeatedDRGavinFinnieINFT13-322/73-322StagesofGrowthforPlanningOrganisationsmustknowwheretheyarenowrelativetostagesTheycananticipatewhatislikelytohappennextFirmcanplantoachievenextstageinsomeperiodUsefultoknowwheretheindustryasawholeisIsourfirmleadingorlaggingtheindustry?Wheredowewantourfirmtobepositioned?DRGavinFinnieINFT13-322/73-3222.CriticalSuccessFactorsForeachexecutive,CSF’sarethefewkeyareasofthejobwherethingsmustgorightfortheorganizationtoflourish.Fewerthan10perexecutiveTimedependent(mustbereexamined)Foursources:industrythebusinessisin,companyitselfwithinindustry,environment(consumertrends),andtemporalorganizationalfactors(inventory)DRGavinFinnieINFT13-322/73-3222.CriticalSuccessFactorsUsedtodeterminefactorscriticaltoaccomplishcorporateobjectivesandcorrespondingmeasuresCanbeusedtoidentifyISthatneedtobedevelopedDRGavinFinnieINFT13-322/73-322CSFsforPlanningCSFsareexcellenttoolstousewithanyplanningprocessTheyareagoodauditonthefinalplan&providefeedbackTheyensurethatnecessaryconditionshavebeenmetITmanagershouldknowtheboss'andthefirm'sCSFs.Aretheybeingmet?TheITplanmustaddresstheseasaminimumDRGavinFinnieINFT13-322/73-3223.CompetitiveForcesModelCompaniesmustcontendwithfivecompetitiveforces:ThreatofnewentrantsBargainingpowerofcustomersand buyersBargainingpowerofsuppliersSubstituteproductsorservicesTheintensityofrivalryamong competitorsDRGavinFinnieINFT13-322/73-322VisualisingCompetitiveForces(1)Needtovisualisetheforcesgoverningcompetition,usePorter’smodelRivalryamongcurrentcompetitorsThreatofnewentrantsThreatofsubstituteproducts/servicesBargainingpowerofsuppliersBargainingpowerofcustomersDRGavinFinnieINFT13-322/73-3223.CompetitiveForcesModelStrategiesfordealingwiththesecompetitiveforces:Differentiateproductandservices-makethem“better”intheeyesoftheconsumerBethelowest-costproducer-notjustalow-costproducerFindaniche-e.g.,geographicalmarketDRGavinFinnieINFT13-322/73-322BasicStrategicThrusts1.Productorservicedifferentiation2.Costadvantages3.Innovationinproductorservice4.Growthforthefirm5.Allianceswithothers6.TimeandspacedimensionsDRGavinFinnieINFT13-322/73-322StrategicSystemsinActionThefollowingthreemajorsystemsshowapplicationinspecificcases,viz.,transportation,financialanddistributionindustries.TheyarerelativelyeasytounderstandTheyillustratesystemsrelatedtostrategicthrustsDRGavinFinnieINFT13-322/73-322AirlineReservationSystemsAmericanandUnitedsystemsarelargeandveryvaluableLargeinvestmentsweremadeoveralongperiodoftimeContinuedinvestmentisrequiredtoremaincompetitiveTheyareveryvaluable(CoviaisvaluedatUS$1billion)Europeanairlinesaredevelopinglargereservationsystems(GalileoandAmadeus)AirlinesarecontinuingtodevelopticketlesstravelDRGavinFinnieINFT13-322/73-322StockBrokerageSystemsAsingleindividualconceivedtheCMAconcept(onlinestockbrokingTheCMAcopedwithfederallawsandregulationsTobesuccessful,theCMAinvolvesanallianceCompetitorsusenewtechnologyasathreatNewfeaturescontinuetobeaddedtoMerrill'sCMAMerrillhopestoprovidefullserviceforfamilyfinancesToday,onlinebrokerageisrapidlyemergingserviceDRGavinFinnieINFT13-322/73-322e-SchwabfeaturesReal-timesecurityquotesResearchreportsDividendreinvestmentservicesOrderentryatreducedcommissionsOnlineaccountmanagementtoolsChequewriting24hour/365dayservice128bitencryptionandothersecurityfeaturesTradingthroughSchwab’swebsite(www.S)DRGavinFinnieINFT13-322/73-322DeliverySystemsFederalExpressappliestelecommunicationstechnologyTheCOSMOSsystemhelpsensurehighqualityserviceItsdeliveryserviceisdifferentiatedfromothersbutthere’sabundantcompetitionFedExsoftwarenowbeinginstalledincustomerofficesFedExnowaggressivelyexpandingintotheAsianmarketFedExisadistribution-outsourcingfirmforothercompaniesDRGavinFinnieINFT13-322/73-322WhereAretheStrategicOpportunities?TherearehundredsofstrategicsystemsinactionManyareproprietaryandoperatetotallywithinthefirm(e.g.,computerdesignsystems)ImportantsystemsinspirecustomerloyaltySomereducecoststoallparticipantsDRGavinFinnieINFT13-322/73-322TheRoleandImportanceofTechnologyInmanycases,technologyisadriverofstrategicsystems.Informationispervasiveinmostprocesses.Advancingtechnologyaltersstructureandindustrybehaviour.DRGavinFinnieINFT13-322/73-3224.9-4.15DRGavinFinnieINFT13-322/73-3224.ValueChainAnalysisFiveprimaryactivitiesthatformthesequenceofthevaluechain:Inboundlogistics:receivingandhandlinginputsOperations:convertinginputstotheproduct/serviceOutboundlogistics:collect,store,anddistributetheproduct/servicetobuyersMarketingandsales:themeans/incentivesforbuyerstobuytheproduct/serviceService:enhancements/maintenanceofthevalueoftheproduct/serviceDRGavinFinnieINFT13-322/73-3224.ValueChainAnalysisFoursupportingactivitiesthatunderlietheentirevaluechain:Organizationalinfrastructur