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Chapter 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 IT
Problem:
 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 longrange 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
Basic IT planning addresses the following four general 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.
3. 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.
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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 topdown 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-Planning
Some 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, Decision making is part of
enterprise support systems, everyone’s job.
expert systems
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Tools for BPR
 Simulation and visual
simulation tools
 Work analysis
 Flow diagrams
 Business process
design
 Application
development tools
 Integrated tool kits
 Workflow software
 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.
 IT helps to contribute to cycle
time reduction.
 Time is recognized as a major
element that provides
competitive advantage.
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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
 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?
 Fitting the IT architecture to the
organization is important.
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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.
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