Transcript Course Outline

Strategic Planning for
Information Systems
(IS 6003)
Masters in Business Information Systems 2004 / 2005
Programme in Professional Information System Practices
Dr. Tom Butler / Fergal Carton
Business Information Systems
Last session
• Outsourcing
• Revision: plan
MBS (BIS) / 6003 / Strategic Planning for Information Systems
This session
• Revision: plan
– EMC: Global procurement
– SP: IT Governance
– CMOD: Outsourcing HR and RFP process
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Globalization of Supply
Base eg. EMC
• Over Half of our Spend now ex Far East
• Significant Cost Savings
• Cork has taken lead in managing Far East
Suppliers due to overlapping time zones.
• Additional Freight Costs
• Additional Leadtimes – Recovery time
longer.
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Globalization of Supply
Base eg. EMC
• Imagine fully outsourced manufacturing,
implications for systems?
– Procurement
– Order processing
– Manufacturing / Quality
– Shipping
– Invoicing
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Globalization of Supply
Base eg. EMC
• Pricing issues
– Volume agreements (based on linear demand)
– Bottom-up pricing / should cost (McKinsey)
– Total landed cost (including transport)
– Total cost of ownership (including failures,
returns)
MBS (BIS) / 6003 / Strategic Planning for Information Systems
The 3 B’s
• Billings
– Shipped
• Booked
– Orders booked and approved
– Not yet allocated product
• Backlog
– Product allocated
– Orders awaiting shipment
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Direct Purchasing – Key Metrics
• Material availability
– Material failures : purge
– Capacity (incl. labour)
• Inventory (12-14 turns vs. 40 @ Dell)
– NB. Shareholder reaction
• Worldwide savings
– (NB. difficulty in maintaining year on year
savings)
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Direct Purchasing – Key Metrics
• On time delivery
• Excess and obsolescence at supply base
• Inventory management of RTV/MAV
• Meet inventory targets
• Drive TCO within supply base
• A/P issue resolution
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Why outsource?
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Concern for cost
Concern for quality
Lagging IT performance
Access to special application skills
Vendor pressure (eg. CMOD)
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Types of outsourcing
• Major outsourcing programme (strategic)
– Eg. IT operations
• Incremental outsourcing
– Eg. Travel Expense reporting
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Outsourcing segments
BUSINESS SYSTEMS SERVICES SECTOR
DIRECT
SERVICES (BPO)
INFRASTRUCTURE
SERVICES
INDIRECT
SERVICES
Accounting
Finance
Asset Mgt.
Risk Mgt.
Legal Services
Admin Services
Recruitment/HR
Marketing
etc.
IT Outsourcing,
Systems
development,
integration and
management
(Includes COTS,
bespoke systems or
hosted applications)
Management
consulting and
other support
services to help
organisations more
effectively manage
and exploit activities
in other two areas.
MBS (BIS) / 6003 / Strategic Planning for Information Systems
How much does outsourcing cost?
• Pay per service provided - the more
comprehensive the service, the more
expensive.
• Other methods include:
– Cost per user model
– Cost per item processed (eg. Calls received to
help desk)
– Percentage of improved revenue or savings
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Cost reduction in IT service chains
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Upgrades to new software done centrally
No need to upgrade individual client PC’s
Reduces risk (and cost) of software piracy
Software is never physically distributed
No inventory of physical media (eg. CD’s)
Vendors economies of scale in staff utilisation
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Globally accessible applications
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IT services delivered over the net
Doesn’t matter where the server is
Services available from any PC + browser
Access restricted to authorised users
Mobile employees have same workspace
Cost of re-location reduced
Combines with mobile devices (phone, PDA, ..)
New opportunities
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Last term
• Introduction to Strategic Planning
• IT Strategy Case study
– Proposal for development of IT strategy
at UCC
• Global procurement (Joe Healy, EMC)
• IT Doesn’t matter (review)
MBS (BIS) / 6003 / Strategic Planning for Information Systems
This term
• IT impact on the organisation
• Malcolm Casey (IT Director, Schering Plough),
24th Jan
– IT Strategy in context of European Operations of
Pharma MNC
• Management consulting case study, Feb 7th
– PeopleSoft rollout in public sector
• IS Role in global organisation
• IT impact on the organisation (centralisation)
MBS (BIS) / 6003 / Strategic Planning for Information Systems
Recap on reading material
• IT Doesn’t matter (Carr, 2003)
• Systems Planning in the Information Age (Sullivan, 1985)
• The impact of enterprise systems on management decision
making (Carton & Adam, 2004)
• Corporate Information Strategy & Management
(Applegate, Austin & McFarlan)
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Introduction
Case 1-1 QuickenInsurance
Chapter 8, esp. Co-ordination and location of IT Policy
Table 8.1 Possible Implications of Excessive IT / User Dominance
MBS (BIS) / 6003 / Strategic Planning for Information Systems
MBS (BIS) / 6003 / Strategic Planning for Information Systems