Transcript Lecture 9.pptx

Information Systems Planning
Lecture 9
Today Lecture

Case examples include Microsoft

Introduction
 Types of planning
 Why
is planning so difficult?
Today Lecture ..

The Changing World of Planning
 Traditional
 Today’s
Strategy-Making
Sense-and-Respond Approach
Introduction

Systems planning, especially strategic systems planning,
is becoming more difficult and more important at the same
time. Technology is changing so fast that it is seems futile
to plan for it, yet the dependence on this technology
makes planning its effective use a matter of organizational
life and death

This lecture / chapter contrasts the traditional view of
planning with the sense-and-respond approach of
strategy-making, presenting seven IS planning techniques
Introduction

IS management is becoming more difficult and more
important at the same time:
 Technology changing so fast: “Why bother?” Vs. Most
organizations’ survival is dependant on technology
 How to resolve this apparent paradox?

Good News = variety of approaches, tools and
mechanisms available
Bad News = no ‘best’ way to go about it

Planning ..Good and Bad News!
Introduction cont.

It is important to establish the appropriate mindset for
planning:
 Some managers believe = “determining what
decisions to make in the future”
 Better view = developing a view of the future that
guides decision making today
 Subtle
difference = ‘strategy making’
 Strategy = stating the direction in which you want to
go and how you intend to get there
 The result of strategy-making is a plan
Why Planning Is So Difficult
Types of Planning:
 Planning is usually defined in three forms,
which correspond to the three planning
‘horizons’. (Figure 4-1)
 Strategic
= 3-5 years
 Tactical = 1-2 years
 Operational 6 months – 1 year
4-8
Why Planning Is So Difficult
Types of Planning:

Planning is usually defined in three forms, which
correspond to the three planning ‘horizons’. (Figure 4-1)
 Strategic = 3-5 years
 Tactical = 1-2 years
 Operational 6 months – 1 year
Types of Planning
Introduction cont.

Why Planning Is So Difficult?:
 Business

Goals and Systems Plans Need to Align
Strategic systems plans need to align with business
goals and support those objectives

Some believe = “too sensitive” = PROBLEMS

Fortunately = trend for CIOs to be part of senior
management
Introduction cont.
 Technologies

Are Rapidly Changing
How can you plan when information technologies
are changing so rapidly
 Continuous
planning?
 Old days of planning at ‘start of year’ = gone
 Advanced technology groups
Introduction cont.

Why Planning Is So Difficult ...
 Companies

Need Portfolios Rather Than Projects
Evaluation on more than their individual merit
 How
they fit into other projects and how they
balance the portfolio of projects
 Infrastructure

Development is Difficult to Fund
Despite everyone “knowing infrastructure
development is crucial”, it is extremely difficult to
get funding just to develop or improve
infrastructure
Introduction cont.

Often done under the auspices of a large
application project
 Challenge = develop improved applications and
improve infrastructure over time
 Responsibility

Needs to be Joint
Business planning, not just a technology issue
 Other


planning issues
Top-down Vs. bottom-up; radical change Vs.
continuous
Planning culture
Business Goals and Systems Plans

Strategic systems plans need to align with business
goals and support them.

If top management believes the firm’s business goals are
extremely sensitive, the CIO is often excluded in major
strategic meetings by top management.
Business Goals and Systems Plans conti

Systems planning is becoming a shared responsibility
among the CIO, CTO, and other members of senior
management.

The emergence of e-commerce and globalization caused
CEOs and CFOs to realize they need to be involved in
systems planning
Technologies Are Rapidly Changing

How can executives plan when IT is changing so rapidly:

Continuous monitoring and planning the changes of
technologies and how the industry would adopt this
technology

The planning process first needs to form a best-available
vision of the future on which to base current decisions.
Technologies Are Rapidly Changing
Conti

The technology needs to be monitored to see whether
that future vision needs alteration.

Some organizations have an advanced technology
group charged with watching and evaluating new
technologies.

It is important for organizations to pay particular attention
to the impact of disruptive technologies or disruptive
innovation
Technologies Are Rapidly Changing
Conti

Sometimes, an emerging and inexpensive technology
emerges and swiftly displaces incumbent technologies.

A classic example is the Linux Operating System (OS).
When it was introduced, its capability was inferior to
other existing OSs like Unix and Windows NT.

Linux was inexpensive, and thanks to continuous
improvements, it has earned a significant market share
for computer servers
Technologies Are Rapidly Changing
Conti

. In 2007, IBM announced it would use Linux with its new
servers.

The USB memory stick is another instance of disruptive
technologies.

This inexpensive storage medium has changed the way
people share files, displacing disk storage.

Many forecasters have predicted that Voice-over-IP will
replace decades-old land-based telephony
Technologies Are Rapidly Changing
Conti

The planning issue here is for management to foresee
the upcoming of innovation with superior technology
potential and viable business applications.

These new technologies can be a cost-effective addition
to the existing technological infrastructure.

Or, they can be a potential replacement that needs a
carefully migration strategy
Companies Need Portfolios Rather Than
Projects

Another planning issue is the shift in emphasis from
project selection to portfolio development.

Businesses need a set of integrated and seamless
technologies that work together.

Project developments have had a history of building
“stove-pipe” systems that result in applications that are
not compatible with each other.
Companies Need Portfolios Rather Than
Projects ..

A portfolio approach requires a more sophisticated form
of planning because projects must be evaluated on more
than their individual merits.

How they fit with other projects and how they balance
the portfolio of projects become important.

The Internet Value Matrix described later is an example
of this approach
Infrastructure Development Is Difficult
to Fund

People understand intuitively that developing an
infrastructure is crucial

. However, it is extremely difficult to determine how much
funding is needed to develop or improve infrastructure.

Often, such funding must be done under the auspices of
large application projects.

The challenge then is to develop improved applications
over time so that the infrastructure improves over time
Infrastructure Development Is Difficult to
Fund conti

Since the mid-1980s, companies have faced a continual
succession of large infrastructure investments.

First, they needed to convert from a mainframe to a
client-server architecture to share corporate and desktop
computing.

Then they implemented ERP to centralize and
standardize data so that everyone had the same
information.
Infrastructure Development Is Difficult to
Fund ..

Then they needed to create a Web presence and give
users access to back-end systems.

Now they are under pressure to implement Web
Services–oriented architectures to work inter-company
and draw on best-of-breed processes.

Boards of directors have realized that they have to fund
these huge multiyear projects just to remain competitive.
Making these large-stakes bets increases the difficulty of
systems planning.
Responsibilities Needs to Be Joint

It used to be easier to do something yourself than gather
a coalition to do it.

This is no longer the case. Systems planning initiated by
and driven by the CIO has not proven as effective as
systems planning done by a full partnership among Clevel officers (CEO, CFO, CIO, COO) and other top
executives.
IT Planning !
IT Planning is not
like This one!
Responsibilities Needs to Be Joint
….

Systems planning has become business planning; it is
no longer just a technology issue.

Many large organizations set up an Information Systems
Council (ISC) or committee to periodically review the
effectiveness of the current strategic plan, assess the
current technological environment, and develop an IT
strategy based on the institution’s mission and goals.
Planning Issues

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
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Several other characteristics of planning make strategic
systems planning difficult.
There is always tension between top-down and bottomup approaches, thus the planning process must strike a
balance between radical change and continuous
improvement.
Furthermore, systems planning does not exist in a
vacuum.
Most organizations have a planning culture into which
systems planning must fit.
This sampling of issues illustrates why systems planning
is a difficult but crucial task.
The Changing World of Planning


Internet etc. = ‘introduced’ speed into the business environment
and transformed how people think about time, how much time they
have to plan, react to competitors etc.
Traditional Strategy-Making:
1.
Business executives created a strategic business plan = where the
business wanted to go
2.
IS executives created an IS strategic plan = how IT would support the
business plan
3.
IT implementation plan created = describe exactly how the IS strategic
plan would be implemented
The Changing World of Planning

Assumptions:

The future can be predicted

Time is available to do these 3 parts

IS supports and follows the business

Top management knows best (broadest view of firm)

Company = like an ‘Army’
The Changing World of Planning
The Changing World of Planning cont.

Today, due to the Internet and other technological
advances, these assumptions no longer hold true:





The future cannot be predicted
 Who predicted Internet, Amazon, eBay etc.?
Time is not available for the sequence
IS does not JUST support the business anymore
 Figure 2-8
Top management may not know best
 Inside out Vs. outside in approach (Figure 4-3)
An organization is not like an army
 Industrial era metaphor no longer always applies
Today’s Sense-and-Response Approach

If yesterday’s assumptions no longer hold true, what is
taking the ‘old’ approach’s place?:
 Let Strategies Unfold Rather Than Plan Them:
 In times of fast paced change (like today!) this is
risky
 When predictions are ‘risky’, the way to move into
the future is step by step using a sense-andrespond approach

Sense a new opportunity and immediately
respond via testing it via an experiment

Myriad of small experiments (Figure 4-6)
Today’s Sense-and-Response Approach
....

Formulate strategy closest to the action:

Close contact with the market

Employees who interact daily with customers, suppliers and
partners

Employees who are closest to the future should become prime
strategists. In the ‘Internet Age’ = younger employees
The Changing World of Planning
MICROSOFT
Case example: Sense and Respond Strategy-Making





Microsoft, the software giant in Redmond, Washington, has taken a
sense-and-respond approach to creating its Internet strategy.
Throughout its history, Microsoft has been slow to embrace some
of the computer industry’s most significant technology shifts and
business chances.
To adopt innovation, the company has often succeeded in using its
financial might to acquire successful leaders (e.g., Lotus
Development Corp. for office automation and Netscape
Communications Corps for Web browsers).
Microsoft moved on to buying Internet companies, aligning with
Sun to promote Java (and create a proprietary version of Java),
and even forging an alliance with AOL.
This catch-up-and-strive approach has worked rather successfully
for Microsoft.
MICROSOFT
Case example: Sense and Respond
Strategy-Making

software giant moved into a variety of technologies:

BASIC programming language for PC

MS-DOS (Microsoft Disk Operating System)

MS Mouse
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..
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MSN Web Portal and ISP (Internet Service Provider)
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Visual BASIC
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MS Windows XP

MS Business Solutions (Financial Management, CRM,
SCM)

Tablet PC
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..
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Windows Mobile OS
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Visual Studio .Net Enterprise Developer

Xbox 360 and the multiplayer broadband gaming
service, Xbox Live

Vista Operating System
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..

MS Word

Internet Explorer

MS Windows

MS Office
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..


Microsoft diversifies in a number of related sectors, to
include:
Web-only magazine, Slate, Web News site with NBC,
Cable news channel with NBA, digital movie production
via Dreamworks, mobile application, .NET platform for
Web Services, and search engines to compete with
Google. As the company celebrates its 30th year
anniversary, it is moving even more to applications areas
(e.g., healthcare) while continuing to explore new
software technologies (e.g., multi-core programming
technology called “F-Sharp” to manage massive server
computers).
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..




Bill Gates has made defining announcements, to be
sure, focusing the company on the Internet, security, and
Web Services.
The strategies have not always come from top
management.
The company’s first server came from a rebel working on
an unofficial project.
In addition, management mistakenly passed up some
cheap acquisitions that later cost them much more via
licensing agreements
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..

In short, Microsoft has been sensing and responding to
the moves in several industries, getting its fingers into
every pie that might become important.

Craig Mundle, Microsoft’s chief research-and-strategy
officer, is designated to replace Bill Gates, who
relinquishes his chairmanship in 2008, as the new longterm strategic thinker.
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..

In a report to the Wall Street Journal (July 30, 2007), Mr.
Mundle wants Microsoft units to constantly search for
innovation: “This is something that should be stuck in the
face of the people who still think this is science fiction.”
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..
Formulate Strategy Closest to the Action:

The major change introduced by the Internet is faster
communication, not only within organizations but, more
importantly, with others—customers, suppliers, and
partners.
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..

Aligning corporate strategy with the marketplace in fastpaced times requires staying in close contact with that
marketplace.

Hence, strategy development needs to take place at
these organizational edges, with the people who interact
daily with outsiders.
MICROSOFT
Case example: Sense and Respond
Strategy-Making ..

Today, this means including younger employees
because they have grown up in an era of the Internet,
PDAS, and cell phones.

They take all three for granted; they wear them like
clothing.

One company that is taking this premise of downside-up
strategizing to heart is Skandia Future Centers.
Different Microsoft Products
http://www.microsoft.com/enable/products/default.aspx
Summary



Case examples include Microsoft
Introduction
 Types of planning
 Why is planning so difficult?
The Changing World of Planning
 Traditional
Strategy-Making
 Today’s Sense-and-Respond Approach