Strategic Information Systems
CBSM4203
TOPIC 5: INFORMATION
SYSTEM STRATEGIC
PLANNING
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Introduction
Improved strategic IS planning is one of the
critical issues facing IS executives today.
Effective strategic IS planning can help
organisations use IT to reach business goals.
It can also enable organisations to use IT to
significantly impact their strategies.
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IS strategic planning
The essential requirement for effective IS
planning is that the needs of the business should
drive the planning for IS development and
deployment.
Business planning is the process of identifying
the goals, objectives and priorities for the firm
and of developing action plans for achieving
these goals, objectives and priorities.
IS planning is a part of business planning and
focuses on deploying the firm’s IT resources and
capabilities to facilitate the overall business
plans for the firm.
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Why strategic planning fails
Failure to tie technology to institutional mission
and priorities
Failure to get the right people on board
Excessive focus on technical details
Lack of suitable leadership
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Critical Success Factor (CSF) analysis
Critical success factors are the limited number of
areas in which satisfactory results will ensure
competitive performance for the individual,
department or organisation.
CSFs include issues vital to an organisation’s
current operating activities and to its future
success.
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What is CSF?
Critical Success Factor (CSF) is the term for
an element that is necessary for an
organization or project to achieve its mission
It is a critical factor or activity required for
ensuring the success of your business.
The term was initially used in the world of
data analysis, and business analysis.
For example, a CSF for a successful IT project
is user involvement.
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Following CSF should be considered
Intellectual capital: Create assets from the
tools you make to run your business.
Strategic relationships: New sources of
business, products and outside revenue.
Employee attraction and retention: Your
ability to find, train, and keep employees and
to let go employees that are not a good fit.
Sustainability: Your personal ability to keep it
all going.
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Following CSF should be considered
Intellectual capital: Create assets from the
tools you make to run your business.
Strategic relationships: New sources of
business, products and outside revenue.
Employee attraction and retention: Your
ability to find, train, and keep employees and
to let go employees that are not a good fit.
Sustainability: Your personal ability to keep it
all going.
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Importance of CSF
Critical success factors are those few things
that must go well to ensure success for a
manager or an organization, and, therefore,
they represent those managerial or enterprise
area, that must be given special and continual
attention to bring about high performance
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Critical success factor analysis
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Characteristics of CSF
CSFs are quite different from “Key performance
indicators” which have been used in the past for
IS planning. They are not a standard set of
measures that can be applied to all organisations.
Rather, they are specific to a particular situation
at a particular time.
CSFs can also be categorised as monitoring and
building.
Monitoring CSFs involves the scrutiny of
existing situations, such as monitoring the
percentage of defective parts.
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Characteristics of CSF
Building CSFs is related to changes in the
organisation for future planning, such as
improving product mix.
Managers who spend most of their time in
control functions are concerned mostly with
monitoring CSFs, whereas those who are
concerned primarily with planning are
concerned mostly with building CSFs.
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Sources of CSF
Industry-based factors - Each industry has a
set of CSFs that are determined by the
characteristics of the industry itself. Each
organisation in the industry must pay attention to
these factors.
Competitive strategy, industry position, and
geographic location – Each organisation in an
industry is in an individual situation, determined
by its history and current competitive strategy.
Differences in industry position, geographic
location and strategies can lead to different CSFs
from one company to another in an industry.
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Sources of CSF
Environmental factors - Environmental factors
are those areas over which an organisation has
little control GDP
Temporal factors - They are areas of activity
that are significant for an organisation because
they are below the threshold of acceptability at
that time. For example, inventory control is
generally not a CSF for a chief executive but
may become a very high level CSF under the
circumstances of either very little or too much
stock.
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Sources of CSF
Managerial position – Each functional
managerial position has a generic set of CSFs
associated with it. For example, almost all
manufacturing managers are concerned with
product quality, inventory control and cash
control.
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Hierarchical nature of CSF’s
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Measuring CSF
To measure is to know. CSFs must be measured
in order to track the progress in achieving them.
Such measures are only rarely provided by the
traditional financial accounting systems; and
may be provided only sometimes by cost
accounting systems (often with some additional
improvements in them).
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Measuring CSF
A small proportion of CSFs require subjective
assessment rather than being easily quantifiable.
Some CSFs can have only soft measures.
However, usually there is some means of
creating numeric measures.
Senior management is used to such situations
and spends much time with subjective
judgements and measurements.
Therefore, they might not have problems with
subjective measures.
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Measuring CSF
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CSF analysis
There are three major uses of the CSF concept
(Boynton and Zmud, 1984):
To help an individual manager determine his
or her information needs.
To aid an organisation in its IS planning
process.
To aid an organisation in its organisational
strategic planning process.
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CSF analysis
The CSF analysis process involves a series of
interviews conducted in two or three sessions.
In the first session, the manager is asked his or
her goals and the CSFs that underlie these goals.
The second session focuses primarily on
identifying specific measures and possible
reports.
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CSF analysis
CSF analysis has been widely used.
Its purpose is to identify the most important ingredients
for the IS strategy since they define the most important
ingredients of the business success.
CSFs keep a firm focus upon strategic issues but
obviously their weakness is that it needs very skilled
and very perceptive interviewers to determine CSFs
from senior managers.
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CSF analysis
The main strengths of CSF analysis are that it provides
effective support to planning since the consideration of
critical activities develops management insights and
CSF analysis may serve as the effective top level for a
subsequent structured analysis.
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Extended CSF analysis
CSFs are time dependent. Thus, even if the
appropriate factors are identified, events may
alter the criticality of these factors.
For example, the rise of crude oil prices in the
1970s caused major changes in various
organisations.
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Extended CSF analysis
This extended CSF analysis method uses the
CSF analysis to provide the planning context in
three critical domains: information, decision and
assumption.
The Critical Information Set (CIS) defines those
measures and associated data necessary to
monitor, analyse and control the CSFs.
This is the traditional product of a CSF analysis.
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Extended CSF analysis
The Critical Decision Set (CDS) defines those
decision processes that will most affect the
successful achievement of a CSF.
For example, if the CSF is to retain highly
skilled employees, the CDS might include the
hire, promotion, merit, raise, job assignment or
other decisions that directly affect a highly
skilled employees decision to remain with the
firm.
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Extended CSF analysis
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Business System Planning
Business Systems Planning (BSP) is an IBM
proprietary technique devised initially for IBM
internal use; later, it was sold as a service to its
customers in the mid-1970s.
BSP was perhaps the earliest formal IS planning
method and is now the most widely known.
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Business System Planning
BSP offers a structured approach to IS planning
via a number of fairly rigorously defined stages
that lead from the identification of business
processes to a definition of required data
structures.
Data are tracked as they flow throughout the
organisation by the business activity support or
from which they result.
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Business System Planning
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Major activities in BSP
The BSP methodology consists of four major
activities:
Documenting the business activities
Defining the business processes
Defining the data necessary to support the business
processes
Defining the information architecture
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BSP study step by step
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BSP study step by step
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Review Questions
Discuss why top management commitment is
required for the BSP study.
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Review Questions - answer
BSP study requires the diversion of staff and
other scarce resources from more immediate
tasks.
Therefore, it is important to gain top
management commitment and involvement.
This support is needed not only to get things
started but also to measure adherence to the
plans.
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Review Questions - answer
Discipline and constraints are imposed by BSP
on managers and high-level business executives,
who often view these constraints as counterproductive to their short-term interests.
This is why top management support is critical
for the BSP study.
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Earl’s multiple methodology
1. Clarification of the business needs and
strategy in IS terms - What is the business
strategy and what is the IS strategy;
2. Evaluation of current IS provision and use How to integrate legacy
systems; and
3. Innovation of new strategic opportunities
afforded by IT - What are the
operational goals.
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Earl’s multiple methodology
Earl’s method is known as the “Multiple
methodology” or „Three-pronged
Methodology” as he tackles his three issues
from different angles top-down, bottom-up and
inside-out.
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Earl’s multiple methodology
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Top down classification
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Bottom-up evaluation
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Common weakness of IS planning methodologies
Poor integration of business and IS planning
Lack of planning for IS ongoing maintenance
requirements
Focus on tools and techniques instead of on real
business needs
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Common weakness of IS planning methodologies
Inability to handle change or uncertainty
Vision or architecture is too narrow and shortranged
Obscure or complex planning processes
Problems without solutions in any current
planning approach
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Other Common weakness of IS planning
methodologies
Failure to deal effectively with applications
integration;
Insufficient evaluation of applications package
options and tradeoffs;
Lack of effective risk assessment and management;
and
Failure to make use of existing „Best practices‰
already proven and public knowledge from other
firms in the industry.
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HAVE A NICE DAY!
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