Lecture 3

CSM Strategic Information

Systems Planning
 Technology is changing very fast.
What do we
know about Most organisations’ survival
Information depend on IT.
systems? IS management is becoming both
more challenging and more critical.
Planning
• 3 different types of planning
Strategic Planning
• Strategic is defined as “having a significant, long-term impact on the
growth rate, industry, and revenue” of an organization.
• It attempts to form a view of the future to help determine what
should be done now.

• Strategic planning is difficult!

Why is strategic planning difficult?
• Business goals and systems plans need to align
• CIOs and IS departments can no longer be excluded from strategic meetings.
• We see the emergence of CEOs and CFOs with systems planning background.
• Technologies are rapidly changing.
• Management need to foresee the upcoming of innovation with superior technology
potential and viable business applications.
• Companies need portfolios rather than projects
• Portfolio bring a more holistic approach to individual projects.
• Infrastructure development is difficult to fund
• It is extremely difficult to determine how much funding is needed to develop or
improve infrastructure.
• Shared responsibility at Cx level
• Systems planning has become business planning and is not only a technology issue.
Traditional Strategy making
• Traditional planning was
based on the following
assumptions:
• The future can be predicted.
• Time is available to progress
through this 3 part sequence
• IS supports and follows the
business
• Top management knows best,
because they have the
broadest view of the firm.
• Leaders issue the orders and
the troops follow.
This is no longer true. Why?
• The future is less predictable.
• Time is running out.
• IS does not just support the business anymore.
• Top management may not know best.
• An organisation is not like an Army.
Today’s Sense and Respond Approach
• Today’s world is characterised by rapid
change and uncertainty about the
future.
• It is risky to make long-term
predictions.
• Move into the future in step by step
manner using a sense-and-respond
approach.
• a myriad of small experiments going
on in parallel, each testing its own
hypothesis of the future
Planning techniques

Three
Stages of Critical Competitive
emerging
growth success factors forces model
forces

Linkage
Value chain Internet value Scenario
analysis
analysis matrix planning
planning
Stages of growth
• Stage 1: Early sucesses
• The first stage is the beginning use of a new technol- ogy. Although stumbling occurs, early
successes lead to increased interest and experimentation.
• State 2: Contagion
• Based on the early successes, interest grows rapidly as new products and/or services based on the
technology come to the marketplace.
• This proliferation stage is the learning period for the field, both for uses and for new products and
services.
• Stage 3: Control
• The proliferation must eventually be controlled.
• Management begins to believe the costs of using the new technol- ogy are too high and the
variety of approaches generates waste. The integration of systems is attempted but proves
difficult, and suppliers begin efforts toward standardization.
• State 4 : Integration
• New technology is already mature.
• The dominant design of the technology has been mastered, setting the stage for newer
technologies, wherein the pattern is repeated.
Stages of growth (2)
• For example • It is important for management to
understand in which stage a
technology or company resides on
the organisational learning curve.
• For example, if a technology is
stage 2 where trial and error is
expected, management needs to
tolerate and encourage
experimentation rather than exert
unwarranted control.
Critical Success Factors
• It focuses on individual managers and their current information
needs, whether factual or opinion information.
• Executives should focus on critical success factors (CSFs) which are
the key areas of the job where things must go right for the
organisation to flourish.
• The CSFs normally are derived from 4 sources: the industry, the
company itself and its situation, the environment and temporal
organisational factors.
• IS plans are then developed based on the CSFs
 Competitive Forces (Porter’s 5 forces)
• Most widely quoted framework
about the strategic use of IT.

• 5 forces
• Threat of new entrants
• Bargaining power of buyers
• Threat of substitute products or
services
• Bargaining power of suppliers
Porter’s 5 forces:
3 strategies for dealing with these competitive
forces
1. Differentiate between products and services
• By making them different—that is, better in the eyes of customers—firms
may be able to charge higher prices or perhaps deter customers from moving
to another product, lower the bargaining power of buyers, and so on. It is
probably the most popular of his three strategies.
2. Be the lowest cost producer
• Not being the lowest causes a company to be stuck in the middle, with no real
competitive advantage.
3. Find and focus on a niche
• Companies that use this strategy can often serve their target market
effectively and efficiently, at times being both the low-cost producer and
having a highly differentiated product as well.
Downes’ 3 emerging forces
• Downes suggests 3 new forces on top of Porter’s 5 forces to reflect
the new role of IT as driver of change from the more traditional role
of a tool for implementing change.

• These forces are:

• Digitalisation (example Amazon and Skype)
• Globalisation
• Market dimension is no longer local but global.
• Deregulation
• Governmental influence on trade has diminished in many industries pushing local
monopolies to lose their market power.
E-business value matrix
• A portfolio planning technique used at Cisco
• Every IT project is placed in one of 4 categories and assessed in 2 key
areas.
E-business value matrix (2)
• New fundamentals
• Projects that provide a fundamentally new way of working in overhead areas
not business-critical areas.
• Projects are low risk and focus on increasing productivity.
• Projects can provide significant cost savings by measurably improving
operations.
• Projects should be managed as quick hits and can be implemented by IS with
little user involvement during development.
E-business value matrix (3)
• Operational Excellence
• Projects are medium risk because they may involve reengineering work
processes
• Projects do not aim for immediate returns, but rather intend to increase such
areas as customer satisfaction and corporate agility.
• Projects can be important in improving IS credibility because they are highly
visible to executives.
• Projects normally involve cross-functional teams and they use tested
technology.
E-business value matrix (4)
• Rational Experimentation
• Projects test new technologies and new ideas.
• Projects are risky.
• Projects are normally a means to move ahead of competitors.
• Projects can also be described as experiments and probably will not hurt the
company if they fail.
• These incubator-type projects should be managed as experiments with short
time frame and incremental funding.
E-business value matrix (5)
• Breakthrough strategy
• Projects potentially have a huge impact on the company and perhaps even on
the industry, if they succeed.
• High risk projects
• Example eBay