Term/Case study
Chapter 3
Establishing an Effective Process for Developing Information Systems and Technology (or Digital) Strategies
Outline
Some Definitional Clarity
The Evolution of the IS/IT Strategy Process: From Technology Deployment to Strategic Focus
The Business Context for Developing and Managing the Strategy
Establishing an Effective Process: Continuous and Flexible
Setting the Scope for the Strategy
A Framework for IS/IT Strategy Formulation
Other Deliverables from the IS/IT Strategy Process
Definitional Clarification
Many “strategies” focus on systems and planning rather than technology and strategy
Strategic Information Systems Planning (SISP)
Information Systems Strategic Planning (ISSP)
IS/IT (Digital) strategy formulation
Who, What, Where, Why, and How, not When
IS/IT (Digital) planning
When
Personally, I think How would fall here rather than above (maybe some of both)
The Evolution of the IS/IT Strategy
Stage 1 sees IT deployed in an ad hoc manner across the organization
Stage 2 Management, now aware of the dependence on IT/IS
Stage 3 This stage is centered on detailed IS/IT planning
Stage 4 is when the business users of information, systems and technology take the reins
‘shadow IT’ often emerges in response to the perceived inability of the in-house IT organization to deliver
Some functional areas, like marketing and R&D, want to move quickly and are not prepared to work to the IS/IT planning cycle
Stage 5 requires bringing it all together by integrating IS/IT and business strategy formulation
Five Approaches to IS Planning
Technology led – carried out mainly by IT specialists to establish technology foundations, architectures and capabilities that should satisfy the expected application needs of business users
Method driven – the use of techniques (often a consultant's methodology) to identify IS needs by analyzing business processes
Administrative – establish IT capital and expense budgets and resource plans to achieve approved IS applications, usually based on a prioritized wish list from users
Business led – Business plans, usually at a functional level, are analyzed to identify where IS/IT is most critical in meeting short- to medium-term needs
Organization led – the development of key themes for IS/IT investment derived from a business consensus view of how IS/IT can help meet overall business objectives, agreed by the senior management team
This stage recognizes that the strategy reflects top management's attitudes to IS/IT and is there to guide future decisions and actions.
Senior Management Issues
IT is critical to our business but I really don't have the time
A perceived credibility gap between the ‘hype’ of the IT industry as to what IT can do and how easy it is to do it
Top managers do not view information as a business resource to be managed for long-term benefit
Top management still demand to see a financial justification for investments
An increasing tendency for top managers to have a short-term (often bonus-based) focus that militates against putting much effort into long-term planning, especially of IS/IT
The Business Context for Developing and Managing the Strategy
Establishing an Effective Process: Continuous and Flexible
There is no standard approach for formulating the IS/IT strategy that can guarantee success
Each situation and organizational context is unique and requires its own tailored approach
A framework and ‘tool box’ of techniques are proposed that can be adapted for use in a wide range of organizational contexts
least to the most mature
most stable to very dynamic
Key Elements for Competitive IT/IS (Sullivan)
The proactive search for competitive advantage through the use of information and the application of technology
A broader scope for the strategy, which incorporates a wide spectrum of digital technologies
Not just the traditional uses of IT for automation, processing data and providing information and communication
Now expanded to include embedding technology in products and processes
The development of information, systems and technology architectures to guide the introduction and integration of new and existing applications and technologies
Use of flexible approaches, whose aims are to find and implement technology-based initiatives for the benefit of the business. They must:
be responsive and able to shift resources to where they are needed
enable and capitalize on innovative use of IT by business users
include knowledge of the digital capabilities of suppliers and customers (current and potential)
be able to identify and evaluate alternative options
include benchmarking to establish standards of performance of external and competitive organizations
Change Drivers: Internal Business
Takeover by a new owner(s)
The appointment of a new CEO or management
Major rationalization necessitating a severe trimming of both business and IS/IT budgets
Restructuring
Changing from a product-led to a customer-centric business
Establishing Shared Service Centers
New products or markets or channels to market
Change Drivers: Technology
Competitive opportunities and threats based on new IT developments
Web 2.0, cloud computing, social media, sensors, analytics, mobile and wearable computing
New products or markets created by IS/IT
Technology cost-factor changes
Recognition that the current infrastructure and legacy systems need replacing
Initiating the Strategy Cycle
Planning to Plan
Decision to initiate the process of ‘formalizing’ the development of an IS/IT strategy should be made by the organization's executive group or the governance mechanism
No one ‘best’ way to formulation and planning for IS/IT
Essential to assess the situation and needs carefully
Deploy the best available people, appropriate methods and techniques to suit this context
Each approach will depend on its current circumstances, and the reasons prompting the need for strategy development
Assess the Current Organizational Environment
Comprehensive picture of the business strategy
long-term mission, goals, vision for the future
drivers for change
values, culture, management style
How effective IS/IT has been in supporting business strategy in the past
The current role of IS/IT in the organization
its effectiveness, capabilities, structure, skills and maturity
the role IS/IT is playing in competitive organizations
role of suppliers should also be included
How IS/IT strategies have been developed in the past
Setting Objectives for the IS/IT Strategy
Identify current and future technology applications that provide maximum benefits in close alignment with the business strategy
Equip the IS/IT organization to be responsive to fast-changing business needs
Determine policies and mechanisms for the management, creation, maintenance, control, security and accessibility of the organization's information resources
Determine an effective and achievable organization structure and role for the IS/IT function
Ensure that an appropriate, cost-effective, resilient information systems architecture and technology infrastructure is created
Identify the capabilities, competences and skills required to implement the strategy
Define migration plans to develop or acquire them
Ensure that the strategy is focused externally and internally
Establish the extent to which the organization itself should deliver the elements of the strategy and which elements should be provided by third parties.
Establish Success Criteria
Two aspects for measuring success
Success of Process
Success of Solution
Three broad headings
Efficiency
Use of resources, including people and finances
Use of Time
Quality
Enrichment
Alignment with business strategy
Innovative use of IT/IS
Effectiveness
Does solution address the problem
How well does the solution solve the problem
Setting the Scope
IT strategy is about how digital technologies are to be applied in creating and handling information and how technology resources are to be acquired, developed and managed to meet the agreed range of business needs
Planning Horizon – how far out are we looking?
What business parts are included?
Functional Area
SBU
Entire organization
Partnerships
Some other subset
A Framework for IS/IT Strategy
Inputs
External business environment
Internal business environment
External IS/IT environment
Internal IS/IT environment
Outputs
Business IS strategies
IT strategy
IS/IT management strategy
A Practical Approach to IS/IT Strategy
Be flexible and modular
Each stage builds on outputs from previous stages or techniques used
Emphasis on the expected deliverables and how the results can be best communicated to the different audiences
Checkpoints for interim reviews of progress
Accept and recognize the interactive and sometimes iterative nature of the process
Emphasize the importance of engaging all types of people in the process
Enable them to contribute their time, knowledge and experience
Use simple, general-purpose diagramming and documentation tools
Define the Team
The team leader and members should come from different parts of the organization and have
Broad knowledge of the business and its organizational objectives, management styles, culture, processes and people
Good communication skills
Ability and authority to make and implement plans and decisions that may affect the whole organization
Respect of management and staff
An interest in areas other than their own
An ability to analyze objectively
Experience of IS/IT strategy formulation and planning in at least some of the team
Executive Sponsor
Extremely Important to have Executive “buy in”. A sponsor’s roles include:
Chairing the steering committee
Approving the budget and plan for any IS/IT proposals
Assuring management participation and commitment
Backing and allocation of the right resources
Representing the interests of the executive team
Heading the ‘marketing’ effort
Acting as the focal point for decisions about the scope, Terms of Reference (TOR) and conduct of the work.
Steering Committee
May be an existing IS/IT governance
Charged with overseeing the formulation and implementation of the strategy
Minimum requirement is the executive sponsor
Typical steering committee functions are
Providing strategic direction and guidance on business issues and priorities
Reviewing and approving the outputs and plans
Taking up risk management issues
Conducting checkpoint reviews and agreeing the continuation of work
Agreeing to the strategy and its recommendations before submission to the executive team
Meets periodically to assess progress
Assess Current Situation and Business “Needs”
Where are we now?
Where do we want to be?
How do we get there?
Analysis of the business strategy, objectives, etc. (more in Chapter 4)
Evaluation of the current IS/IT capability (more in Chapter 4)
Analysis of the external and internal business environments (more in Chapters 5 and 6)
Deliverables Resulting from Strategic Planning
Business IS Strategy (Chapter 7)
Definition of IT/IS Infrastructure/Architecture (Chapter 4)
IS/IT Strategy (Chapters 8-11)
Migration Plans
IT/IS Management Strategy (Chapter 10)
Plan for “Marketing” the Strategy
Others as needed