Strategic Information System Planning - Literature review Example

Strategic Information System Planning Name: Course: Institution: Tutor: Strategic Information System Planning As a Source of Competitive Advantages Executive Summary A number of claims have been made in the recent past regarding the utilization of information technology as a source of strategic competitive advantages and as a means of enabling strategic moves in organizations. This report explores evidence to suggest that identification and successful implementation of strategic information system planning can be a success factor and a major source of competitive advantages in business. The report finds that organizations which implement successful strategic information system planning (SISP) have many advantages over their competitors. For instance, SIPS facilitates decision making and information sharing within an organization and between stakeholders, which is essential for rapid problem solving and responsiveness to changes. Although SISPs are necessary for successful organizational growth and success, there are certain factors that impact on their implementation. These include commitment of top management and competencies of SISP team leaders. Table of Contents Strategic Information System Planning 12 1 Strategic Information System Planning 1 Name: 1 Course: 1 Institution: 1 Tutor: 1 Executive Summary 2 Table of Contents 3 Introduction 4 Overview of Strategic Planning As a Critical Competitive Factor 6 Strategic Information System Planning as a Critical Success Factor 7 Introduction Strategic planning refers to the formally documented processes that organizations use to develop a list of key decisions that must be implemented in order for the organizations to thrive in the next few years. Every major organization or part of a large organization must make certain momentous decisions- the kind of decisions which affect the future destiny of the organization. These decisions are usually designed to address major issues affecting the organization, its business processes and interaction with the outside environment. Essentially, strategic planning does not involve small minor adjustments to activity levels but are usually the type of decisions which may lead to substantial adjustment of organizational structures or major changes in the relationships of key stakeholders and strategic partners of the organizations. As such, strategic decisions have a strong impact on an organization’s competitive position (Kuang, Lau & Nah, 2001). According to Palanisamy (2005), pressures from both the external and internal environments compel organizations to implement strategic decisions. External forces may include shifts in market dynamics, radical moves by competitors and big changes in government policy. Occasionally, the need for strategic planning may be fueled by changes in the internal environment. Such changes include exit of skilled of workers, technological changes and weakening of an organization’s financial structure. These pressures not only force organizations to make huge decisions but are also sources of major threats and opportunities for organizations. Strategic planning is different from the often confusing concept of business planning. Strategic planning differs from business planning in that the former looks much further ahead and consists of mainly words instead of figures to indicate the planner’s intentions. Business planning on the other hand is short term (used for only a few months) and consists mainly of figures. Generally, strategic planning determines an organization’s course over the next few years, what it aims to achieve during this period and how it will know that it has achieved it. For this reason, the focus of strategic planning is normally on the entire organization while the focus of business plan is on a particular program or product (Palanisamy, 2005). Kuang, Lau and Nah (2001) have documented that there are a variety of models that can be used to implement strategic planning. These models include the goal based model, the organic model and the issues based model among others. The goal-based model of strategic planning is the most common approach for strategic planning and involves focusing on the organization’s mission and goals to develop strategies for achieving the goals. This approach is ideal because it allows planners to implement strategies that are in line with the organization’s strategic goals. The issue based approach to strategic planning examines the issues and challenges facing the organization and develops strategies to address these issues. This approach is appropriate when an organization’s competitive advantages and strategic capabilities are threatened by external and intern issues. The organic approach of strategic planning might start by articulating an organization’s vision and core values and then develop action plans to achieve the vision while adhering to the core values. Overview of Strategic Planning As a Critical Competitive Factor Strategic planning is an essential tool that organizations use to readily gain competitive advantages in various aspects including marketing and human resource management. According to Millar and Porter (2002) organizations rely on strategic planning to establish clarity and agreement on corporate vision and mission. Essentially, agreement on vision and mission is of paramount importance. Without it, an organization cannot be effective. In addition to providing invaluable opportunities for dialogue on importance business matters among stakeholders, strategic planning also defines an organization’s future direction and the development of strategies based on certain desired outcomes. In the contemporary world of business where competition is the order of the day, strategic planning outlines essential measures that can be taken to achieve a particular future. The planning process prioritizes the work that needs to be done and facilitates short-term decisions based on their long term implications. More importantly, strategic planning lends flexibility to an organization so that in case changes occur, the strategic vision can be readily adapted to accommodate these changes. This way, strategic planning allows organizations to anticipate dramatic changes in the business environment and deal with the change. In their article, Kuang, Lau and Nah (2001) have emphasized that strategic planning is a critical success factor that promotes effective stewardship in organizations. Basically, success factors refer to those issues which should be deemed important to the success of an organization, with regard to its present position and desired future position and also with regard to the stakeholders. These factors are crucial to the success of organizations in industries. Because strategic planning helps organizations to fulfill their missions, it helps them to be stewards of their stakeholders’ trust. The process also facilitates and improves the decision making process. By making decision easier, strategic planning reduces workplace stress, which is a major impediment to enhanced productivity. Besides being an important foundation for executing work, strategic planning also sets the stage for process improvement, enterprise architecture, portfolio management, risk management, process improvement and other enterprise-wide initiatives. In the modern world of business, well-documented strategic planning is critical for improved organizational planning and communication of thoughts, which are important aspects of competitive advantages. In his article, Griffiths and Hackney (2001) have noted that strategic planning is the most vital tool for solving strategic issues related to success factors. It is a valuable process of developing, monitoring and controlling a strategic balance between an organization’s goals and resources in the market environment. Therefore, the process involves activities that are geared towards facilitating an organization’s growth and success. Strategic Information System Planning as a Critical Success Factor Strategic information systems planning (SISP) refers to the process of selecting an appropriate portfolio of computer-based applications for use by an organization in executing business plans and in achieving business objectives. Basically, strategic systems are any information systems that are developed in response to an organization’s corporate business initiatives. They are intended to act as success factors and to give competitive advantages to an organization. Such systems can help an organization develop a product that is unique and differentiated or that focuses on a particular market segment. Therefore, developing a right SISP is an important business activity that helps business managers identify strategic computer applications and align them with their organization’s IT needs. Hartono, Lederer, Sethi and Zhuang (2003) have noted that strategic information systems planning are essential for organizations to succeed in the modern world of business. Although strategic information systems planning is a major source of competitive advantages in organizations, the process of implementing it is difficult and most often, organizations do not know how to approach it. According to ISACA, (2008), strategic information system planning encompasses major changes for an organization, from planning for systems based on the user’s demands to those systems based purely on business strategy. Moreover, strategic information systems planning helps change an organization’s basic planning characteristics in major ways. Successful planning of strategic information systems will perhaps be more problematic in today’s world of business because of rapid changes, stiff competition and business uncertainties. Essentially, SISP is a cornerstone of an organization’s information system and hence a lot of attention should be paid to its success (Arbab, Bosma and Wieringa, 2006). There are, however, specific factors that influence the success or failure of SISP implementation. One of these factors is the involvement and commitment of an organization’s top commitment. According to King (2000) there is an overwhelming consensus in empirical researches that no other variable impacts greatly on the success of SISP much as the active participation and commitment of top management. An organization’s top management plays a crucial role in facilitating good communication and cooperation between various stakeholders and departments which have specific information system needs. The top management also plays a crucial role in promoting organizational commitment to change, controlling implementation of SISP and in initiating regular updates of the SISP plan. The quality of the strategic business plan is another important factor that influences the success of SISP. According to Griffiths and Hackney (2001), strategic business planning represents one of the most sophisticated and complex processes of strategic thinking which provide organizations with the capacity to continuously analyse and control their long term strategic initiatives. This process consists of four different phases (environmental scanning, formulation of strategy, implementation of strategy and strategy evaluation and control) all of which are greatly influenced by strategic information systems. The sophistication of an organization’s top management (knowledge of the top management about all the four phases) has an important effect on the effective use of information systems in an organization. The role of Information Technology (IT) also impacts significantly on the selection and implementation of strategic information systems planning. Until recently, most organizations considered information technology to be a utility limited only to the operational level of planning. They did not imagine that information technology could be a major source of strategic competitive advantages. However, in the past few years, such views have changed drastically. Today, information technology is considered a key general purpose technology which can deliver strategic competencies throughout all levels of strategic planning. It has, therefore, become more essential that all functional departments in organizations become power users of information technology since lack of first-hand knowledge in IT can ruin successful implementation of SISP (Hartono, Lederer, Sethi & Zhuang, 2003). In addition to the role of information technology in business planning, alignment of key internal business and information technology strategies is an essential factor that influences the selection and successful implementation of SISP. Numerous researchers and practitioners such as Arbab, Bosma and Wieringa (2006) have advocated the need to align business strategies and IT strategies as being essential for an organization to gain sustainable competitive advantages. As such, imitating or copying an information system from competitors may not create any meaningful benefits unless the organization operates on a similar business strategy. Therefore, the need to align IT with recognized business needs is a recognized objective of the SISP process. To stay true to the goal of practical utility, it is imperative for organizations to monitor separately the external and internal alignment of business and information technology strategies. Such an alignment can greatly create strategic opportunities by improving operational efficiency and functional effectiveness as well as product innovation. In addition, good personal and professional competences of project team member are required to lead successful implementation of an SISP program with high chances of success, timely completion and on budget delivery (Grover & Segars, 2005). The ability of organizations to appoint competent project leaders and team members from the ranks of the middle management has been recognized as essential to the success of SISP. In implementing an SISP program, competence includes not only familiarity with the technical aspects of the system but also knowledge about business processes, business process identification and interpersonal skills. Conclusion Organizations have long invested considerable resources and time in developing SISP and IT processes to obtain various strategic advantages. As a result, SISP have continued to be recognized as one of the most significant critical success factors and domains of IT governance and framework for improving accountability, business processes and structures of the organization. Available literature indicates that the use of SIPS in business processes is growing at a fast rate and that the choice of SISP process is a critical issue in the management agenda. Therefore, there is need to take a wide consideration when developing and implementing SISP to ensure that the desired change outcomes are viable, both inside and outside the organization. References Arbab, W., Bosma, F and Wieringa, R 2006, ‘Enterprise architecture: Managementtool and blueprint for the organization,’ Information Systems Frontiers, vol. 8, no. 2, p. 63-66. Griffiths, G and Hackney, R 2001, Strategic Information Systems for Competitive Advantage: Planning, Sustainability and Implementation, Strategic Information Technology: Opportunities for Competitive Advantage, Papp, R. (ed), Hershey, PA, Idea Group Publishing. Grover, V and Segars, A 2005, ‘An Empirical Evaluation of Stages of Strategic Information Systems Planning: Patterns of Process Design and Effectiveness,’ Information and Management, vol. 42, no. 5, p. 761-779. Hartono, E., Lederer, A., Sethi, V and Zhuang, Y 2003, ‘Key Predictors of the Implementation of Strategic Information Systems Plans,’ The DATA BASE for Advances in Information Systems, vol. 34, no. 3, p. 41-53. ISACA 2008, Top Business/Technology Issues Survey Results, Retrieved 14 september, 2012, http://www.isaca.org/Template.cfm?Section=Homeandtemplate=/ContentManagement/C ontent King, W 2000, ‘Assessing the efficacy of IS strategic planning,’ Information Systems Management, vol. 17, no. 1, p. 81-83. Kuang, J., Lau, J and Nah, F 2001, Critical Factors for Successful Implementation of Enterprise Systems, Business Process Management Journal, vol. 7, no. 3, p. 285-296. Millar, V and Porter, M 2002, How information gives you competitive advantage. Harvard Business Review, vol. 63, no. 4, p. 149-160. Palanisamy, R 2005, Strategic information systems planning model for building flexibility and success, Industrial Management & Data Systems, vol. 105, no. 1, p. 63-81. Read More