Strategic Information Systems Planning - Essay Example

Strategic planning xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Executive summary Strategic planning is s prerequisite for the success of both large and small businesses. By spelling out specific strategies that the organization intends to follow within a defined period of time, a strategic plan propels an organization to a competitive advantage. With the outburst of technology, Strategic Information System Planning (SISP) has become a critical management issue. It is considered as the best mechanism of ensuring that IT activities are congruent with other business activities within an organization. This report will expound on the concepts of strategic planning and SISP. It will define the terms and examine their roles as competition tools. It will also discuss factors that impact the selection, implementation and general success of SISP processes. The report will also evaluate roles played by SIPS especially with regard to business process transformation (BPT). The last part of the report discusses some approaches used in strategic planning and SISP and highlights their strengths and weaknesses. Table of Contents Executive summary 2 Table of Contents 2 1.0 Introduction 3 2.0 Strategic Information Systems Planning (SISP) 5 2.1 The planning process 6 2.2 Factors that impact selection and implementation of SISP 7 2.2.1 Business strategy clarity 8 2.2.2 Management involvement in planning 8 2.2.3 Business planning- SISP integration (BP-ISP Integration) 8 3.0 SISP and Business Process Transformation (BPT) 9 4.0 Approaches of Strategic planning and SISP 9 4.1 Impact methodologies 10 4.1 1 Value chain analysis 10 4.1.2 Critical Success Factor Analysis (CSF) 11 4.2 Alignment methodologies 11 4.2.1 Business Systems Planning (BSP) 11 4.2.2 Strategic Systems Planning (SSP) 12 5.0 Conclusion 12 References 13 1.0 Introduction Strategic planning is a major part of any successful business; whether large or small. CEOs and managers of medium and small companies often fail to plan with the notion that this is a strategy that should only be applied by large firms to remain competitive. This is however, far from the truth as any firm that intends to expand and compete against giant corporations must learn how to plan. Strategic planning basically means setting up a systematic approach or strategy to be followed within the organization over a defined period of time. The purpose of this process is to propel the organization to an expected level of growth or to achieve stipulated profitability objectives. Strategic planning is designed to create insight into the strengths of the organization and how they can be matched with available opportunities. It enhances screening and analysis of the company and its environment thus develop clear objectives, goals and missions for the business (Ariyachndra and Frolick 2008). Strategic planning leads to a systematic way of asking critical business questions. This inquiry challenges past business challenges and paves way for new, more viable alternatives. The result is a well prepared, usually written document, known as a strategic plan. The document spells out specific strategies to revitalize, increase profits, improve customer satisfaction and prepare the organization for the nest level of growth. The plan also describes programs that can accelerate the growth, identifies directions for future growth and states a well articulated business mission. In other words, the strategic plan indicates ways in which a business can effectively compete. Organizations that are well planned out-perform those without a clear plan. Strategic planning serves as a reference point used by an organization to make crucial decisions regarding competition in the market place. Strategic planning necessitates strategic thinking which essentially refers to thinking from the customer’s point of view. Through this plan the company is able to identify key success factor that ought to be incorporated into core competencies in order to achieve planned goals. It therefore, goes without saying that strategic planning is a fundamental ingredient in creating significant competitive advantage. The purpose of this report is to shed light into the inherent contribution of strategic planning in gaining a competitive advantage. It will specifically expound on Strategic Information Systems Planning (SISP), which has now the prevailing strategic planning tool among modern enterprises. The report will examine the role of SISP in Business Process Transformation (BPT). In addition, the report will discuss changes that have occurred in strategic planning and SISP as well as different approaches that are being applied by modern organizations. 2.0 Strategic Information Systems Planning (SISP) SISP refers to identification of information systems that are strategic, effective and efficient in nature together with their correspondent resources (financial, technical and human), organizational structure, control procedures and change management considerations (Basir and Norzaidi 2009). The main objective of SISP is to align business needs and identify competitive advantage through information technology management strategies. Also, featuring among the top objectives of SISP is improvement of cooperation and communication among members of the organization. Bechor et al (2010) asserts that SISP can be conceptualized as a socio-cultural, sense-making, communicative process, highlighting ritualistic, communicative and interpretive activities. Although there is no clear theory to describe the concept of SISP, mainstream literature has recommended adaption of an input-process-output variance model to form the basis for SISP theory. The model attempts to describe the correlation between the internal environment, external environment, planning resources, planning process, information plan, plan implementation and plan alignment. Fig 1: Cyclical representation of SISP; explaining the theory of SISP 2.1 The planning process Pearlson and Saunders (2010) state that strategic planning does not involve shortcuts and all preparatory steps have to be followed, that is, information, organizational and business strategies have to be aligned in a complementary fashion as shown in their proposed framework below; Fig 2: The information systems strategic triangle The overall role of information and technology systems within the organization must be determined, and external and internal assessments needs addressed. Mandatory to this process is the determination of the amount of money to be spent on technological initiatives as technological facilities are fundamental requirements in the process. Most importantly is to ensure that the process of planning for technology is part of the overall business plan. Piccoli (2008), states that the process of planning can be rigorous and lengthy and therefore proposes a five phase breakdown as follows: i. Strategic business planning: consists of strategy, targets, mission and future directions. It is a prerequisite to systems planning. ii. Information systems assessment: Involves evaluation of the current IS resources and their efficiency in serving the organization. iii. Information systems vision: The ideal purpose of pursuing the IS resources. iv. Information systems guidelines: Set of statements that give directions into the use of organization’s technical and IS resources. v. Strategic initiatives: Long term proposals that stipulate new initiatives for IS organizations. 2.2 Factors that impact selection and implementation of SISP There are various SISP techniques used across different organizations. A framework for evaluation of the technique to use is vital as it supports the planning team in their decision making process. Three main factors have been found to have significant contribution to the success of the SISP process (Irwin 2010): 2.2.1 Business strategy clarity An elaborate business strategy should serve as the basis of SISP. Unfortunately, many organizations lack a clear and tangible business strategy usually due to political reasons. Business strategy is vital as it paves way for the direction to be taken by the proposed IT project. It becomes easy to determine areas where IT can be incorporated to enhance the overall business performance. As such, IS planners ought to put these factors into perspective and work in collaboration with top management so as to develop well articulated business strategy (Gutierrez et al 2009). 2.2.2 Management involvement in planning Management plays a major role in the success of SISP. The absorptive capacity model maintains that the social interaction between IT and business managers will influence the nature of decisions made during the SISP process and enhance their shared knowledge (Bakar et al 2009). Apparently, failures in the implementation of SISP are majorly contributed by lack of manager’s commitment in carrying out the task to the final plan by motivating the team and providing required resources. Executives’ participation in SISP is quite beneficial to the achievement of SISP objectives. Managers, who are knowledgeable and competent in IT, are in a better position of controlling SISP initiatives. Even so, stakeholder involvement in SISP also affects its successful implementation. 2.2.3 Business planning- SISP integration (BP-ISP Integration) The BP-ISP relationship has a profound effect in the improvement of the SISP outcomes. This integration can be described from different levels (Basahel and Irani 2009): Proactive- IS planning precedes business planning and is used as an input into business planning. Reciprocal- Business planning and IS planning are mutually reinforcing. Sequential- Business planning is supported and followed by business planning. Administrative- Business planning and IS planning are separate unrelated entities. 3.0 SISP and Business Process Transformation (BPT) Business process transformation is a model that is aimed at analyzing business processes with the objective of using the analysis data to drive process transformation. This analytical tool enables the analyst to understand and qualify the effects of different transformation approaches. Various BPT patterns can be leveraged to determine the potential process transformation options. One of these options is to introduce business integration solutions (IT systems). This pattern lead to reduction in operation costs through information technology solutions and automation of business processes. Thus, SISP can be regarded as a prerequisite of BPT. This is because SISP entails strategic thinking to identify the most desirable IS activities upon which an organization can enforce and implement its long term IT policies and activities (Ramachandran et al 2006). 4.0 Approaches of Strategic planning and SISP Due to the uniqueness of each organization as well as the complexity of process, there is no one standard approach of carrying out SISP. Nevertheless, majority of literature agree that SISP approaches can be cauterized into two main classes: alignment and impact. 4.1 Impact methodologies They help to develop and justify new uses of IT. 4.1 1 Value chain analysis This concept is described using the Michael Porter. According to Porter, a firm is an aggregate of activities that are performed to create, produce, market and support its products. A collection of all these activities is what is known as a value chain. Porter further asserts that information technology provides fundamental support to the value chain. A firm that is able to discover better ways of executing its value chain gains competitive advantage. The analysis entails chartering the value chain so as to determine departments that are central to the organization. Besides that, it allows management to identify interfaces between primary functions within the organization and how they might be improved. The analysis enhances derivation of information systems by decomposing the enterprise into parts, helps identify information systems that increase overall profits and helps to identify benefits of mutual collaborations inside or outside the industry as revealed by information interchanges. The major strength of value chain analysis is that it enables direct pitching of information of information systems into the value chain as it concentrates on direct value adding activities. However, the methods has the shortcoming of failing to address issues of development and implementation and failing to define data structure of the organization as it mainly focuses on internal operations rather than data. 4.1.2 Critical Success Factor Analysis (CSF) This method is mainly used for interpreting more clearly or elaborating operational activities, tactics, and objectives in terms of strengths and weaknesses of prevailing systems within the organization as well as its key information needs. Critical success factors are the limited areas, whose satisfactory results, will lead to competitive performance of the firm. Initially, the approach was used for identifying information needs of CEOs. The approach has however, been extended to other functions of the organizations for broader planning methodologies. CSFs occur in a number of levels: managers, business unit, organizational or industry. At all these levels, the analysis is aimed at assessing the contribution of IT to the organization. The major strength of CSF is that it concentrates on key information needs of the organizations and enables management to concentrate resources in deficient areas. The method is however limited as it does not provide data architecture. 4.2 Alignment methodologies 4.2.1 Business Systems Planning (BSP) This approach combines top down planning with bottom up implementation. It mainly focuses on business processes which are factored in the organization’s goals, objectives and mission. BSP involves analysis of business processes to determine data needs which is the followed by data classification. Data classes that are similar are then combined to develop a database. This results to the final business systems plan which generally describes the overall information systems architecture as well installation procedures for each system. The advantage of using this method is that it allows a concrete understanding of the IS needs and business plans since it applies an integrated methodology. Some of its disadvantages are that it requires a firm commitment of all members from top down and high degree of IT expertise and experience within BSP planning team. 4.2.2 Strategic Systems Planning (SSP) SSP is quite similar to BSP as it involves analysis major business functions and retrieving of data architecture so as to identify information requirements. The major difference between the two approaches is that SSP uses automated systems to handle the data collected for SISP processes. Its strengths and weakness are similar to those of BSP. 5.0 Conclusion Strategic planning and SISP play a fundamental role in ensuring developing and sustaining competitive advantage for an organization. They enable identification of deficiencies within an organization that need to be reinforced particularly by use of information technologies. The SISP model is used to describe the correlation between the business environment and how they are aligned to the business plans and operations. Business strategy clarity, involvement of top management and the integration of the business plan and the SISP are the key factors which influence implementation of SISP. Impact and alignment methodologies are the two major categories of SISP approaches used by organizations. Under impact methodologies are value chain and critical success factor analysis while under alignment methodologies are business systems planning and strategic systems planning approaches. Even though these approaches can be used separately, it is recommendable that they are used in combinations so that the strengths of one can complement the weaknesses of the other. References Ariyachndra, T, and Frolick, M 2008, Critical success factors in business performance management- striving for success, Information systems management, Vol. 25, p. 113-120. Bakar, F, SUhaimi, M and Hussain, H 2009, Conceptualization of strategic information systems planning (SISP) success model in public sector: An absorptive capacity approach. European and Mediterranean conference on information systems, Izmir. Basahel, A, and Irani, Z 2009, Evaluation of strategic information systems planning (SISP) techniques: Driver perspective. European and Mediterranean conference on information systems, Izmir. Basir, H, and Norzaidi, M 2009, The effect of strategic alignment on strategic information systems planning (SISP) success: An explanatory in public universities in Malaysia. International journal of scientific research in education, Vol. 2(2), 76-87. Bechor, T, Neumann, S, Zviran, M, and Glezer, C 2010, A contingency model for estimating success of strategic information systems planning, Information and management, Vol. 47, p. 17-29. Gutierrez, A, Orozco, J, and Serrano, A 2009. Factors affecting IT and business alignment: A comparative study in SMEs and large organizations. Journal of enterprise information management, Vol.22, No, 1/2. Irwin, B 2010, Strategic information systems planning: Comparative espoused beliefs with practice. 18th European Conference on Information systems, Cape Town. Pearlson, K and Saunders, C 2010, Managing and using information systems: A strategic approach. Hoboken: John Wiley and Sons, Inc. Piccoliu, B 2008, Information systems for managers: Text and cases. Hoboken: John Wiley and sons, Inc. Ramachandran, B, Fujiwara, K, and Benayon, J 2006, Business process transformation patterns and the business process transformation wizard, Proceedings of the 2006 Wniter simulation conference, New York. Read More