strategic planning for information system

Strategic Planning for Information System

Erwin SutomoS1 Sistem Informasi

Mata kuliah ini memberikan konsep dasar perencanaan strategis sistem informasi.

What is Strategic Planning Anyhow ?

Introduction

121

Strategic ?

• Strategy means consciously choosing to be clear about your company’s direction in relation to what’s happening in the dynamic environment.

• With this knowledge, you’re in a much better position to respond proactively to the changing environment.

121The fine points of strategy are as

follows : (1)• Establishes unique value proposition

compared to your competitors• Executed through operations that provide

different and tailored value to customers• Identifies clear tradeoffs and clarifies what not

to do

121The fine points of strategy are as

follows : (2)• Focuses on activities that fit together and

reinforce each other• Drives continual improvement within the

organization and moves it toward its vision

121

Strategy is not :

• Best practice improvement

• Execution• Aspirations• A vision• Learning• Agility• Flexibility

• Innovation• The Internet (or any

technology)• Downsizing• Restructuring• Mergers/Consolidation• Alliances/Partnering• Outsourcing

121

What is a strategic plan? (1)

• Simply put, a strategic plan is the formalized roadmap that describes how your company executes the chosen strategy.

• A plan spells out where an organization is going over the next year or more and how it’s going to get there.

• Typically, the plan is organization-wide or focused on a major function such as a division or a department.

121

What is a strategic plan? (2)

• A strategic plan is a management tool that serves the purpose of helping an organization do a better job, because a plan focuses the energy, resources, and time of everyone in the organization in the same direction.

121Strategic plans and business plans

aren’t the same concepts• A strategic plan :

– Is for established businesses and business owners who are serious about growth

– Helps build your competitive advantage– Prioritizes your financial needs– Provides focus and direction to move from plan to

action

121Strategic plans and business plans

aren’t the same concepts• A business plan :

– Is for new businesses, projects, or entrepreneurs who are serious about starting up a business

– Helps define the purpose of your business– Helps plan human resources and operational

needs– Is critical if you’re seeking funding– Assesses business opportunities– Provides structure to ideas

121

What are the big planning pitfalls?

• Relying on bad information or no information• Ignoring what your planning process reveals• Being unrealistic about your ability to plan• Planning for planning sake• Get your house in order first• Don’t copy and paste

121What are the components

of a strategic plan?• Strategy and culture• Internal and external• The Balanced Scorecard perspectives• Market focus• Where are we now? Where are we going?

How will we get there?

121

The Elements of a Strategic Plan

• Strategic Review• Mission• Values

Where are we now ?

• Strategic Objectives

• Goals• Priorities• Action Items• Strategies• Scorecard• Execution

How are we going to get

there? • Vision• Competitive

Advantage

Where are we going?

121An outline of a typical strategic plan

(1)• Mission statement: To define the

organization’s core purpose. Why do we exist?• Vision statement: To explain where you are

headed, your future state. To formulate a picture of what your organization’s future makeup will be and where the organization is headed. What will our organization look like in 5 to 10 years from now?


(2)• Values statement or guiding principals: To

clarify what you stand for and believe in.• SWOT: To assess the particular strengths,

weaknesses, opportunities, and threats that are strategically important to your organization. (You may or may not choose to include your SWOT in your strategic plan but as supporting documentation.)


(3)• Competitive advantage: What can your

organization potentially do better than any other organization?

• Strategic objectives: To connect your mission to your vision. Strategic objectives are long-term, continuous strategic areas that get you moving from your mission to achieving your vision. What are the key activities that you need to perform in order to achieve your vision?


(4)• Strategies: To establish a guide that matches

your organization’s strengths with market opportunities to position your organization in the mind of the customer. Does your strategy match your strengths with how you will provide value and be perceived by your customers?


(5)• Short-term goals/priorities/initiatives: To set

goals that converts the strategic objectives into specific performance targets. Effective goals clearly state what, when, how, who and are specifically measurable. What are the 1- to 3-year goals you are trying to achieve to get to your strategic objectives?


(6)• Action items/plans: To set specific actions

plans that lead to implementing your goals. Are your action items comprehensive enough to achieve your goals?

• Scorecard: To measure and manage your strategic plan. What are the key performance measures you can track in order to monitor if you are achieving your goals?


(7)• Financial assessment: To determine if your

strategic plan makes financial sense. Do the estimated revenue projections exceed your estimated expenses?

121An effective plan and execution

require several elements : (1)• Purpose-driven: A plan based on a mission

and a real, true competitive advantage is key. Without it, what is the point of the plan or the organization?

• Integrated: Each element supports the next. No objectives that are disconnected from goals and no strategies that sit all alone.


require several elements : (2)• Systematic: Don’t think of the plan as one big

document. Instead, give it life by breaking into executable parts.

• Dynamic: Not a static document, but a living document.


require several elements : (3)• Holistic: All areas of organization are included.

Don’t plan based on departments first because you risk limiting your thinking. Plan by thinking about the organization as a whole entity and then implement on a department by department basis.


require several elements : (4)• Understandable: Everyone gets it. If anyone,

from the top of the organization to the bottom, does not understand the plan or how they fit in, it won’t work.

• Realistic: You can implement it. Don’t over-plan. Make sure you have the resources to support the goals you decide to focus on.

The Evolving Role of Information Systems and Technology in Organizations: A Strategic

Perspective

Chapter 1

121

Preface (1)

• Information technology has become inextricably intertwined with business.

• In industries such as telecommunications, media, entertainment and financial services, where the product is already or is being increasingly digitized, the existence of an organization crucially depends on the effective application of information technology (IT).

121

Preface (2)

• With the emergence of e-commerce, the use of technology is becoming just an accepted, indeed expected, way of conducting business.

• Consequently, organizations are increasingly looking toward the application of technology not only to underpin existing business operations but also to create new opportunities that provide them with a source of competitive advantage.

121

Preface (3)

• To manage information systems and information technology (IS/IT) strategically, it is helpful to understand how the role of technology-based information systems has evolved in organizations.

• While organizations today want to develop a more ‘strategic’ approach to managing IS/IT, many have probably arrived at their current situation as a result of various short-term ‘tactical’ decisions regarding IS/IT.

121

Preface (4)

• Many organizations would no doubt like to rethink their investments, or even begin again with a ‘clean sheet’, but unfortunately have a ‘legacy’ resulting from a less than strategic approach to IS/IT in the past.

• Learning from experience—the successes and failures of the past—is one of the most important aspects of strategic management

121Information System - Information

Technology (1)• IT refers specifically to technology, essentially

hardware, software and telecommunications networks. It is thus both tangible (e.g. with servers, PCs, routers and network cables) and intangible.

• ICT is generally used instead of IT to recognize the convergence of traditional information technology and telecommunications


Technology (2)• IS as the means by which people and

organizations, utilizing technology, gather, process, store, use and disseminate information. It is thus concerned with the purposeful utilization of information technology.

• Some information systems are totally automated by IT.


Technology (3)

121Structure for information systems in

an organization• Structure for information systems in an

organization, based on a stratification of management activity into:– Strategic planning– Management control– Operational control

121Typical planning, control and

operational systems

121Transition between computer and

information management (1)

121Transition between computer and

information management (2)• To achieve effective Information (Systems)

Management, a new top-down approach was required, depends on the role of IS in relation to the outside world.

121Three stage model transition role of IS

(1)• Delivery:

– IS issues are mainly internal—improving the ability to deliver and support the systems and technology.

– Achieving top management credibility as a valuable function is a prime objective. This means improving delivery performance, not necessarily providing users with what they really need


(2)• Reorientation:

– establishing good relationships with the main business functions

– supporting business demands through the provision of a variety of services as computing capability spreads through the business.

– The issues focus is extended outside the ‘DP department’ and a key objective is to provide a valued service to all business function management.


(3)• Reorganization:

– The high level of awareness created both ‘locally’ in the business area and ‘centrally’ in senior management creates the need for a reorganization of responsibilities designed to achieve integration of the IS investment with business strategy and across business functions.

– A key objective becomes the best way of satisfying each of the differing business needs through a coalition of responsibilities for managing information and systems.

121

Early Views And Models: Up To 1980

from the 1960s onwards—the DP era; from the 1970s onwards—the MIS era.

121The DP And MIS Eras: The Lessons

Learned (1)• There have been essentially three parallel

threads of evolution that have enabled more extensive and better information systems to be developed:– Hardware—reducing cost and size, improving

reliability and connectivity, enabling the system to be installed closer to the business problem.



threads of evolution that have enabled more extensive and better information systems to be developed:– Software, more comprehensive & flexible operating

software & improved languages, enabling business applications to be developed more quickly, with greater accuracy & by staff with less experience. In addition, there was an increased availability of application packages available ‘off the shelf ’.



threads of evolution that have enabled more extensive and better information systems to be developed:– Methodology, ways of organizing and carrying out

the multiplicity of tasks, in a more coordinated, synchronized and efficient way to enable ever more complex systems to be implemented and large projects to be managed successfully.

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DP lessons (1)

• Need to understand the process of developing complete information systems, not just the programs to process data.

• More thorough requirements and data analysis to improve systems linkages and a more engineered approach to designing system components.

121

DP lessons (2)

• More appropriate justification of investments by assessing the economics of efficiency gains and converting these to a return on investment.

• Less creative, more structured approaches to programming, testing and documentation to reduce the problems of future amendments. More discipline was introduced with ‘change control procedures’ and sign-off on specifications and tests.

121

DP lessons (3)

• Extended project management that recognized the need for coordination of both user and DP functions and the particular need to establish user management in a decisive role in the systems development—the user had to live with the consequences.

121

DP lessons (4)

• The need for planning the interrelated set of systems required by the organization. Better planning produced overall improvements in systems relevance and productivity.

121

MIS lessons (1)

• Justification of IS investments is not entirely a matter of return on investment/financial analysis.

• Databases require large restructuring projects and heavy user involvement in data definition—data integration had been weak based on the project by project DP approach.

121

MIS lessons (2)

• The IS resource needs to move from a production to a service orientation to enable users to obtain their own information from the data resource—the information centre concept.

• Need for organizational policies, not just DP methodologies.

121

MIS lessons (3)

• Personal computers and office systems enable better MIS to be developed, provided that users and IS specialists both focus on the information needs rather than the technology.

121

The Three-era Model

• The prime objective of using IS/IT in the eras differs:– Data processing, to improve operational efficiency by

automating information-based processes.– Management information systems, to increase

management effectiveness by satisfying their information requirements for decision making.

– Strategic information systems, to improve competitiveness by changing the nature or conduct of business.

121Trends in the evolution of business

IS/IT

Aligning the IS Direction and Priorities to the BusinessDirection and Priorities

Introduction

121

IS and Business Direction

• Over the past few years, companies have felt increasing pressure to improve efficiency and effectiveness, decrease costs, and enhance competitive position.

• Companies can attain these goals through aligning the IS direction with the business direction.

• Proper alignment can have a considerable impact on a company’s financial performance

121What is alignment? How do you

achieve alignment?• When all IS activities provide optimal support

for the business goals, objectives, and strategies, then IS and the business are in alignment.

• True alignment implies that the IS strategy and the business strategy are developed concurrently rather than sequentially so that technology enables the business strategy.

121

Alignment components

121

Business value and alignment

121

Business and IS plan alignment

121Identify organizations that have not

achieved alignment (1)• Canceled projects• Redundant projects• Projects that do not

deliver the intended value• Lack of coordination

between the business and IS

• Systems that do not meet the needs of the business

• Systems that cannot respond quickly to the demands of the business

• Business users unsatisfied with IS services

• Reactive, constant fire fighting

• Never enough resources; fighting for resources

121Identify organizations that have not

achieved alignment (2)• Churning of priorities;

slow progress• Uninvolved business

management• High IS costs with a

sense of low value

• Systems and tools not fully utilized

• Lack of integration of systems

• IS decisions made as a result of emotion or opinions

121With Planning, Companies Transform

IS

strategic planning for information system

Documents

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typical strategic plan

strategic planning

conceptsa business plan

strategic plan121an

business plans

business owners

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