Week 5
Monday, September 26
• IT Planning
• Strategic IS Alignment
R. Ching, Ph.D. • MIS • California State University, Sacramento
1
Planning Techniques
•
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Stages of Growth: Nolan's Stages Theory
Rockart's Critical Success Factors (CSF)
Porter's Competitive Forces Model
Porter's Value Chain Analysis
e-Business value matrix
Linkage analysis planning
Scenario planning
R. Ching, Ph.D. • MIS • California State University, Sacramento
2
Nolan's Stages Theory
An organization’s experience with adopting IT
Investment
in IT
Integration
Control
Contagion
IT Resource
Introduction
Diffusion
Time
Stage 1
Stage 2
R. Ching, Ph.D. • MIS • California State University, Sacramento
Stage 3
Stage 4
3
Major Dimensions of CSFs
Sources
Interest rates
• Industry
• Strategy
New skill
acquisition
• Environment
• Temporal
Building
(Innovation)
• Position
Monitoring (Control)
External
R. Ching, Ph.D. • MIS • California State University, Sacramento
Internal
4
Porter’s Five Forces Model
Forces that Shape Strategy

How will the business
Potential
react to threats (and
Entrants
opportunities)?
Threat of new entrants
Industry
Competitors
Bargaining power of
suppliers
Customers and
Buyers
Suppliers



Bargaining power of buyers
Rivalry among
existing firms
Substitutes
R. Ching, Ph.D. • MIS • California State University, Sacramento

Threat of substitute products or
services
5
Porter’s Five Forces Model

Potential
Entrants
Threat of new entrants
Industry
The
strategy
and
actions
an organization Bargaining
adopts depend
Bargaining power of
power of buyers
Competitors
upon
its
perceptions
of
itself
and
these
threats.
suppliers
Customers and
Buyers
Suppliers
Porter’s strategies:



• Product differentiationRivalry
(non-duplicable
among product or service)
• Low-cost producer
existing firms
• Market niche (market segment or geographical market)

Substitutes
R. Ching, Ph.D. • MIS • California State University, Sacramento
Threat of substitute products or
services
6
Value Chain Analysis
Firm infrastructure
Support
Activities
Human resource management
Technology development
Procurement
Inbound
logistics
Operations
Outbound Marketing
logistics
and sales
Customers
Service
Primary Activities
How can value be added at every activity?
R. Ching, Ph.D. • MIS • California State University, Sacramento
7
e-Business Value Matrix
• Project categories:
– New fundamentals
– Operational excellence
– Rational experimentation
– Breakthrough strategy
• Value of the project (low, high)
– Criticality to business
– Newness of idea
R. Ching, Ph.D. • MIS • California State University, Sacramento
8
e-Business Value Matrix
Operational
excellence, high
criticality to business,
high newness of idea
New fundamentals
Operational
excellence
Rational
experimentation
High
Breakthrough
strategy
Low
High
Low
Criticality to business
R. Ching, Ph.D. • MIS • California State University, Sacramento
9
Linkage Analysis Planning
• Steps
– Define power relationships among various players and
stakeholders: Identify links between internal and external
entities
– Map out the extended enterprise to include suppliers,
buyers and strategic partners: Manage the linkages
– Plan electronic channels to deliver the information
component of products and services: Facilitate and enhance
the exchange of information
R. Ching, Ph.D. • MIS • California State University, Sacramento
10
Linkage Analysis Planning
Top management
Middle
management
Operations
management
R. Ching, Ph.D. • MIS • California State University, Sacramento
Suppliers
New
competitors
Traditional
competitors
Stockholders
Government
Distributors
Retailers
Electronic Channels
11
Scenario Planning
• Steps:
– Define a decision problem and timeframe to bound the
analysis (What if…)
– Identify the major known trends that will affect the
decision problem
– Identify just a few driving uncertainties
– Construct the scenarios based on uncertainties
• Trigger events
R. Ching, Ph.D. • MIS • California State University, Sacramento
12
Strategic Information Systems Planning
(SISP)
• Definition
... a process conducted within the contexts of scope,
perspective, time frame, and level of abstraction, with any or
all of the following agenda: (1) supporting and influencing
the strategic direction of the firm through identification of
value-adding computerized information systems, (2)
integrating and coordinating various organizational
technologies through development of holistic information
architectures, and (3) developing general strategies for
successful systems implementation.
Segars, Grover and Teng.1998
R. Ching, Ph.D. • MIS • California State University, Sacramento
13
SISP Progression
Alignment of
IS strategy
with corporate
strategy
Enabling
initiatives for
gaining
competitive
advantage
Architectures for
sharing
organizational and
interorganizational
data and
integration
technologies
IS viewed as
strategic
resource
R. Ching, Ph.D. • MIS • California State University, Sacramento
14
Context Characteristics
Scope (broad)
Perspective
(upper management)
Time Frame
(long range)
Strategic
Information
Systems
Planning
Level of Abstraction
(conceptual)
R. Ching, Ph.D. • MIS • California State University, Sacramento
15
Six Process Dimensions
Comprehensiveness
Formalization
Focus
Coalignment*
Flow
Participation
Consistency
R. Ching, Ph.D. • MIS • California State University, Sacramento
Planning
Effectiveness
Favorable coalignment will
lead to effective planning
*Alignment of dimensions
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1. Comprehensiveness
• Thoroughly canvassing a wide range of alternatives
• Surveying a full range of objectives
• Carefully weighing the costs and risks of various
consequences
• Intensively searching for information to evaluate alternative
actions
• Objectively evaluating information or expert judgment
regarding alternative actions
• Re-examining the positive and negative consequences of all
known alternatives
• Making detailed plans, including consideration of
contingencies, for implementing a chosen action
R. Ching, Ph.D. • MIS • California State University, Sacramento
17
2. Formalization
• Existence of structures, techniques, written procedures and
policies that guide the planning process
– Written policies that structure the process of planning
– Formalized techniques adopted for the purpose of
conducting strategic planning
– Known procedures for initiating the planning process
• Processes systemize information collection and dissemination
Formalization vs. Flexibility
R. Ching, Ph.D. • MIS • California State University, Sacramento
18
3. Focus
• The balance between creativity and control orientations
inherent within the strategic planning system
Innovation vs. Integration
– Innovative orientation nurtures creativity (innovative, novel
solutions)
– Integrative orientation focuses more on control (budgetary,
cost performance, controlled diffusion of assets within the
organization)
R. Ching, Ph.D. • MIS • California State University, Sacramento
19
4. Flow
• Locus of authority or devolution of responsibilities for
strategic planning
– Roles played by corporate and divisional managers in the
initiation of the planning process (vertical orientation)
Top-down vs. Bottom-up
– Top-down: limited participation of lower level managers in
the initiation of the strategic planning process
– Bottom-up: functional management involvement in the
initiation of strategic planning
R. Ching, Ph.D. • MIS • California State University, Sacramento
20
5. Participation
• Breadth of organizational involvement in strategic planning
– Representation from the functional areas
Narrow vs. Broad
– Narrow: fosters an isolated approach to plan formulation
with little involvement or interaction among various
functional or operational managers
– Broad: a variety of functional and operational areas help
offset “bounded rationality” of top managers
R. Ching, Ph.D. • MIS • California State University, Sacramento
21
6. Consistency
• Concerned with the frequency of planning activities or cycles,
and evaluation /revision of strategic choices
Frequent vs. Infrequent
– Infrequent: time frame longer, face-to-face meetings tend
to be ad hoc or sporadic, planning cycles may be year-toyear (vs. continuous or consistent process)
– Frequent high levels on consistency characterized by
continuous planning process with frequent meetings,
constant communication among planning participants, and
frequent assessment and revision of strategic direction
R. Ching, Ph.D. • MIS • California State University, Sacramento
22
Proposition
• Strategic IS planning systems that reflect a profile of rational
adaptation will be positively associated with planning
effectiveness. The structure or internal coalignment of a
rational adaptive planning system includes:
– higher levels of comprehensiveness
– higher levels of formalization
– a focus on control vs. creativity
– a top-down vs. bottom-up planning flow
– higher levels of participation
– higher levels on consistency
Segars, Grover and Teng.1998
R. Ching, Ph.D. • MIS • California State University, Sacramento
23
Coalignment
• Coalignment strongly associated with planning effectiveness
– If dimensions of strategic planning systems favorably align,
the planning system as a structure should be more
successful than its individual dimensions
– Effectiveness may beyond performance measurement (e.g.,
ROI, ROE)
– Alternative: value-added approach
• Improved management making
• Lower costs of development
• Plans that are actionable and implemented
R. Ching, Ph.D. • MIS • California State University, Sacramento
24
Internal Planning System Coalignment
• The planning system should be structured process of
opportunity search that “adapts” through consistent feedback
and wide participation
– Rational planning tendencies of extensive alternative
generation and solution search, formalized procedures and
policies for planning, a focus on control, and top-down
planning flow
– Adaptive tendencies of wide participation profiles and high
levels of planning consistency
Rational adaptation
R. Ching, Ph.D. • MIS • California State University, Sacramento
Planning effectiveness
25
Implications for Strategic IS Planning
• Planning must be designed, evaluated, and refined such that
the overall activity of planning does not become dysfunctional
• Emergent systems of planning should reflect the
environmental and organizational context within which they
function
R. Ching, Ph.D. • MIS • California State University, Sacramento
26
Source: “Strategic Information Systems Planning: Planning
System Dimensions, Internal Coalignment and Implications
for Planning Effectiveness,” Albert H. Segars, Varun Grover,
and James T. Teng. Decision Sciences (journal), vol. 29, no. 2
(Spring 1998).
R. Ching, Ph.D. • MIS • California State University, Sacramento
27
Architecture and Infrastructure
• Architecture – a blueprint that shows interrelationships of the
components of a system
– Emphasis on the whats
– Based on the business model
• IT Infrastructure – implementation of the architecture
Purpose: To deliver the right information to the right people at
the right time
– Two parts:
• Technical IT infrastructure (processors,
telecommunication, database, etc.)
• Human IT infrastructure
– Emphasis on the hows
R. Ching, Ph.D. • MIS • California State University, Sacramento
28
Architecture
• Defines guidelines and standards
• Service Oriented Architecture (SOA)
– Emphases on accessibility of others systems to data and
functions, and reusability of programming code
– Supports the organization's agility
R. Ching, Ph.D. • MIS • California State University, Sacramento
29
Infrastructure
• Delivering IT resources to support users throughout the
organization
• Four layer infrastructure (Weill and Broadbent)
– IT components
– Human IT infrastructure
– Shared IT services – services that users can draw upon and
share to conduct business
– Shared and standard IT applications – stable applications
that change less frequently
R. Ching, Ph.D. • MIS • California State University, Sacramento
30
Structure of the IT Infrastructure
Local applications
IT infrastructure
Shared and standard
IT applications
Shared IT services
Human IT infrastructure
IT components
R. Ching, Ph.D. • MIS • California State University, Sacramento
31
Three Views of Infrastructure
• Economies of scale (utility) – providing IT/IS as a service to
the business to facilitate operations
– Emphasis on reducing costs
• Support for business programs (dependent) – IT tied to
business plan and value-added initiatives
• Flexibility to meet changes in the marketplace (enabling) – IT
planning tied to business strategic plan
– Co-alignment between business strategy and IT strategy
– Strategic IT and strategic IT planning
R. Ching, Ph.D. • MIS • California State University, Sacramento
32
Centralized vs. Distributed Processing
• Centralized processing: Processing centrally located usually at
a single site (at least logically centralized)
• Distributed process: Processing divided between (among)
different physically dispersed sites
– Transparency – The user or customer is unaware where the
processing is handled
– Reduces network traffic to one location
– Closely places the data to where they are needed or used
– Follows a system-wide protocol
Depends on the organization
R. Ching, Ph.D. • MIS • California State University, Sacramento
33
Centralized Processing
Single Site
R. Ching, Ph.D. • MIS • California State University, Sacramento
34
Distributed Processing
Geographically Distributed
Network
Transparency
DDBMS
Global Data
Dictionary
DDBMS
Global Data
Dictionary
Local DBMS
Local DBMS
Database
Database
Site 1
Site 1
Site 1
Site 3
DDBMS
Global Data
Dictionary
Local DBMS
Database
Site 2
Site 1
Heterogeneous vs. Homogenous
R. Ching, Ph.D. • MIS • California State University, Sacramento
35
R. Ching, Ph.D. • MIS • California State University, Sacramento
36