IS Strategy development

Information systems strategy

The formulation of approaches and planning needed to deploy information systems resources to support organizational strategy

Organizational strategy
Definition of the future direction and actions of an organization specified as approaches and allocation of resources to achieve specific objectives

IS strategy development

the process of identifying a portfolio of computer-based applications to be implemented, which is both highly aligned with corporate strategy and has the ability to create an advantage over competitors.

Purpose of IS strategy development

An information systems strategy brings together the business aims of the company, an understanding of the information needed to support those aims, and the implementation of computer systems to provide that information. It is a plan for the development of systems towards some future vision of the role of information systems in the organization.

Emphasis of IS Strategy

information systems strategy emphasis is on delivering an applications portfolio of appropriate software tools and systems that support the future direction of an organization and achieve advantage for the organization (strategic objectives).

IS Strategy development process

A framework for approaching strategy development in a series of logical steps

The IS strategy development process must have these characteristics:

Achieves alignment of IS strategy with business strategy while identifying competitive opportunities available through IS. Simplicity through well-defined stages. Continuous process with evaluation and improvement built-in. Flexibility.

Long-term VS short-term scope of IS strategy

Long-term IS strategy
Specifies broad strategic approaches over a three- to five-year period

Short-term strategy
Details of strategy over a six- to twelve-month period

Example long term

The five main approaches to the IS strategy development process

Business-led approach.
IS strategy is led by the business and based on business plans or strategies which are analyzed to identify where IS are required.

Method-driven approach.
In this approach, a formal method such as IBMs Business System Planning (BSP) method or other proprietary methods devised by IS consultants is used to develop IS strategy based on best practice.

 Administrative approach Technological approach.

- This approach tends to focus on technical plans as

outputs, such as business process models, standards, information audits and data models and IT architectures.

Organizational approach.
- The organizational approach is often a response

to failure in the other approaches. This approach aims to engender collaboration between the business and IS managers.

Responsibilities and controls for IS strategy

A common approach in organizations is to have a single person responsible for information systems. The role is usually referred to as IS manager, IT manager or chief information officer (CIO) Although the IS/IT manager/CIO will often develop the IS strategy, other members of the organization are needed to input to the strategy, review it and authorize investment

The stages of IS strategy development

Strategic situation analysis

It assesses the current status of an organization with respect to a particular strategy. It asks Where are we now? Situation analysis includes not only the status of the organization itself, the internal business environment, but also the external business environment.

Focus of Situation Analysis

1 Internal organizational environment. This includes different characteristics of the organization which affect its strategy. These are summarized well by the McKinsey 7S model (Waterman et al. (1980)) which refers to an organizations strategy, structure, systems, staff, style, skills and superordinate goals. 2 Internal IS environment. This reviews the sophistication of IS usage within an organization including the current portfolio of applications and the IT infrastructure.

3. External micro-environment (IS perspective). This reviews the IS capabilities and information needs of an organizations external stakeholders including customers, suppliers, other partners and competitors. 4. External macro-environment (IS perspective). The social, legal, economic, political and technological developments of the environment. These may place constraints on IS strategy for example, legal barriers, but may also create opportunities as new technologies are introduced.

1. Internal organizational environment

An organizations internal environment includes the different characteristics which form its identity and character.

IS analytical tool 1: The 7S model

A useful framework for assessing the linkage between the internal organizational environment and IS is the McKinsey 7S model (Waterman et al., 1980) which refers to an organizations strategy, structure, systems, staff, style, skills and superordinate goals.

7S model

developed by Tom Peters and Robert Waterman in response to the lack of a cohesive and useful definition of organizations

 Strategy. The organizations strategy its plan for allocation of resources to achieve its objective is the most significant input to the IS strategy from an organizations internal environment. Structure. Structural changes to a business are now commonplace as new strategies are adopted or with mergers and acquisitions with other companies. In such cases, the IS strategy may need to focus on accommodating these changes.

 Systems.
This applies to operating procedures or business processes rather than information systems.

Style.
The style of a company or its culture does not typically directly affect information systems. If a company is relatively conservative, then this may cause difficulties with the introduction of a new system. also refers to the managerial style and this may also be relevant.

 Staff. With the introduction of new IS, we need to question whether the appropriate mix of staff is available. Skills. Are the correct skills available internally? What training is required? Do we need to outsource some services? Superordinate goals. This refers to the higher goals of the company that may be encapsulated in the mission statement. The IS strategy should naturally support these goals.

7S Model

7S Questions
Structure - How is the business organised/divided up? Strategy - What plans does the business have in response to the external environment? Systems - What formal and informal procedures does the business have in place? Shared Values/Superordinate goals - What is most important to us? Skills - What does the business do best? Style - How does management come across and what is true of the culture? Staff - Who are the people and how are they treated?

 Strategy: * What is our strategy, in real terms? * What are our strategic objectives? * What will we do about the competition? * What will our customers demand from us in the future?

 Structure: * How is the company set up? * What is the organisational structure? * How do the teams work together to achieve goals? * How do the team members work together? * What is the quality of communication? Systems: * What are the main systems we use in the company? * How do we monitor and measure the systems? * What processes do we currently use?

 Shared Values: * What are the values we keep to within the business? * What is the corporate culture? * What is the strength of these values? * How are we communicating those values? Style: * What style does the management team adopt? * How effective is it? * How would we rate the teamwork among our staff?

 Staff: * How do our teams specialise in their roles or are they more general in their responsibilities? * Have we the right people in the right places? * What development do they need? Skills: * What are the strongest skills we have in the company? * What skill gaps are there? * Do we have staff who can do the job competently? * How do we measure and reward success?

Internal IS environment
Analysis of the internal IS involves the sophistication of IS usage within an organization including the current portfolio of applications and the IT infrastructure. The gap analysis approach is an effective approach to assessing the internal IS environment. Analysis of business processes will also identify areas where information systems can increase process efficiency and effectiveness.

Gap analysis

Identification of the requirements from information systems by comparing the current systems and information availability to what is required by users

IS analytical tool 2: Stages of growth models

IS stages of growth model A six-stage evolutionary model of how IS can be applied within a business Enable companies to compare the sophistication of their IS strategy to other organizations. They can also be used to identify future IS requirements. The best-known model is a six-stage model developed by Nolan (1979).

The characteristics of the six stages are as follows:

1 Initiation. The first use of applications within an organization. Characterized by lack of senior management interest, operational or simple office systems and transactional systems to reduce costs. 2 Contagion. Widespread use of applications as benefits are sought from automation and information management. Characterized by rapid growth in use of application with enthusiasm from departmental managers, overall control is limited.

3 Control. This stage is a reaction against excessive and uncontrolled expenditures of time and money on computer systems from the contagion stage. It is characterized introduction of plans, methodologies and expenditure controls, often resulting in an applications backlog.

4 Integration. This is a reaction against the use of departmental applications arising from earlier poor control. Traditionally characterized by use of databases, today by the use of middleware and enterprise resource planning systems. Control continues to improve at this stage.

5 Data administration.
A change of emphasis to information management rather than focus on technology and applications. Databases and document or content management systems are introduced to help achieve this.

6 Maturity.
Information systems are put in place that reflect the real information needs of the organization. Characterized by planning and development of IS closely linked to business strategy.

Stages in adoption of different models

Source: Galliers and Sutherland (1991)

E-business adoption stages model

Quelch and Klein (1996) developed a five-stage model referring to the development of sell-side e-commerce.

1. Image and product information. A basic brochureware Website with no interactivity. 2. Information collection. Interactivity is introduced. 3. Customer support and service. 4. Internal support and service. 5. Transactions.

IS analytical tool 3: IS applications portfolio

IS applications portfolio The range of information systems deployed within an organization A widely applied framework for assessing the IS applications portfolio is that of McFarlan and McKenney (1993).

Categories of Applications portfolio

Strategic IS the business depends on these IS to achieve or sustain competitive advantage. Turnaround IS the application does not currently deliver significant competitive benefits, but it has the potential to positively affect the businesss competitive position.

Categories of Applications portfolio

Factory IS. Currently of competitive
importance, but less relevant in the future.

Support IS. No significant competitive

advantages are derived from these IS, although they may be important for operational purposes.