A Practical Guide to Information Systems Strategic Planning / Edition 2

by Anita Cassidy

Overview

The foundation of a successful information systems strategic plan is the recognition that business direction and requirements must drive the IS strategy and computing architecture. A Practical Guide to Information Systems Strategic Planning, Second Edition outlines a systematic approach to guide you through the development of an effective IS plan that is formulated from your company's business plan.

This volume outlines a quick and easy approach with concepts, techniques, and templates for analyzing, organizing, communicating, and implementing an IS strategy. This approach unites an organization in a collaborative effort resulting in a solid direction that has the support of the entire organization. Establishing this direction cultivates the support of management, enabling necessary strategic IS investments.

With a new look at the role of IS governance in strategic planning, this second edition reflects advances in technology and provides an improved and thorough planning methodology. The strategic planning process outlined in this book has been supplemented by lessons learned from applying the process in numerous companies, cultures, and environments.

Product Details

ISBN-13:	9780849350733
Publisher:	Taylor & Francis
Publication date:	10/14/2005
Edition description:	REV
Pages:	394
Product dimensions:	6.12(w) x 9.19(h) x (d)

Read an Excerpt

Chapter 7: Determining How to Get to Where You Want to Be

Recommendation

Now it is time for another Information Systems Steering Committee meeting. Present the information you have received to date. Outline the various options and associated information. Typically, with all the quantification completed so far, the recommended solution is obvious and obtained with complete consensus. If it is not, you will need to formulate a smaller representative group from the Information Systems Steering Committee to work through the details and recommend a solution to the group. A sponsor or vocal member of the Information Systems Steering Committee may begin to emerge. It is extremely useful to involve that person because he or she will be a key resource in the selling process. In one company, this person was extremely well respected by upper management and was actually the individual who presented the recommendation to upper management rather than Information Systems! It can be extremely powerful if it appears to upper management that it is the recommendation of the entire business rather than just Information Systems.

In addition to the recommendation in the area of business applications, remember the other components of information systems. Include recommendations on the network environment, PC or desktop environment, engineering environment, service architecture, or any other information systems areas that you have in your environment. Use a similar approach in each area, that of identifying options, estimates, presenting to the Information Systems Steering Committee, and developing recommendations.

R0I Analysis

Before presenting the finalrecommendations to Executive Management for approval, you often need a Return On Investment Analysis. This could also be a net present value or internal rate of return depending upon the requirements at your company. Executive Management typically needs to know how much it will cost and how much benefit it will have to the business before making an investment decision. Depending upon your company culture, this step may or may not be significant. Again, it is extremely helpful if the business groups complete this economic analysis because they need to sign up for and deliver the anticipated savings. Exhibit 7.6 shows one example of an ROI analysis for a company.

Exhibit 7.6 ROI Analysis

The business recognizes that improving our information systems is a critical action and key enabler for our future business direction. We recognize that improving information systems is the number-two overall divisional business priority during the next year. Although we will outline benefits of implementing a new system in more detail in the Appropriations Request, this section will outline an overview of the key benefits.

The ROI for the implementation of the new system is XX%. This ROI is based on a capital request of $XK and implementation costs of $XK. The expected benefits for this program have been segregated into four categories: sales impact, direct material savings, manufacturing resource improvements, and asset management. The detailed ROI forms and schedules are included in the Appendix.

• Sales Impact:
  A conservative estimate of the sales impact from implementing a new information system is X% of market share (for example, with the system, we expect worldwide market share to be XX% in FY 1999; without the system, we expect worldwide market share to drop to XX%). The dollar impact of this improvement is $XXK in operating profit five years after implementation.
  One of the reasons for this market share improvement is better customer interfaces. Customers are currently demanding greater access to our system, which we will be able to provide with the new system. Additionally, the new system will allow us to more accurately process orders, update orders for changes, and provide more timely information on order status. We will provide improved responsiveness to customer needs with immediate information, which we do not have today. Ship complete logic, available to promise, customer credit card processing, and customer bar coding are just a few examples of customer requests that we are unable to meet today. These benefits are critical to ensure that we protect the market share we currently have.
  The new system will also allow us to improve lead times, improve service levels, and reduce the time to market on new products and line extensions. Time to market will decrease through concurrent engineering, preferred vendor and parts lists, commonality of product design across multiple products, and a seamless integration between our engineering systems and business systems. These are key attributes that a system will need to provide for the division to grow its market share.
  
• Direct Material Savings:
  Direct material savings will come from two areas: yield improvements and reduced purchase costs. The model assumption is that yields, with the new system, will improve from 94.9% in FY 1994 to 96.7% in FY 1999. However, without the system, yields will improve only slightly, from 94.9% to 95.1 %. These yield improvements are possible by improved feedback within the shop control system that will allow for more timely response to process problems.

  We will improve purchase costs since the system will provide our suppliers with better access to our forecasts and specs, as well as improved supplier management, common parts, and common designs. With worldwide purchasing information available, we will be able to leverage global procurement and planning strategies. We will also realize cost savings through a streamlined interface to our suppliers with electronic document transfer. The ROI model assumes that with the system we will be able to reach our net inflation goal of .9%. However, without the system we assume that net inflation will be 1.2%.
  Together, these material cost reductions wi I I generate material cost savings of $XXXXK in FY 1999 (X% of sales).
  

• Manufacturing Resource Improvements:
  The new system will not only allow us to do what we currently do more efficiently, but it will also allow us to grow the business without adding resources as soon as we would have to without the system. Depending on the function, the new system will provide an opportunity for efficiency gains of X% to XX% over our current head count, as outlined in the efficiency comparison. Additionally, the new system will allow the division to continue to leverage head count additions, estimated to be XX% of sales (same as the past 5 years), whereas, without the new system, the next 5 years' high expected sales growth will cause that leverage factor to drop (head count growth expected to be XX% of sales in FY 1999).
  These labor savings will come mostly from the areas of Contracts, Purchasing, Planning, Marketing, and Accounting. This labor will be reduced through re-engineering efforts of the business processes, including decreased rework of product and processes, and eliminating non-value-added tasks.
  We expect the value of these savings to be $XXXXK in FY 1999....

Table of Contents

Purpose of Information Systems Strategic Planning. IS Governance. The Planning Process. The Visioning Phase. The Analysis Phase. The Direction Phase. The Recommendation Phase. Next Steps.

Editorial Reviews

"Everyone needs an IT strategy but nobody knows exactly what one is, let alone how to build one. Anita Cassidy has written the definitive how-to book for a traditionally fuzzy field."
Bob Lewis, President, IT Catalysts

"A well defined IT strategy provides the cornerstone for any IS organization wishing to distinguish itself as a value added business enabler. This is a clear and practical guide for developing such a strategy. Keep it handy, you'll be using it frequently."
Ruth Dessel, CIO, Metropolitan Council

"I read the first edition and now luckily the second. Cassidy's methodology has been enhanced and lifted to the next level. This edition contains new real world examples, checklists, and templates. It is a must read (and follow) for all IT managers."
Keith Guggenberger, Senior Vice President of Operations , Starkey Laboratories

From the Publisher