Assessing and understanding the Business Needs

LEARNING OBJECTIVES To understand the process in assessing and understanding the current situation in an organization, comprising of internal and external environment strategic analysis of the business and ICT. To utilize tools that can be used for assessment of current situation.

Model of Strategic Planning Process Planning element Plan component Key Question Mission What should we be doing ? Strategic analysis Goals Where are we going ? Strategic choice Strategies What routes have we selected ? How do we guide our collective decisions to get there ? Policies Strategic implementation Decisions What choices do we have ? Actions Shall we do it ?

Main Deliverables of the Business IS Strategy Analysis of existing & expected future business; IS/IT environments & strategies; IS demand from current business strategy through alignment of IS requirements with business needs and initiatives; Future potential from IS/IT through identification of opportunities to impact the business strategy and significantly raise its competitive performance.

Business Re-engineering and IS Strategy Most re-engineering initiative will spring from, and be part of, the business strategy The early work in developing IS strategy is first to flesh out the details behind the headlines in the business strategy, this means working with the business areas to helps determine what those business initiative will be and their expected contribution to business objective. Will accommodate in the IS strategy, and need to allocated the same priority that the business places on the change program. Common need in both IS strategy development business re-engineering to build up a model of the business as it currently exist and other potential models of how following transformation or evolutionary change. Success re-engineering, as which the development and implementation of IS/IT strategy, demands a strong business-IS function partnership. Designing or redesigning business process to take advantage of IS/IT capabilities is essential if the traditional problems of automating poorly-designed processes or inefficient work practices through IT are to be avoided.

Business Re-engineering and IS Strategy IT is driver for re-engineering, an enabler or one of means of implementation. Two key question should be asked: How can business processes be transformed using IT (Based on a full understanding of the capabilities of IT)? How can IT support business process?

The role of IS/IT in BPR Develop options for radical change Capabilities of IT as an enabler of Change Identify need for change in development of business strategy Develop options for radical change IT can be used to model / simulate / prototype option for change Evaluation of Option IS and IT as a key component of achieving change Implementation of chosen Options

Reconciling IS/IT in BPR Questions BPR IS/IT strategy formulation and planning Formulation How can we re-engineer our business to provide advantage? How can IS/IT be exploited to provide business advantage? (impact) implementation How can we improve our process to ensure success of the strategy How can IS/IT ensure the success of the business strategy? (alignment)

Planning Components SITUATION ANALYSIS: Description of where we are today: 4 areas: IBE, EBE, IICTE, EICTE (Internal, external, business, ICT) GAP ANALYSIS STRATEGY FORMULATION: Description of where we want to be: Business & ICT Future STRATEGY IMPLEMENTATION: How to use ICT to get to where we want to be.

Phases of Planning Process Visioning Phase Initiate & manage the project Understand business situation and vision Document and Confirm business analysis Analysis Phase Understand Current IS situation Analyze Current IS situation Develop recommendations, solution alternatives Direction Phase Develop IS Vision and direction Develop IS plan Identify IS project Recommendation Phase Develop roadmap Develop business case Communicate the plan

Visioning Phase Initiate & manage the project Understand business situation and vision Review business documentation Develop instruments Collect Data Document findings Document and Confirm business analysis: Document: Current business description, vision, values, goals, strategies, directions, operating vision, projects & initiatives Industry business trends, business and customer requirements Business SWOT analysis Business Impact

UNDERSTANDING THE CURRENT SITUATION Understand/Obtaining in depth the business strategy the business and technology environments Current status of IS/IT in the business Determine the opportunity, threats and requirements inherent in the business strategy Recognize the strength and weakness of the business and it IS/IT operations. Determining IS Demand Fact Finding

Wish list of business requirements of each area; Understanding the current situation Determine the IS/IT Requirement: The IS Demand Wish list of business requirements of each area; Absorb every written strategy statements, and interpret into relevant IS/IT principles and CSFs, application requirements associated with the major planned initiatives, and a set of supply criteria to deliver the services possible if have comprehensive documentations of current and planned business activities and environment In practice, this documentation is rarely exists, unless it was build up earliest business or IS strategy cycle and has been updated to reflect the current situation and requirements.

Understanding the current situation Determine the IS/IT Requirement: The IS Demand Develop IS Strategy and IS Demand in parallel with the Business Strategy; feed trends / opportunities / ideas into top level business strategy, and work closely with the business to build up IS/IT initiatives to deliver the targeted performance;

Understanding the current situation Determine The IS Demand SWOT CSFs. Value Chain Business Model Current and Expected Business and Technical Environment Business Strategy Potential Status Of IS/IT Current Status of IS/IT Determine the IS Demand IS/IT Opportunities Proposed IS/IT Initiatives Proposed Business initiatives Impact and role of IS/IT

Understanding the current situation Gathering the Relevant Data Value of IS/IT strategy is dependent upon the depth of understanding of business and its needs, and the constructive interpretation of these needs into beneficial information, systems and IT services. Thus, facts need to be recorded so as to facilitate analysis; The approach relies on building up a clear structured set of information, and where suitable, constructing models showing the organization, business and information requirements. Requirement of fact finding – understanding of business and information environments to be able to develop sensible and realistic strategies.

Understanding the current situation Gathering the Relevant Data Start with Documentation Review of: business strategy, objective, mission, annual plans, budgets, forecasts, KPIs (key performance indicator). prospectus supporting the raising capital, annual report providing the official financial view of the company’s objective and general direction, additional sources such as job description for management level staff, This is followed by discussion, interview, workshop, or other information and issues not available in the documentation.

The IS/IT Strategic Model External Business Environment Internal External IS/IT Environment Internal IS/IT Strategy Process Current Applications Portfolio IS/IT Management Strategies IT Strategies Future Application Portfolio Business IS Strategies Planning Approaches, Tools and Technique

BUSINESS STRATEGY ANALYSIS Download the blueprint document for your Case Study. Identify the following business strategy elements from the document: History and Background Business Description Vision and Mission Goals, Objectives Strategies Growth Objectives: geography, market, customers, products, channels. SWOT Analysis

INTERPRETING THE BUSINESS STRATEGY Two input from business perspective (Internal business environment & External business environment) should be identified and analysed. IS demand can be derived; exploiting opportunities or countering threat can be determined. The majority of information need are internally.

Interpreting The Business Strategy Internal Business Environment Three Element The business strategy The current business processes, activities and main information entities The organisational environment, covering its structure, assets and skill, and also the less tangible factor such as values style, culture and relationship. Identify The activities that can contribute to the achievement of business objectives and their supporting information needs; Secondary activities that have to be performed in order to measure performance towards achieving those objectives, and which may then be used to modify goals.

Interpreting The Business Strategy The Business Strategy Identify the current strategy, and, in particular, any new elements added since the previous strategy development cycle If necessary, investigate, extend and analyse the strategy, and document it in a structured manner. The best to tackle is by mixed group of both business and IS disciplines and skills Compile and confirm the IS requirements, and document the IS demand The business strategy may exist in a variety of forms. It may be accessible through formally recorded corporate, business unit or functional area strategy documents, or less formally in other documents and in people’s heads. It can usually be confirmed and expanded through discussions with senior management.

Interpreting The Business Strategy The Business Strategy IS strategy development and implementation Deriving the strategy alongside all other component strategies, such as marketing or product development, or within a business re-engineering programme or redesign of business processes Implementing a programme of initiatives to deliver the business strategy, which is coordinated to include the critical IS/IT development alongside and within other business initiatives. Possibility to business strategies & objective Not recorded formally Not well constructed Not well communicated

Interpreting The Business Strategy The Business Strategy No business strategy at all; Analyse and record current activities, tactics, and operational needs from top-down viewpoint. The analysis of the business and of its critical components will provide invaluable input into any future formulation of business strategy. Short-term planning can focus on supporting current high priority business needs, and on identifying and alleviating critical problems, which threatens the business with competitive disadvantage. The main technique used in this case is critical success/ failure factors Information needs may arise from all elements in the business strategy and they are significant sources of requirements and compilation of IS strategy.

Interpreting The Business Strategy Business Process, Activities and Key Entities. Another deliverable derived from analysis current situation, are models that depict the processes, activities and main information elements and how they relate to one another. These models make up the business model; together with supporting IS models, comprise an IS architecture for business.

Architecture Model Business Model IS Model Business Process Model Data Model Process/Entity Matrix IS Model Entity Life History IS Process Model IS/Entity Matrix IS Data Model IS Functional Model

Interpreting The Business Strategy Organizational Environment Must have clear understanding of the organization’s current structure, relationships and people composed Organization is dynamic form an important input into the planning process. Necessary to understand the environment, and it skills, resources, values, culture and social interaction, management style and it’s relationship with the external environment.

EXAMINING CURRENT IS/IT ENVIRONMENT Examination of external IT environment enables the strategist to take account of trend and opportunities from emerging technologies To investigate how competitive or complimentary organizations are applying IT. Assessment of the internal IS/IT environment: an evaluation of current application portfolio and the applications under development to determine their content, coverage and contribution a similar evaluation of current databases and those under construction ascertaining the user’ perception of the value of portfolio an evaluation of current infrastructure and IT supply provisions, accomplished through a technology assessment and IT infrastructure review. The result are the basis assessment of the gap between the current and required provisions.

EXAMINING CURRENT IS/IT ENVIRONMENT Current Portfolio Evaluation Current/Previous Strategies and Policies IS Organization and processes Current Assets, Resources and Skills Method and training provisions External IS/IT environment

TECHNIQUES FOR INTERPRETATION AND ANALYSIS Business strategy analysis Critical success factor analysis SWOT Analysis Balance Scoreboard Analysis Business portfolio and competitive strategy analysis Value chain analysis Process analysis/ BPR Organizational modeling Business modeling – information analysis technique Current portfolio evaluation Technology assessment and IS/IT infrastructure review

TECHNIQUES FOR INTERPRETATION AND ANALYSIS Balanced Scorecard Analysis Financial: how do we look our shareholders and those with a financial interest in the organization? Internal business perspective: how do we have to excel at if we are to meet the expectations of our employees and trading partner? Customer perspective: how do our customer perceive us in term of products, service, relationships and value-added? Innovation & learning perspective: to achieve our future vision, ho will we continue to improve and create future value for our stakeholders?

TECHNIQUES FOR INTERPRETATION AND ANALYSIS Balanced Scorecard Analysis TECHNOLOGY VIEW process DATA interpret INFORMATION Balanced scorecard obtain decisions KNOWLEDGE defines drive ORGANIZATION ACTIONS BUSINESS VIEW require BUSINESS RESULTS Critical Success Factors measure

Information and Balanced Scorecard Financial Perspective Objective Measures How do we look to shareholders? Ho do customer see us? What must we excel at ? Customer Perspective Objective Measures Internal Business Perspective Objective Measures Innovation and learning Perspective Objective Measures How can we continue to improve and create value?

Critical Success Factor Analysis For any business, the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for organisation Rockart (1979) Thing must go right for business to flurish.

CSF Identification Identify CSF against each objective Consolidate them across objectives, since many CSFs will recur Ranking of objective and the number sharing the same CSF Number of CSF: 5 – 8 per objective Too many, objective is unachievable Too few, not ambitious enough

CSF CSF Should be easily and directly related back to the objectives of the business units. CSF focus primarily on management control and tend to be internally focused and analytical, rather than creative. Nature of CSFs and KPIs reflect a particular executive management style. Involve top management in the IS/IT strategy process and gaining their commitment Developing concensus view of IS aplication in the business Linking IS activity to business strategy Providing guidance for defining executive information needs.

Level of CSFs INDUSTRY CSFs Help define Oganizational Objective ORGANISATIONAL CSFs Set Business Unit or Functional Objective BUSINESS UNIT OR FUNCTION CSFs Help define Manager’s Objective MANAGER’S CSFs

CSF basic process MISSION CSFs CSFs CSFs SWOT CSFs Business Objective Balanced Scorecard CSFs Information To measure performance SWOT CSFs Options for Evaluation

Two types of IS requirement derived from CSF analysis Information System to Manage the Business Information System to Produce and Deliver the Product / Service Control Focus /Select Define Critical Success Factor To be prioritised Objectives Application Identified AS Required to support Business Activities

Understanding the Current Situation CSF analysis process mission and Objective Determine CSF for Each Objective Conduct a SWOT on each CSF Consolidate Across Objectives and identify Information Dependencies Develop Measures Result: Guides for the executive Information System Result: Outline plan of IS Requirement

Example of BSC & CSF Analysis Manufacturing company For each perspective, construct scorecard of Objectives & KPI/Measures Use CSF Analysis to identify CSF for each objective. Determine Information and Systems requirements to support the CSFs Consolidate the output of the BSC and CSF