61 6. Determining IS Strategy Overview of IS planning process Framework for IS planning process Appraise IS relationship to business Determine short-term IS investments Identify long-term IS investments Multi-business unit organizations

62 Overview of IS Planning Process Internal business environment External business environment External IS environment Internal IS environment Critical success factor analysis Business process analysis Organizational modeling Product portfolio analysis Competitive forces analysis Value chain analysis Value system analysis Strategic options generator Resource life cycle analysis Creative thinking Opportunistic thinking Strategic High potential Key operational Support Applications portfolio

63 Framework for IS Planning Process Existing Required Potential applications portfolio Understand business and structure of industries Interpret business objectives and strategy Determine areas critical to business success Identify critical business processes and activities Determine focus of short-term IS investments Consider potential IS impact on industry Consider potential of IS to change business Identify options for long-term IS investments Analyze value system and external information flow Analyze value chain and internal information flow Analyze existing IS contribution to business

64 Appraise IS Relationship to Business Existing applications portfolio Understand business and structure of industries Analyze value system and external information flow Analyze value chain and internal information flow Analyze existing IS contribution to business Characteristics of key players in the industry Strength-weakness-opportunity-threat analysis and product portfolio analysis Current information flow (role of IS) among key players in the industry Value system analysis Current information flow (role of IS) among key business activities Value chain analysis External and internal information flow that can be improved using IS Creative thinking and opportunistic thinking IS currently in place or being developed 0 to 6 month time frame

65 Determine Short-Term IS Investments Required applications portfolio Things that the business may do, wants to do, must do, and can do Organizational modeling Link IS and business strategies (with management involvement) Critical success factor analysis Key activities are high value adding or high cost or linked to critical success factors Value chain analysis Focus on key activities that can produce immediate benefits Creative thinking and opportunistic thinking IS that can make specific business contribution 6 to 12 month time frame Interpret business objectives and strategies Determine areas critical to business success Identify critical business processes and activities Determine focus of short-term IS investments

66 Identify Long-Term IS Investments Potential applications portfolio Bargaining power of customers and suppliers, and threat of competitors Strategic options generator and resource life cycle analysis Possible impact of IS strategy on future business strategy and activities Value chain analysis and value system analysis IS options to change industry dynamics and improve the position of the business Strategic thinking and opportunistic decision making IS that may make strategic business contribution 1 to 3 year time frame Consider potential IS impact on industry Consider potential of IS to change business Identify options for long-term IS investments

67 Multi-Business Unit Organizations Corporate headquarters Business unit 3 Business unit 2 Business unit 1 Strategic applications Capitalize on strategic benefits gained through applications High potential applications Communicate ideas and results of prototype evaluations Support applications Constrain by sharing applications and standardizing resources Key operational applications Control transfer of experience in usage of applications

68 Multi-Business Unit Organizations Benefits that can be derived from consolidation of applications depend on whether business units: –Compete in similar or comparable industries –Are in similar competitive positions –Have similar customers or suppliers –Trade with each other –Carry out similar business activities –Have comparable objectives and strategies –Must follow organization wide standards –Have similar support activities