Strategic Information Systems Planning © Gabriele Piccoli Chapter 6

The Changing Face The changing face of who the CIO reports to © Gabriele Piccoli

Strategic Alignment A high degree of fit and consonance between the priorities and activities of the IS function and the strategic direction of the firm

Creating Value with IT © Gabriele Piccoli

Six Key IS Decisions & Their Actions 1.How much should we spend on IT? –Define what the role of IS and technology should be 2.Which business processes should receive the IT dollars? –Define which business processes are most important 3.Which IT capabilities need to be companywide? –Focus on the cost/benefits of standardization and flexibility 4.How good do our IT services really need to be? –Decide on the degree of service the firm needs and is willing to pay for

Describe Reliability Needs for… Retailer with POS system that’s connected to inventory management system NASDAQ Restaurant with electronic ticketing system (no paper) Nail Salon that uses scheduling book and a cash register (Quickbooks for accounting)

Six Key IS Decisions & Their Actions Ctd. 5. What security and privacy risks will we accept? –Decide on which risk the firm is willing to accept, based upon the controls we have in place 6. Whom do we blame if an IT initiative fails? –Allocate resources and assign responsibility for IS projects © Gabriele Piccoli

Who Should be involved in Strategic IS Planning? A partnership between –Those with technical skills –The information systems group –General and functional managers Objective: –Define how the firm plans to use and manage IS resources to fulfill its strategic objectives

© Gabriele Piccoli Strategic IS Planning Process Strategic business planning IS assessment IS vision IS Guidelines Strategic Initiatives An Iterative Process

© Gabriele Piccoli Information Systems Assessment Know Where You Start The process of –Taking stock of the firm’s current IS resources –Evaluating how well they are fulfilling the needs of the organization IS resources IT resources –Technical resources: hardware, software and networking components of the IT infrastructure –Data and information resources: databases and other information repositories –Human resources: skills, attitudes, preconceptions, reporting structures and incentive systems of IS professionals and the user community Output: a snapshot of the current “state of IS resources” in the organization

© Gabriele Piccoli Information Systems Vision Know Where You Want To Go Based on the role that information systems should play in the organization Defines the ideal state the firm should strive for, in its use and management of its resources –More IT-intensive firms: IS may play a strategic role –Less IT-intensive firms: IS may be a “necessary evil”

© Gabriele Piccoli Information Systems Vision The Information Systems Vision The Firm’s Business Strategy Two analytical tools: –Critical Success Factors (CSF) methodology –Strategic impact grid aligned and reflect

© Gabriele Piccoli Critical Success Factors The limited number of areas which managers must effectively control to ensure that the firm will survive and thrive It ensures that the planning team is able to prioritize It focuses on business objectives, not on information systems

© Gabriele Piccoli The Strategic Impact Grid Enables simultaneous evaluation of the firm’s current and future information systems needs Impact On Core Capabilities Impact on Core Strategy

Strategic Impact Grid Impact on Core Capabilities –Processes and infrastructure –People and partners –Organization and culture –Leadership and governance Impact on Strategy –Product –Market –Business network –Boundary positioning –Differentiation –Sustainable advantage –Development of proprietary assets

IBM IT Impact Map Business Process Outsourcing 52% of business 1 of IBM’s 3 core businesses

Medtronic IT Impact Map

Can IT change the Basis of Competition? Sometimes big ideas start with automating mundane back office internal business processes –AHCS –AA

Facing Outward AHSC –Gave card readers to hospitals –Trained hospital staff –Helped hospital redesign internal purchasing processes –Result: Save $11M per year and add $5 M additional revenue AA –Gave computer terminals to large travel agencies –Allowed access to AA scheduling information

Jeff Bezos Amazon.com’s platform includes its brand, customers, technology, distribution capability, deep e-commerce expertise, and a great team with a passion for innovation and serving customers well…We believe that we have reached a “tipping point,” where this platform allows us to launch new e-commerce businesses faster, with a higher quality of customer experience, a lower incremental cost, a higher chance of success, and a clearer path to scale and profitability than perhaps any other company.