1 Information Systems Planning. 2 Introduction Whether & how extending e-business capabilities would...

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Information Systems Planning

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Introduction

Whether & how extending e-business capabilities would revive the company’s competitive position

The IT initiatives must be based on planning issues Aligning information systems with business

strategy Deciding what projects to do, etc.

The Importance of Planning

The bigger the project: The more likely that poor planning will lead to

significant problems Important factor for systems development

success: Organizational experience with the systems

development process

Fundamentals of Information Systems,

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The Process of Information System Planning


Information Systems Planning (ISP) An orderly means of assessing the information needs

of an organization and defining the systems, databases and technologies that will best satisfy those needs

Three key activities: Describe the Current Situation Describe the Target (or Future) Situation Develop a Transition Plan and Strategy

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Information Systems Planning1. Describing the Current Situation

Top-down Planning Generic methodology that attempts to gain a broad

understanding of the information system needs of the entire organization

Bottom-up Planning Generic methodology that identifies and defines IS

development projects based upon solving operational business problems or taking advantage of some business opportunities

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Corporate and Information Systems Planning

Information Systems Planning1. Describing the Current Situation (Continued) Planning team is chartered to model existing situation Identification of Organizational:

Locations Units Functions Processes Data Information Systems

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Information Systems Planning Information Systems Planning

1. Describing the Current Situation (Continued) Matrices are developed to cross-reference units

Location-to-Function Location-to-Unit Unit-to-Function Function-to-Objective Function-to-Process Function-to-Data Entity Process-to-Data Entity Process-to-Information System Data Entity-to-Information System Information System-to-Objective

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Information Systems Planning Information Systems Planning

2. Describing the Target Situation Update list of organizational locations,

functions, etc. to reflect desired locations, functions, etc.

Matrices are updated to reflect future states

Planners focus on differences between current lists and matrices and future lists and matrices

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Corporate and Information Systems Planning


3. Developing a Transition Strategy and Plans Broad, comprehensive document that

looks at both short and long-term organizational development needs

Consists of a series of projects

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What Is an Information Systems Plan?

Information systems planning should be an integral part of business planning Business planning – the process of identifying

the firm’s goals, objectives, and priorities + developing action plans for accomplishing them.

Information systems planning – the part of business planning concerned with developing the firm’s information systems resources

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Challenges in Business Planning

Foreseeing and assessing opportunities Assuring consistency with organizational

plans and objectives Building systems Maintaining information system

performance Collaborating with IT professionals

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Principles for IS Planning

Support the firm’s business strategy with appropriate technical architecture

Evaluate technology as a component of a larger system

Recognize life cycle costs, not just acquisition costs

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Design information systems to be maintainable

Recognize the human side of technology use

Support and control the technical system

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Planning Role of the IS and User Departments

The IS department is responsible for producing the IS plan in conjunction with the user departments

Chief information officer (CIO)Chief information officer (CIO) Leads the IS function, and is responsible for

making sure that the IS plan supports the firm's business plan

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User roles in IS planning – roles: SponsorsSponsors – senior managers who make sure

resources are allocated for building and maintaining the system

ChampionsChampions – individuals that recognize the importance of an IS, and exert effort to make sure that others share that recognition

IS steering committeesIS steering committees – make sure that the IS reflects business priorities

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Project Roles of IT Professionals

Project managers Application

programmers System analysts Programmer-

analyst Technical writers

Computer operators

Database administrators

System managers System

programmers User support staff

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Strategic Alignment of Business and IT

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Figure 11.3

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Consistency With Business Priorities

Critical success factors (CSF) – the things that must go right for a business to succeed Identify the firm’s primary mission and the

objectives that determine satisfactory overall performance

Executives identify a relatively small number of CSFs

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Describing a Business-driven Infrastructure Figure 11.5

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Outsourcing

A long-standing practice in IS departments Application service provider (ASP) Application service provider (ASP)

Operate a firm’s application on remote servers on a WAN

Advantage: the firm no longer needs to install and maintain the software

Disadvantage: the firm has less control over the application, and may have difficulty transferring to another ASP if needed

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Selecting Systems to Invest In

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Cost/Benefit Analysis

The process of evaluating proposed projects by comparing estimated benefits and costs

Key issues: Tangible and intangible benefits Tendency to understate costs Timing of costs and benefits

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Risks

Desired benefits are not achieved The project is late and/or over budget The system’s technical performance is

inadequate User acceptance is low Shifting priorities reduce the project’s

importance, etc.

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Risks

More about risks can be found at following link

http://www.odu.edu/ts/security/risk-assessment/information-systems-risks





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Financial Comparisons

Some common criteria used for comparing and ranking projects: Net present value (NPV) Internal rate of return (IRR) Payback

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Project Management Issues

Division of labor between the IS department and users

Keeping the project on schedule Goals, deliverables, schedules Challenges in information system projects

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Systems Analysis Revisited

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Information Sources for Analyzing Systems

Interviews Inputs, outputs, and documentation of

existing systems On-site observation Questionnaires Benchmarking

Factors Involved in Planning for IS

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MIS goals and objectives

The MIS goals and objectives will consider management philosophy , policy constraints , business risk , internal and external environment of the organization and the business . The goals and the objectives of the MIS would be so stated that they can be measured . •Strategy for the plan achievement

The designer has to take a number of strategic decisions for the achievement of the MIS goals and objectives . They are :•Development strategy •System development strategy •Resources for the system development•Manpower composition

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The architecture of the MIS

The architecture of the MIS plan provides a system and subsystem structure and their input , output and linkages . It also provides a way to handle the systems or subsystem by way of simplification , coupling and decoupling of susbsystems . It spells out in detail the subsystems from the data entry to processing , analysis to modelling , and storage to printing . •The system development schedule

A schedule is made for the development of the system . While preparing the schedule due consideratin is given to the importance of the system in the overall information requirement . Due regard is also given to logical system development . For example , it is necessary to develop the accounting system first and then the analysis .

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Hardware and software plan

Giving due regard to the technical and operational feasibility , the economics of investment is worked out . Then the plan of procument is made after selecting the handware and software . One can take the phased approach of investment starting from the lower congfiguration of hardware going over to higher as develoment takes place . The process is to match the technical decisions with the financial decisions . The system development schedule is linked with the information requirements which in turn , are linked with the goals and objectives of the business .

•Ascertainng the class of information The design of the MIS should consider the class of information as a whole and provide suitable information system architecture to generate the information for various users in the organisation . Let us now proceed to ascertain the information needs of each class .

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THE CLASSES OF INFORMATION

Organizational - The number of employees , products , services , locations , the type of business , turnover ad variety of the details of each one of these entities

Functional –- Purchases , sales , production , stocks , receivables , payables , outstanding , budgets statutory information.

Knowledge – The trends in sales , production technology . The devotions from the budgets , targets , norms etc . Competitors information , industry and business information plan performance and target; and its analysis .

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Decision support – Status information on a particular aspect , such as utilization , profitability standard , requirement versus availability . Information for problem solving and modeling . Quantitative information on the business status . Non-living inventory , overdue payments and receivables.

Operational – Information on the production , sales , purchase , dispatches consumptions , etc. in the form of planned versus actual . The information for monitoring of execution schedules .

• Capacity planning

• Capacity planning• Process of predicting when hardware system

becomes saturated

• Ensuring firm has enough computing power for current and future needs

• Factors include: • Maximum number of users

• Impact of current, future software

• Performance measures

• Scalability: Ability of system to expand to serve large number of users without breaking down

Managing Hardware and Software Technology

Essentials of Business Information SystemsEssentials of Business Information SystemsChapter 4 IT Infrastructure: Hardware and SoftwareChapter 4 IT Infrastructure: Hardware and Software

• Total Cost of Ownership (TCO) model

• Used to analyze direct and indirect costs to help determine the actual cost of owning a specific technology

• Direct costs: Hardware, software purchase costs

• Indirect costs: Ongoing administration costs, upgrades, maintenance, technical support, training, utility and real estate costs

• Hidden costs: Support staff, downtime, additional network management

• TCO can be reduced through increased centralization, standardization of hardware and software resources



• Using technology service providers

• Outsourcing

• Using external provider to:

• Run networks

• Host, manage Web site(s)

• Develop software (offshore software outsourcing)

• Manage IT infrastructures

• Requires Service Level Agreements (SLAs)



• Using technology service providers

• On-demand computing (utility computing)

• Firms off-loading peak demand for computing power to

remote, large-scale data processing centers

• Software as a Service (SaaS)

• Firms rent software functions from Web-based services, with

users paying either on a subscription or per-transaction basis



• Managing software localization for global business

• Local language interfaces• English not typically standard at middle, lower levels

• Interfaces are complex: Menu bars, error messages, online forms, search results, etc.

• Differences in local cultures

• Differences in business processes

• All of these factors add to TCO of using technology service providers


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Outsourcing and On-Demand Computing

Reasons for using outsourcing and on-demand computing approaches: To reduce costs To obtain state-of-the-art technology To eliminate staffing and personnel problems To increases technological flexibility

What computer hardware does our organization need?

What networking arrangement is best for our organization?

What software do we need to run our business, and how do we select it?

How should we acquire and manage the firm’s hardware and software assets?

OBJECTIVES

NetworkingNetworking

Personal Computer (PC) Small desktop or portable computer

Server Mid size computer, ‘front-end’ Provides services to other computers over a network

Mainframe Large computer, ‘back-end’ processing Provides management of corporate data base

Centralized Processing Processing done by mainframe

Client-Server Computing Splits processing between “clients” and “servers” on

network

NetworkingNetworking

Network Computer (NC)Network Computer (NC) – ‘Thin Client’ – ‘Thin Client’

•Simplified desktop computer, does not store data permanently

Program:Program: • instructions to the computerinstructions to the computer

System Software:System Software:• manages computer’s resources so that application manages computer’s resources so that application

software can run efficientlysoftware can run efficiently• eg multiprogramming, multiprocessingeg multiprogramming, multiprocessing

Application SoftwareApplication Software::• Programs to serve end usersPrograms to serve end users

• eg MS Accesseg MS Access

SOFTWARE

SOFTWARE

Types of Software Types of Software Software SuitesSoftware Suites

– Integrated Applications - eg MS Office XP– Word Processor, Spreadsheet, Database Manager

Enterprise SoftwareEnterprise Software– Integrated modules allowing data sharing across major

business functions - eg SAP

MiddlewareMiddleware• Allows two disparate applications to exchange data

SOFTWARE

• Capacity Planning:Capacity Planning: Process of predicting the Process of predicting the computing power neededcomputing power needed

• Scalability:Scalability: Ability of a computer system to Ability of a computer system to expand without breaking downexpand without breaking down

• Management of TCO:Management of TCO: total cost of owning IT total cost of owning IT resources includes:resources includes:• initial cost of hardware and software• cost of maintenance, upgrades, training etc.

• In-house vs Out sourcing:In-house vs Out sourcing: Use of service Use of service providers? providers?

MANAGING HARDWARE AND SOFTWARE ASSETS

MANAGING HARDWARE AND SOFTWARE ASSETS

Acquiring Hardware from an IS Vendor

IS vendor Company that offers hardware, software,

telecommunications systems, databases, IS personnel, or other computer-related resources

Types of IS vendors include: General computer manufacturers Small computer manufacturers Peripheral equipment manufacturers


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Acquiring Software: Make or Buy?

Make-or-buy decision: Whether to obtain software from external or

internal sources Externally acquired software and Software

as a Service (SaaS): Software as a Service (SaaS) allows

businesses to subscribe to Web-delivered application software by paying a monthly service charge


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PURCHASING PREWRITTEN SOFTWARE Criteria to evaluate hardware include:

• Cost• Ability to run required software• Processing speed and

capabilities• Secondary storage capability• Input and output speeds• Communication capabilities• Expandability• Recency of technology

• Availability• Compatibility with existing

hardware, software, and peripherals

• Performance compared to competitors

• Cost and availability of support and maintenance

• Warrantees and guarantees• Financing arrangements• Ability to meet mandatory

requirements

PURCHASING PREWRITTEN SOFTWARE Criteria to evaluate software include:

• Conformity with specifications• Need for modification• Performance (speed, accuracy,

reliability)• Use by other companies• Satisfaction of other users• Documentation• Compatibility with existing

software

• User-friendliness• Ability to be demonstrated and

test-driven• Warranties• Flexibility and maintainability• Capability for online inquiry of

files and records• Vendor upgrades

OUTSOURCE THE SYSTEM Outsourcing is hiring an outside company

to handle all or part of an organization’s data processing activities. In a mainframe outsourcing agreement:

The outsourcers buy the client’s computers and hire all or most of the client’s employees.

Then operate and manage the entire system on the client’s site or migrate it to the outsourcer’s computers.

Many of these contracts have terms of 10 or more years and cost from hundreds of thousands to millions of dollars a year.

OUTSOURCE THE SYSTEM In a client/server or a PC outsourcing

agreement the organization outsources: A particular service (e.g., help desk services); A segment of its business; A particular function; or PC support.

OUTSOURCE THE SYSTEM Examples of outsourced activities:

Installation Training Maintenance Help desk Technical support

OUTSOURCE THE SYSTEM The growth in outsourcing applications

Outsourcing was initially used for standardized applications such as payroll, accounting, and purchasing.

Also used by companies that were struggling to survive and wanted a quick cash infusion from selling their hardware.

OUTSOURCE THE SYSTEM Most companies that outsource use

several different companies rather than a single source in order to: Increase flexibility Foster competition Reduce costs

Most companies do not outsource: Strategic management of their IT environment Business process management IT architecture

OUTSOURCE THE SYSTEM Benefits of outsourcing:

Provides a business solution• Allows companies to concentrate on their core

competencies.


Provides a business solution Asset utilization

• Companies can improve cash position and reduce expenses by selling their computers to an outsourcer.


Provides a business solution Asset utilization Access to greater experience and more

advanced technology• The cost and time to stay at the cutting edge of technology

is escalating rapidly.



advanced technology Lower costs

• Outsourcing can reduce IS costs by 15–30% because of economies of scale and lower costs of outsourcers.

• IBM outsources project management and programming to China where labor costs are 1/3 of U.S. costs.



advanced technology Lower costs Improved development time

• Experienced specialists can often develop and implement a system faster and more efficiently.

• Can also help the company cut through some of the internal politics.



advanced technology Lower costs Improved development time Elimination of peaks-and-valleys usage

• Companies with seasonal fluctuations don’t have to staff an IT force or maintain hardware for peak periods.



advanced technology Lower costs Improved development time Elimination of peaks-and-valleys usage Facilitation of downsizing

• Companies with in-house systems that downsize are often left with an unnecessarily large AIS function.

OUTSOURCE THE SYSTEM Risks of outsourcing

Many outsourcing contracts fail to meet expectations for reasons including:

Inflexibility

• Many outsourcing contracts are for 10 years.• If the company is dissatisfied, has problems, or goes

through extensive structural changes, the contract is difficult and/or costly to break.

OUTSOURCE THE SYSTEM Risks of outsourcing:

Inflexibility Loss of control

• The company may lose control of its system and data.• Also risk of confidential data being shared with others.


Inflexibility Loss of control Reduced competitive advantage

• Companies can lose a fundamental understanding of their IS needs and how the system can provide it with competitive advantages.

• Outsourcers are not as motivated to meet the client’s competitive challenges.

• Can be mitigated significantly by outsourcing the portion of business processes considered standard (e.g., payroll, accounts receivable) and customizing the portion that provides competitive advantage.


Inflexibility Loss of control Reduced competitive advantage Locked in system

• It is expensive and difficult to reverse outsourcing.


Inflexibility Loss of control Reduced competitive advantage Locked in system Unfulfilled goals

• Many outsourcing goals and benefits are never realized.


Inflexibility Loss of control Reduced competitive advantage Locked in system Unfulfilled goals Poor service

• Some companies complain of poor service from their outsourcers, particularly with respect to:

– Slow or no responsiveness to changing business conditions.– Poorly planned migration to new technologies.


Inflexibility Loss of control Reduced competitive advantage Locked in system Unfulfilled goals Poor service Increased risk

• Increased risks include loss of market position, loss of human capital, and reputation impairment among others.

Chapter 1473

System Development AlternativesThe buy The buy decisiondecision

1 Information Systems Planning. 2 Introduction Whether & how extending e-business capabilities would...

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