University of Leeds

SCHOOL OF COMPUTER STUDIES

RESEARCH REPORT SERIES

Report 93.32

An Integrated Framework for Information SystemsPlanning and its Initial Application

by

Gwo-Guang Lee & Tom GoughDivision of Operational Research and Information Systems

July 1993

ABSTRACT

This paper outlines an approach to information systems planning (ISP) that addresses

not just the technical problems encountered in ISP but the whole range of problems which

derive from social systems, organisational processes, formal organisational arrangements,

technology, and the external environment. The approach is designed to improve the

effectiveness of the high-level planning processes for information systems (IS).

A five-phase framework is proposed. The first phase, the perception phase, aims to

provide the managers with an environment that enables them to recognise the strategic value

of IS and that activates them to participate in strategy formulation. The second phase, the

evaluation phase, involves the evaluation of the organisation's systems. The third phase, the

selection phase, is focused on analysing the data collected from previous phases in order to

select feasible projects. The fourth phase, the construction phase, is responsible for

producing a set of preliminary IS plans. The fifth phase, the review phase, aims to ensure

that ISP effectiveness is further enhanced by ongoing adjustments to the plans.

The paper includes brief comments on the initial application of the framework in the

Mingchi Institute of Technology.

INTRODUCTION

Information systems planning (ISP) has been identified as vital to continuing

organisational success and effective information systems (IS) performance (Dickson, et al.,

1984; Hartog and Herbert, 1986; Brancheau and Wetherbe, 1987). However, although ISP

methodologies have been used for many years, organisations are still failing to deal

effectively with untangling IS-related problems. This is mainly because many ISP

methodologies do not seem to realise that the IS-related problems result not merely from

technological problems but are also derived from paying too little attention to the

interrelationship between IS and organisational factors (Galliers, 1992c).

The key objective of this research is to provide a more practical approach that

addresses not just the technical problems encountered in information systems planning but

the whole range of problems which derive from social systems, organisational processes,

formal organisational arrangements, technological change, and the external environment.

The approach is intended to improve the effectiveness of the high-level planning processes

for information systems.

Olle, et al. (1991) indicate that ISP is taken to refer to the strategic planning of

computerised information systems. The main purpose of ISP is generally to identify which

information systems are needed rather than to plan in detail any specific system. An

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information systems plan should show which new systems are required and the sequence in

which they should be implemented. Some researchers use different terms, such as strategic

information planning, information strategic planning, and strategic information systems

planning, to represent the strategic level of information systems planning. According to

Battaglia (1991), strategic information planning is the analysis of a corporation's information

and processes using business information models together with the evaluation of risk, current

needs and future requirements. The result is an action plan showing the desired course of

events necessary to align information use and needs with the strategic direction of the

corporation. Information strategic planning, as proposed by Martin (1989), is a

determination of the strategic opportunities, goals, critical success factors, and information

needs of different parts of the enterprise. However, although both definitions include the

strategic aspect of ISP, they both seem to view ISP as context-independent.

Galliers (1987) defines information systems planning as a management task which is

concerned with integrating information systems considerations into the corporate planning

process and with providing a direct link between this and, for example, information

technology acquisition decisions and the applications development process. Ward, et al.

(1990) also provide a broader view with strategic information systems planning meaning

planning for the effective long-term management and optimal impact of information,

information systems, and information technology and incorporating all forms of manual

systems, computers and telecommunications. Strategic information systems planning also

includes the organisational aspects of the management of IS throughout the business.

Dantzig (1990) further suggests that ISP needs to address the problems of limited

management awareness, communication barriers, and problematic organisational approaches.

The challenge of ISP is to develop an integrative process that helps managers identify

the potential of IS, matches the right IS projects to the company's business plans, facilitates

communication between IS professionals, users and management, and ensures that sufficient

resources are available and used optimally (Dantzig, 1990). However, to meet this

challenge, the framework needs to pay particular attention to the following key social

characteristics of ISP, as:

• An aspect of business plans (Galliers, 1992b);

• An innovative idea generation process (Sullivan, 1988);

• A political group process (Ruohonen, 1991);

• A change management process (Lederer and Gardiner, 1992);

• An organisational learning process (Henderson and Sifonis, 1988).

Based on this broader view, ISP can be defined as one area of business strategic

planning which aims to achieve business goals through the effective integration of

organisational management and various information systems in an adaptive and ongoing

process.

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MODES OF INFORMATION SYSTEMS PLANNING

Lederer and Sethi (1988) offer a dichotomous representation of ISP:

• ISP refers to the process of identifying a portfolio of computer-based

applications that will assist an organisation in executing its business plans and

consequently realising its business goals.

• Conversely, ISP can also entail searching for applications with a high impact and

the ability to create an advantage over competitors.

Vitale, et al. (1986) recognise the distinction between the two approaches and refer to the

former as attempting to 'align' MIS objectives with organisational goals and the latter as

attempting to 'impact' organisational strategies. Two different modes of ISP methodologies

are proposed: align mode and impact mode (Ruohonen, 1991). ISP methodologies which

link with business planning in a unidirectional way are labelled as align mode. ISP

methodologies such as Business Systems Planning (IBM, 1975), Strategic Systems Planning

(Holland, 1986), and Information Engineering (Martin, 1982) tend to possess the

characteristics described as belonging to the align mode. These methodologies are discussed

by Lederer and Sethi (1988). Conversely, ISP methodologies which link with business

planning in a bi-directional way are labelled as impact mode. Information systems planning

methodologies such as Value Chain Analysis (Porter, 1985a and 1985b) and Strategic

Thrusts Model (Wiseman, 1985) tend to possess the characteristics described as belonging to

the impact mode. These methodologies are discussed by Bergeron, et al. (1991).

However, neither the alignment mode nor the impact mode ISP methodologies

recognise that the very nature of ISP is now seen to be more complex than before (Galliers,

1991). Organisations should no longer regard a prioritised portfolio of information systems

applications as the sole outcome of the ISP process. Human, organisational and

infrastructural issues are now seen as critical components of the task (Galliers, 1991). A

third mode, the fit mode, has been proposed by Ruohonen (1991). This is concerned mainly

with organisational culture, requirements for human resources and capabilities for change

since the use of information technology, corporate strategy, and the organisational factors

should 'fit' together (Ruohonen, 1991). As a recent empirical study (Earl, 1993) concluded,

the most effective approach to strategic information systems planning is the one which

performs the process of ISP through continuous integration between the IS function and the

organisation. Several key organisational features embedded in this approach are revealed

(Earl, 1993). These are:

• Performing collective learning across the organisation;

• Using organisation devices (such as teams, task forces, and workshops) to tackle

business problems or pursue initiatives;

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• Maintaining close partnership between the IS department and the rest of the

organisation;

• Developing devolution of some IS capability across the organisation;

• Implementing ISP as part of the normal business planning of the organisation;

• IS strategies emerging from ongoing organisational activities, such as trial and

error changes to business practices.

Burn (1993) also argues that since the focus of research on organisational strategy is

contextual, it would seem likely that IS strategies will also refocus.

As the focus of ISP is increasingly on organisational issues, it appears that current

ISP methodologies cannot meet the new requirements deriving from this change. To deal

effectively with the IS-related problems, ISP methodologies need to establish a framework

which enables organisations to undertake the ISP process in its organisational context. The

'fit' mode becomes a key direction for the development of ISP methodologies.

To meet the new requirements arising from the 'fit' mode, an effective ISP framework

is required to take account of three critical perspectives:

Incorporating organisational change and political group processes

Organisations should first identify business change needs or opportunities before any

investment in information technology takes place since business benefits are derived from

understanding the business, committing it to change, and aggressively pursuing the ends not

the means (Earl, 1992). Change is defined in dictionaries as 'to make or become different'.

Organisational change is seen to encompass fundamental transformations in human

behaviour, work patterns and values in response to, or anticipation of, modifications in

corporate direction, resources or the technology used to accomplish work (Herzog, 1991).

Leavitt (1965) suggests that organisations should be considered as interacting,

interdependent systems of structure, technology, humans, and tasks. Scott Morton (1991)

argues that an organisation can be thought of as comprised of five sets of forces in dynamic

equilibrium among themselves: management processes, structure, individuals and roles,

technology, and strategy. A change in any one of these will cause changes in the others.

Nelson (1990) emphasises that technological innovation is not solely a technical change;

rather, it is a social change. Since most IS developers do not comprehend that this is what is

happening in the development of IS projects, Lederer and Nath (1991) argue that this is the

major cause of most information systems failures. An ISP methodology will work much

more effectively if it incorporates an appropriate change and political group process.

Angell and Smithson (1991) suggest that change must be seen as a systemic reality

and not necessarily as systematic. Change must be dealt with from a systems viewpoint. In

addition, Herzog (1991) argues that the key success factor in dealing with the

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implementation of change is how well organisations can manage people through change.

The change process may also require the interaction and collaboration of managers and

managerial groups (Ruohonen, 1991). Based on these viewpoints, a three-step process for

managing change, proposed by Lewin and Cartwright (1951), can be incorporated into the

process of ISP. The first step in introducing change is 'unfreezing', reducing resistance to

change by helping people understand the need for it and the benefits to be gained from it.

The second step is 'changing'; once people realise that old values, attitudes, and behaviour

are no longer effective, they will be open to new ways. The third step is 'refreezing' the

change through reinforcement and continued application.

Integrating various perspectives

The use of information systems can be viewed from different perspectives. For instance, as

Earl (1989) suggested, based on a business perspective, it is about what is needed by way of

system services and applications (so-called IS strategy); based on a technical perspective, it

is about the ways and means through which technology in total is applied in meeting

organisational information requirements (so-called IT strategy). However, managers must

view information systems using an integrated and broader perception. In addition, this

perception must also take into account the different stakeholders' perspectives on IS in order

to meet their needs properly (Earl, 1990; Galliers, 1991; Ruohonen, 1991). In other words,

managers ought to avoid overemphasis on one single perspective. An overemphasis on IT

strategy is likely to lead to information systems failure (Earl, 1989; Galliers, 1991). To

encourage managers to obtain a proper IS perspective, Galliers (1991) proposes a model

based on a socio-technical perspective.

Enabling dynamic strategic management

Strategic ISP requires close alignment with business plans (Galliers, 1987; Certo and Peter

1988; Jackson, 1989; Parker and Benson, 1989; Silk, 1989; Silk, 1990a; Silk, 1990b;

Niederman, et al., 1991). However, a further complication for ISP is the actual strategic

planning process itself, which for most organisations is not that successful (Jackson, 1989).

Perhaps, this is because current strategic management is ineffective when organisations

operate in an extremely turbulent environment. Stacey (1990) argues that current strategic

management is totally inappropriate because conventional theory is based on an assumption

that change can be understood in terms of past experience, that probability is applicable, that

small change can be ignored, and that clear frameworks which aim to produce a grand plan

can be established. If strategic ISP is carried out in this inappropriate context, strategic

advantage may be extremely difficult to achieve.

Stacey (1990) suggests that strategy is not predetermined, it emerges

opportunistically in the form of strongly backed single-issue responses or experiments. It is

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dynamic and organic. It is not comparatively static as the long-term plan is. Therefore,

successful strategic management starts from the existing business, and extends the

boundaries of that business by a process of experimentation, trial and error, playing games

and taking chances. Successful strategic management is not a grand design. Strategic ISP

must therefore not set down a rigid plan but define a business information systems

environment which can be adapted as circumstances change (Ward, et al., 1990).

AN INTEGRATED FRAMEWORK FOR ISP

To improve the effectiveness of the high-level planning processes for IS, the planning

framework needs to address the socio-technical problems rather than just the technical ones.

In other words, any framework should tackle the problems derived from social systems,

organisational processes, formal organisational arrangements, technological change, and the

external environment. A five-phase practical framework for constructing high level IS plans

is proposed. This framework is part of a cyclic process, producing actions that cause results,

and then learning from results and making adjustments. Ongoing evaluation and review of

organisational activities is incorporated.

Framework components

There are two main stages in the proposed framework. The first stage, activating business

change, aims to activate business change with the implementation of a learning and

participation process and the evaluation of the organisation's current systems. The learning

and participation process is focused on encouraging managers at all levels to reduce their

resistance to change and to participate in the process of strategy formulation. Once managers

are freed from their 'old thinking', the evaluation of the organisation's current systems

encourages managers to identify the 'right' business functions to help achieve organisational

objectives more effectively. However, business change cannot generate business benefits.

To secure the benefits, the proposed framework calls for the second stage, pursuing strategic

value, which involves prioritising potential IS projects in a wider context, producing

preliminary plans based on business plans, and assessing the effectiveness of ISP using a

multiple dimensional model. The first stage comprises two phases: perception phase and

evaluation phase. The second stage comprises three phases: selection phase, construction

phase, and review phase. A diagram of the proposed framework is shown as Figure 1.

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Stage Stage 1 Activating Business ChangeStage 2 Pursuing Strategic Value

Phase Perception

Phase

Evaluation Phase Selection PhaseConstruction

Phase

Review

Phase

Purpose Identification of

IS strategic

value

Identification of

required business

functions

Prioritisation of

potential IS

projects

Generation of

preliminary IS

plans

Assessment

of ISP

effectiveness

Change

process

Unfreezing Change Change Refreezing Follow-up

and feedback

Tool Group and self

learning

Strategic review,

CSF, Value chain,

Strategic function

chain, System

audit grid

Strategic and

feasibility

factors, Group

evaluation

method

Documentation,

Stages of growth

model

Multi-

dimensional

assessment

Computer

-aided

systems

Computer-based

learning system

Strategic review

and SFC

construction

system

Group

evaluation

system

Preliminary plans

system

Computer-

based

assessment

system

Figure 1 The proposed five-phase framework for ISP

PERCEPTION PHASE

The first phase in Stage 1 is the perception phase. Many IS researchers have claimed that

organisations should view information as a strategic resource (for example, King, 1984;

Clemons and Row 1988; Lehane, et al., 1990; Ward, et al., 1990; Battaglia, 1991). In

addition to the strategic view of information systems, many other viewpoints, related to the

perception aspect, have been suggested. However, a proper perception of IS issues cannot

lead to practical implementation unless organisations are freed from their old thinking first.

Therefore, one of the key success factors for ISP is to encompass organisational

change processes into its framework in order to reduce resistance from the outset. However,

none of the existing ISP methodologies applies a systemic and effective approach to deal

with the perception problems.

Failure to incorporate a means of tackling the perception problems may lead to a

common and frustrating outcome which is that most ISP methodologies are unsuccessful,

since they fail to accomplish organisational change. The purpose of this perception phase is

to create an environment in which people are proactive in reviewing their old thinking and in

acquiring new knowledge by taking a broader view. More specifically, it provides

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organisations with an environment that enables managers to recognise the strategic value of

information systems and that activates them to participate in strategy formulation.

To achieve the objectives of this phase, an appropriate 'educational' approach needs to

be incorporated. Two approaches are applied in this phase together: a group learning

approach and a self learning approach. Group learning is a process in which a small group

of managers discuss and learn about selected topics under the guidance of a facilitator. The

purpose of using group learning is to gain a high degree of consensus, effective coordination,

a sense of partnership, and maximum creativity. When the organisation is going to enter into

a new stage of growth or to launch key IS projects, the group learning approach is the

primary approach. Self learning is a process in which a manager learns about selected topics

using a computer-based learning system in an interactive way. The self learning approach is

used to obtain such advantages as, time saving and cost-effectiveness, flexibility and ease of

learning (Gongla, et al., 1989). Furthermore, the individual manager's learning may be

highly effective if the system can match each individual's learning behaviour and style. The

educational mode regarded as the preferred choice, for convincing top management of the

strategic potential of information systems is personal education on a one-to-one basis (see the

survey in Lederer and Mendelow, 1988). Thus, the self learning approach can be used as a

major tool to help meet this need.

To achieve the purpose of the learning approaches, a set of modules and topics with

respect to the area of ISP needs to be set up. Based on the findings in Kaddah's research

(1990) and a literature survey (see, for example, King, 1988; Lederer and Sethi, 1988; Earl,

1989; Galliers and Sutherland, 1991; Nelson, 1991; Ruohonen, 1991), the following modules

and topics have been identified for inclusion (Figure 2):

The topics in Stage 1 illustrate the contents of business strategy and plans defined by

the users' organisation. A general introduction to the definition of information systems, the

evolution of ISP, and successful examples of the strategic use of information systems is

described in the topics in Stage 2. The topic in Stage 3 is the seven 'Ss', each associated with

six sets of key features. There is no specific topic provided in Stage 4. Through the

previous three stages, users are encouraged to assess their day-to-day work experience in the

context of all the topics and Stage 4 enables users to 'navigate' back to any of the topics

addressed in the first three stages and add any new ideas arising from their review of their

overall work experience. More importantly, users are able to explore these new ideas. This

'exploration' ability helps users to share and to generate different ideas. As a result, the sense

of participation in the process of strategy formulation is enhanced through the

implementation of the learning process.

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Stage Modules Topics

Stage 1 Introduction to this firm What are the mission, goals, objectives,

strategies, CSFs?

What are the business areas and business

functions?

Stage 2 Introduction to IS

Strategic advantage of IS

Several critical themes

What is IS?

How has ISP evolved?

What are the strategic opportunities offered

by IS?

How can IS affect the success of a firm?

What is the overall strategic scope of IS for a

business?

What are the critical factors and perspectives

for ISP?

Stage 3 Stages of growth What are the current capabilities with respect

to the seven 'Ss'?

Stage 4 Review and comment

Figure 2 The modules and topics

EVALUATION PHASE

Once managers have completed the perception phase, the evaluation of organisational

systems starts. Organisations need to concentrate on rethinking business by analysing

current business problems and environmental change and by considering IS as only one

ingredient of the solution, not the solution itself (Earl, 1992). However, although this

argument has provided an important guideline for ISP, organisations need practical

assistance to put it into practice.

The main function of the evaluation phase is to evaluate the organisation's systems and

then propose relevant sets of strategic function chains to be the 'leverage point' (Vincent,

1990) for achieving organisational objectives. A strategic function chain refers to a set of

well integrated business functions focusing on accomplishing corporate objectives. The

evaluation phase involves the evaluation of the organisation's systems in terms of its mission,

dominant influences, CSFs, and business functions. The purpose of this phase is not only to

stimulate managers at all levels to review business functions based on a strategic perspective

but also to assist them in proposing appropriate sets of interrelated business functions as the

basis for constructing their strategic function chains. Without this evaluation, information

9

systems projects will only automate the status quo and the bi-directional linkage between

business strategy and information systems strategy will not be achieved. As a result, it will

be extremely difficult to gain substantial advantages through the use of information

technology.

To accomplish this purpose, managers need to carry out three key tasks:

Review of the current business functions

The purpose of this review is to encourage managers to examine business functions from a

strategic point of view and, in turn, to propose a set of more effective business functions that

support the organisation in achieving its objectives. An important guideline for this review

is that it should be based on what activities are required to meet organisational objectives,

not just how they are achieved currently (Wilson 1980, 1984; Galliers, 1985).

One critical factor for this review is that it needs all levels of managers to take part in

the strategic examination of various business functions. The way to implement this review

may be either a bottom-up process or a top-down process or both. However, organisations

may prefer using the bottom-up process at the initial stage since the successful operation of

the business functions relies mainly on middle and lower levels of managers. This may lead

the managers at these levels to acquire a sense of ownership and encourage them to review

business functions in a proactive way. Nevertheless, an innovative review can only occur if

it receives adequate attention from top management.

The effectiveness of the review depends on the extent to which managers review

business functions through strategic thinking. In other words, managers must perform the

review based on a comprehensive understanding of both the internal and external

environments in which organisations operate, and try to set up appropriate business functions

to meet both short-term and long-term organisational needs. Strategic thinking is the prelude

to designing an organisation's future (Zabriskie and Huellmantel, 1991).

However, in general, managers do not apply strategic thinking in an integrated way.

They tend only to be concerned about the business functions for which they are responsible

(Freund and Schlier, 1989), and pay little attention to other functions with which their own

functions may be highly interrelated. As a result, effective strategic thinking may not be

achieved. Therefore, an important factor for organisations wishing to implement strategic

thinking is to involve a range of managers, especially those who manage the same strategic

function chain, in reviewing business functions in a systemic fashion. In this way, managers

will also be encouraged to accept a synthesis of different views and visions and to apply a

process of creative thinking during the implementation of the ISP process (Galliers, 1992c).

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Formulation of the strategic function chains

In accomplishing its objectives an organisation needs to carry out a great number of business

functions. Some of them may connect strongly with one or more of the strategic factors,

such as customers, suppliers, competitors, technology, and organisational objectives. In

addition, since most business functions cannot be carried out individually, most organisations

require several function chains with business functions in each one closely interrelated and

linked (Stalk, 1988).

Managers, therefore, need to view business functions as interrelated business activities

and direct them to accomplish organisational objectives (Jackson, 1989; Davenport and

Short, 1990; Wetherbe, 1991). However, to integrate various business functions, managers

must overcome political barriers resulting from significant organisational changes in work-

flow, communication patterns, reporting relationships, and internal control processes (Cash

and Konsynski, 1985; Freund and Schlier, 1989; Kim and Michelman, 1990; Wetherbe,

1991).

Since almost all organisations need to employ several sets of well integrated business

functions to achieve their corporate objectives, the evaluation phase provides tools for

helping set up strategic function chains. Strategic function chains are constructed by:

(1) Grouping business functions into the five categories of 'inbound logistics',

'operations', 'outbound logistics', 'marketing and sales', or 'services' according to

their characteristics;

(2) Establishing the linkage between business functions for each grouping based

on the investigation of the interrelationships within them;

(3) Determining the extent to which each grouping is of strategic importance and

automatable based on the investigation of its major characteristics;

(4) Defining the overall objective for each grouping to integrate a range of

business functions and the managers responsible for them;

(5) Appraising current information systems used to support strategic function

chains in achieving organisational objectives;

(6) Assessing the extent to which the strategic function chains are constructed

effectively and efficiently.

Each grouping comprises several business functions that must be managed as a whole

since they are closely interrelated. This may imply that an information systems project

should take the whole group of business functions into account even though only a small part

of the group may be immediately involved in the project. Organisations must construct their

strategic function chains properly before any information systems projects are developed.

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Evaluation of current information systems

Since organisations may have several existing information systems which may not meet the

integrated requirements of their strategic function chains, these systems must be evaluated in

the cyclic implementation of the proposed framework. The evaluation of current

information systems needs to examine the extent to which they fit strategic function chains.

Two important criteria are used to undertake this evaluation: compatibility and technical

quality. The first criterion of the evaluation, compatibility, aims to evaluate whether the

existing information systems link effectively with other systems and meet the requirements

of the whole chain. The second criterion is related to the evaluation of the technical quality

of information systems. The following diagram shows the four classes resulting from the

evaluation based on these two criteria (Figure 3):

H

Maintain and

enhance

Renew

Compatibility

L

Reassess Monitor

H Technical Quality L

Figure 3 The information systems audit grid

(1) Maintain and Enhance

The first class contains information systems that are able to fit a strategic function chain and

their technical quality is highly satisfactory. According to the evaluation, these systems are

worth maintaining and enhancing.

(2) Renew

The second class contains information systems that are able to fit a strategic function chain

but their technical quality is not satisfactory. These information systems need to be revised

to raise their quality.

(3) Reassess

The third class contains information systems that are of high technical quality, but it is

difficult to fit them into a strategic function chain. In this case, the information systems may

work well individually but have problems working with other business functions. These

systems need to be reassessed.

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(4) Monitor

The fourth class contains information systems that have problems fitting a strategic function

chain and their quality is not satisfactory. However, since they may still contribute some

business value to the organisation, they need to be kept under review.

However, although this evaluation indicates whether information systems fit strategic

function chains, the business value of the current information systems to the organisation is

still not clear. The evaluation needs to be extended. To identify the business value derived

from the existing information systems, it is proposed that the above approach be incorporated

into McFarlan's strategic grid model (McFarlan, 1984). The purpose of this revision is not

only to assess the business value but also to help managers determine the priorities for the

further development of existing information systems. The following diagram shows the

revised model (Figure 4):

Strategic 1 5 9 13

Factory 2 6 10 14

Turnaround 3 7 11 15

Support 4 8 12 16

Maintain Renew Reassess Monitor

Figure 4 The revised model

Based on this revised model, information systems located in different cells have different

priorities. For instance, an information system in Cell 1 means that it contributes strategic

value to the organisation, and currently fits a strategic function chain and is of high quality.

Thus, it will receive higher priority with regard to resources and managerial attention than

information systems in other cells.

SELECTION PHASE

The selection phase is intended to prioritise potential IS projects based on strategic factors

and feasibility factors. This phase is not used just to consider the strategic value provided by

IS but also to see whether the particular IS projects can match organisational needs and

capabilities. Prioritisation must also take into account each group of IS projects which are

derived from the same strategic function chain, since they are highly interrelated and cannot

be assessed independently.

Two key processes must be carried out to select a set of appropriate IS projects:

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Determination of required factors

Many managers believe that business benefits can be directly obtained as long as they invest

in information technology. However, in fact, investment in information technology alone

usually yields very little return (Earl, 1992). Therefore, to ensure that IS projects not only

assist organisations to gain strategic advantage but also match their needs and capabilities,

organisations need to base assessment of IS projects on a balanced perspective. This

perspective needs to consider all the required factors, such as the risks associated with the

portfolio of projects chosen, the tangible and intangible benefits derived from the selected

projects, and the resources necessary to develop the projects. These factors can be classified

into two types: strategic factors and feasibility factors (Burch, 1990).

The strategic factors aim to enable organisations to assess the extent to which an IS

project can yield strategic value. Assessment of the strategic value derived from IS projects

can be made only by thinking strategically. Managers must see IS projects not just from a

tactical point of view. The strategic value generated by IS projects may be derived from any

of the following:

• Increasing productivity;

•Enhancing products and service differentiation;

• Improving management decision-making.

The feasibility factors are used mainly to examine whether an organisation is capable

of developing IS projects. These factors are not less important than the strategic factors.

They are necessary because most managers tend to be overly optimistic about IS projects,

and they need to examine the feasibility factors to see whether an organisation is really ready

for such projects. Organisations need to assess the capabilities required against six feasibility

factors: (1) technical, (2) economic, (3) legal, (4) social, (5) operational, and (6) scheduling.

Prioritisation of IS projects

Having examined the required factors, the prioritisation of IS projects can commence.

However, each IS project cannot be assessed individually, since an IS project may be

designed to support a set of interrelated business functions. Assessing an IS project alone

without considering its interrelationship within these business functions may lead to a

piecemeal development. Therefore, an essential point of this phase is to prioritise groups of

IS projects servicing the same strategic function chain rather than individual IS projects

which are not 'members' of the same strategic function chain.

The prioritisation must be implemented in a systemic way, as an individual business

function cannot be assessed and prioritised without considering its interrelationship with

others. This prioritisation is to be implemented in terms of focusing on various sets of

strategic function chains. The diagram in Figure 5 shows an example of this prioritisation

using the required factors as criteria.

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Strategic

Function

Chain

Productivity

Strategic Factors

Differentiation Management Sum

A 6 5 8 19

B 3 6 7 16

C 9 7 8 24

D 7 5 3 15

E 5 8 6 19

Strategic

Function

Chain

Technical Economic Legal

Feasibility

Social

Factors

OperationalSchedulingSum

A 7 8 - 6 7 5 33

B 6 7 - 4 7 4 28

C 5 8 - 3 6 8 30

D 4 7 - 6 5 7 29

E 6 4 - 3 4 3 20

Scale from 1 (no fit at all) to 10 (maximum possible fit)

Figure 5 An example of prioritisation

Having carried out prioritisation, the organisation needs then to review the appropriateness

of the linkage between business strategy and the proposed strategic function chains. The

purpose of this review is to decide which strategic function chains can best enable the

organisation to accomplish its objectives. To assist managers to implement this review using

the previous example (from Figure 5) the following summary shows the feasible candidates

with their different strategic values (Figure 6):

Strategic Factor Feasible Strategic Function

Chain

Productivity A

C

Differentiation C

Management A

C

Figure 6 An example of feasible strategic function chains with strategic values

15

From this summary, the organisation can then select one or more strategic function chains

that best fit its business strategy and organisational development. In general, there are three

generic strategies which an organisation can follow: cost leadership, differentiation, and

focus (Johnson and Scholes, 1989). Two possible routes can be chosen to support the

linkage between business strategy and the proposed strategic function chains. Firstly,

assuming that an organisation is trying to sustain its competitive advantage through

continued attention to its cost structure, it may then select either The Strategic Function

Chain A or C or both since they can best support its selected strategy. Alternatively, an

organisation may be willing to modify its current strategy to gain maximum advantage

derived from the feasible strategic function chains. In an organisation where the higher level

of IS maturity in terms of the Seven 'Ss' has not been achieved it is appropriate to use

strategic function chains in a support role to underpin the implementation of the business

plans. Conversely, in a mature organisation it is appropriate to use strategic function chains

in an impact role to change its business plans. However, the making of this choice depends

on several factors, such as organisation culture, planning style, and risk assessment.

CONSTRUCTION PHASE

Most conventional ISP methodologies focus on constructing an IS architecture that is used as

the basis for developing detailed IS projects. Although this provides IS developers with a

valuable and detailed plan for further development of IS projects, it cannot guarantee that

these IS projects will be capable of linking with business strategies, and that the priorities of

the IS projects will best meet organisational needs. The construction phase aims to generate

a set of preliminary IS plans based on the outputs derived from the previous phases. The

preliminary plans provide a strategic blueprint that enables organisations to comprehend their

business objectives and strategies, strategic function chains, and the capabilities required to

pursue business benefits, and that helps to link IS projects and business strategy more

effectively.

The products stemming from the process of ISP are a mixture of hard and soft

deliverables (Ward, et al., 1990). The soft outputs may refer to a change in human factors,

such as skills, awareness, and motivation (Ward, et al., 1990). However, this phase is

intended to focus on the hard outputs. The hard outputs are a set of documents that highlight

the strategic choices that result from the planning process (King, 1988). Premkumar and

King (1991) suggest that the various strategic choice elements are the IS mission, objectives,

strategies, goals, resource allocation, information architecture, and strategic programmes.

To achieve the purpose of this phase, the high-level IS plans need to cover the

following four key components:

16

• Organisational objectives and strategies;

• Business functional areas and business functions;

• Strategic functions chains;

• Current status and planned improvement.

REVIEW PHASE

According to Drucker (1973) "strategy is nothing until it degenerates into work". Similarly,

a plan is nothing until it is implemented. However, the implementation of a plan needs to

incorporate a series of adjustments based on an examination of the results of the

implementation that has already taken place. The purpose of this review phase is to ensure

that ISP effectiveness is enhanced through ongoing adjustments derived from this review.

Since ISP is a comprehensive process, ISP effectiveness cannot be evaluated using only a

single overall measure, such as financial performance. Furthermore, the impact of ISP on

financial performance is affected by many factors (Pearce, et al., 1987). Besides which,

strategic planning often provides organisations with intangible benefits. An alternative

approach to be used as a guideline for this review is required.

A multi-dimensional approach to assess the effectiveness of ISP was proposed by King

(1988) and subsequently endorsed in an empirical study (Premkumar and King, 1991).

Using this approach, the key components of ISP are taken into account, including

organisational/environmental factors, information input, planning resources, planning

process, planning output, and planning outcome. King (1988) suggests that there are eight

review points which collectively produce an ISP review profile. These are:

• Achievement of ISP;

• Relative worth of the ISP system;

• Role and impact of the ISP system;

• Performance of the IS plans;

• Relative worth of IS strategy;

• Relative efficiency of the ISP system;

• Adequacy of ISP resources;

• Strategic congruence.

However, to incorporate the multi-dimensional approach into this phase, a practical

procedure which provides groups of stakeholders with rich guidelines and clear steps to

implement it in an agreed routine fashion needs to be devised. This requirement may be met

effectively by means of a computer-based assessment system. Using this system, assessment

is carried out regularly and managers can then identify crucial areas that require

improvement, based on the results of the review performed at different time points.

17

A COMPUTER-AIDED SYSTEM

To achieve the objectives of the framework, the activities of each phase involve handling a

great deal of data. As a result, it is essential that a computer-aided system is incorporated

into the framework for it to be used effectively and economically by managers. The benefits

derived from the computer-aided system include not just increasing ISP efficiency, but, more

importantly, it also brings about the improvement of ISP effectiveness since appropriate

guidelines and knowledge provided by the system lead managers to implement the ISP

process more thoroughly.

The computer-aided system comprises six modules. The objectives of each module are

designed to improve planning efficiency and to help achieve the purposes of each proposed

phase. These six modules aim to:

• Construct the organisation's basic data on which the implementation of the

subsequent five modules will be based;

• Provide an interactive learning system that enables managers to view information as a

strategic resource, to participate in the strategic planning process, and to develop the

capabilities required;

• Assist managers in evaluating the organisation's current systems strategically and

identifying the 'right' business functions;

• Help select potential IS projects based on the strategic factors and the feasibility

factors in the context of strategic function chains;

• Generate the preliminary IS plans for managers at all levels;

• Assess ISP effectiveness based on viewpoints provided by different groups of

stakeholders.

AN INITIAL APPLICATION

At the request of the authors, the Mingchi Institute of Technology in Taiwan agreed to

participate in the first implementation of the framework. The objectives of the Institute

focus on three major targets: students, lecturers, and industry. Regarding its students, the

Institute aims to produce capable industrial engineers with both practical and theoretical

skills. Regarding its lecturers, it aims to develop competent researchers and teachers who

have both practical and theoretical knowledge. Regarding industry, it aims to provide an

effective consultancy service. Three key problem areas were identified by the top

management of the Institute:

• There was no clear understanding, within the Institute, of its strategic plans;

• Most departments tended to work independently;

• Computerised systems were focused on individual applications.

18

Unless the Institute dealt successfully with these problem areas, the organisational

functions of the Institute would continue to operate in a piecemeal way and the

organisational objectives would not be achieved effectively. In fact, the achievement of all

of three objectives depends on the effective integration of the organisational functions. The

top managers concluded that addressing these problems required the Institute to undertake a

fundamental review of its current organisational functions. The Institute decided that the

proposed framework would help it achieve its objectives more effectively.

The framework was implemented in the Institute during the period February - May

1993 and all of its components were used (see Figure 1). Three sets of stakeholders were

involved in this project: top managers, senior staff, and IS professionals. In setting the

project up, the computer-aided system was first installed in ten key departments. Top

managers then made initial use of the system. The major outcome of this initial use was that

it was decided to implement the computer-aided system within a Chinese MS-Windows

environment to enable users to understand the content of the proposed framework better and

use it more effectively. Having revised the computer-aided system as a result of initial

experience in use, the primary organisational data was set up with the use of the basic data

input module. Following the completion of the basic data input, implementation of the

planning phases began.

During Stage 1, activating business change, both the group learning process and the

self learning process were carried out. One important outcome from the use of the self

learning process was that some users who were reluctant to express their ideas during the

group learning process were able to contribute their opinions through the computer facilities

and the self learning process in effect seemed to provide some users with a complementary

channel for communication. Furthermore, some of the top managers felt that since the self

learning process provided users with the opportunity to view 'ideas and opinions' freely

through the computer-aided system, creative thinking was encouraged. As a result, the self

learning process was also used as a tool to help generate creative ideas for the Institute. The

major result of the implementation of the perception phase, the first phase in Stage 1, was

that the users in the Institute were freed from their old thinking and were ready for change.

To make change happen, the evaluation phase was implemented. Based on the guidelines

derived from the research, five strategic function chains were constructed for the Institute.

These were:(1) examination and enrollment SFC, (2) teaching and learning SFC, (3)

cooperative education SFC, (4) research and consultancy SFC, and (5) career development

SFC. Each strategic function chain comprised several interrelated functions. To construct

these chains effectively, five task forces, one for each chain, were organised to help achieve

integration. The overall objective of each chain was then defined by these task forces to

ensure the effectiveness of the integration.

19

By the end of the evaluation phase, various sets of interrelated organisational functions

were constructed. Each task force focused on ensuring the integration of its strategic

function chain through establishing a sense of teamwork. Following the implementation of

the first stage, the second stage, pursuing strategic value, started. The results of the

implementation of the selection phase showed that the feasible candidates were the

examination and enrollment SFC and the cooperative education SFC. However, although the

teaching and learning chain is not currently feasible for computerisation, it does not mean

that it is less important than the feasible chains. The Institute still needs to allocate sufficient

resources to manage it effectively. During the implementation of the last two phases, the

construction phase and the review phase, various stakeholders were encouraged to re-

examine the preliminary IS plans and to assess ISP effectiveness against the eight review

points. The results of this examination have enabled the Institute to identify the problem

areas which need to be addressed.

The implementation of the ISP framework in Mingchi Institute of Technology showed

that, in general, ISP effectiveness was improved and several specific outcomes were

identified:

• A sense of change occurred in the Institute;

• Users became more proactive than before;

• More users participated in the process of strategy formulation;

• IS projects were seen to derive from business change;

• IS projects are to be developed in the context of strategic function chains;

• Users now view IS as a means to achieve organisational objectives;

• Managers are beginning to deal with IS-related problems based on the socio-

technical perspective.

The implementation of the proposed framework in Mingchi Institute of Technology

has created a promising situation in which users are willing to acquire the necessary

knowledge, refinement of the organisational functions is being undertaken, and several sets

of interrelated organisational functions are equipped with proposed IS projects designed to

achieve the Institute's objectives.

CONCLUSIONS

The five-phase framework enables organisations to construct IS plans through the

implementation of the three-step change process: 'unfreezing', 'change', and 'refreezing'. The

major function of each phase is related to one of the organisational change processes.

Implementing ISP in the light of these change processes leads organisations to deal with IS-

related problems in their socio-technical context. This overcomes a major drawback of most

ISP approaches which drive organisations to implement ISP in the technical context only.

20

The central part of each phase is carried out by three sets of stakeholders together: top

managers, line managers, and IS managers. A sense of partnership between these

stakeholders is enhanced through the implementation of key processes such as the learning

and participation process and the construction of strategic function chains. This enables

organisations to construct IS plans based on the integration of various stakeholders'

perspectives. Integrating various perspectives ensures that IS plans are created in the context

of the coming together of several points of view. This overcomes another major drawback

of most ISP approaches which generate IS plans derived mainly from the viewpoint of IS

managers.

Strategic planning is an ongoing adjustment process, not a grand design process. The

underlying assumption of strategic planning is that the organisational context is dynamic

rather than static. The proposed framework enables users at all levels to participate in the

process of strategy formulation and to modify strategic plans based on the viewpoints

provided by various stakeholders. In a sense, the proposed framework encourages

organisations to undertake the ISP process from the strategic management point of view.

This overcomes the weakness in most ISP approaches which lead organisations to implement

ISP in a fixed way.

The effectiveness of ISP is enhanced using this framework, since it encourages

organisations to carry out the process of ISP based on a broader holistic view. Specifically,

this is mainly because tackling IS-related problems in the socio-technical context, which is

encouraged by the framework, is more effective than addressing the technical context only.

However, although the integrated framework provides an innovative approach to the process

of ISP, its application has to match its organisational context. This paper provides an initial

analysis of the first application of the framework, the full details of which are still being

assessed. There will then be a need to test the framework out in other organisations.

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