CE53802-3 Information Systems Strategy Week 4

1. CE53802-3 Information Systems Strategy Week 4

2. What systems are critical to the organisation? How can we prioritise spending on and investment in IT? Mcfarlan and McKenny�s Strategic Grid as adapted by Earl

3. The McFarlan & McKenney Grid Puts organisations, business units, or departments into one of four categories, depending on the significance of IT to them

5. Using the grid Support Applications Can improve business performance, but are not business-critical, for example: Office automation Can be managed ad hoc and in a discrete fashion Low technical input Low spending Low management Input Example: Payroll

6. Using the grid Factory Applications. Provide the mechanisms by which current business is done. Hence �factory� analogy Critical to running the existing business Must operate efficiently & reliably Must be well supported/backed up Tightly controlled Spending is significant Example: Steel Production

7. Using the grid Turnaround Applications. The use of IT/IS is becoming strategic for the business � from the Factory quadrant Systems may be in embryonic form at present Need planning, spending, creative thinking about new ways of using Initiatives will be led by senior management Investment needed Example: Supermarket Retailer

8. Using the grid Strategic Applications Those critical to the future success of the business May need to be innovative to gain competitive advantage Will be led by highest level managers with advanced IT understanding Should be owned by business units and managers IT investment is high as % of total capital spend Must fully integrate into business/strategic plan Example: Credit card company

10. Strategic grid driving factors Matching IT/IS to present business operations Matching IT/IS to future business strategy Matching business strategy to future IT/IS Changes in the competitive environment Searching for competitive advantage The amount of funds available

11. Stage One Organisation Support: Early DP Department Development is piecemeal. Separate systems need to be interfaced, one by one. Dependence on IT grows. Senior management begins to see IT potential.

12. Stage Two Organisation Factory: Knowledgeable management. Top down review of IS applications takes place. Priorities assigned to systems based on business needs, and using formal appraisal methodologies.

13. Stage Three Organisation Integration/Re-integration. New stage. Detailed planning of introduction of new systems. �Factory� systems now seen as critical. Database idea emerges. Information centre, bought-in application packages applied. Feeds stages four and five.

14. Stage Four Organisation Turnaround. Innovation stage. User entrepreneurial flair encouraged. May start in stage three as a protest against delay. Generates the few good turnaround ideas that the IS function can build on. Is the Inside-Out function, in practice.

15. Stage Five Organisation Strategic. Delivers truly strategic uses of IS. Difficult. Ideas from stage four need to be sifted, developed in the business context. Linking IS potential to the business strategy is the main task. Calls for coalition of senior management, line management, IS specialists. A first!

16. Comment In real life, parts of an organisation may be at a different stage (or straddle stages) compared with others. Traditionally, the manufacturing area, and finance enjoy high automation What about order processing, the supply chain, distribution?

17. References McFarlan F. W. and McKenney J. L., Corporate Information Systems Management: The Issues Facing Senior Executives, Dow Jones Irwin, 1983 Earl M. J., Management Strategies for Information Technology, Prentice Hall, 1989

18. Self Study Read Earl Chapter 1: pp 5-8, Chapter 2: pp 32-34, Chapter 9: 193-195 Read week 4 in the handout pack

19. Next week Earl's three pronged approach � top down