STRATEGIC PLANNING (Part II) - FOR INFORMATION SYSTEMS
A. Description of the topic
The term "strategic planning" is gaining currency among systems management as they become increasingly concerned with more formalized and disciplined approaches to indetifying requirements beyond the immediate future. The complexity of today’s information systems, and the increasingly large share of company resources earmarked to support them, underscore the need for a more carefully prepared "road map" to the future. This is especially so because of the long lead times that typically many of toady’s’ large systems projects.
The word "planning" in the context of this discussion connotes a process for exercising favorable influence over future events. It is an active rather than a passive exercise, as contrasted to forecasting which is concerned with estimating the future rather than influencing it through actions and decisions.
The word "strategy" has been borrowed from military parlance to convey the notion of an important and high-level form of activity, such as might be required to command a military theater of operations.
Strategic planning has, by its nature, a long-range rather than a short-range connotation. Though there can be decisions within the near term that have strategic implications, strategic planning tends to cover a time horizon of at least five years into the future, with eight to ten year planning cycles not uncommon.
Because information systems planning is concerned with long-range activities, it concentrates on the broad goals an organization is trying to achieve, leaving more specific objectives to be articulated through subordinate planning exercises. A distinction between goals and objectives is useful in delineating the realm of strategic planning.
B. Importance of the topic
As adapted from the military vocabulary, strategic planning has to do with the overall conduct of large-scale operations. This is in contrast to tactical planning, which concentrates on the immediate problems of maneuvering military units in the field to achieve specific objectives. In a business organization, strategic planning reflects the concern of top management with the future directions, profitability, product line and position in t he community of the firm, while tactical planning addresses the conduct of day-to-day operations such as getting this week’s, or this month’s or this year’s workload processed in the form of payroll checks produced, customer accounts updated or airline reservations booked.
Strategic planning for information systems seeks to assure that the organization will be in a position to take full advantage of emerging equipment and software technology to satisfy requirements throughout the planning period. At the tactical level, management must make certain that enough resources are available to support the near term data processing requirements of the organization as, for example, in assuring that as increase in reservations workload can be handled by an airline or that a growth in account activity can be accommodated by a bank’s computers.
Regardless of terminology, most organizations have come to recognize that planning is necessary on these two levels: the tactical, to assure that there is sufficient equipment capacity, the recurring work done; and the strategic, to anticipate what future workloads, and workload processing systems, are likely to be.
Though the field of systems planning is relatively new, having gained widespread acceptance even within large companies only in the late 1970s, many of the methods that it utilizes are well established and have been available to planners for some time. Business systems planners have been able to borrow techniques from related kinds of planning, in many instances adapting them to the more specialized and technical milieu of computer systems.
Over the past twenty-five years, most large well-managed organizations have adopted formalized approaches to long-range business planning. This emphasis within leading corporations has been accompanied by a growth in business planning literature which has helped to establish the concepts of business planning, the methodology associated with such planning and descriptions of the results of the planning process in particular companies and industries.
Today. practitioners of systems planning will find themselves in one of three environments with respect to business planning:
1. Companies in which there is a set of policies and procedures governing the preparation of business plans.
2. Companies in which business goals and objectives are not documented or published for general distribution.
3. Companies in which there is no formalized planning of any kind.
Systems planning can further be categorized into:
• Business Planning. Business planning consists of a set of methods and techniques that represent an extension of accounting and statistical disciplines that have been used in forecasting financial and sales performance. Others embody more sophisticated modeling techniques in which a variety of external environmental factors, such as government policy, labor demands, consumer buying trends, sources of capital investment and other variables are considered.
• Project Planning. Among the "classical" and still widely used techniques of project management are the CPM (Critical Path Method) and PERT (Program Evaluation and Review Technique) networking approaches in which estimates are derived for the various activities associated with a project and the events which these activities result in.
• Capacity Planning. Data processing managers concerned with assuring that their installations will have sufficient processing and storage capacity for future application growth have developed a variety of measuring and forecasting procedures that have come to be characterized generally as capacity planning. Most modern computer installations generate a substantial amount of useful quantitative data as a by-product of normal processing operations. Some of this is used as input to computer performance evaluation activities in which the percentage of utilization of various pieces of equipment can be analyzed and "balanced".
• Technology Assessment. This had its inception more than a quarter century ago in military planning and has since been widely adopted as a planning tool by civil agencies and business organizations.
D. Current state of the art
The above enumerated methods and techniques in today environment are implemented via a computerized way. There are numerous software manufacturers that supply general as well as customized packages that offer support in strategic business planning. These tools are running on a variety of computer platforms and operating systems. The most widely used and well known are Microsoft’s Project, Computer Associate’s Superproject, Applied Business Technology Corp.’s Total Project Management, Project Workbench, Artemis, Primavera, to name just a few. These products offer a series of techniques such as PERT, or graphical capabilities that allow project management.
In addition, software products such as Microsoft’s Excel, or Lotus’s 1-2-3, or Borland’s Quattro Pro, have What-If analysis capability similar to some more sophisticated Decision Support Systems (DSS) widely used by strategic planners.
Also, most of enterprise operating systems have built in the capability of systems monitoring to provide systems managers with data on system utilization and performance, needed for capacity planning purposes.
As far as financial planning there are also a number of packages out there such as SAS, or IFPS that allow financial planner to plan strategically by interpreting various collections of data through financial ratios. These very important indicators allow top management to make both long-range or tactical, immediate business and information systems planning.
As related to Information Systems, strategic planning is a process consisting of various steps taken in a particular sequence. The following are those steps or activities grouped on phases:
Phase I - Situation Analysis, identifying Issues and Objectives. A Mission statement or goal should preclude phase I.
Phase II - Business Planning, describing the business functions and preparing the Strategic Analysis.
Phase III - Information Services Planning, correlating IS Issues with the Strategic Inputs.
Phase IV - Setting Strategic Priorities, performing analyses and ranking the options.
Phase V - Strategic Planning, describing proposed architectures and strategies.
Phase VI - Operational Planning, entering the systems planning phase of the Systems Development Life Cycle (SDLC).
In the above list of activities the following are also recommended:
• Involving top management
• Organizing for planning
• Planning task force
• Staff written plan
• Use of consultants
• Data collection
F. Future directions
AS above stated, the emergence of Decision Support Systems (DSS), Executive Information Systems (EIS) or Executive Support Systems (ESS), and Expert Systems (ES), already in use in more and more companies for both decision making and strategic planning are going to expand. More sophistication of such tools supported by more complex technology will allow a better, an educated strategic planning process with superior results, as far as accuracy of predictability and goals reaching. Better strategic planning, in particular for Information Systems area, will provide better results for the entire enterprise from the business standpoint.
Information systems planning remains one of the most important activities in assuring the competitiveness of a business organization. Technology and information are and continue to be the backbone, the driving force of the viability of a corporation in today’s highly competitive business environment. The principal benefit inherent in planning is that it permits the organization to exercise a favorable influence on future events. Her are some of the direct benefits derived from a good strategic planning:
• Enhancing Communications. The systems plan provides a vehicle for communication both upward from information systems function to top management and downward from the director (VP, Sr. VP or CIO) of information systems to subordinate managers and professionals within the information systems functions.
• Obtaining Organizational Commitment. The issuance of an approved information systems plan implies a commitment on the part of the top management to support the plan by providing adequate resources and on the part of the systems staff to apply their best efforts to achieving mutually agreed upon goals.
• Establishing Constraints. An information systems plan that reflects the goals and policies of top management will provide a constraining mechanism on the allocation of resources among systems projects.
• Improving Project Selection. With the goals set forth in an information systems plan at the apex of company systems activities, subordinate objectives can be delineated and projects authorized that will most effectively carry out the systems strategy.
• Controlling Resources. The systems plan permits goals and objectives to be tied into budget allocations to provide better assurance that dollars are channeled to those activities that are most relevant to the achievement of strategic goals.
• Improving Levels of Confidence. Because the information systems plan provides positive direction by means of goals and negative guidance in the form of constraints, there can be greater confidence that goals will be achieved without undue diversion of effort or resources.
• Managing Technological Change. Change in information systems Is inevitable as technology advances and as user demands for information services increase.