Business Process and IT Strategy
Abstract
Strategic Planning and Strategic Information Systems Planning (SISP) have been among the top issues facing business executives for many years. The approach taken for SISP influences the execution and methods applied to the SISP process by a given enterprise (King 2009, p.11). This report analyses the state of Strategic Planning and SISP in Australian organizations. First, there is an overview of strategic planning as a critical factor. Then there is discussion of three issues that impact the choice and execution of SISP in modern Australian enterprises. This research thus presents the factors involved in information systems technology in SISP, business process transformation, and why enterprises implement SISP to achieve sustainable competitive advantage. There is further explanation of changes in field of strategic planning and SISP. Finally, this report presents comparison of some of the current approaches to strategic planning and SISP, their strengths and weaknesses.
Strategic Planning
Effective strategic planning of the most significant business activities that an enterprise needs to undertake so as to gain competitive advantage in today’s marketplace. Strategic planning is the managerial process concerned with establishing and maintaining a balance between a company’s objectives and resources and the evolving market opportunity (Teubner & Mocker 2008, p.5).. The main aim for strategic planning is long-term profitability and growth. It thus implies that a strategic plan is primary foundation of any given enterprise as it provides a solid frame of reference for reaching decisions about how to compete in the market place.
In other words, a strategic plan serves to identify the key success factors that a business requires to implement in order to attain plan goals in addition to identifying ways of developing these into core competencies. The strategic plan carries a clear outline of both the functional and financial assets as well as system requirements required to achieve the objectives set out in the organizational plan (Teubner & Mocker 2008, p.9). Successful business executives have the understanding that strategic planning done through integration of combined experience, education and perspectives of the leadership team is indeed a highly effective technique of developing focus in management together with competitive advantage in their respective marketplace.
In the effort to develop long-term strategies targeted at increasing the competitiveness and profitability of a business, managers often develop new enterprise for their business such as organic production, on-plant processing, directing marketing of products/services to customers, along with efficient production of contemporary enterprise commodities (Basahel 2009, p.132). Figure 1 shows the typical strategic planning process employed by most enterprises in the desire to gain competitive advantage in the marketplace.
(Hill & Jones 2011, p.45)
Strategic planning is a challenging undertaking especially for enterprises that are integrating it for the first time. However, when strategic planning is handled as a continuous process, it becomes a source of competitive advantage as well as a guarantee of improved daily execution of business practices. It helps determine and direct the quality of relationships with employees, suppliers, customers, unions, and financial institutions (Teubner & Mocker 2008, p.23).
Sustainable competitive advantage
Competitive advantage refers to something a given business can do better compared to its competitors. Competitiveness relies on the productivity with which a business can utilize labor, capital and natural resources to give high-quality goods and services. The growth and development of any given enterprise depends on its competitive advantage, which is determined by the competitive strategies that the company adopts. The sort of plan an enterprise chooses to enable its information system determines whether the enterprise’s business strategy will deliver the desired results of creating a favorable competitive situation, or create an endless battle to continue staying relevant in the market (Basahel 2009, p.120). Lack of competitive advantage makes the target customers of the company to lack any sound reason to patronize the business instead of its competitors.
On the other hand, sustainable advantage refers to the differential advantage that cannot be replicated by the competition. It is the prolonged benefit that results from the implementation of some unique value-creating business strategy not simultaneously being used by any other current or potential competitors together with the inability to replicate the benefits of the strategy. Sources of competitive advantage lay in the organizational skills and assets, which include locations, equipments, technology, customer service, promotion, patents and copyrights (Hill & Jones 2011, p.13). In order for a business to have competitive advantage in the marketplace, it must have the ability to sustain the advantage itself over a long period of time. Nonetheless, it is apparent for business executives to keep in mind that sustainable competitive advantage is indeed a function of speed that can be imitated or copied by competitors. The competition identifies the market leader’s competitive advantage, determine how the strategy is attained, and then learn how to duplicate the strategy.
Strategic Information Systems Planning
Strategic Information Systems Planning (SISP) refers to the process of deciding the goals for organizational computing followed by identification of potential computer applications that the organization should implement to meet its business goals. SISP thus alludes to the analysis of an organization’s information and processes through business information models along with the evaluation of risk, current requirements and needs (Khani et al 2011, p.52). In the same vein, SISP can also refer to the searching for applications that have high impact and great ability to produce an advantage over competitors.
In the recent past, Strategic Information Systems Planning has increasingly become a key concern for many information systems and top business executives. The present business environment is highly competitive, characterized by growing internal and external pressures. This has necessitated adoption of strategies that would result in increased management and control of initiatives and projects along with efficiency and effectiveness in the planning process in the effort to achieve enterprise goals and objectives (Khani et al 2011, p.66).
In the current SIS era, undertaking SISP is not easy owing to the fact that such a process is deeply rooted in business processes. As such, the system must meet the strategic demands of the enterprises, which means catering for the business goals, creating competitive advantage in addition to fulfilling their data processing and management information systems (MIS). Consequently, enterprise executives are continuously faced with the dilemma that both too little and excessive implantation planning can hinder the success of SISP, and in turn compromise the enterprise’s competitive advantage (Newkirk et al 2003, p. 204). Too little SISP is a recipe for insufficient understanding of the internal organizational environment, the external competitive environment, as well as the emerging information technology. The net result for this could be ill-conceived strategic alternatives together with poor selections from them. In view of this, the investments outlined in the strategic information systems plan would turn out insufficient to enable the enterprise to attain its impending challenges.
On the other hand, excessive SISP would demand too much implementation time from the enterprise executives. As such, there is always the danger of the plan being rendered obsolete before it can be implemented as a result of the consistent changes in the internal organization environment, the competitive environment, along with changes in the emerging information technology. This further implies that the plan itself would be insufficient to allow the enterprise to satisfy its forthcoming challenges.
At the minimum, an enterprise’s information systems investments ought to be in line with the entire business strategy, and sometimes become an emerging platform for competitive advantage. Enterprises can best attain competitive advantage or IS-based alignment by adhering to a proactive, formal and compressive procedure which consists of the development of extensive organizational information requirements (Newkirk et al 2003, p. 214). In general, Strategic Information Systems Planning offers businesses the processes to navigate effective investment in Information Technology (IT). In addition, SIPS ensures that the very adoption and assimilation of these technologies will result in tangible business gains and desired returns on investment that can translate into real competitive advantages.
Benefits of SISP
There are a number of benefits that an enterprise can reap from implementing SISP. First, SISP delivers benefits that go beyond the amount of resources invested to sustain positive organizational effectiveness and capability. This is because of its ability to sustain an enterprise-wide vision; the ability to effectively coordinate the efforts of members of the organization; and capability to diminish any uncertainty and redundancy (Khani et al 2011, p.40). Furthermore, SISP help corporate executives to appropriately prioritize their decision making for the purpose of achieving competitive advantage besides facilitating the use of Information Systems and Information Technology to significantly impact the business strategies. Through SISP, an enterprise is able to exploit IT for competitive advantage.
Issues impacting selection and implementation of SISP
Success of SISP is measured on the degree of achievement of the goals of SISP on one hand, and the improvement in the ability of the planning system on the other hand.
SISP Methodologies and Success
A SISP methodology consists of one or more strategies where each strategy is defined by a specific set of practices, procedures and rules. The methodologies offer mangers with techniques and principles that help in analyzing the enterprise’s information processing needs, identifying priorities for applications that address these needs in addition to developing schedules and architectures for implementation (Teubner & Mocker 2008, p.19). Generally, enterprises favor the use of several methodologies in gaining competitive advantage. However, adoption a range of different methodologies does not necessarily guarantee SISP success. The choice of SISP methodologies is determined by both the characteristics of the methodologies along with other several factors, such as historical reasons, internal policy, familiarity, a preferred supplier, among others.
In the recent past, a few Australian enterprises have adopted the SISP methodology. As the turn of the new millennium, new approaches to SISP seemed well behind modern thinking and business practice. The adoption of wrong methodologies has significantly resulted into SISP failures among Australian companies. It must be noted that there is nothing like industry standard for SISP. The bulk of SISP approach studies are based on Earl’s (1993) theory. Earl conducted an examination of the SISP experience in some 27 UK based companies and reached valuable conclusions pertaining five different approaches: Method-Driven, Administrative, Business-Led, Technological, and Organizational. Earl’s research showed that the most superior approach was the organizational technique as measured on three approach elements: method, process and implementation (Newkirk et al 2003, p. 212). However, Sigars et al (1998) contradicted this by proposing a single approach called the ‘rational approach’ as the most effective way for implementing SISP. In addition, study results using frequency analysis show that 49.74% of the respondents did not apply or recognize any of the approaches championed by Earl (Pita et al 2010, p.38). a study by Pita et al (2010) also gave different results as shown in figure 2 below:
Figure 2. SISP approaches and SISP success in Australian enterprises
(Pita et al 2010, p.41)
The results show that there is no significant big difference in the mean score between approaches used in implementing SISP. The success of SISP methodologies and approaches is not measured basing on the financial criteria owing to the inability to identify the effect of SISP as one of the several contributors of the organization’s financial performance (Newkirk et al 2003, p. 205). While the implementation of SISP may be essential in measuring its success, the planning process must be considered because the outcomes of implementation will be desirable with an ill-defined plan. Following thorough examination of SISP success, two dimensions have been suggested: fulfillment of SISP objectives or improvements in the SISP capability. In this report, the measure of SISP success is based on the fulfillment of SISP objectives.
In a study to demonstrate the impact of variable from the item perspective, where IT executives were the key informants, showed that about 24% of Australian enterprises do not undertake SISP in any form whatsoever. This is evidenced by Table 1 below:
(Pita et al 2010, p.31)
Excluding the organizations that do not practice SISP in Australia, it was found that about 17% of the companies attempting SISP, 15% if them were in the SISP development stage, 38% have irregular SISP, whilst 31% had some of IS planning. The results are reflected in Table 2 below:
(Pita et al 2010, p.33)
Large enterprises in Australia are associated with the top-down planning style while small organizations mostly use the bottom-up or a mix of top-down and bottom-up planning. Medium sized companies are found to be most successful in SISP when they integrate Bottom-up planning style and implement the Technology assessment IT/IS infrastructure review methodology (Pita et al 2010, p.38). Figure 3 (below) shows chart representation of SISP techniques or methodologies used by Australian companies.
Figure 3: Company size, methodology and SISP success comparison in Australia
(Pita et al 2010, p.39)
Changes in Strategic Planning and SISP
The SISP notion has undergone gradual metamorphosis since its inception. This has been as a result of rapid IT and business change. Figure 4 shows the evolution of SISP in four stages.
Figure 4. The Evolution Perspective of SISP
(Khani et al 2011, p.79)
Each of the SISP evolution has been significantly influenced by the changing nature of IT and its role as a strategic resource for enterprises.
Current approaches to Strategic Planning and SISP
Strategic Planning
There are several approaches that are used by organizations for strategic planning. They include: Future search, open space, SWOT, & ZOPP/OOPP/LFA ((King 2009, p.75).
Future Search Approach
This is a structured planning approach that avails actions initially perceived to be beyond reach in large, diverse organizations. Its main advantage is that it lays emphasis on going forward in time to identify desired future condition and make initiatives to attain that situation.
Open Space Approach
This is a less structured strategic planning approach where the agenda is often the topic agreed during previous meeting. It lacks planned panel discussions as well as plenary sessions. The agenda is born from issues brought forth by participants, for which they are willing to take responsibility for.
SWOT Analysis Approach
This is the most popular approach in business environments. It strives to assess the strengths, weaknesses, opportunities and treats (external & internal) that the business faces (King 2009, p.92).
ZOPP/OOPP/Logical Framework Approach
This is a structured meeting process that aims to identify the major present problems through cause-effect analysis and establish the best strategy to address the noted issues. It helps in identifying the cause of a given problem so that the proper corrective action can be taken (King 2009, p.125). Its main disadvantage is that the much focus on current problems and problem analysis can often result in the team getting absorbed in the negative feelings of the persistent problems or constant apportioning of blame to a specific part of the organization for the problems.
References:
Teubner, A., & Mocker, M. 2008. A Literature Overview on Strategic Information Systems Planning. Retrieved from: http://www.ercis.de/sites/default/files/publications/2012/ercis_wp_no_6_sisplitoverview.pdf
Basahel, A.M., 2009. Evaluating the adoption of Strategic Information Systems Planning (SISP) in global organizations. Brunel University
Newkirk, H.E., A.L. Lederer, & C. Srinivasan, 2003. Rapid business and IT change: Drivers for strategic information systems planning? Journal of Strategic Information Systems, 12(3), 201-228.
King, W. R. 2009. Planning for Information Systems, Advances in Management Information systems. New York: M.E. Sharpe, Inc.
Hill, L.W.C., & Jones, R. G. 2011. Essentials of Strategic Management. Connecticut: Cengage Learning.
Khani, N., Nor, M. K., & Bahrami, M. 2011. IS/IT capability and Strategic Information System Planning (SISP) Success. Retrieved from: http://usimr.org/IMR-2-2011/v7n211-art10.pdf.
