IS strategy evolves in much the same way as Nolan predicted in his stage model.
Given the availability of large scale databases and fast communications networks, many organizations have turned themselves into extended enterprises that operate on the basis of inter-organizational information systems and form highly competitive value chains.
We must emphasize that the Internet is not the only driving force behind the trend of extended enterprises. Some other drivers for the building of cross-organizational systems are (Bloch and Pigneur, 1995):
Ć an increased focus on core competencies · companies can concentrate on what they do best (e.g. to market products and interact with customers are excellent in Company A) and other activities can be outsourced to others;
Ć an increased need for partnering · modern design usually requires parts from different vendors where business partnering is an advantage; and
Ć an increased request for flexibility · driven by the rate of technology change and the shortening product life cycle.
No matter how small a step the construction of extended enterprises moves business organizations up on NolanÊs ladder, the idea has already been associated with a number of innovative theories in information system management. To help you develop an understanding of extended enterprises, please read the following chapter.
4.2
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Recently, extended enterprises have been considered as a natural environment to integrate legacy systems (internal) with the processes of supply chain management (inward facing) and customer relationship management (outward facing). A higher level of data administration (in NolanÊs stages) can be achieved by forming an end-to-end connection between suppliers and customers. This is why data warehousing and knowledge management are mentioned in Chapter 5 of your textbook.
Providing efficient communications between its partners can become a competitive advantage for the enterprise. This new breed of intermediaries will be moulding business practices in the age of e-commerce.
In a nutshell, there is no standard description on what the nature of IS strategy should be. It varies according to how different organizations see it. When an IS strategy is brought to managementÊs the attention, it requires a more workable schedule and manageable activities. The IS planning process will be discussed in the next section
INFORMATION SYSTEMS PLANNING
IS planning refers to the broadly based management activity that provides direction within an organizational setting for the development and use of information systems and technology (Finnegan and Fahy 1993). OÊConnor defines it as the process of establishing IS goals to support business goals, the identification of IS and associated resources necessary to support the achievement of these goals, the establishment of priorities, schedules and budgets, and the management of specific development efforts (OÊConnor 1993).
The field of IS planning is relatively new and the rate of change in this field is high.
As a consequence, the concepts and terminology used in the literature are not
4.3
Chapter 5: Managing the Extended Enterprise, in DicksonÊs textbook, pages 125ă 143.
Questions for discussion:
1 What are the external factors that urge organizations to move towards the construction of an extended enterprise?
2 What are the internal factors that urge organizations to move towards the construction of an extended enterprise?
3 What role does knowledge management play in an extended enterprise?
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always well defined. IS planning is used as a generic term covering similar notions such as Âstrategic information systems planningÊ, Âstrategic data planningÊ, Âstrategic information planningÊ, ÂMIS planningÊ, Âinformation resource planningÊ, Âinformation technology planningÊ, Âinformation systems strategic planningÊ, and Âstrategic information management planningÊ. (You should understand from those aforementioned titles that the planning is generic to cover areas such as IS, IT, information resources, data architecture, etc.). However IS planning is not limited to the strategic angle, so a more general definition would be used here. In topic 1 and topic 2, planning was defined as an analytical process for determining objectives in the context of future and selection of a course of action to achieve them. In other words, IS planning is the process to make and integrate decisions with respect to IT support throughout the organization, using formal procedures and producing articulate results (Stegwee and van Waes 1990). These results can either be explicit decisions or provide input to other (informal) decision-making processes.
IS planning could be differentiated by the time over which it is valid; that is, the planning horizon. IS strategic planning is long-term and usually covers the next three to five years or more, although the exact timeframe is dependent upon the volatility (frequency of change) of the organization and its environment. It also forms the basis for short-range IS planning: tactical planning, which is medium-range and commonly addresses the period from one to three years; and operational planning, which considers the near-term of three months to one year.
IS planning has both a process and a product side to it. Though it refers to process and not the product, the two aspects are often equally important. That is so because the quality of the process determines the degree of acceptance of the products, and hence their influence on the desired effects of IS planning. As IS planning has evolved, the content of both process and products has changed, as you will see in the next section.
4.3.1 Historical Evolution of IS Planning
The evolution of IS planning can be divided into six stages (Stegwee and van Waes 1990, Andrew et al. 1992, Finnegan and Fahy 1993):
Ć No IS planning
Ć First generation · demand-driven IS planning Ć Second generation · methodological IS planning Ć Third generation · organization-wide IS planning Ć Fourth generation · IS and business strategy interaction Ć Fifth generation · integrated methodologies
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No IS Planning
As we described in topic 3, in the data processing era of the 1960s, the principal uses of ISs were to automate the basic business processes of the organization. The main goal of management when introducing computers into their business was to reduce the cost of processing information, and therefore the first IS applications were (and still are) in the areas of accounting, payroll, invoicing, etc. In this context of cost reduction as an exclusive goal, formal IS (or data processing (DP)) plans neither existed nor were they generally necessary.
The Electronic Data Processing (EDP) department would simply receive requests for developing IS applications and would implement them as efficiently as possible.
DP plans were, therefore, plans for developing and implementing user requests for DP applications. The decisions to be made mainly related to selecting the DP projects and allocating resources, which could be easily made at the DP department level on the basis of a cost-benefit analysis based on strictly economic terms.