Strategic information systems planning have always been considered as an important topic both in information system professionalism and the business community. In any organization, planning plays an important role in achieving a competitive advantage. Today, information systems are critical in enhancing many organizational transformations thereby increasing their ability to benefit from the information system investment. This has seen many organizations leveraging their investment on information technology and systems. This requires effective planning to enable an organization achieve benefits associated with information systems. This implies that there should be a congruency between planning as is done by an organization and its information systems. In so doing, strategic information system planning will ensure that information systems are interactively aligned with evolving needs and strategies of an organization so as to meet its information system objectives.
For a long time, top managements of different firms or organizations were not much interested in the relationship between information system functions and corporate strategy. This is because information systems were only considered as an aid in processing of corporate data and were treated as back-room operations that were intended to support daily organizational tasks. However, in the contemporary technological world, there has been an increasing realization of the need of ensuring that information systems are of strategic importance to any organization. In today’s world of rapid changing of consumer demands and global marketplace, information systems have become the most critical and powerful tools in enhancing and managing corporate innovation and growth. In this regard, no single organization can claim of being able to extend its market, create its products and services, manage its investments or interactively communicate with its customers, employees, and suppliers without information systems. This is the reason why strategic information system planning is essential for any organization.
Strategic information system planning (SISP), as defined by Basahel and Irani (2009), is the processes of identifying a portfolio of computer-based applications that will enable an organization to execute its business plan effectively and efficiently, thereby realizing its business or organizational goals. It means that planning for information systems begins with the identification of organizational needs. Such knowledge enables organizational managers to effectively develop a computer-based system that would adequately respond to their needs. This implies that SISP provides an important activity in helping information executives and top organizational managements in identifying relevant strategic applications. Such applications, if aligned with information technology and business needs, can enable an organization to achieve its success effectively. Therefore, planning of information systems is more like the strategic planning in management where objectives, priorities, and authorization of information system must be adequately formalized. In this regard, system development planning should be able to identify the resources required, general procedures, and constraints that are associated with the strategic development of information system infrastructure in a bid to improve any organization’s capabilities.
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This paper thus discusses key stages and existing methodologies for strategic information system planning and how to implement them effectively in a bid to realize further improvement of the effectiveness of strategic planning for any organization. In so doing, we will be able to examine the capacity that drives organizations in developing corporate information system planning that is effective enough in supporting their economic evaluation of information system investment.
In order to understand the key stages and frameworks of information system in today’s organizations, one needs to clarify the importance of the information system’s triangle; hence, it is imperative to discuss the evolution of information systems based on three-era model by Pant and Hsu (2006). According to their model, there has been the era of information breakthrough that dates back to the 60’s. During 60’s, information system were only used for data processing (DP). During this time, computer technologies were remote from users (Pant & Hsu, 2006). This was totally different from what was experienced during the 70s and 80s, the eras which were associated with improvement in the management of information systems, in order to distribute organizational processes, and interconnect and regulate such processes so as to support businesses. However, in the course of the 80s through 90s’, strategic information system (SIS) evolved where networked and integrated computer systems were used by various organizations in order to support related business strategy that would drive business agenda (Pant & Hsu, 2006). However, it is the applicability of overall data processing (DP), management information system (MIS), and strategic information system (SIS) that has called for the need to plan and manage information system. This is what has finally resulted into strategic information system planning (SISP).
In essence, it means that strategic information system planning in today’s strategic information system must be deeply embedded in business process. This brings us to the understanding of the three basic elements of information system triangle which SISP should be aligned to. These include business, organizational, and information system strategies. However, it is important to point out that, of all the elements, the business strategy should be at the top of the triangle as illustrated in the diagram below.
Pollack (2010) defines the three elements of the triangle in a more conceptual manner. According to him, business strategy is where organization’s mission is coordinated through a set of actions in order to purposely fulfill an organization’s goals and objectives. This implies that business strategy is solely incorporated to set limits on what an organization is seeking and able to achieve. On the other hand, organizational strategy primarily deals with the people, firm’s structure, work processes, and plans that are incorporated to achieve business goals. Finally, information system strategy is the plan that an organization uses in order to provide important information services (Pollack, 2010). It, therefore, implies that in order for organizations to be successful, they have to set clear and effective business strategies while giving more emphasis to the information related strategies. This is because information system strategy can, in itself, affect both business and organizational strategies.
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Normally, there have been two core arguments towards deploying strategic information systems planning approaches in an organization. The first has been the argument that organization’s information system investments should be aligned interactively with the overall business strategy, of which synergy, at some point, a source of competitive advantage can emerge (Basahel & Irani, 2009). This implies that, in studying strategic information system planning, it is important to understand how this alignment does take place and the benefits related to it are measured. It has also been argued that the only way in which companies can best achieve their information system-based alignment for its competitive advantage is through strategic information system planning (Basahel & Irani, 2009). This is due to the fact that SISP will help in the setting out of the techniques or approaches that would be followed in a more proactive, formal, and comprehensive way by organization. It therefore contradict the “reactive” strategy where information system personnel only sits back and respond to other areas of business when need arises.
Based on the above argument, there is no misunderstanding regarding a structural approach to planning for information system, especially with emphasis on the important role played by the chief information officers (CIO). Since the late 1980’s, the position of CIO has evolved from an “expensive necessity” to a “strategic enabler” (Pollack, 2010). This means that the days where CIOs were simply required to help in controlling cost and reporting the same to chief financial officers (CFO) have evolved in this technological world. CIOs are currently required to gain awareness of both the technical and business aspects of an organization. These aspects are the essence of information technology that continues to complicate the strategic information system planning process especially when coupled with the rapid changing of organization so as to conform to challenges of the technological era.
However, before discussing the stages of strategic information system planning (SISP) in detail, it is important to make a very essential point of difference between SISP and the general planning. SISP differs from planning because, whereas planning primarily focuses on user demand and financial justification, strategic information system planning is only used in reflecting the convergence of means and ends (Pollack, 2010). By means, it implies that information system is an important aspect in achieving an organization’s objectives, which must be weighed in a selective manner but not merely for accomplishing of objectives already identified. Strategic information system planning is, therefore, essential in helping an organization in planning for information systems not merely for cutting organization’s cost, but as a means of adding value to the organization.
This is well captured in the article by Pant and Hsu. In their article, Pant and Hsu (2006) presents their findings following their review of another article by Business Week, “The Technology Payoff” of 1994. It indicates that, throughout the 1980s, most of United States businesses invested almost $1 trillion in information technology, yet it did not amount to commensurate productivity gain in overall national productivity as compared to Japan (Pant & Hsu, 2006). However, this paradoxical productivity was identified as having been caused by the country’s organizations using information technology in automating routine task, without strategizing or altering business processes. It means that strategizing of information system by incorporating it towards the effective planning is essential in supporting business processes, which would support direct value adding activities for an organization and enhance corporate growth.
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Albeit much has been said in this article about opportunities for strategic use of information technology by various organizations with the purpose of enabling them gain competitive advantage, not much has been known concerning the actual process which helps in the identification of opportunities for the use of strategic information system. There is no doubt that, if information systems are strategically used, they can help advance the knowledge extent of any business. It is thus useful in the development of understanding on how to generate, solidify, implement, and plan strategically the organization’s information system. While all these are important, having a detailed planning on information system is very important in terms of building an effective strategy. This is the reason why it is essential to discuss key stages or techniques that can be deployed towards the utilization of strategic information system planning (SISP).
According to Basahel and Irani (2009), it is imperative for any organization that wishes to create an information system strategic (ISS) plan to have a framework of doing so. This is because such frameworks normally contain the planning techniques and stages that are flexible enough to provide adaptable processes, which can help in meeting desirable goals. Though there are many approaches to planning, it is vital for an organization to create an effective methodology that supports its management plan, review, and control of strategic information system plan. Therefore, these approaches must adhere to a standard set of techniques and supportive tools that facilitates the planning process (Basahel & Irani, 2009).
Normally, a number of categorized technologies can be used in supporting strategic planning. The categorization may be based on the model of planning or decision making process, the nature of attention towards opportunities, as well as the identification of their perspective in solving business problems. On the other hand, these techniques can be grouped in a manner that they help in meeting the goal of efficiency, competitiveness, effectiveness, business alignment, or business impact as described by Basahel and Irani (2009). However, in general, strategic information system planning techniques should be grouped according to how they can be used purposely for strategic focus towards competitiveness, alignment, or analysis.
According to Teubner and Mocker (2008), an approach to strategic information system planning (SISP) helps in determining how the SISP process is executed and methods that are applied in doing so. In this regard, SISP approach can be defined as interaction of methods, processes, implementations, and varieties of activities and behaviors that are depicted or deployed by organizations towards SISP. Towards this, SISP approach can be viewed in terms of its emphasis, basis, ends, method, nature, influencer, business strategy relation, priority setting, and the role of information system (Teubner & Mocker, 2008). These criteria have been essential in understanding the effectiveness of differentiating SISP approaches in practice.
Taking into account the highly complex nature of strategic information system planning, it is usually not easy to conduct such activities especially for managers who are in charge of the process. However, a number of techniques and tools have usually been proposed by consultants that, if applied effectively by managers during the planning process, can support their principles and techniques of analyzing their organizations’ information processing needs. It can also help in the identification of priorities for applications that need to be developed and addressed. These methodologies include IBM’s Business Systems Planning, James Martin’s Strategic Information Planning, or Method/1 by Arthur Anderson (Teubner & Mocker, 2008). These methodologies are modeled from Software Engineering that are integrated within the whole process of SIS, right from planning objectives to defining information system project.
Whereas many organizations have adopted a combination of planning techniques in undertaking their strategic information system planning process, there are three essential planning techniques that have to be considered. These include critical success factor analysis, value chain analysis, and strategic thrust analysis. In the context of information technology planning, a set of Critical Success Factors (CSF) usually refers to the conditions that must be seen by business executives to support the establishment of information systems. This means that system(s) employed must, at all times, remain vital to success of the organization (Teubner & Mocker, 2008). This is essential as critical success factors will help in identifying new opportunities for information systems’ use. It will also inform the management’s decision in as far as prioritizing on the information technology resource allocations is concerned.
Secondly, SISP process must consider value chain analysis in ensuring its effectiveness. Normally, value chain analysis does conceptualize an organization as a series of activities that adequately transforms inputs into outputs (Teubner & Mocker, 2008). It implies that the competitiveness of any position in an organization is enhanced by every transformational activity that bears opportunities. In this regard, information system can be seen as playing a significant role in enhancing activities that are tied to information intensiveness. Through this, an organization is able to understand the inbound logistics or infrastructures, operations, outbound logistics, as well as services that must be put in place or adhered to; this is vital in ensuring information system projects are effectively implemented.
Moreover, strategic thrust analysis is essential in SISP process especially in determining whether this process in made by the organization for differentiation, cost reduction, innovation, growth, or for alliances or combination of all these factors. When this SISP impact method is considered during the planning process, information system can be strategized and devised in a manner that targets suppliers, customers, and competitors in order to support or shape an organization’s competitive strategy and strategic alignment (Teubner & Mocker, 2008). However, what makes the difference between strategic alignment and traditional views of “linkage” and “fit” is the manner in which strategic alignment helps in a fundamental shift from operation orientation to taking into account the external marketplace and the future requirements related to information system resources and organization.
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It is important to note that the success of strategic information system planning is usually influenced by environmental factors; both external and internal. External conditions are normally the conditions outside the organization, such as information intensity of the industry or the stability of the market. Internal conditions, on the other hand, include the overall organization structure, status of the highest information system manager, or the organization of information system function (Teubner & Mocker, 2008). This brings us to the next topic of discussion on how we can evaluate or measure the success of SISP process or its implementation.
According to Hovelja, Rozanec and Rupnik (2010), the commitment of top management and their involvement in strategic information system planning will eventually determine its level of success. This is due to the fact that the top management plays a critical role in enhancing their various organizations’ strong communication and cooperation between different departments, as well as that among stakeholders which have specific needs and opinions towards information technology and system. Similarly, the fact that top management can help in the promotion of commitment change towards SISP among employees is an important factor that will help in the control of SISP implementation process and initiatives towards the plan.
Another factor that can measure the successfulness of SISP is the quality of strategic business planning. Normally, strategic business planning represents an enterprise with the most sophisticated and complete process of strategic thinking that endows it with the capability of having continuous control and analysis in determining the long term alignment of relevant environmental factors and organization’s characteristics (Hovelja, Rozanec & Rupnik, 2010). Consequently, the fact that strategic business planning comprises of four phases namely: environmental scanning, strategy formulation, strategy implementation, and strategy evaluation and control, makes it an important element in determining the success of SISP. This implies that the way in which the top management members of any organization measure the quality of their own knowledge and knowhow based on all the four phases of strategic business planning process will positively help in enhancing the efficiency and spread of information system and technology use within the respective organizations.
Thirdly, the success of strategic information system planning can be measured through understanding the role being played by information technology in strategic business planning. As had earlier been discussed, until 90’s, the role of information technology was only limited to operational level of planning and, therefore, was not considered as an important tool that could help create competitive strategic advantages for organizations. However, in today’s technological world, information technology and systems have been considered as having the capacity of delivering strategic advantages through all four phases of strategic planning mentioned above (Hovelja, Rozanec & Rupnik, 2010). Therefore, successful implementation of strategic information system planning can only be achieved if top managers become power users of such systems. Without this, top managers will not have the first-hand knowledge and personal experience that are essential in a successful management of SISP in capturing the potential of information system.
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Fourthly, the success of SISP can be measured through its ability to align key internal business and information technology strategies. For an organization to gain sustainable competitive advantages, it must be able to use strategic information system planning in aligning its business strategy, its information technology, as well as its system strategy (Hovelja, Rozanec & Rupnik, 2010). This can be understood through the manner in which an enterprise recognizes its SISP objective and present it in several SISP success models. If this is achieved in the organizational structure, more and more people and stakeholders will show the tendency of using an information system or even implementing policy frameworks related to IS.
On the other hand, the successfulness of SISP can be determined by how it aligns the key external business and information system strategies. Porter’s Industrial Organization perspective raises four major areas, through which information system can help in creating strategic opportunities for businesses. These include improvement of operational efficiency and functional effectiveness, coupled with product innovation and IS, use of inter-organizational synergy effect, and acquisition for competitive advantage (Hovelja, Rozanec & Rupnik, 2010). While the former two are the internal factors to an organization, the latter two are external. There is a difference in know-how and skills needed in developing and aligning both internal and external business and information system strategies; hence, no single measure can help an organization in detecting and addressing the varying causes of misalignments. Therefore, in order to monitor and measure the success of SISP, an organization must measure both alignments individually.
Significantly, an organization can only achieve the success of strategy information system planning if it designs and implement its organizational changes. Any organization can gain numerous benefits associated with information system investments if it is able to complement such investment with changes in its business strategy, structure, processes, and culture (Hovelja, Rozanec & Rupnik, 2010). It, therefore, means that an organization must overcome the difficulties associated with successful management of organizational change because of the significant risks, increased complexity and related large cost it has. In doing so, it will be able to design and implement organizational changes that would help in implementing SISP. This enables for the respective organizations to capture related benefits associated with information system investment and implementation.
In essence, success of strategic information system planning is based on the manner in which the strategy is implemented. Though most organizations tend to understand the importance of strategic planning for information system, most of them have failed in the implementation of such strategies. In a study conducted on Norwegian organizations, it was found out that only 42 percent of projects that had been defined in information system strategy had been implemented five years thereafter (Teubner & Mocker, 2008). In this regard, when stricter implementation measures, such as completion time were measured against intended benefits, the result showed smaller implementation ratios. This implies that strategy implementation is an important element especially in meeting SISP objectives, understanding missed opportunities, or the inefficiencies resulting from incompatibility of information systems.
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Teubner & Mocker (2008) identified important inhibitors and enablers to the implementation of information system strategies. In their case, enablers include incorporating comprehensive and well communicated strategy and ensuring that the strategy clearly defines the architectural standards and investment priorities together with actions and resources that must be considered. It also entails having a clear link between business and strategy (Teubner & Mocker, 2008). On the other hand, inhibitors are the opposite of enablers. These include; having inscrutable concepts and poorly communicated plans, failure to align information strategy with the overall organization direction, lack of skills and resources to implement the plan, and assigning responsibility to people who lack essential authority in enforcing its realization (Teubner & Mocker, 2008). Therefore, organization must ensure that they actively enhance enabler factors to the implementation of SISP, in order to allow them meet information system objectives and priorities.
In conclusion, strategic information system planning (SISP) is an essential element in realizing and meeting any organization’s information system objectives and opportunities. The fact that the nature of technological development is changing rapidly has made it difficult in employing towards standard planning processes. This has called for the need to provide guidelines for strategic information system planning. This means that organizations, which are engaged with strategizing of their information system plans, must design and conduct them in a manner that aligns such strategies with their organizational and business plans. In this case, the top management has an important role in ensuring that SISP process is actively implemented in their various enterprises. They do this especially through creating an environment that can help in communicating such plans. Moreover, organizations must adequately choose tools available for strategic information system planning that match their focus and desired areas that need improvement. It is by introducing technology-driven approaches to planning that organizations will be able to speed up their operations in an efficient and flexible manner that enhances overall communication, both internally and externally.
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