Chapter 14

Managing IT: Planning and Implementing Change

V. LECTURE NOTES

SECTION I: Planning for Business Change with IT

Introduction:

Effective planning of investments in information technology by business unit managers is a key

ingredient in achieving strategic business success with IT.

Analysing the FAA

We can learn a lot about the consequences of failure to properly plan for the use of information
technology from Real World Case on the U.S. Federal Aviation Administration.

Take a few minutes to read it, and we will discuss it (See U.S. Federal Aviation Administration in
section XI).

14-1 Organizational Planning: [Figure 14.2]

Planning is deciding what to do before you do it. Strategic business and IS planning lays the
foundation needed for long term success and survival. Organizations and their managers go
through an organizational planning process which involves:
 Team building, modelling, and consensus
 Evaluating what they have accomplished and the resources they have acquired
 Analysing their business, economic, political, and societal environment
 Anticipating and evaluating the impact of future developments
 Building a shared vision and deciding on what goals they want to achieve
 Deciding what actions to take to achieve their goals.

A plan is a result of this planning process. It formally articulates the actions we feel is necessary
to achieve our goals. Thus, a plan is an action statement for action. Plans lead to actions, actions
product results, and part of planning is learning from results. In this content, the planning process
should be followed by implementation, which should be followed by control measures, which
provide feedback for planning.

Planning Terminology:

Some terms used in the organizational planning process include:

 Shared Vision - is a common sense of purpose and values shared by the members of a team
 or organization.

 Mission: - is an organization’s “reason for being”. It is a statement of the basic purpose or

purposes for which the organization exists.

 Goals: - are broad statements of the ends the organization intends to accomplish in order to
fulfil its mission.

 Objectives: - are more specific, measurable targets for the accomplishment of goals.

 Strategies: - are general approaches that show how goals should be achieved.

 Tactics - are more specific guides to actions that will implement established strategies.

 Policies - are general guidelines that direct and constrain decision making within an
organization.

 Rules and Procedures - are specific statements that direct and constrain decision making in
accordance with the organization's policies.

Types of Planning:

Planning is typically discussed in terms of the level of planning (strategical, tactical, and
operational) and the planning time frame. It deals with:

 Strategic Planning: - Deals with the development of an organization's mission, goals,

strategies, and policies. Corporations may begin the process by developing a shared vision
using a variety of techniques including team building, scenario modelling, and consensus
creating exercises.

 Tactical Planning: - Involves the design of tactics, the setting of objectives, and the
development of procedures, rules, schedules, and budgets.

 Operational Planning: - Planning which is done on a short-term basis to implement and

control day-to-day operations.

 Long-Range Planning: - Usually involves looking three to five years (or more) into the
future. Many organizations have a planning process that reviews and modifies their long-
range plans on a regular basis, such as six months to a year.

 Short-Range Planning: - Can range from daily, weekly, or monthly planning to a one year
 or two-year time frame.

Strategic Information Systems Planning: [Figure 14.4]

Information systems planning is an important component of organizational planning.

Companies do strategic IS planning with four main objectives of strategic in mind:

 Business Alignment - Aligning investment in information technology with a company

business vision and strategic business goals.

 Competitive Advantage - Exploiting information technology to create innovative and strategic

business information systems for competitive advantage.

 Resource Management - Developing plans for the efficient and effective management of a
company’s information system resources, including IS personnel, hardware, software, data,
and network resources.

 Technology Architecture - Developing technology policies and designing an information

technology architecture for the organization.

The Information Technology Architecture: [Figure 14.4]

The IT architecture that is created by the strategic-planning process is a conceptual design, or

blueprint, that includes the following major components:

 Technology Platform - computer systems, system and application software, and

telecommunications networks provide a computing and communications infrastructure, or
platform, that supports the use of information technology in the business.

 Data Resources - many types of operational and specialized databases, including data
warehouses, analytical databases, and external data banks store and provide data and
information for business processes and managerial decision support.

 Applications Portfolio - business applications of information technology are designed as a

diversified portfolio of information systems that support key business functions as well as
cross-functional business processes. In addition, an applications portfolio should include
support for interorganizational business linkages, managerial decision making, end user
computing and collaboration, and strategic initiatives for competitive advantage.

 IT Organization - the organizational structure of the IS function within a company, and the

distribution of IS specialists among corporate headquarters and business units can be designed or
redesigned to meet the changing strategies of a business. The form of the IT organization
depends on the managerial philosophy, business vision, and business/IT strategies formulated
during the strategic planning process.

Tactical and Operational Planning [Figure 14.4]

Information systems planning are an important component of organizational planning. IT plays a

vital role in the efficiency of a company’s operations, the effectiveness of managerial decision
making, and the success of an organizations strategic initiatives. Managing IT requires a planning
process that is part of the strategic, tactical and operational planning of the organization.
Tactical and Operational Planning:

Tactical information systems planning involve:

1. Specific assessment of an organization's current and projected information requirements.
2. Requirements are then subdivided into individual project proposals for the development of new
or improved information systems.
3. Projects are then evaluated, ranked, and fitted into a multiyear development plan.
4. Resource allocation plans are developed to specify the hardware, software, & personnel
resources, telecommunications facilities, and financial commitments needed to implement the
master development plan.

Operational Information Systems Planning:

Operational information systems planning involve:

1. Preparation of annual operating budgets
2. Planning for individual information systems development projects.

Project Information Systems Planning:

Project information systems planning involve:

1. Development of plans, procedures, and schedules for an information systems development
project. Techniques for project planning include GANT Chart, PERT system.

14-2 Information Systems Planning Methodologies:

Many organizations have found that they need to use a formal information systems planning
methodology to ensure that all important planning activities and products are accomplished and
produced. Using a planning methodology helps a company translate its strategic business goals

into IS development plans to achieve those goals.

14-3 The Scenario Approach:

Managers and planners continually try different approaches to make planning easier, more
accurate, and more relevant to the dynamic, real world of business. The scenario approach to
planning has gained in popularity as a less formal, but more realistic, strategic planning
methodology for use by planning teams.

In the scenario approach to strategic IS planning:

1. Teams of business and IS managers create and evaluate a variety of business scenarios. For
example, they make assumptions of what a business will be like three to five years or more into
the future, and the role that information technology can or will play in those future scenarios.
2. Alternative scenarios are created by the teams or by business simulation software, based on
combining a variety of developments, trends, and environmental factors, including political,
social, business, and technological changes that might happen.

14-4 Planning for Competitive Advantage:

Planing for competitive advantage is especially important in today’s competitive arena and
complex information technology environment. So strategic IS planning involves an evaluation of
the potential benefits and risks a company faces when using information technology for
competitive advantage. Models that are used for planning for competitive advantages included:
 Competitive forces - (competitors, customers, suppliers, new entrants, and substitutes).
 Competitive Strategies - (cost leadership, differentiation, growth, innovation, and alliances).
 Value Chain - (basic business activities).
 Strategic Opportunities Matrix - includes SWOT analysis (strengths, weaknesses,
opportunities, and threats) which is used to evaluate the impact that each possible strategic
opportunity can have on the business and its use of information technology.

14-5 Critical Success Factors: [Figure 14.8]

The critical success factors (CSF) approach for information systems planning is based on the
premise that the information requirements of an organization should be determined by its critical
success factors, i.e., a small number of key factors that executives consider critical to the success
of the enterprise. These are key areas where successful performance will ensure the success of the
organization and the attainment of its goals. Thus, information systems are designed to

continually measure performance in each CSF and report this information to management.
Examples of the goals of critical success factors include:
1. Earnings Per Share
2. Market share
3. ROI
4. New Product Success

14-6 Business Systems Planning:

Business systems planning (BSP) is a structured approach that assists an organization in

developing information systems plans to satisfy its short and long-term information requirements.
Its three major objectives are:
1. Translate the business mission, strategies, objectives and structure into an information systems
mission, strategy, objectives and structure.
2. Determine information systems priorities and allocate resources to high-return projects that
support business goals.
3. Plan long-lived information systems based on enduring business processes.

One of the basic premises of BSP methodology is top-down planning and bottom-up
implementation.

 Top-Down Planning:
1. Requires that a group of top executives lay out the strategic mission and objectives of the
organization to a study team composed of managers, professionals, and information systems
specialists.
2. A study team to systematically interview managers throughout the organization to determine
how these objectives are implemented in the basic functions (marketing, manufacturing, etc.)
and processes (order entry, shipping, etc.) of the business.
3. The team examines the types or classes of data needed to support these basic processes.
4. The team designs an information architecture that defines the relationships between classes of
data and the business process. The information architecture specifies the basic structure,
content, and relationships of the organizational databases that provide the data needed to
support basic business processes.

 Bottom-Up Implementation:
1. Involves application development activities that are performed by end users and information
systems professionals. These are specific information system applications (such as sales
transaction processing) that rely on databases whose design was determined by the information
architecture.

2. Each application should serve a business function that supports the mission and objectives of

the organization.

14-7 Computer-Aided Planning Tools:

Computer-aided planning tools help ease the burden of information systems planning. A variety of
computer-aided planning tools are available for strategic planning. For example:

1. Business simulation software is frequently used in the scenario approach for teams to
experiment with plans to successfully confront a variety of business situations.
2. Computer-aided planning software provides generic planning features that can support other
planning methodologies such as the BSP and CSF methodologies. They are used to define a
planning environment (strategic, tactical, etc.) and planning structures such as critical success
factors, organizational units, business processes, data structures, and so on. The software
 helps planners identify and experiment with ways to improve the planning process relationships
between planning structures.

SECTION II: Implementing Business Change with IT

14-8 Managing Organizational Change: [Figure 14.13]

Typically, implementing changes in information technology is only part of a larger process of

managing major changes in business processes, organizational structures, managerial roles, and
employee work assignments. Organizations must implement a variety of management initiatives
to help manage business change. For example, change management requires:
1. Involvement and commitment of top management and a formal process of organizational
design.
2. Involves human resource management. It includes activities such as developing innovative
ways to measure, motivate, and reward performance. Also included is designing programs to
recruit and train employees in the core competencies required in a changing workplace.
3. Involves analysing and defining all changes facing the organization, and developing programs
to reduce the risks and costs, and to maximize the benefits of change.

Change experts recommend:

 Involve as many people as possible in reengineering and other change programs.
 Make constant change part of the culture.
 Tell everyone as much as possible about everything as often as possible, preferably in person.
 Make liberal use of financial incentives and recognition.
 Work within the company culture, not around it.

“People don’t like change.” End user resistance can be minimized by formal technology

implementation programs which end user mangers and IS consultants can develop to encourage
user acceptance and productive use of reengineered business processes and new information
technologies. Some keys to solving problems of end user resistance include:
1. Proper end user education and training.
2. Improved communications with IS professionals.
3. End user involvement in the development and implementation of new systems.

Direct end user participation in systems development projects before a system is implemented is
especially important to reducing the potential for end user resistance. This involvement helps
ensure that end users “assume ownership” of a system, and that its design meets their needs.

14-9 Implementing New Systems: [Figure 14.16]

The implementation process for newly designed information systems involves a variety of
acquisition, testing, documentation, installation, and conversion activities. It also involves the
training of end users in the operation and use of the new information system. Thus,
implementation is a vital step in ensuring the success of new systems. Implementation involves a
variety of activities which include:
1. Acquisition of hardware, software and services
2. Software development or modification
3. End User training
4. Testing of programs, procedures, and hardware
5. System documentation
6. Conversation (parallel, pilot, phased, plunge)

14-10Acquiring Hardware, Software, and Services:

Acquiring hardware, software, and external IS services are a major implementation activity.
These resources can be acquired from many sources in the computer industry.

Hardware & Software Suppliers:

Computer manufacturers produce many types of computer systems, as well as peripheral

equipment and software. You can also buy software packages directly from large software
developers such as Microsoft and Lotus Development, or through computer-retailers and mail-
order companies. Other buying methods include:

 Corporate Buying Plans: - Corporate buying plans allow employees to purchase hardware
and software at substantial discounts directly from hardware manufacturers and software
companies.

 OEM - Original Equipment Manufacturers (OEMs) - produce and sell computers by

assembling components produced by other hardware suppliers.

 PCMs - Plug-Compatible Manufacturers (PCMs) - manufacture computer mainframes and

peripheral devices that are specifically designed to be compatible (just “plug in”) with other
computers.

 VARs - Value-Added Resellers (VARs) - specialize in providing industry-specific hardware

and software from selected manufacturers.

Suppliers of IS Services:

The major sources of information systems services are:

1. Computer manufacturers
2. Computer retailers
3. Computer service centres (provide off-premise computer processing)
4. Systems integrators (take complete responsibility of an organizations computer when an
rganization outsources its computer operations. They may also assume responsibility for
developing and implementing large systems development projects that involve many vendors
and subcontractors)
5. Independent consultants
6. Other services include computer rentals, systems design services, contract programming,
consulting, education, and hardware maintenance.

14-11 Evaluating Hardware, Software, and Services:

To evaluate and select hardware and software, computer-using organizations typically:

1. Require suppliers to present bids and proposals based on system specifications developed
during the design stage of systems development.
2. Minimum acceptable physical and performance characteristics for all hardware and software
requirements are established. Government agencies and most large businesses use a document
called an RFP (request for proposal) or FRQ (request for quotation), which lists all the
required specifications.
3. When several competing proposals for hardware or software acquisition need to be evaluated,
a scoring system may be used, giving a numerical score for each of several evaluation factors.
Each competing proposal is assigned points for each factor, depending on how well it meets
the specifications of the computer user.
4. Hardware and software should be demonstrated and evaluated.
5. Using special benchmark test programs and test data to evaluate proposed hardware and
software. Special software simulators may also be available that simulate the processing of
typical jobs on several computers and evaluate their performances.

Hardware Evaluation Factors:

When evaluating computer hardware, you should investigate specific physical and performance
characteristics for each hardware component to be acquired. This is true whether you are
evaluating mainframes, microcomputers, or peripheral devices. Hardware evaluation factors
include:
1. Performance 7. Technology (Obsolescence)
2. Cost 8. Ergonomics (user-friendly, safe, comfortable etc.)
3. Reliability 9. Connectivity (interconnectibility)
4. Availability 10. Scalability (wide range of processing demands)
5. Compatibility 11. Software
6. Modularity 12. Support

Software Evaluation Factors:

You should evaluate software according to many factors that are similar to those used for
hardware evaluation. Thus, the factors of performance, cost, reliability, availability, compatibility,
modularity, technology, ergonomics, and support should be used to evaluate proposed software
acquisition. In addition, however, software evaluation factors should also include evaluating:
1. Efficiency 2. Flexibility
3. Security 4. Connectivity
5. Language 6. Documentation
7. Hardware 8. Other factors (performance, cost, reliability etc.)
Evaluating IS Services:

Suppliers of hardware and software products and many other firms offer a variety of IS services
to end users and organizations. Evaluating IS services include factors such as:
1. Performance 6. Backup
2. Systems Development 7. Accessibility
3. Maintenance 8. Business Position
4. Conversion 9. Hardware
5. Training 10. Software

14-12Other Implementation Activities

Testing, documentation, and training are keys to successful implementation of a new system. The
testing of a newly developed system is an important implementation activity.

Testing:

System testing involves:

1. Testing hardware devices
2. Testing and debugging computer programs
3. Testing information processing procedures

Documentation:

Developing good user documentation is an important part of the implementation process.

Documentation:
1. Serves as a method of communicating among the people responsible for developing,
implementing, and maintaining a computer-based system.
2. Is extremely important in diagnosing errors and making changes.
3. Involves developing:
1. Manuals for operating procedures 3. Sample forms
2. Sample data entry display screens 4. Sample reports

Training:

Training is a vital implementation activity. IS personnel must be sure that end users are trained to
operate a system or its implementation will fail. Training may include:
1. Only data entry
2. Or all aspects of the proper use of a new system
3. Managers and end users must be educated in how the new technology impacts the company’s
business operations and management.
4. Training programs for specific hardware devices, software packages, and end user applications.

Conversion Methods: [Figure 14.26]

The initial operation of a new computer-based system can be a difficult task. Such an operation is
usually a conversion process in which the personnel, procedures, equipment, input/output media,
and databases of an old information system must be converted to the requirements of a new
system. Four major forms of system conversion include:

 Parallel Conversion:- Both the old and the new system are operated until the project
development team and end user managements agree to switch completely over to the new
system. It is during this time that the operations and results of both systems are compared and
evaluated. Errors can be identified and corrected, and the operating problems can be solved
before the old system is abandoned.

 Phased Conversion: - Only parts of a new application or only a few departments, branch
offices, or plant locations at a time are converted. A phased conversion allows a gradual
implementation process to take place within an organization.

 Pilot Conversion: - Where one department or other work site serves as a test site. A new
system can be tried out at this site until developers feel it can be implemented throughout the
organization.

 Plunge/Direct Cutover: - Use the system immediately, and totally abandon the old system.

IS Maintenance:

Once a system is fully implemented and being operated by end users, the maintenance function
begins. System maintenance is the monitoring, evaluating, and modifying of operational
information systems to make desirable or necessary improvements. The maintenance function
includes:
1. A postimplementation review process to ensure that newly implemented systems meet the
systems development objectives established for them.
2. Correcting errors in the development or use of the system. This includes a periodic review or
audit of a system to ensure that it is operating properly and meeting its objectives.
3. Making modifications to a system due to changes in the business organization or the business
environment.