Strategic Information Management Third Edition Challenges and Strategies in Managing Information Systems_2 docx

Information Systems Strategy 29 Chapter 3, by Smits, van der Poel and Ribbers, is the closest we found to an article representing our view of information strategy, as depicted in Figure I.1. Our intention was to include a chapter which focused attention on the strategic information required to enable the implementation of business strategy, and which would provide strategists with information that would enable the questioning of assumptions on which that strategy was based. This would include information from the business and technological environment, and feedback informa- tion concerned with the impact (both intended and unintended) of the strategy once implemented. Smits and colleagues describe the information strategies of three major insurance companies in the Netherlands. The chapter includes reflections on the various stakeholders involved in the IS process, and on aligning IT to business goals and processes. A major finding, contrary to the above comment regarding necessary feedback information (and in our experience common to most organizations), was that none of the companies studied assess the effects of their information strategies at an organization-wide or business process level, and certainly not over time. Chapter 4, by Karimi and Konsynski, focus attention on alternative structures associated with different global strategies and consider the need to align the information technology departmental structure with these alternatives in mind. Useful illustrations are given from various, very different, parts of the world including, for example, Finland and Singapore, as well as North America. Key issues associated with, for example, different regulatory environments and transborder data flows are highlighted. A key point that this chapter makes relates to the kind of relationship that should exist between considerations of organizational form and IT infrastructure, highlighted in the innermost circle of our conceptualization of strategic information management in Figure I.1. For further reading on transnational organiza- tions and associated strategic management issues see, for example, Ohmae (1989). In Chapter 5, we turn to the topic of managing change – a key feature in any IS strategy, as in any other strategy process (see, for example, Whittington, 1993). While strategy formulation (or formation) is one thing, implementation is quite another matter, suggest Markus and Benjamin! The authors focus on the role of IS professionals in the change process, their motivation being to ‘stimulate IS specialists’ efforts to become more effective – and more credible – agents of organizational change’. They describe – and critique – what they believe to be a commonly-held view of this role on the part of IS professionals, namely one which is embedded in technological determinism: a belief in ‘the ability of technology (versus people) to cause change’.* Referring to the organizational design† literature, they propose two alternative models that might be more appropriate, and more successful, in the light of the rapidly changing nature and impact of modern IT: the ‘facilitator’ model and the ‘advocate’ model. As a result they propose new skills and career paths for IS personnel and IT managers, a revised research agenda for IS academics, and reform of IS educational curricula‡ to take account of the ‘softer’ skills necessary for the changed conditions pertaining in the late 1990s and into the twenty-first-century. Chapter 5 brings Part One of the book, dealing with IS strategy, to a close. We trust that our treatment of this aspect of strategic information management has demonstrated just what a diverse and important topic this is – i.e. that it is much more broadly based than commonly * A point taken up by Davenport (1996) in his critique of applications of the BPR concept (see also Chapter 14). † See, for example, Cummings and Huse (1989), Schwarz (1994), Kanter et al. (1992) and Rogers (1995). ‡ Earlier calls for a more broadly based approach to IS education can be found in Buckingham et al. (1987). 30 Strategic Information Management assumed, often with the focus being little more than on information technology issues. Part Two then focuses on information systems planning, the means by which this more broadly based strategy may be developed. References Avison, D. and Fitzgerald, G. (1995) Information Systems Development: Methodologies, Techniques and Tools, 2nd edn, McGraw-Hill, London. Benbasat, I., Dexter, A., Drury, D. and Goldstein, R. (1984) A critique of the stage hypothesis: theory and empirical evidence. Communications of the ACM, 27(5), May, 476–485. Buckingham, R. A., Hirschheim, R. A., Land, F. F. and Tully, C. J. (eds) Information Systems Education: Recommendations and Implementation, Cambridge University Press on behalf of the British Computer Society, Cambridge. Ciborra, C.U. and Associates (2000) From Control to Drift: The Dynamics of Corporate Information Infrastructures, Oxford University Press, Oxford. Cummings, T. G. and Huse E. F. (1989) Organization Development and Change, 4th edn, West Publishing, St Paul, MN. Currie, W. I. and Galliers, R. D. (eds) (1999) Rethinking Management Information Systems, Oxford University Press, Oxford. Davenport, T. (1996) Why reengineering failed. The fact that forgot people. Fast Company, Premier Issue, 70–74. Earl, M. J. (1986) Information systems strategy formulation. In (1987), Critical Issues in Information Systems Research (eds R. J. Boland and R. A. Hirschheim, Wiley, Chichester. 157–178. Earl, M. J. (1999) Strategy-making in the Information Age. In W. I. Currie and R. D. Galliers (eds), op. cit., 161–174. Galliers, R. D. (1991) Strategic information systems planning: myths, realities and guidelines for successful implementation, European Journal of Information Systems, 1(1), 55–64. Galliers, R. D., Pattison, E. M. and Reponen, T. (1994) Strategic information systems planning workshops: lessons from three cases. International Journal of Information Management, 14, 51–66. Gibson, R. and Nolan, D. (1974) Managing the four stages of EDP growth. Harvard Business Review, 52(1), January–February. Greiner, L. E. (1972) Evolution and revolution as organizations grow. Harvard Business Review, 50(4), July–August. Gunton, T. (1989) Infrastructure: Building a Framework for Corporate Information Handling, Prentice Hall, New York. Hirschheim, R. A., Earl, M. J., Feeny, D. and Lockett, M. (1988) An exploration into the management of the information systems function: key issues and an evolutionary model. Proceedings: Information Technology Management for Productivity and Strategic Advantage, IFIP TC8 Open Conference, Singapore, March. Kanter, R. M., Stein, B. A. and Jick, T. D. (1992) The Challenge of Organizational Change: How Companies Experience It and Leaders Guide It, Free Press, New York. King, J. and Kraemer, K. (1984) Evolution and organizational information systems: an assessment of Nolan’s stage model. Communications of the ACM, 27(5), May. Kwon, T. H. and Zmud, R. W. (1987) Unifying the fragmented models of information systems implementation. In R. J. Boland and R. A. Hirschheim (eds), (1987), op cit., 227–251. Lacity, M. C. and Willcocks, L. P. (2000) Global IT Outsourcing, Wiley, Chichester. Nolan, R. (1979) Managing the crises in data processing. Harvard Business Review, 57(2), March–April. Information Systems Strategy 31 Ohmae, K. (1989) The global logic of strategic alliances, Harvard Business Review, 70(2), March–April, 143–154. Rogers, E. M. (1995) Diffusion of Innovations, 4th edn, Free Press, New York. Sauer, C. (1993) Why Information Systems Fail: A Case Study Approach, Alfred Waller, Henley-on-Thames. Schwarz, R. M. (1994) The Skilled Facilitator: Practical Wisdom for Developing Effective Groups, Jossey-Bass, San Francisco, CA. Ward, J., Griffiths, P. (1997) Strategic Planning for Information Systems, 2nd edn, Wiley, Chichester. Whittington, R. (1993) What is Strategy? – And Does It Matter? Routledge, London. Willcocks, L. P., Feeny, D. and Islei, G. (1997) Managing IT as a Strategic Resource, McGraw-Hill, London. Willcocks, L. P. and Lacity, M. C. (1997) Strategic Sourcing of Information Systems: Perspectives and Practices, Wiley, Chichester. 2 The Evolving Information Systems Strategy Information systems management and strategy formulation: applying and extending the ‘stages of growth’ concept R. D. Galliers and A. R. Sutherland Introduction For some time, reason has held that the organizational growth with respect to the use of Information Technology (IT) and the approach organizations take to the management and planning of information systems could be conceived of in terms of various, quite clearly defined, stages of maturity. Whilst there has been some criticism of the models that have been postulated, many view the various ‘stages of growth’ models as being useful in designating the maturity (in IT terms) of organizations. Four such ‘stages of growth’ models are described briefly below, i.e. those postulated by: (a) Nolan (1979); (b) Earl (1983; 1986, as amended by Galliers, 1987a, 1989*); (c) Bhabuta (1988), and (d) Hirschheim et al. (1988). The Nolan model is perhaps the most widely known and utilized of the four – by both practitioner and researcher alike. Despite its critics, by 1984 it had been used as a basis for over 200 consultancy studies within the USA by Nolan, Norton and Company, and had been incorporated into IBM’s information systems planning consultancies (Nolan, 1984); Hamilton and Ives (1982) report that the original article describing the model (Gibson and Nolan, 1974) was one of the 15 most cited by information systems researchers. * Galliers, R. D. (1989) The developing information systems organization: an evaluation of the ‘stages of growth’ hypothesis, paper presented at the London Business School, January 1989. 34 Strategic Information Management The Nolan model Nolan’s original four-stage model (Gibson and Nolan, 1974) was later developed into a six-stage model (Nolan, 1979), and it is this latter model which is most commonly applied. Like the models that followed it, it is based on the premise that the organizations pass through a number of identifiable growth phases in utilizing and managing IT. These ‘stages of growth’ are then used to identify the organization’s level of maturity in this context, with a view to identifying key issues associated with further IT development. Nolan posited that the growth phase could be identified primarily by analysing the amount spent on data processing (DP) as a proportion of sales revenue, postulating that DP expenditure would follow an S-curve over time. More importantly, however, it was claimed that this curve appeared to represent the learning path with respect to the general use of IT within the organization. As indicated above, the original four-stage model (Figure 2.1) was expanded into a six-stage model in 1979 with the addition of two new stages between ‘control’ and ‘maturity’, namely ‘integration’ and ‘data administration’. The six-stage model is illustrated in Figure 2.2. As can be seen, Nolan indicates that, in addition to DP expenditure, there are four major growth processes that can be analysed to identify the organization’s stage of maturity with respect to IT use. 1 The scope of the application portfolio throughout the organization (moving from mainly financial and accounting systems to wider-ranging operational systems, to management information systems). 2 The focus of the DP organization (moving from a centralized, ‘closed shop’ in the early stages to data resource management in maturity). Figure 2.1 Four stages of DP growth (amended from Gibson and Nolan, 1974; Earl, 1989, p.28) The Evolving Information Systems Strategy 35 3 The focus of the DP planning and control activity (moving from a primarily internal focus in the first three stages to an external focus in the latter stages), and 4 The level of user awareness [moving from a primarily reactive stance (reactive, that is, to centralized DP initiatives) in the first two stages, to being a driving force for change in the middle stages, through to a partnership in maturity]. Nolan argues that the information systems management focus is very much concerned with technology per se during the earlier stages of growth, with a transformation point occurring at the completion of stage three, after which the focus is on managing the organization’s data resources, utilizing database technology and methods. As indicated earlier, the model has been criticized because it has not proved possible to substantiate its claims to represent reality, either as a means to describe the phases through which organizations pass when utilizing IT, or as a predictor of change (Benbasat et al., 1984; King and Kraemer, 1984). In addition, its focus on database technology clearly dates the model. Earl (1989), for example, argues that organizations will pass through a number of different learning curves with respect to different ITs, as illustrated in Figure 2.3. In addition, it is now clear that different parts of a single organization may well be at different stages of growth with respect to a particular IT. Figure 2.2 Nolan’s six-stage growth model (amended from Nolan, 1979) 36 Strategic Information Management The Earl model Unlike Nolan’s model, Earl’s concentrates attention on the stages through which organizations pass in planning their information systems. First described in 1983 (Earl, 1983), the model has been revised on a number of occasions (Earl, 1986, 1988, 1989). The version presented here is based on the two earlier versions, as amended by Galliers (1987a, 1989), bearing in mind Earl’s own subsequent changes. As can be seen from Table 2.1, Earl illustrates the changing agenda for information systems planning by concentrating attention on what is seen as the primary task of the process: its major objective, the driving forces of the planning process (in terms of those involved), the methodological emphasis, and the context within which the planning takes place. Following research on current information systems planning practice, Galliers adds to this a supplementary early stage of planning (which is essentially ad hoc in nature) and an additional factor, concerning the focus of the planning effort. In the latter context, he argues that the focus has tended to change over the years from a predominantly isolated, Information Systems function orientation, through an organizational focus, to a competitive, environmental focus. Earl’s argument is essentially that organizations begin their planning efforts by the first attempting to assess the current ‘state of play’ with respect to information systems coverage and IT utilization. Increasingly, the focus shifts Figure 2.3 Multiple learning curves (amended from Earl, 1989, p.31) Table 2.1 Earl’s planning in stages model (amended from Earl, 1986, 1988, 1989) and Galliers (1987a, 1989) Factor Stages I II III IV V VI Task Meeting demands IS/IT audit Business support Detailed planning Strategic advantage Business-IT strategy linkage Objective Provide service Limit demand Agree priorities Balance IS portfolio Pursue opportunities Integrate strategies Driving force IS reaction IS led Senior management led User/IS partnership IS/executive led; user involvement Strategic coalitions Methological emphasis Ad hoc Bottom-up survey Top-down analysis Two-way prototyping Environmental scanning Multiple methods Context User/IS inexperience Inadequate IS resources Inadequate business/IS plans Complexity apparent IS for competitive advantage Maturity, collaboration Focus IS department Organization-wide Environment 38 Strategic Information Management to management concern for a stronger linkage with business objectives. Finally, the orientation shifts to a strategic focus, with a balance being maintained in relation to the make-up of planning teams (between information systems staff, management and users), environmental and organizational information (with the likelihood of inter-organizational systems being developed, cf. Cash and Konsynski, 1985), and the range of approaches adopted (with multiple methods being accepted). The Bhabuta model Based on earlier work by Gluck et al. (1980), which proposes a four-stage process of evolution towards strategic planning, and a somewhat similar model of IT assimilation and diffusion postulated by McFarlan et al. (1982, 1983), Bhabuta (1988) developed a model which attempts to map the progress towards formal strategic planning of information systems. This is illustrated in Table 2.2. Underpinning Bhabuta’s argument is the contention that strategies based on productivity improvement (and the information systems needed to support them) ‘will become the dominant paradigm in the turbulent and fiercely competitive markets of the next decade’ (Bhabuta, 1988, p.1.72). His model is more widely focused than either the Nolan or Earl models, in that it attempts to bring together elements of, for example, strategy formulation, information systems, and the mechanisms by which the information systems function is managed. The value systems associated with each phase of the model are also identified (cf. Ackoff, 1981). In interpreting the Bhabuta model, it should be noted that the categories used are not distinct nor absolute. With the maturing of IT utilization, and managerial sophistication with respect to IT, it can be expected that some of the attributes associated with, for example, Phase 3 and 4 organizations will emerge within Phase 1 and 2 organizations. This point takes account of some of the criticism of the Nolan model (Benbasat et al., 1984), which is itself based on earlier work by Greiner (1972), regarding the discontinuities that organizations experience in growth. The Hirschheim et al. model The Hirschheim et al. (1988) model also builds on the earlier work of Nolan (1979) and arises from research, undertaken during the first half of 1986, into the evolution and management of the IT function in a number of British organizations. As a result of this research. Hirschheim and his colleagues contend that in companies where top management had begun to realize that information systems are vital to their business, organizations move through three evolutionary phases in their management of the IS/IT function. The three [...]... 2(4), 25 May 62 Strategic Information Management Galliers, R D (1991) Strategic information systems planning: myths, reality and guidelines for successful implementation European Journal of Information Systems, 1, 55–64 Galliers, R D and Sutherland, A R (1991) Organizational learning and IT: steps towards managing and planning strategic information systems Warwick Business School Working Paper, University... contribution is in focusing management attention onto a broad range of issues associated with the planning and management of information systems, in surfacing assumptions and attitudes held by key executives about the role IT does and might play in achieving/supporting business objectives The Evolving Information Systems Strategy 61 and thereby enabling a shared understanding/vision to be achieved, and (most... to assist in the planning of strategic information systems and the management of the information systems function School of Information Systems Working Paper Curtin University of Technology, Perth, Western Australia, February Ward, J., Griffiths, P and Whitmore, P (1990) Strategic Planning for Information Systems, Wiley, Chichester Reproduced from Galliers, R D and Sutherland, A R (1991) Information. .. software, etc IT audit Find out and meet user needs (reactive) Top-down IS planning Integration, coordination and control Environmental scanning and opportunity seeking Maintain comparative strategic advantage Monitor futures Interactive planning Structure None IS often subordinate to accounting or finance Data processing department Centralized DP shop End-users running free at Stage 1 Information centres,... Somogyi, E K and Galliers, R D (1987a) Applied information technology: from data processing to strategic information systems Journal of Information Technology, 2(1), 30–41, March Somogyi, E K and Galliers, R D (1987b) Towards Strategic Information Systems, Abacus Press, Cambridge MA Sullivan, C H (1985) Systems planning in the information age Sloan Management Review, Winter Sutherland, A R and Galliers,... able to specify effectively and use DSS and other Executive Information Systems (EIS) Staff The new role at this stage is that of a combined Business and Information Systems Planner These people are responsible for recognizing and planning for The Evolving Information Systems Strategy 55 strategic information systems, for the organization as a whole and for individual business units They have had some... Business Review, 63(2), March–April, 134–142 Earl, M J (1983) Emerging trends in managing new information technologies, Oxford Centre for Management Studies Research Paper 83/4 In The Management Implications of New Information Technology (ed N Peircy), 1986, Croom Helm, London Earl, M J (1986) Information systems strategy formulation In Critical Issues in Information Systems Research (eds R J Boland and. .. May Land, F F (1982) Adapting to changing user requirements Information and Management, 5, Reproduced in Galliers, R D (ed.) (1987) Information Analysis: selected readings, Addison-Wesley, Wokingham, pp 203–229 McFarlan, F W and McKenney, J L (1982) The Information archipelago: gaps and bridges Harvard Business Review, 60(5), September–October McFarlan, F W., McKenney, J L and Pyburn, P (1983) The information. .. elsewhere (Galliers and Sutherland, 1991) In this context, however, and in subsequent applications, the model has proved useful not only in clarifying the location of each organization in IT maturity terms, but also in providing insights into aspects of IS management and planning which appear to require particular attention Specific insights into the model’s application include the following: 1 2 3 Any... within the area requiring the application Systems tend to be operational in nature, concentrating on the financial aspects of the organization, rather than its core business The ad hoc approach to development and use of information systems results in many being located within, and supporting, just one functional business area Most of these systems will overlap and are inconsistent in operation and . Sourcing of Information Systems: Perspectives and Practices, Wiley, Chichester. 2 The Evolving Information Systems Strategy Information systems management and strategy formulation: applying and. in their management of the IS/IT function. The three Table 2. 2 Bhabuta’s model linking the evaluation of strategic planning with information systems and the or ganization of the information systems. development and use of information systems results in many being located within, and supporting, just one functional business area. Most of these systems will overlap and are inconsistent in operation and