16. Strategic Overview

(c) Copyright Custom Decision Support, Inc. (2001, 2002)

The Information Systems Function whether it is called a department, a division, or even a business, performs activities for the business enterprise as any other staff function for the firm. Planning for any function consists of targeting activities to meet both a short-term objectives and long term goals.

  1. Short Term Performance
  2. There are at least five elements that give direction to for planning short-term actions for the Information Systems Function. Each of these have different purposes but should be coordinated to provide a logical and consistent approach. It should be noted that short-term responsibilities take precedence over longer-term goals.

    The table below summarizes the key elements, their purpose and the authority to establish them.









    Senior Management


    Measured Value


    Functional Imperatives


    Operational Critical

    Competitive Advantages

    Bottom Line Measures

    Key Success Factors

    1. Mission
    2. The mission of the function is usually developed by the group for communications with the rest of the organization. It reflects the scope of the activities that the function will perform. The mission statement is usually very general but does provide limitations in activities and some long-term focus of the group.

    3. Charter
    4. The charter, if used, presents the responsibilities of the group. It should be noted, however, that these responsibilities might not be exclusive. While mission statements may or may not be approved by management, charters usually are. Furthermore, charters are intended to be stable and long lived. Once again, they tend to be general but with sufficient clarity to delineate responsibility.

    5. Objectives
    6. Objectives (as opposed to goals as used in these notes) reflect short-term activities. Ideally, they should be the measures for which the function will be judged. However, they are typically written in such a form that measurement is infeasible. Organizational management tries to push objectives to the infeasible, while function management tends to generate objectives so any performance would be a success. Typically, function supervision approves the objectives.

    7. Functional Imperatives
    8. Functional Imperatives are those things that must happen or must not be allowed to happen that a function is accountable for. They are the fundamental issues that a function is created to assure will take place. Setting functional imperatives are discussed in detail below

    9. Competitive Advantages
    10. Competitive Advantages are those things that give value to the firm in the competitive environment. We generally think of these as existing competitive advantages, which are derived from the success factors of the business, and potential competitive advantages that lead to future earnings. Identifying competitive advantages are discussed in detail below

  3. The Present vs. the Future
  4. Planning must extend into the future. Not only, should strategies and plans address the immediate problems and issues, they must lead the organization into a successful future. Stubbing along, without a formal plan or strategy is an alternative action. It is the traditional state when an ineffective or non-implementable is proposed. Unfortunately, it is usually not a good strategy for the firm but maybe a safe one for management.

    The time frame imposes great difference in the planning process. Those issues that must be address in the short-term, within two years, must be tightly specified and actionable tactics indicated. However, in the longer term the strategy is intended to give direction and guidance rather than specifying the exact plan. The following chart shows the connection between short and long term issues. Basically, strategy is directions and policies, which indicate what are intended to be done and the resources required for execution. Without resources, a strategies and plans are merely hypothetical exercises.

    1. Mission vs. Vision
    2. The Mission of a function describes the specifics of what the function is intended to do into the near future. It is a description of the present situation. The Vision of the function describes what we expect it to evolve at a specific future time. By its nature, the Vision is "visionary," it is intended to stretch the expectations for the function. It also tends to be a general set of statements rather than specifics. It should be noted, however, that Visions are seldom approved by upper management. It is generally desirable to allow the functions to expand out in the ideas. The problem here is that the Vision also needs to be doable.

    3. Objectives Vs. Goals
    4. Similarly, Objectives focus on the near future while Goals provides the expectations for the future. Objectives must be very specific and often "understated," since the function will be kept to meeting them. Occasionally, the function's Objectives are used to set achievement levels and are the basis of both personal objectives as well as the basis for financial rewards.

      Goals on the other hand relate to the future of the organization and the function. Typically, these are integrated into the Vision giving substance to the future view. However, unlike the Vision, the Goals are usually quantitative, indicating the size and duties of the function. For example, the Goals of Information Systems generally include the size and extent of the anticipated function five or ten years into the future.

    5. Competitive Advantages vs. Opportunities

    Competitive Advantages reflect the means by which the firm succeeds. They reflect the present "business model" indicating why the firm is able to survive. Future competitive advantages reflect opportunities to grow the business or at least to allow it to survive in an increasingly competitive environment. The sources of future competitive advantages must be consistent, however, with the future directions of the firm. In this regard, function strategy must be integrated into the total firm strategy.

  5. Perceptions of Information Systems Planning
  6. Information Systems holds a unique position in the firm. It functions both as a technology driver and a service bureau in the firm. It is the advocate of information age as well as the conventional workhorse for maintaining the infrastructure of the firm. As such, there are at least five perspectives that must be considered in developing IS plans. The first three of these, Operational, Strategic and Organizational perspectives are common in principle with all other functions. Information and Knowledge Management perspectives are unique to IS.

    1. Operational Perspective
    2. The Operational Perspective focuses on the delivery of services necessary to maintain the business. In this perspective, functional imperatives rule. We need to plan to maintain the ability to deliver the required services over the short time horizon. Adequate resources need to be available to meet these activities.

      The Operational Perspective is structured by classic "Quality" concepts. That is the "Meeting or exceeding of client expectations." The measure of performance from this perspective is based on meeting existing clients' needs.

    3. Strategic Perspective
    4. The Strategic Perspective which is also the Technical Perspective, focuses on the advocacy by IS of the strategic value of IS technology and procedures. IS usually contains the unique knowledge of these technologies and as such is the only competent source of knowledge in these areas. This produces an inherent conflict in that IS is both the advocate of the potential uses of IS and the source for assessing that information. This long-term vision of the uses of IS and its potential impact on the firm, often puts great responsibility on the function.

    5. Organizational Perspective
    6. Information Systems exists within the firm. It is, by its nature, in competition for resources and for an audience for its opinions. These are organizational issues involving power and influence. While it is typically in everyone's interest to strive for the best interests of the firm, what those firm's interests are depend on the perspectives of the functions. The full scope of the role of IS in the firm differ by organization. And, therefore, the Organizational Perspective will likewise differ. The Organizational Perspective also deals with the make of the organization and the issues of out-sourcing and maintenance of the staff functions and skills.

    7. Information Management Perspective
    8. Information Management is a uniquely IS perspective. Information Management focuses on the maintenance, security and accessibility of information usually in the form of corporate and strategic data. In today's IS environment this generally includes communications and infrastructure as well as data storage. This is a highly traditional IS perspective and usually does not include the source of data but only its distribution and protection. The typical issue here is the size and breadth of the infrastructure to support the information requirements.

    9. Knowledge Management Perspective

    The Knowledge Management perspective is relatively new and can be considered an expansion of the Information Management focus. However, here we are also concerned about the sources and uses of information. This perspective expands the responsibilities of IS. In some cases, IS also contains the library and analysis functions as well as the traditional information handling duties. Further discussion on Knowledge Management is in a separate chapter in these MIS notes.

  7. Functional Imperatives
  8. As previously noted, the Functional Imperatives are the accountable commitment of the IS function to the firm. It is the reason why IS exists. IS is held totally accountable for meeting these Functional Imperatives or contrary, for not allowing bad things to happen. It should be noted, that meeting Functional Imperatives takes precedence over any other function of IS. These are the highest priority things that must be maintained. The criticality of meeting the functional imperatives are often in conflict with the desire to improve systems, which requires disruptions. These disruptions of service by their nature interrupts operations and can endanger critical operations.

    1. Must and Must Not's
    2. Functional Imperatives are those things that must happen or must not be allowed to happen. They are very specific. These are not general objectives, such as supporting a client, but reflect specific actions. Examples include a system that must be functional over a specific time or down time will be limited by duration and occurrence.

    3. Quantitative
    4. Functional Imperative must be quantitative. Specific times and limits are required. The Functional Imperative are a contract between IS and the organization to meet specific demands. As such, they need to be very specific. The success of IS will be measured partially by they ability to meet these demands. As such, it is important that they be clearly specified with specific limits.

    5. Doable
    6. While it is always desirable to give broad scope to the Functional Imperatives. They are usually not doable. Once again, functional imperatives are contractual agreements that are expected to be met to the limits of the statements. For example, truly 24/7 service is usually not doable unless the system is totally mirrored. As such, typically some downtime needs to be specified in the functional imperative statements. If on the other hand, truly 24/7 is required, then that implies a major difference in the system design and the size support staff.

    7. Operational Critical Functions

    The IS functional imperatives flow from the operational critical functions. These are functions that can not be allowed to be down for any extended period of time. These usually include manufacturing systems that need to be monitored and controlled, sales and transaction support necessary to maintain the business operations, and financial reporting. In addition, phone and e-mail service may also generate IS functional imperatives.

    Notice that support, consulting and adversary functions are usually not included. However, response to inquiries can be. Organizations with strong Quality orientations usually will require rapid responses to inquiries and while these are usually not considered operationally critical, they may be for the IS function.

  9. Competitive Advantage
  10. Competitive advantages are those things, skills and processes that make a business successful against its competition. As previously, noted, competitive advantages apply both to the present business and to the future. The potential competitive advantages set the goals for the IS function.

    1. Key Success Factors
    2. Competitive advantages are derived from the key success factors for the firm. While all meaningful activities of the firm, by definition, provide value, some are essential to its success. Each type of business and enterprise has specific functions that are critical to its operations or critical to its commercial activities. In some cases, it is the focus on inventory and cost control. Others focus on marketing and merchandising effort, and still others on customer service and reputation. These key success factors define those issues that are the competitive advantages.

      The very fact that multiple businesses compete against each other and survive illustrates the existence of multiple competitive advantages. These advantages are determined not only by the nature of the business but the business strategy being undertaken and the nature of the market and technologies.

    3. Strategic Driven
    4. For the strategy of a function to be successful, it must be aligned with the direction of the firm. As such, the function's plan and in particular, Information Systems' plan must be driven by the strategy of the firm. To effectively build an Information Systems function and organization which does not support the needs of the firm, can not succeed. Value is derived from the firm's successful use of the Information Systems capabilities.

      1. Aligned with the Strategic Goals
      2. Long term and potential competitive advantage must be aligned with the strategic goals of the firm and its accepted direction. The direction of the firm may change, producing great stresses on operations. The competitive advantages must be aligned in such a way that there are effective into the future. In some cases, enterprises plan to change directions and enter into different businesses. The competitive advantages that IS intends to extend must be applicable to the new businesses and not be exclusively stuck into the old operations, businesses and approaches.

      3. Providing a Unique Advantage over Competition
      4. Competitive advantages must provide unique advantages over competition. While it might seem straight-ward, it is difficult to implement. Most new IS capabilities while powerful are usually universally available. However, it is not what is being implemented but its impact on the business. Uniqueness is not packaged in the technology but in the benefits and uses of that technology.

      5. Bottom Line Measures
      6. The measure of all value to the firm should be on the "Bottom-Line." This is particularly the case with IS since it is usually under-the-gun to establish its value. There are usually three basic ways that the earnings, "the bottom-line" can be effected by Information System programs:

      1. Reduced Costs
      2. Real cost reduction is the simplest but often the most difficult to prove source of bottom-line value. Typically, cost reduction comes with increased scale. We argue that more can be done with slightly higher costs with IS technology. However, this is a difficult argument since it is usually unclear if we will get that increased scale. There are some new technologies that do provide direct cost reduction. Shifting manual sales operations to the Internet can provide this ability.

      3. Increased Revenue
      4. Particularly, with the accent of E:Commerce, IS is being looked upon as a source of new revenue. The problem here is double accounting. Often the same processes are viewed as cost reduction programs as well as sources of new revenue. Revenue production is almost always viewed speculatively.

      5. Providing Value
      6. The easiest way to prove value is by providing a means of delivering future functional imperatives. This route simply eliminates the need for bottom calculations since the underlying need is assumed. The problem here, is that senior management must agree with IS's view of what the functional imperatives in the future will be.

  11. Core Competencies
  12. The extent of core competencies of a function or business is a measure of their inherent strength and importance to the firm. However, core competencies also take on an important planning function, for they define the future skill development needs for the firm. Core competencies center around two issues: (1) things we do or must do well, and (2) things that provide competitive advantage.

    1. Things we do well
    2. This is a test of honesty and perception. No one likes to think of themselves as merely "good" performers. Our organization must do things far better than anybody else! This is of course not true. Most things that we do we do adequately but not world class. Any time we consider bringing in consultants or out-sourcing providers we are admitting that someone else can be at least as good as us. However, once again, we must differentiate between the simple process and its results. Our task may be the planning function for which, for our firm, we are excellent. The execution may be only adequate. As such, our core competencies lie in those things that we do rather than all possible functions.

    3. Provides Competitive Advantage
    4. However, not all things that we do have value. Core competencies consists of the intersection between things we do well and those that things that provide unique value to the firm, or competitive advantage. This is an important distinction. Not all things we do well are core competencies. Most things do not give competitive advantage to our firm and as such should not be consider core competencies. In fact, some very competent organizations do not have core competencies, not because of performance only because their functions do not yield competitive advantage. These are your best candidates for out-sourcing.

    5. Things we should do Well
    6. Core competencies do not emerge from nowhere. They need to be planned. People need to be either hired with specific skills or trained. Looking forward, we need to project what the core competencies are needed for the firm in IS. Once again, this is the merger of future excellence in performance on things that deliver competitive advantage.

  13. Planning Processes
  14. There are a host of tools and procedures that have been proposed for the IS planning process. The following four approaches are widely used and advocated by major consulting firms.

    1. Planning Dynamic Scorecard
    2. The Planning Dynamic Scorecard is simply a breakdown in the activities of the function or business. Viewed on the chart below from left to right it describes the business activities. It is used as a scorecard to determine the effectiveness of the organization, including: (1) how it is meeting objectives and (2) how it is allocating and managing resources.

      From a planning perspective, however, it is read from right to left, indicating eventually what resources will be required to meet the strategic goals. In a typical planning process, the card is used in both directions. First it is used to develop a forecast of needed resources and then as a check of the value of allocating those resources.

    3. Top-Down
    4. Top-down planning is also referred to as strategic planning since it starts with a set of strategic goals, objectives and functional imperatives from which the organizational plan is developed. It is referred to as top-down since upper management gets a crack at it first. Advocates propose that it is the only way to assure alignment of IS with the firm.

    5. Bottom-Up
    6. Bottom-up planning is also referred to as technology planning since it usually focuses on capabilities needed to meet current and future needs. Since only the IS and business personnel have knowledge of the technologies and problems involved, it is natural that the planning process should start there. Here the plan is built-up based on specific functions and needs. The objectives and goals as well as the strategy follow from the programs. Advocates propose that it is the only way to assure effective uses of functions to meet doable tasks.

    7. An Iterative Process
    8. Clearly, both Top-down and Bottom-up methods have merit. Typically, most procedures start with a Bottom-up with the current requirements and needs. This is the standard planning process. However, occasionally, a Top-down procedure is imposed to assure that the IS function is provided strategic direction.