Module 2 - Organisations and Strategic Planning Overview Module 2 discusses the definition of an organisation and strategy. Understanding the different definitions of strategy will give you an understanding of the focus a strategic plan can take on once developed. Strategic Planning can occur at multiple levels within the organisation. From the business strategy, an IS Strategy can be developed, and from the IS Strategy a systems strategy. After this module you are expected to be able to distinguish between the different definitions of strategy, the link between business and IS Strategy and the basic concept of the strategic planning process. Module Objectives This module addresses the following objectives 1. Definitions a. Organisation b. Strategic Planning 2. Types of Strategic Planning 3. Typical ICT Strategic Plans and Issues 4. Strategic Planning Process Organisations Merriam-Webster, (2016) defines organisations as organised groups of people with a particular purpose. Organisations consist of people, processes and technology and endeavor to deliver products or services to certain customers or markets. Merriam-Webster, (2016) outlines the definition of strategy for students as a carefully developed plan or method for achieving a goal or the skill in developing and undertaking such a plan or method. Reading Selected Reading 2.1 Mintzberg, H 1987, 'The Strategy Concept I: Five Ps For Strategy', California Management Review, vol. 30, no. 1, pp. 11-24. Read the complete article. From the article it is important to understand the different types of strategy definitions which are identified. These strategies are not mutually exclusive and a number of these definitions can be used to define an overall strategy. Organisations use strategy to plan on how to use the people, processes and technology effectively and efficiently to deliver their products and services to customers within different markets. Mintzberg (1987), identified five definitions of strategy, these definitions are well known as the five Ps’ for strategy. - Strategy as a Plan – conscious intended course of action - Strategy as a Ploy – a specific manoeuvre intended as a way to disrupt, dissuade, discourage, or influence competitors. - Strategy as a Pattern – actions or a pattern based on behaviour. Actions and behaviours sometimes deliver successful outcomes; these actions or behaviours turn into a strategy. - Strategy as a Position – placing yourself in a certain position within a marketplace to gain an advantage. - Strategy as a Perspective – as behaviour can turn into patterns, ideas and thoughts can turn into a perspective. A strategy can be developed at different levels of an organisation. • As organisation strategy outlines how and organisation plans to achieve certain goals and objectives. • Departmental strategies outline how a department within an organisation will meet its identified goals and objectives. • Product strategies outline how a product will be developed, marketed and sold. • Application strategy outlines how a technology solution plans to be identified, designed, develop, implement and supported in the achievement of the organisational, departmental or product goals. Porter (1980) developed the five force framework which is an analysis tool to determine 1. the threat of entry 2. power of buyers 3. power of suppliers 4. threat of substitutes 5. competitive rivalry This framework can be used to explore the environment in which the product or organisation operates to generate competitive advantage. Reading Selected Reading 2.2 Dobbs M, (2014),"Guidelines for applying Porter's five forces framework: a set of industry analysis templates", Competitiveness Review, Vol. 24 Iss 1 pp. 32 - 45 From the reading Dobbs, M, (2014) outlines several deficiencies within the five forces analysis tool. This is important to understand. You should pay particular attention to the templates in the Appendix. The visual ways to represent the five forces are valuable for Strategic Plans. Information systems (IS) strategy or information and communications technology strategy outlines how technology can be used to support the business goals and objectives (business strategy). It is important to understand the conception and standpoint of the strategy. This will drive the development of the IS Strategy. Depending on the IS Strategy this will also drive the individual strategies of the assets within IT. Table 1 Three Conceptions of IS Strategy Identified from IS Literature Source: Chen, DQ, Mocker, M, Preston, DS, & Teubner, A (2010) Chen, Mocker, Preston & Teubner (2010) outline three conceptions of Information Systems (IS) Strategy as it relates to business strategy identified in literature: 1. Use of IS to support business strategy – strategy is defined as a position which is used to support the business strategy. This type of strategy is business centric and developed as part of the business strategy. IS Strategy does not exist on its own. IS is deployed to support the attainment of the business strategy. 2. Master plan of the IS function – strategy is defined as a plan where IS resources (people, processes and technology) are employed to efficiently support the IS plan. This type of strategy is IS centric and developed in isolation of the business strategy and is a separate functional strategy. IS is deployed to ensure required assets are acquired and efficiently allocated. 3. Shared view of IS role within the organisation – strategy is defined as a perspective based on how the organisation views IS. This type of strategy is organisation centric but developed separately. A shared understanding of IS guide the acquisition and deployment of assets. Strategic Planning and Execution Strategic Planning is the process of defining the strategy of the organisation at any one of the different levels within the organisation. The strategic plan outlines the vision, mission, objectives, strategies and action plans. The strategic plan defines how one will move from a current position to a future desired position. This position can be a new operating model, product release into a market or implementation or upgrade of new software. “Strategic planning processes are among the most demanding tasks that managers face in today’s complex market place. It can be an overwhelming challenge to take into account, simultaneously, the developments of technologies and societal trends, the behaviour of competitors, customers and regulators, all within a changing legal, environmental and financial framework. When this is compounded with time pressures, market uncertainty and constant distractions and internal tensions, making sound and sustainable strategic decisions becomes an immense challenge. This task is made even more difficult by the subsequent need to communicate, implement and monitor these decisions in a systematic, orchestrated and disciplined manner. Taken together, these activities pose numerous cognitive (e.g. information overload), social (e.g. co-ordinating multiple groups and hierarchic levels) and emotional (e.g. achieving staff buy-in) challenges for a business manager. “ Eppler, M & Platts, K, 2008 Eppler, M & Platts, K (2008) developed a framework consisting of four (4) phases to develop a strategic plan. As can be seen from Figure 4 below each phase focusses of different aspects of the development of the strategic plan. Figure 1 : Fig 1 Conceptual framework for visual strategizing Source: Eppler, M & Platts, K (2008) The analysis phase is focussed on accessing and structuring data and information about the external environment. Instead of a textual based approach, visualisation is recommended to display a wide range of quantitative and qualitative information. In the development phase options for action are explored which include goals, milestones, activities and resource. For the planning phase specific objectives are developed and plans to achieve these objectives are formulated. Timelines, deliverables, resource allocations and responsibilities are included into the plan.The implementation phase actions are executed (projects, initiatives etc), relationships and results are reviewed. Key performance metrics can be key to understanding the effectiveness of this phase. There are many different frameworks and methodologies for strategic planning and management, Eppler M & Platts K (2008) outline one above. While there are no absolute rules regarding the right framework, most follow a similar pattern and have common attributes. 1) analysis or assessment, where an understanding of the current internal and external environments is developed, 2) strategy formulation, where high level strategy is developed and a basic organisation level strategic plan is documented 3) strategy execution, where the high level plan is translated into more operational planning and action items, and 4) evaluation or sustainment / management phase, where ongoing refinement and evaluation of performance, culture, communications, data reporting, and other strategic management issues occurs. Reading Selected Reading 2.3 Gates, Linda Parker, 2010, Strategic Planning with Critical Success Factors and Future Scenarios: An Integrated Strategic Planning Framework , USA Read the entire article Strategic planning augmented with Critical Success Factors outlines what an organisation must do to be successful. With adding future scenarios, it gives the strategic plan an insight into potential future alternatives as well as strategies to address future scenarios. In this module there has been a lot of information to outline strategic planning and strategic management. It is important to understand that this information can be applied to different levels within an organisation (organisation, department, product, information system). The definition of the strategy, contents of the strategic plan are similar for the different levels. Information in the strategic plan include: 1. Company definition a. Mission – core purpose and focus b. Vision – eventual end state c. Goals – desired result or results d. Objectives – the point of the mission 2. Current State – the current starting point of the mission 3. Influences affecting the organisation 4. Future State or States – the end state of the mission 5. Alternatives 6. Roadmap or Action Plans – the journey, steps or milestones to get to the future state 7. Critical Success Factors – the factors which must be achieved in order 8. Key Performance Metrics / Indicators – the indicators which outline if the roadmap is proceeding as expected or if the roadmap is not proceeding as expected. 9. Business case (cost and benefits)In preceding modules, we will cover different techniques and frameworks to identify the necessary information for incorporation into a Strategic Plan. For this course the Strategic Plan will be split into two components: 1. Planning – this includes all the necessary information on how to plan the installation / upgrade for an information system within an organisation. 2. Implementation– this includes all the necessary information on how to implement the information systems within an organisation. Strategy and Strategic Planning has been discussed in general terms. The next article Strategic Direction (2013 ) outlines the need to include adaptability, flexibility and realism into the strategic planning process. Reading Selected Reading 2.4 Strategic Direction , 2013, "Better strategic planning: Managing change and planning for the future require both vision and strategy", MCB Business Strategy Publications Strategic Direction, Vol. 29 pp.30 – 32 Read the entire article It is not enough just to create the strategy but it has to be testing in order to determine if feasible. Strategies can no longer be developed from the top down and expect managers to adopt them. They need to be built in collaboration at the different levels of the organisation. This gains acceptance, adoption and make the strategy real to the rest of the organisations. Haines, S 1998, outlines enterprise applications as a system which has different components and interacts with other systems to achieves its goals is critical to understand. This allows one to understand how the entire technology ecosystem operates and interacts while providing bounds. Reading Selected Reading 2.5 Almquist, E, Senior, J & Bloch, N 2016, 'The Elements of Value', Harvard Business Review, vol. September 2016, pp. 46 - 53. The elements of value gives you an understanding from a customer perspective on the value an organisation can provide. This value is often delivered using or supported by enterprise applications. From the discussion and articles you can see Strategic Planning is key for organisations to outline a plan to achieve a future desired destination. However, this is not an easy task as there are many variables and unknowns for managers who are developing a strategic plan. The strategic plan needs to include information based on the best information the organisation has at its disposal at the point in time. Strategic plans should be revised and updated as the journey is undertaken to validate or invalidate and refine these assumptions. This correction enables organisations to adjust to those variables and deliver on the Strategic Plan. Often however the expected outcomes are not necessarily the outcomes which are achieved. Haines (1998) outlines a yearly Strategic Management System and checklist to enable one to focus on systems thinking. Consumers perceive value from a multitude of elements which differ from industry to industry, (Almquist et al. 2016) identifies 30 such elements and at a high level maps these elements to industry types. Assignment Exercise For the organisation you have chosen what are the elements of value which you think will be important for the organisation. Based on the research, value elements, application and research what type and level of strategy do you think they would need to develop to describe one of the major applications in their eco-system. Module Review Questions 1. What strategy types exist? 2. How can the checklist from Haines (1998) assist? 3. How would the elements of value, influence the design of a strategic plan? Module Summary Strategic planning is a business tool to outline how to achieve a set of goals and objectives. This can be done at many different levels within an organisation. Within ICT Strategic Planning can be used to plan the activities of the entire department or a single solution. The aim of the plan is the common no matter which level it is developed at. The main aim of the plan is to develop a shared vision of the current state, future state and the journey to achieve the goals and objectives. References Merriam-Webster, (2016) Strategy. Merriam-Webster's Dictionary AND Thesaurus. Merriam-Webster, (2016) Organisation. Merriam-Webster's Dictionary AND Thesaurus. Mintzberg, H 1987, 'The Strategy Concept I: Five Ps For Strategy', California Management Review, vol. 30, no. 1, pp. 11-24. MindTools, 2016, ‘Mintzberg's 5 Ps of Strategy Developing a Better Strategy’, weblog, viewed 17 August 2016, < https://www.mindtools.com/pages/article/mintzberg-5ps.htm> Porter, M. E. 1996. ‘What is strategy?’ Harvard Business Review, November–December, pp.61–79 'Better strategic planning: Managing change and planning for the future require both vision and strategy', 2012, Strategic Direction, vol. 29, no. 1, pp. 30-2. Chen, DQ, Mocker, M, Preston, DS & Teubner, A 2010, 'Information Systems Strategy: Reconceptualization, Measurement, and Implications', MIS Quarterly, vol. 34, no. 2, pp. 233-59. Gates, L 2010, Strategic Planning with Critical Success Factors and Future Scenarios: An Integrated Strategic Planning Framework, Carnegie Mellon University, Hanscom AFB, MA. Haines, S 1998, The manager's pocket guide to systems thinking & learning, Computer Program, HRD Press, Amherst, Mass, 9780874254532;0874254531Dobbs, Michael, 2014, 'Guidelines for applying Porter's five forces framework: a set of industry analysis templates', Competitiveness Review, vol. 24, no. 1, pp. 32-45. Mintzberg, H 1987, 'The Strategy Concept I: Five Ps For Strategy.', California Management Review, vol. 30, no. 1, pp. 11-24. Reese, RJ 2010, Troux Enterprise Architecture Solutions : Driving Business Value through Strategic IT Alignment (1), Packt Publishing, Olton, GB.