Planning For Information Systems:

Business Process Re-Engineering

by

Matthew Martin

Business processes may need to be changed in order to facilitate the introduction of new IT systems. The altering of business procedures in this context is called business process re-engineering.

 

Contents

Strategic Planning

The high level plan of the organisation should take into account information systems, providing a strategy for the future development and deployment of IS, or information systems plan. This states the long-term aims of the company and how IS will assist in fulfilling these aims. The plan should also state milestones, providing identifiable goals by which progress may later be judged. As time goes by, the strategic plan will need periodic review and updating in accord with what has been achieved and issues that have been identified.

Strategic Issues

• All too often organisations fail to have a clear strategy, leading to the muddled introduction of IS over a number of years. This can result in problems in sharing information within the organisation as different systems are later found to be incompatible. Also the introduction of IS may fail to serve the needs of the business strategy.
• Often milestones and goals are not clearly stated or thought out. Without clear milestones it is difficult to judge progress and keep the strategy on track. Further the lack of clearly stated milestones can result in “mission creep”, the original aims intended grow and grow. This moving goal posts syndrome means that it is extremely difficult to bring projects to a successful conclusion.
• Attempting to do too much. Big bang introductions invite system failure and project over-reach means that the development and introduction of IS are greater than can be achieved in practice.
• The strategy and the milestones identified in the information systems plan must be championed. Clear sponsorship by high-level management and board members is required in order to provide the clear guidance and support needed to carry the plan through. Failure of senior management to do this will typically result in the partial implementation of the strategic plan.
• Proper co-ordination between different parts of the organisation is required.

Identifying The IS Requirements

There are two major approaches to identifying the IS requirements for an organisation.

Enterprise Analysis

Enterprise Analysis or Business Systems Planning requires the involvement of managers from various parts and levels of the organisation. A detailed view of the current usage and future requirements of IS can be obtained. This can produce large amounts of data that can be difficult to analyse and also tends to be skewed through the optic of the managers’ view of the organisation (workers may have a different point of view).

Strategic Analysis

This approach to IS strategic planning is based upon the identification of critical factors for success, Critical Success Factors (CSFs). The CSFs can be seen as the goals of the organisation. The approach usually involves interviewing a number of senior managers, using this to identify their goals. This forms the basis for identifying CSFs. The IS requirements can then be identified from these.

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Organisational Changes, Key Terms

Rationalisation

This involves the removal of bottlenecks from SOPs, making them more efficient.

Business Re-engineering

The redesign of business processes, usually taking a fresh look at them.

Work Flow Management

The addressing of inefficiencies in procedures, usually concerned with paperwork.

Total Quality Management (TQM)

The aim is to introduce quality controls, ensuring that all work is performed to a defined standard. There are a number of different approaches.

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Costs & Benefits

The costs and benefits of introducing information systems need to be assessed. Clearly there must be some financial advantage to the organisation to make the introduction of an IS worth while.

Capital Budgeting

Capital budgeting is the process of selecting among various proposals for capital expenditure.

• Cash Flows: Alterations in cash flows are assessed, both in and out (e.g. increased sales & expenditures).
• Tangible Benefits: Benefits that can be assigned a monetary value.
• Intangible Benefits: Those benefits that cannot easily be assigned a monetary value.

Payback

Investment	= Number of year to pay back
Annual net cash inflow

This is a simple calculation of how long it will take to payback the investment.

Rate of Return on Investment (ROI)

Adjusts the rate of cash inflow generated by investment by the rate of depreciation.

Present Value

Since the value of money changes over time, present value provides a means of adjusting for the changing value of money.

Payment *	1 – (1 + interest)-n	= Present value
	Interest

Cost-Benefit Ratio

Total Benefits	= Cost-benefit ratio
Total Costs

Profitability Ratio

Used in comparing the profit gained by different investments.

Present value of cash inflows	= Profitability index
Investment

Rate of Return

The rate of return (profit) on investment.

Portfolio Analysis

Portfolio analysis does not consider the financial costs and benefits but rather looks at the possible projects that the organisation might adopt as a portfolio. The risks and benefits of each potential project must be weighed up. If the risks are high and the benefits low then the project is probably not a good idea.

Risks:

• Costs may not stay in budget.
• Time scales may not be achieved.
• Technical difficulties may hamper the project.
• Benefits desired may not be achieved.

The risks must be identified and the factors contributing to the risks identified. This then allows for a list of actions or steps to be taken to minimise the risks. This is all a normal part of project planning.

 

by

Matthew Martin

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