The importance of strategic information

Abstract

In a global marketplace, information has emerged as an agent and enabler of new competitiveness for today’s enterprise. However the paradigm of strategic planning changes sufficiently to support the new role of information and technology. The question is, are changes can support the new role of information and technology and what is the relationship between strategic information system planning with the development database in an organization. Therefore, the development of strategic information system planning is importance in an organization. Strategic information system planning (SISP) is the process of creating a portfolio based on the use of information system in order to achieve organizational goals and objectives. Within SISP, organizational can clearly define their organizational goals, the critical success factor (CSF) and the problem areas within the organization activity. This article is to discuss the importance of SISP and its relationship with organizational database development and implementation.

Keywords

Strategic Information System Planning, SISP, DBMS, CSF, EI

Introduction

A succeed organization will have proper SISP to drive the organization to achieve their business needs and business goals. For that, SISP is developing to make sure that all activities support organization’s business plan and at the same time align with its business needs and business goals. SISP is also use to predict the organization future. Within SISP, organization can avoid from barrier that they predict in a long term planning. Rockart (1979) stated that top management firm doesn’t not much interest to the relationship between information system function and corporate strategy. He also said information system is treated as some back-room operation in support of day-to-day operation in an organization.

As referred to Lederer A. L ( 1996), strategic information system planning is one of the major issues because of it is often face the failure while implement it. Many applications recommended by strategic information system planning studies are often disregarded while many other applications are implemented. Strategic information system planning is important to an organization because it can influence an organization favorably, and is difficult to accomplish, it is a legitimate target for research.

Factor affecting strategic information system planning include top management of IS that are IS managers and chief information officer (CIO) emphasize the importance of their relationship with the Chief Executive Officer (CEO). Those closer to the CEO have a better understanding of the CEO’s expectations. It is good to have a good relationship between CIO and other business unit for obtaining understanding and support of current and potential clients. Lack of management commitment and the absence of the control mechanism necessary to ensure the success of the plans can impede its implementation.

Strategic Information System Planning

According to Lederer and Sethi (1988) in 1980s, the concept of strategic information system planning (SISP) evolved. They come with the two concept of SISP. The first one is SISP viewed as the process of identifying a portfolio of computer based applications that will assist an organization in achieving the business plan and at the same time achieve the business organization goals. Meanwhile the second one is SISP involved searching for application with a high impact and with the ability to create an advantage over competitors to gain competitive advantage. Based on the theory of SISP, it can be define that the process of identifying a portfolio of computer-based applications to be implemented aligned with the corporate strategy and has the ability to create an advantage over competitors.

Organization goals is analyze by defining what exactly organization hope in order to accomplish the goals. After organization goals have been analyzed, then critical success factor will evaluated so that it will affect the organization goals and objective in long term. Critical success factor is the element that organization should know and must work in order to survive in the business environmental. And lastly, identify the problem areas which are the weaknesses that organization already have.

SISP help organization in overall strategic planning process in effectively and efficiently. Rogerson and Fidler (1994), a study on satisfaction using SISP showed that most organization that used SISP in running their operation more satisfied with the planning process and outcome than those who did not implement specific SISP method.

SISP participants include top business, functional area, and information system management. In an organization, the success of IS plan can be determined with the involvement and commitment of senior management. Involvement of senior management is very important to determine whether the success or failure of the project. Senior management was the backlog behind the success of the project. Within SISP also can be used to improve the communication between top management and users regarding IT. This actually gain top management commitment. Communication and commitment will also help in increasingly the visibility of IT in organization.

The purpose of SISP is to ensure that the IT organization align with the strategic goals of organization. Alignment of IT organization and business goals has been used to control and ensure that business goals will achieve and all the operation included the IT and IS that used in running the organization will keep in track. As referred to Earl (1993) , SISP alignment will also help in identifying strategic applications, identifying new and higher payback applications, and developing an information architecture. Organizations also use the SISP to help in forecasting and allocating IT resources. With SISP, also can avoid loss of control of IS/IT in an organization. SISP is needed for the system to ensure the system that used in the organization integrated with other system or not.

Without SISP in an organization, may lead to missed opportunity, duplicate system, incompatible system and wasted resources.

Importance of Strategic Information System Planning

The importance of SISP in an organization has been well documented within the IS literature. Within SISP, the integration of IS function within organization can be facilitate. Besides, SISP supports the identification of opportunities to use information systems for strategic purpose. SISP also ensures that adequate resources or the use of scarce resources are allocated to critical application and the use of resources in properly manner. With SISP, can ensures that the IS function support the organizational goals and objectives and also the activities at every level.

Having a good strategic information system planning in organization, will determine whether the organization will success or failure. The reason why organization needs good strategic information system planning is that it can help organization to avoid misused of scarce resources. By planning, only projects that can generate good returns will get investors from the firm. A good planning is very important to avoid problem such as the misuse and wasted resources in form of system that nobody likes and used the system effectively. When a new system developed, pre-existing system can be used to communicate or interface properly and at the same time avoid the problem of “Islands of automation”. This can be happen if the organization has proper planning for their organization.

Before develop a new system, planning is very important to make sure the smooth of business operation. First of all, the organization should identify their needs. Development of system should be a response to need whether at the transaction processing level or at the more complex information and support system levels. Priorities, objectives and authorization for information system projects need to be formalized first. The system development plan should identify the project resources that needed the procedures, and constraints for each application area. Planning should be flexible to adjust the priorities if necessary. Furthermore, to facilitate understanding of each application the plan must be specific enough. According to King, (King, 1995) in his article has argued that a strategic capability architecture mu st flexible and continuously improving infrastructure of organizational capabilities and at the same time gain company’s sustainable competitive advantage.

It is important to have SISP to maximize the benefits of changing technology and to take account of the different viewpoints of business professionals and IT professionals. System investments are made to support business objectives and also to gain inadequate infrastructure. SISP is important because it emphasizes the need to bring IT to bear on and sometimes influence strategic direction of the corporation is widely accepted by researchers. This is particularly true in contemporary environments where harnessing the power of technology resources could be critical for competitiveness.

Relationship with Organizational Database Development

Data are the raw material from which information is produced. Therefore, it is not surprising that in today’s information-driven environment, data are a valuable asset that requires careful management. To access data’s monetary value, data that stored in company database are data about customers, suppliers, inventory, and operations and so on. Imagine that all the data in the database loss. What will happen if the situation like that happen? Data loss puts any company in a difficult position. The company might be unable to handle daily operation effectively; it might be faced with the loss of customers who require quick and efficient service, and it might lose the opportunity to gain new customers.

Data are a valuable resource that can translate into information. If the information is accurate and timely, it is likely to trigger action that enhance the company’s competitive position and generate wealth. In effect, an organization is subject to a data information decision cycle; that is the data user applies intelligence to data to produce information that is the basis of knowledge used in decision making by the user.

A critical success factor of an organization is efficient asset management. Critical success factor involve the management in an organization to know the current status of the organization in ICT. Based on the analysis of the business environment of the corporation, the critical success factors concerning the firm are identified. Critical success factor is refer to the limited number of area in which result, if satisfactory will ensure successful competitive performance for the organization. There are such area where thing’s must go right for the business to flourish. Thus, the factor that are critical for accomplishing the objectives are identified at this stage.

To manage data as a corporate asset, managers must understand the value of information that is processed data. Data are used by different people in different departments for different reasons. Therefore, data management must address the concept of shared data. Whatever the type of organization, the database predominant role is to support managerial decision making at all level in the organization. That’s why, SISP play a big role in organization. SISP is an important management function. It can help an organization use information technology (IT) more competitively, identify new, higher payback IT applications, and better forecast IT resources requirements.

An organization’s managerial structure might be divided into three levels which are top, middle and operational. Top level management makes strategic decisions; middle management makes tactical decisions and operational management make daily operational decisions. Operational decisions are short terms and affect only daily operations for example deciding to change the price of a product to clear it from inventory. Tactical decision involve a longer time frame and after larger scale operation; for example changing the price of a product in response to competitive pressures. Strategic decisions are those that affect the long term well-being of the company or even its survival; for example changing pricing strategy across product lines to capture market share. This shows that having a good SISP will lead the organization to achieve the goal and objective in short or long term in an organization.

Database : Special Consideration

The company’s database is also known as the corporate or enterprise database. The enterprise database might be defined as “the company’s data representation that provides support for all present and expected future operations.” Most of today’s successful organization depends on the enterprise database to provide support for all of their operations from design to implementation to sales and services and from strategic planning to daily decision making. Having a computerized database management system does not guarantee that the data will be properly used to provide the best solution required by managers. A DBMS is just a tool for managing data and must be used effectively to produce the desired result.

The introduction of a DBMS represents a big change and challenge. Throughout the organization, the DBMS is likely to have a profound impact, which might be positive or negative depending on how it administered. For example, one key consideration is adapting the DBMS to the organization rather than forcing the organization to adapt to the DBMS. The main issues should be the organization’s needs rather than the DBMS’s technical capabilities. However, the introduction of a DBMS cannot be accomplished without affecting the organization. The flood of new DBMS generated information has a profound effect on the way the organization functions and, therefore, on its corporate culture.

The introduction of a DBMS into an organization requires careful planning to create an appropriate organizational structure to accommodate the person or people responsible for administering the DBMS. The organizational structure must also be subject to well developed monitoring and controlling functions. The administration personnel must have excellent interpersonal and communication skill combined with broad organizational and business understanding. Top management must be committed to the new system and must define and support the data administration functions, goals, and roles within the organization and that also the need of SISP in an organization.

In the database development process, there have importance elements in order to develop the database. First, we need to identify the strategic planning factors. The strategic planning factors are in term of the goals of organization that want to achieve, the critical success factor and the problem areas in achieving the goals.

In 80’s and 90’s, there has been a growing realization of the need to make information system of strategic information to an organization. In order to put the planning for strategic information system in perspective the evolution of information systems according to the three era model of John Ward, et al. (1990) is pertinent. According to this model, there are three distinct, albeit overlapping, eras of information system, dating back to the 60’s. The relationship over time of the three eras of information system is shown in table 1:

Data processing, management information system and strategic information system need to be planned and manage effectively and efficiently. Strategic information system needs to cater to the strategic demand of organization. For example, serving the business goals and creating competitive advantage as well as meeting their data processing and MIS needs. The key point is, as I just said before, organization need to have proper planning not only as tools for cutting cost but as means to adding value.

Database Development and Implementation.

For a company to succeed, its activities must be committed to its main objectives or mission. Therefore, regardless of a company’s size, a critical step for any organization is to ensure that its information system supports is strategic plan for each of its business areas.

The database administration strategy must not conflict with the information systems plans. After all, the information system plans are derived from a detailed analysis of the company’s goal, its condition or situation and its business needs. Several methodologies are available to ensure the compatibility of data administration and information systems plans and to guide the strategic plan development. The most commonly used methodology is known as information engineering.

Information engineering (IE) allows for the translation of the company’s strategic goals into the data and application that will help the company achieve those goals. IE focuses on the description of the corporate data instead of the process. The IE rational is simple; business data type tends to remain fairly stable and do not change much during their existence. In contrast, processes change is often and thus require the frequent modification of existing system. By placing the emphasize on data, IE helps decrease the impact on systems when process change. The output of IE process is an Information system architecture (ISA) that serves as the basis for planning, development, and control of the future information system.

Conclusion

Linking IS to business goals is the heart of IS planning and without this link, the IS function will not have major relevance for the organization. Choosing the right planning methodology depends on the current use and spread of technology within the organization and the importance of the current systems. Resources available such as staff, skill, CASE tools, etc. will also impact this process. It appears that the use of more than one methodology should be recommended. While new technology can be advantageous, it can also pose severe problems if the right skills and expertise are not available to use it properly.

The success of the overall information system strategy and therefore of the data administration strategy depends on the several critical success factors. Understanding the critical success factor help the database administration (DBA) develops a successful corporate data administration strategy. However, no matter how comprehensive the list of success factor is, it must be based on the notion that development and implementation of a successful data administration strategy are tightly integrated with the overall information system planning activity of the organization.

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