Sesi04 Internal IS and IT Strategic Analysis
IS/IT Strategic Analysis: Assessing and
Understanding the Current Situa8on
(Internal Business Analysis)
By: Zainal A. Hasibuan
Faculty of Computer Science
University of Indonesia, Oct. 2009
Review From Previous Session
• The development of IS/IT Strategies should be aligned with
business strategies
• The processes of developing IS/IT Strategic Plan consist of:
– Current situa8on analysis
• Internal business analysis
• Current IS/IT analysis
– Future situa8on analysis
• External business analysis
• IS/IT trend analysis
– Gap analysis
• The output of IS/IT Strategic Plan: (1) IS/IT management strategy,
(2) Business IS/IT strategy, (3) IT strategy
We are here
Context of This Session
External Business Environment
Internal Business Environment
Internal IS/IT environment
Current Applications Portfolio
External IS/IT Environment
Strategic IS/IT
Planning Process
Planning Approaches, Tools and Techniques
IS/IT Management Strategy
Business IS Strategies
Applications Portfolio
IT Strategy
Model & Matrices
Session Objec8ves
• To understand the current situa8on in the
business as the baseline of the SPIS analysis
• To iden8fy business ac8vi8es and business
processes (exis8ng condi8on)
• To obtain Informa8on System logical
requirements based on fact finding, analysis and
interpreta8on
• To understand the use of various modeling and
analysis tools (techniques).
• To develop IS/IT Strategy based on the analysis
I. Analysis of Internal Business
Environment
Business Process Re‐engineering and IS Strategy
• Most business strategy development needs re‐
engineering to improve performance
• Developing IS strategy needs understanding of
business strategy
• The success of BPR usually supported by IS
strategy.
Which one comes first: Business drives IS/IT or IS/IT
support Business?
The Role Of IS/IT in BPR: Ques8ons to
be asked
• How can business processes be transformed using IT?
– Based on IT capabili8es
– IT as enabler
• How can IT support business processes?
– Provide value added
• Ul8mately, how can IT deliver op8mal benefits to
organiza8on?
– Interface to IT Governance
– Improve performance
Role of IS/IT in BPR
Organizational Approach
All levels
should be
well defined
and value-added
can be measured
Source Ward and Peppard
Impact & Alignment of BPR and IS/IT
Strategy
Drive
Techniques and Analysis to Determine The IS
Demand
SWOT, CSFs,
Value Chain
Business Model
Current & Expected
Business & Technical
Environment
Current Status of IS/IT
Business
Strategy
Opportunities
For IS/IT
Innovation
Proposed
Business
Initiatives
Determine
The IS
Demand
Impact and Role of IS/IT
Potential Status of IS/IT
Proposed
IS/IT
Initiatives
Gathering the Relevant Data in Order to Determine the
Demand of Informa8on Systems
Task
Deliverable
Analysis of the business
strategy
Identified its components and its information
needs
Analysis of current and
future portfolio of the
business
Determine how IS/IT can strengthening business
competitive position
Analysis of the internal
business environment
Understand the relevant organizational
characteristics, SWOT, SLOT, and other factors
Identification of CSF of
the business
Crystallize the meaning of success in meeting
the objectives stated in the strategy
Information Analysis
Model the logical activities and inherent
information elements in the business
Evaluation of the
Effectiveness
Identify where changes need to occur, how IS/IT
can improve performance
Task
Deliverable
Identification and analysis of
internal and external value chain
Identify information flow through
business and across its value chain
Creation of a conceptual
architecture
Modeling future processes
Compilation of a catalogue of all
the HW, SW being used and their
functions
Input to migration plan
Evaluation of the current
application portfolio
List of information systems in use
and assess their contribution
Evaluation of IS/IT policies,
organization, processes, services,
capabilities, etc
Assess their applicability to meet
current and future business needs
Where can you find all these data/
informa8on?
How do you collect the data/
informa8on?
Use scien8fic method to collect
data/informa8on
Where to Find Data and Informa8on?
• All strategic business units (SBU) in the
organiza8onal hierarchical structure
• Documenta8ons related to business plan,
business report, decree (surat keputusan)
policy and regula8on, etc.
• Observa8on: work flows, informa8on flow,
chain of command, etc.
• Survey and Interview
Scien8fic Method to Collect Data
and Informa8on
• Develop ques8oner for survey
• Develop list of ques8ons for interview
– Record the interview
• Develop check list for observa8on
– Business process
– Human resources
– ICT facili8es
• Note taking for reading the documents of
business report, strategic plan, etc.
Points to Analyzed in the Internal
Business Environment
• The business strategy as the means to achieve
business objec8ves
– Business strategy 8es to business objec8ve?
• The current business process, ac8vi8es, and the
main informa8on en88es
– Is there any business process value chain?
• The organiza8onal environment: structure, asset
and skills, competency, culture, etc.
– How does chain of command?
– How do resources being allocated?
Internal Business Environment (Interpre8ng The
Business Strategy)
• Business strategy
– Purpose: to ensure that IS strategy supports rather contradicts business
strategy
– Iden8fy and analyze the current strategy
– Compile and confirm the IS requirements, and document in the IS
demand
– Tools: cri8cal success factors analysis and business drivers analysis
• Business processes, ac8vi8es, and key en88es
– Purpose: to understand important business tasks and processes, and the
flow of informa8on. Make up the business model with suppor8ng IS
model
– Tools: processes effec8veness analysis, process flow diagrams, DFD, ER,
and ac8vity en8ty matrices (tabular representa8on of the business…)
• Organiza8onal environment
– Purpose: to understand organiza8onal arrangements, value system, and
key people and their rela8onships. Understand the environment, its skills,
resources, values, culture, social interac8ons, its management style…
– Tool: organiza8onal modeling
Cons8tuents of a Business Strategy
(Usually included in “Renstra”)
• Mission: Statement of overall purpose for the organiza8on
• Vision: Brief descrip8on of the future that is consistent with the
mission
• Business drivers: A set of cri8cal forces for change that the
business must respond to
• Goals: Major achievements necessary to accomplish the vision
• Objec8ves:Measurable targets that take the organiza8on towards
the goals
• Strategies: Concrete ways to achieve the objec8ves (inputs from IS
planning process)
• Cri8cal success factors: Areas where things must go right for the
organiza8on to flourish
• Business area plans: the plans of various areas of the business
Business Processes, Ac8vi8es, and Key
En88es
• Business model depict the processes, ac8vi8es and
main informa8on elements and how they relate to
one another
• IS model consists of
– Process flow, func8onal decomposi8on, ERD, DFD, Ac8vity/
en8ty matrices
– Use case diagram, Class Diagram, Ac8vity Diagram, etc
• IS architecture for the business: Rela8onship of
business model to IS model
Source Ward and Peppard
Business Model
• Business processes: the sets of interlinked ac8vi8es or
roles that deliver specific outputs to iden8fied customers
inside or outside the organiza8on
• Ac8vi8es: the elements of the business processes that
organiza8on undertakes to produce, promote and
distribute its products or services, to develop, support
and administer its infrastructure and to measure
performance against objec8ves.
• Key en88es: within an ac8vity that are of fundamental
importance to business processes.
IS Model
•
•
•
•
•
•
Process flow models
Func8onal decomposi8on model
ERD
DFD
Ac8vity/En8ty Matrices
Other Diagramming Techniques using UML ‐
OO
IIA. Analysis of Internal IS/IT Environment
• Current IS management strategy (applica8ons
porholio)
– Content and coverage of applica8ons
– Contribu8on of applica8ons
• Current IS/IT regula8on and policies
• Value of IS organiza8on
– IS profile in organiza8on: structure, func8on, etc.
– IS percep8on in organiza8on
• Current IT management strategy (IT infrastructure)
– IS/IT organiza8on and processes
– IS/IT assets, resources, and skills
– IS methodologies and training provisions
IIB. Analysis of External IS/IT Environment
• To gain perspec8ve on IT trend and
opportuni8es
• Looking at what compe8tors are doing with
IS/IT
• Iden8fy elements of IS/IT that need further
inves8ga8on
III. Measurements, Techniques, Methods, etc to
Determine IS Needs
Cri8cal Success Factors Analysis
• “The limited number of areas, in which
results, if they are sa8sfactory, will ensure
compe88ve performance of the
organiza8on
• Hierarchy of CSF (industry, organiza8onal,
business unit, and manager)
• Iden8fied from objec8ves and strategies
• For priori8zing and determining IS
applica8ons
Objectives and CSFs Relationship:
CSF occurs at each Level
CSF Levels
Industry
CSFs
Organizati
Onal CSFs
BusinessUnit
or Function CSFs
“CSF: things must go right”
Manager’s
CSFs
Example: Objective is To achieve 1 % growth in market share.
In order to achieve that objective, Strategy, CSF
and Measurement needed are as follow:
Strategy
CSF
Measure to be
developed
Improve sales in
all sites at rates
higher than
industry average
Competitive pricing
Company price versus
Salary of site
industry average
Manager salary versus
industry average
Proportion of high
turnover sites
Improve sales of
underperfoming
sites
Level of advertising
manager
Distribution of sites
Amount spent versus
industry average
Other examples of CSFs: access to raw material, timely delivery, etc
Objec8ve must be well defined and
measureble
CSF HELPS DEFINE AND SET
OBJECTIVES
Rela8onship BSC and CSF
Example of Rela8onship BSC and CSF
• The objec8ve is to reduce stockholding
costs
– The CSFs for this objec8ve are:
• Earlier iden8fica8on of obsolete items
• Improve forecas8ng to reduce safety stock
– Informa8on requirements:
• Analysis of stock turn
• Stock forecas8ng
• Stock replacement
Information System
Needed?
CSF Analysis
Executive IS
IS applications
Define
Critical Success
Factors
Prioritize
Define
Identify
Objectives and
Strategies
Business tasks
and processes
CSFs help manager to control the business performance
CSFs help define and prioritize the IS needs
Technique to analyze business processes:
Process Effec8veness Analysis
• To measure the ability of business processes to contribute
to mee8ng business needs
• Assess the effec8veness of each business process against
each cri8cal business driver
• A business process is a logical collec8on of related
business tasks
• Examples of cri8cal business drivers
– Produc8on efficiency: removal of duplica8on, removal of unnecessary
checking, reduced transfers of responsibility, simplified procedures, and
streamlined informa8on flows
– Customer sa8sfac8on: reduced 8me to process orders, reduced 8me to
answer queries, and improved quality of products delivered, and
improved quality of services rendered
Technique to analyze degree of Information
System: IS Profile in Organizations
High
Support routine,
Distributed
Computing
Strategic to entire
organization
Support routine,
Centralized
computing
Crucial to some
business areas
Low
Diffusion
(deployment
in business)
High
Infusion (impact on business)
Technique to analyze the rela8onship of
business and IS: Organiza8onal Modeling
• Structured technique to ensure
comprehensive examina8on of business and IS
environments
• Documents environmental factors underlying
each key business process
• Assesses the implica8ons of changing each key
business process
• Aid to decision making and communica8on
• Especially useful during business re‐
engineering exercises
Organizational Modeling Technique to Identify
Key Business Processes
Organization arrangements
• Hierarchy charts
• Job description
• Budgets
Employees and other assets
• Skills and training
• Fixed assets
• Financial assets
Social systems
• Relationships
• Working attitudes
• Cultural values
Technology
• Hardware
• Software
• Methodologies
Key business
processes
• Acquisition
• Production
• Decision making
External environment
• Competition
• Legislation
• Fiscal policies
Dominant coalition
• Key players
• Power distribution
• Personal goals
Evalua8ng the Gap Between Current
and Required IS/IT
• Iden8fy business processes in need of
recogni8on, simplifica8on, streamlining, or
redesign
• Iden8fy new or upgraded informa8on provisions
– New uses of exis8ng sources of informa8on
– New sources of informa8on
• Iden8fy changes in the IT management strategy
(supply provisions) to support the new role of IS
in the organiza8on
Tips and Bits for this Session
• Fact finding processes to obtained relevant
informa8on to develop IS/IT strategy
• There are techniques to analyze and interpret
the development of IS/IT Strategy
• No trivial ajempt to develop IS/IT strategy
• More techniques to come….
Understanding the Current Situa8on
(Internal Business Analysis)
By: Zainal A. Hasibuan
Faculty of Computer Science
University of Indonesia, Oct. 2009
Review From Previous Session
• The development of IS/IT Strategies should be aligned with
business strategies
• The processes of developing IS/IT Strategic Plan consist of:
– Current situa8on analysis
• Internal business analysis
• Current IS/IT analysis
– Future situa8on analysis
• External business analysis
• IS/IT trend analysis
– Gap analysis
• The output of IS/IT Strategic Plan: (1) IS/IT management strategy,
(2) Business IS/IT strategy, (3) IT strategy
We are here
Context of This Session
External Business Environment
Internal Business Environment
Internal IS/IT environment
Current Applications Portfolio
External IS/IT Environment
Strategic IS/IT
Planning Process
Planning Approaches, Tools and Techniques
IS/IT Management Strategy
Business IS Strategies
Applications Portfolio
IT Strategy
Model & Matrices
Session Objec8ves
• To understand the current situa8on in the
business as the baseline of the SPIS analysis
• To iden8fy business ac8vi8es and business
processes (exis8ng condi8on)
• To obtain Informa8on System logical
requirements based on fact finding, analysis and
interpreta8on
• To understand the use of various modeling and
analysis tools (techniques).
• To develop IS/IT Strategy based on the analysis
I. Analysis of Internal Business
Environment
Business Process Re‐engineering and IS Strategy
• Most business strategy development needs re‐
engineering to improve performance
• Developing IS strategy needs understanding of
business strategy
• The success of BPR usually supported by IS
strategy.
Which one comes first: Business drives IS/IT or IS/IT
support Business?
The Role Of IS/IT in BPR: Ques8ons to
be asked
• How can business processes be transformed using IT?
– Based on IT capabili8es
– IT as enabler
• How can IT support business processes?
– Provide value added
• Ul8mately, how can IT deliver op8mal benefits to
organiza8on?
– Interface to IT Governance
– Improve performance
Role of IS/IT in BPR
Organizational Approach
All levels
should be
well defined
and value-added
can be measured
Source Ward and Peppard
Impact & Alignment of BPR and IS/IT
Strategy
Drive
Techniques and Analysis to Determine The IS
Demand
SWOT, CSFs,
Value Chain
Business Model
Current & Expected
Business & Technical
Environment
Current Status of IS/IT
Business
Strategy
Opportunities
For IS/IT
Innovation
Proposed
Business
Initiatives
Determine
The IS
Demand
Impact and Role of IS/IT
Potential Status of IS/IT
Proposed
IS/IT
Initiatives
Gathering the Relevant Data in Order to Determine the
Demand of Informa8on Systems
Task
Deliverable
Analysis of the business
strategy
Identified its components and its information
needs
Analysis of current and
future portfolio of the
business
Determine how IS/IT can strengthening business
competitive position
Analysis of the internal
business environment
Understand the relevant organizational
characteristics, SWOT, SLOT, and other factors
Identification of CSF of
the business
Crystallize the meaning of success in meeting
the objectives stated in the strategy
Information Analysis
Model the logical activities and inherent
information elements in the business
Evaluation of the
Effectiveness
Identify where changes need to occur, how IS/IT
can improve performance
Task
Deliverable
Identification and analysis of
internal and external value chain
Identify information flow through
business and across its value chain
Creation of a conceptual
architecture
Modeling future processes
Compilation of a catalogue of all
the HW, SW being used and their
functions
Input to migration plan
Evaluation of the current
application portfolio
List of information systems in use
and assess their contribution
Evaluation of IS/IT policies,
organization, processes, services,
capabilities, etc
Assess their applicability to meet
current and future business needs
Where can you find all these data/
informa8on?
How do you collect the data/
informa8on?
Use scien8fic method to collect
data/informa8on
Where to Find Data and Informa8on?
• All strategic business units (SBU) in the
organiza8onal hierarchical structure
• Documenta8ons related to business plan,
business report, decree (surat keputusan)
policy and regula8on, etc.
• Observa8on: work flows, informa8on flow,
chain of command, etc.
• Survey and Interview
Scien8fic Method to Collect Data
and Informa8on
• Develop ques8oner for survey
• Develop list of ques8ons for interview
– Record the interview
• Develop check list for observa8on
– Business process
– Human resources
– ICT facili8es
• Note taking for reading the documents of
business report, strategic plan, etc.
Points to Analyzed in the Internal
Business Environment
• The business strategy as the means to achieve
business objec8ves
– Business strategy 8es to business objec8ve?
• The current business process, ac8vi8es, and the
main informa8on en88es
– Is there any business process value chain?
• The organiza8onal environment: structure, asset
and skills, competency, culture, etc.
– How does chain of command?
– How do resources being allocated?
Internal Business Environment (Interpre8ng The
Business Strategy)
• Business strategy
– Purpose: to ensure that IS strategy supports rather contradicts business
strategy
– Iden8fy and analyze the current strategy
– Compile and confirm the IS requirements, and document in the IS
demand
– Tools: cri8cal success factors analysis and business drivers analysis
• Business processes, ac8vi8es, and key en88es
– Purpose: to understand important business tasks and processes, and the
flow of informa8on. Make up the business model with suppor8ng IS
model
– Tools: processes effec8veness analysis, process flow diagrams, DFD, ER,
and ac8vity en8ty matrices (tabular representa8on of the business…)
• Organiza8onal environment
– Purpose: to understand organiza8onal arrangements, value system, and
key people and their rela8onships. Understand the environment, its skills,
resources, values, culture, social interac8ons, its management style…
– Tool: organiza8onal modeling
Cons8tuents of a Business Strategy
(Usually included in “Renstra”)
• Mission: Statement of overall purpose for the organiza8on
• Vision: Brief descrip8on of the future that is consistent with the
mission
• Business drivers: A set of cri8cal forces for change that the
business must respond to
• Goals: Major achievements necessary to accomplish the vision
• Objec8ves:Measurable targets that take the organiza8on towards
the goals
• Strategies: Concrete ways to achieve the objec8ves (inputs from IS
planning process)
• Cri8cal success factors: Areas where things must go right for the
organiza8on to flourish
• Business area plans: the plans of various areas of the business
Business Processes, Ac8vi8es, and Key
En88es
• Business model depict the processes, ac8vi8es and
main informa8on elements and how they relate to
one another
• IS model consists of
– Process flow, func8onal decomposi8on, ERD, DFD, Ac8vity/
en8ty matrices
– Use case diagram, Class Diagram, Ac8vity Diagram, etc
• IS architecture for the business: Rela8onship of
business model to IS model
Source Ward and Peppard
Business Model
• Business processes: the sets of interlinked ac8vi8es or
roles that deliver specific outputs to iden8fied customers
inside or outside the organiza8on
• Ac8vi8es: the elements of the business processes that
organiza8on undertakes to produce, promote and
distribute its products or services, to develop, support
and administer its infrastructure and to measure
performance against objec8ves.
• Key en88es: within an ac8vity that are of fundamental
importance to business processes.
IS Model
•
•
•
•
•
•
Process flow models
Func8onal decomposi8on model
ERD
DFD
Ac8vity/En8ty Matrices
Other Diagramming Techniques using UML ‐
OO
IIA. Analysis of Internal IS/IT Environment
• Current IS management strategy (applica8ons
porholio)
– Content and coverage of applica8ons
– Contribu8on of applica8ons
• Current IS/IT regula8on and policies
• Value of IS organiza8on
– IS profile in organiza8on: structure, func8on, etc.
– IS percep8on in organiza8on
• Current IT management strategy (IT infrastructure)
– IS/IT organiza8on and processes
– IS/IT assets, resources, and skills
– IS methodologies and training provisions
IIB. Analysis of External IS/IT Environment
• To gain perspec8ve on IT trend and
opportuni8es
• Looking at what compe8tors are doing with
IS/IT
• Iden8fy elements of IS/IT that need further
inves8ga8on
III. Measurements, Techniques, Methods, etc to
Determine IS Needs
Cri8cal Success Factors Analysis
• “The limited number of areas, in which
results, if they are sa8sfactory, will ensure
compe88ve performance of the
organiza8on
• Hierarchy of CSF (industry, organiza8onal,
business unit, and manager)
• Iden8fied from objec8ves and strategies
• For priori8zing and determining IS
applica8ons
Objectives and CSFs Relationship:
CSF occurs at each Level
CSF Levels
Industry
CSFs
Organizati
Onal CSFs
BusinessUnit
or Function CSFs
“CSF: things must go right”
Manager’s
CSFs
Example: Objective is To achieve 1 % growth in market share.
In order to achieve that objective, Strategy, CSF
and Measurement needed are as follow:
Strategy
CSF
Measure to be
developed
Improve sales in
all sites at rates
higher than
industry average
Competitive pricing
Company price versus
Salary of site
industry average
Manager salary versus
industry average
Proportion of high
turnover sites
Improve sales of
underperfoming
sites
Level of advertising
manager
Distribution of sites
Amount spent versus
industry average
Other examples of CSFs: access to raw material, timely delivery, etc
Objec8ve must be well defined and
measureble
CSF HELPS DEFINE AND SET
OBJECTIVES
Rela8onship BSC and CSF
Example of Rela8onship BSC and CSF
• The objec8ve is to reduce stockholding
costs
– The CSFs for this objec8ve are:
• Earlier iden8fica8on of obsolete items
• Improve forecas8ng to reduce safety stock
– Informa8on requirements:
• Analysis of stock turn
• Stock forecas8ng
• Stock replacement
Information System
Needed?
CSF Analysis
Executive IS
IS applications
Define
Critical Success
Factors
Prioritize
Define
Identify
Objectives and
Strategies
Business tasks
and processes
CSFs help manager to control the business performance
CSFs help define and prioritize the IS needs
Technique to analyze business processes:
Process Effec8veness Analysis
• To measure the ability of business processes to contribute
to mee8ng business needs
• Assess the effec8veness of each business process against
each cri8cal business driver
• A business process is a logical collec8on of related
business tasks
• Examples of cri8cal business drivers
– Produc8on efficiency: removal of duplica8on, removal of unnecessary
checking, reduced transfers of responsibility, simplified procedures, and
streamlined informa8on flows
– Customer sa8sfac8on: reduced 8me to process orders, reduced 8me to
answer queries, and improved quality of products delivered, and
improved quality of services rendered
Technique to analyze degree of Information
System: IS Profile in Organizations
High
Support routine,
Distributed
Computing
Strategic to entire
organization
Support routine,
Centralized
computing
Crucial to some
business areas
Low
Diffusion
(deployment
in business)
High
Infusion (impact on business)
Technique to analyze the rela8onship of
business and IS: Organiza8onal Modeling
• Structured technique to ensure
comprehensive examina8on of business and IS
environments
• Documents environmental factors underlying
each key business process
• Assesses the implica8ons of changing each key
business process
• Aid to decision making and communica8on
• Especially useful during business re‐
engineering exercises
Organizational Modeling Technique to Identify
Key Business Processes
Organization arrangements
• Hierarchy charts
• Job description
• Budgets
Employees and other assets
• Skills and training
• Fixed assets
• Financial assets
Social systems
• Relationships
• Working attitudes
• Cultural values
Technology
• Hardware
• Software
• Methodologies
Key business
processes
• Acquisition
• Production
• Decision making
External environment
• Competition
• Legislation
• Fiscal policies
Dominant coalition
• Key players
• Power distribution
• Personal goals
Evalua8ng the Gap Between Current
and Required IS/IT
• Iden8fy business processes in need of
recogni8on, simplifica8on, streamlining, or
redesign
• Iden8fy new or upgraded informa8on provisions
– New uses of exis8ng sources of informa8on
– New sources of informa8on
• Iden8fy changes in the IT management strategy
(supply provisions) to support the new role of IS
in the organiza8on
Tips and Bits for this Session
• Fact finding processes to obtained relevant
informa8on to develop IS/IT strategy
• There are techniques to analyze and interpret
the development of IS/IT Strategy
• No trivial ajempt to develop IS/IT strategy
• More techniques to come….