The Importance Of Strategic Planning Information Systems Information Technology Essay

Introduction: What is SISP? Being in twenty-first century which revealed that most of the activities in any organization will use technology as their method to accomplish and assist their core business activities. It is because technology has a powerful effect in producing things with minimum energy consuming, and gives them a cost advantage in competition. An information system is an important component in an organization which consists of hardware, software, procedure, people, and data. It has the responsibility and task to gather, collect, store, process, retrieve, transmit, and distribute the information among the organization. Since the world is so competitive, the strategic level of management will invest in information system to help a corporation to achieve competitive advantage. To ensure the effectiveness of investment in IS, it has to incorporate the company’s planning policies within Strategic Information System Planning (SISP) activities. In addition, one of the objectives of implementing SISP is the business strategy of the organization should align with the IS investment. (Bozarth, 2006).

Strategic Information System Planning (SISP) is a planning on how to ensure the information system (IS) is strategically locates in the organization in order to accomplish their goals and gain competitive advantage. Remenji (1991) stated that, “SISP is the process of establishing a programme for the implementation and use of IS in such a way that it will optimize the effectiveness of the firm’s information resources and use them to support the objectives of the whole enterprise as much as possible”. SISP is the process whereby an organization determines a portfolio of computer-based applications to help it to achieve its business objectives. It includes formulating IS objectives, defining strategies and policies to achieve them, and develop detail plans to give effects on strategies and policies. (Lederer & Sethi, 1998). SISP can help organizations to determine the main concern for information systems development in the organization in term of effectiveness, efficiency, and others.

The reasons in conducting SISP are to ensure that IS both complements and assists in the achievement of the business goals; to ensure the use of scare resources are maximized within a business; to exploit the benefits of changing technology; and to take account of the different viewpoints of business professionals and IT professionals.

Source: Ward & Grififiths, (1997)

Figure 1

Figure 1 illustrates the overall aim of SISP which direct the IS resources to those areas offering the most important corporate benefits. Normally those who involves in the organization will involve in SISP to ensure a successful ISP will achieve. The personnel involved are the Information System Analyst/Planners, Top Management commitment, and Stakeholders (employees, suppliers, sponsors, etc.).

SISP is a critical issue facing today’s businesses because it can identify the most appropriate targets for computerization and make a huge contribution to businesses as well as other organizations. Effective SISP can help organizations use information system to implement business strategies and reach business goals. (Lederer & Sethi, 1998).

There are two methodologies in implementing SISP such as impact methodologies and alignment methodologies. Impact methodologies consist of Value Chain Analysis and Critical Success Factor, where as alignment methodologies consist of Information Engineering, Business System Planning, and Method/1. Those methodologies have their own advantages and disadvantages and each organization has their own feasibility to choose the best method.

Source: Bhattacharjya, & Venable, 2001

Figure 2

Figure 2 illustrates the needs for IS planning in the organization because without proper planning, the organization will find it difficult to have the best information systems in the organization hence causing the wasting of provision, money and time consuming.

A SISP consists of a strategy in planning and managing the information and resources by using information system, including the use of functions and features of IS. (Noor, Hasinda, Rafeah, & Hafizah, 2007).With a proper strategic IS planning, organizations can use IS more competitively, identify newer and higher payback IS applications, and better forecast IS resource requirements.

Why does the organization need to implement SISP? The reasons are; identify important application to invest; help organization use its IS to carry out existing business strategy; help organization defines business strategy; maximize profit; increase efficiency; and other activities.

The Importance of Strategic Information System Planning

Identification of the Organization Current Position

There are several important strategies of applying SISP to the organization using appropriate SISP methodologies. It can be discussed in terms of the identification of the organization’s current position. (Basu, Hartono, Lederer, & Sethi, 2002). SISP can assist the organization to identify their current position either they are in critical situation that need IS immediately or not. The analysis of company situation will be done by strategic level management in terms of the problem arise, budget allocation, staff requirement, IS needed, and others If the company need the IS immediately therefore they have to find out ways to solve the problems and at the same time, the process does not bother key functional process in the organization. If they have enough budget allocation to have a new information system, they can carry on the process to have it either by outsourcing, develop in-house, or buy the information system and customized it to make suitability with the organization needed. Otherwise if they recognize that the company still can use the existing information system for their organization therefore they do not have to invest for the new one. That is why SISP is importance nowadays in the organization since it can help the organization to find out and determine the priorities in certain situation that need attention.

Establishment of New Computer System Can Improve Strategic Position

Besides the information mention above, another important point of implementing SISP in the organization is the establishement of new computer system that can improve the strategic position. (Lederer & Sethi, 1988). With the support of SISP, the organization can find out the suitable computer systems for their organization which ensure the strategic position of the information system in the organization consecutively to support the organization’s strategic goals and objectives. The players in the SISP play an important role to ensure the computer hardware and software requirement are compatible with the information system that will be developed or modify. If the company does not conduct SISP therefore the process of adopting the information system as a tool to accomplish the organization’s strategic goal and objectives will suspend and disturbing the chores work in the organization hence affect the organizational performance. Moreover with the assisting of the SISP the organization could identify the most important application system that they need to invest for the organization. Given an example in Sultanah Zanariah Library (PSZ) at Universiti Teknologi Malaysia (UTM), which they are developing a new information system which is Reading Station. PSZ is an organization that supports the chore business to their parent organization which is UTM by providing the best services for their users either UTM’s internal or external community in term of support the information needed. Therefore PSZ are managing their resources aligned with the university’s chore activities which teaching, learning, consultancy, research, and publication. Realizing that their users need their services everywhere hence they are developing a Reading Station. There are about fourty reading station that placed around the university to support their users need indirectly to accomplish their objective which is to nurture a knowledge-based culture and towards excellence mindset amongst UTM’s internal and external community. Those reading station must be organized in a proper manner therefore they decide to develop a new information system named Reading Station (RS). They make a decision to develop that kind of information system when they conscious that particular IS could improve their strategic position in the organization hence accomplish their goals and the parent organization’s goals. They will not develop that particular IS if there is no benefit at all. The process taken by them in deciding whether they need the new information system or not, will involve the SISP. By conducting SISP also, PSZ could decide and develop that new information system which compatible with their existing Integrated Library Management System (ILMS). They have to consider the system requirement, suitable computer hardware and software when they developing their new information system and databases.

Improve Internal Coordination In An Organization

Beside that, by implementing SISP the organization can improve internal coordination in an organization. (Hartono, Lederer, Sethi, & Zhuang, 2003). SISP give niche to manage and control internal coordination of organization. It can coordinate their internal information resources so that the dissemination and accessibility of internal information resources become smooth and wider. The information needed can be access through all departments in that particular organization. For instance the Academic Affairs Department and Financial Department in higher educational institution can get the information and related data of the students from the Student Database since the database can be used for information and knowledge sharing. This internal coordination gives advantage to that organization which it can cut cost, reduces data redundancy, and will increase effective management.

Ensure The Current And Future Developments In The Organization

Apart from that, SISP is important to ensure the current and future developments in the organization which reflect the basic strategic thrust of the business. (Newkirk, Lederer, & Srinivasan, 2003). SISP can help the organization to predict the future development in the organization which is parallel to the organization mission and vision. Basically SISP will be conducted in order to align the IS plan with the organization’s objectives and goals.

The other importance of SISP is efficient and effective management for information system resources. With the help of SISP the organization can manage well their resources and create the alignment between business and IST activity, (Acumen Insights, 2009).

The Relationship between SISP and Database Development and Implementation

SISP will assist information system analyst and top management (end user) to determine the best information system that could be used in the organization for each department since SISP as medium for information system analyst and manager or staffs in the organization to have a discussion in order to determine the preeminent and suitable information system (IS) for their organization. It is difficult to decide which information system is the best for the organization, but with the help of SISP it could be done. It is because strategic IS planning will involved all the management levels in the organization that is operational level, tactical level, and strategic level. End user is the most important aspect in preparing information system for the organization because end-user is the one who will use it. Normally information system analyst will conducting SISP activities to analyze which is the best or suitable information system for the organization since it must take into consideration about the alignment of information system (IS) planning and organizational strategic goals and objectives.

Database is one of the components that comprise in the information system, and it is required for the purpose of knowledge sharing, decision making, storing, managing, retrieving and analyzing the information in the organization. It is not an easy process to develop a database since there are several phases that the database administrators have to follow. Process of developing the database will make the involvement of SISP process because they are interrelated. Database development describes the process of database design and implementation. (Rob & Coronel, 2007). Database development and implementation are engage in Database Life Cycle (DBLC). More explanations on DBLC and the relationship of the importance of SISP with the database development and implementation will discuss further.

Database Life Cycle (DBLC)

As stated by Rob & Coronel, (2007), The Database Life Cycle (DBLC) is the history of a database within an information system, and phases that involves in DBLC is shown in Figure 3. DBLC is one of the processes that contain in SDLC (System Development Life Cycle) since SDLC provide the big picture within which database design and application development is able to map out and evaluated.

Source: Rob & Coronel (2007). Database Systems: Design, Implementation, and Management.

Figure 3:

Database Life Cycle (DBLC)

SISP Help in Database Initial Study

The first phase in DBLC is database initial study which requires a database administrator to examine operation of the current system used in the organization. In this phase, the database administrator has to analyze the organization environment, their information needed and functional requirement for the database. Therefore, SISP is needed in order to complete this phase because during SISP the project team which comprise of information system analyst, database administrator, top management, and end user will discuss further detail on what the organization preferred from the IS and database. Moreover by conducting SISP the project team can identify the portfolio of computer-based applications for the organizations indirectly assist the organization in executing its business plan and realizing business goals. (Hartono, Lederer, Sethi, & Zhuang, 2003). Ideally, this phase is occurring when the current system used in the organization is failed or the organization intends to develop a new one. If the current system is failed, the designer has to determine why and how it failed. Process of deciding whether to build a new system or modify the existing system also involves SISP process such as Value Chain Analysis (VCA) which consists in impact methodologies in SISP. In VCA, the SISP will be conducted by analyzing the need of each department in the organization towards information system, and those all the information system could integrate with each other in order to be a niche for the organization to gain competitive advantage. Diagram 1 show the process in deciding the adoption of information system in the organization. The chosen of designer is depending on the complexity and scope of the database environment which consider the organization goals and objectives since the database that will be developed or modify must support the organization’s goals and objectives.

Assess Needs (what are you doing now)

Fix or replace the current system

Buy, Build or Outsource a new system?

Replace

Fix it (Select a Consultant)

Buy

Build

Outsource

Select an ASP

Select a consultant

Specify solution requirements

Select a vendor

Source: Database planning guide. (2001). Compu Mentor. Retrieved from http://www.compumentor.org.

Diagram 1

SISP Help In Determine the Organizational Environment

The company situation describes the company operations, its organizational structure, its mission, goals, and objectives, its functional requirement for each department, and others. In analyzing the company situation, it must resolve the issues like “what is the organization’s general operating environment?” Therefore the design of the database must align with the organization’s operating environment in order to assist the chores work in the organization since the used of information system is to smoothen the daily and nature work. For instance, the database that will be developed in library environment is quite differing from the database that will be developed in hospital (health) environment. In library environment it maybe concern of the library holdings; patron details – for the purpose of circulation process; vendors; cataloging; and other. While health environment maybe concern about the database that will be used in storing patients’ history – including the medication that they have taken before; doctors’ particular details, treatment; and other that is related to this management. That is why the SISP is needed in the organization to develop a new system or to modify the existing system. For instance if the organization took the Business System Planning methodologies (BSP), therefore it could assist in interpreting the organization’s operating environment because during this methodology, the firm can recognizes its business mission, objectives, functions, and determine its business process. By analyzing that business process hence could determine the data classes. All combination of data classes could assist database administrator to develop database for the organization. (Lederer & Sethi, 1988). Thus it shows that SISP is related to the development of database in the organization because the database cannot be develop if the nature and chores work in the organizations is unknown. Furthermore the development of database must also comply with 5W such as “Who is the end user that will use it”? (Manager? Clerk? Chief Executive Officer? and others), “What are the functional requirement”? “How the database can operate”? and those question can be answer with the help of SISP.

SISP Support the Organization In Define Problem and Constraints

Other than that, defining problems and constraints in the organization also important in the database initial study. (Bozarth, 2006). It is because the database can be developed or modify when the problems and constraints are known. Therefore, the designer must collect and analyze those problems and constraints that arise in the company before developing a new database or modifying the existing database or replacing the current database that already outdated. For instance, the problems may arise from production manager, marketing manager, machine operator, and others. Different organization and company will have different problems and constraints. Then the designer must gather all particular information (problems arise from various business unit) and probe carefully in order to identify the problems in the company operations with a larger framework. The designer must find the precise answer since it is important to facilitate the development of the database which is concerned with operational relationships among business units. For example how does the problem of the marketing manager fit within the broader set of marketing department chores works? This situation also involved the SISP process since process of gathering that particular information (collect and analyze the problems and constraints) could be done with the assist of SISP because SISP consists of a strategy in planning and managing the resources in the organization including the use and application of information system.

SISP Is Significant in Defining Scope and Boundaries in Developing the Database

More over the first phase in DBLC also involve defining scope and boundaries in implementing the development and creation of the database. Scope and boundaries is a limit to the system. The scope means that to what extent the database design can operates according to the operational requirement. (Rob & Coronel, 2007). Will the database encompass the entire departments in the organizations or specific to certain department? By defining the scope will assist designer to determine the required data structure of the database, number of entities, size of database, and so on. In other hand, the boundaries are the external limit of the system, for instance budget allocation, software and hardware that will be used, time consuming in developing the database, and so on. (Rob & Coronel, 2007). In an ideal world, the designer can choose which is the best software and hardware that can be used in implementing and accomplish the database system goals. It is because, in SDLC, the selection of suitable hardware and software is important in order to produce the quality system. Unfortunately, nowadays the technology changed rapidly, and those databases that will be designed must follow and comply with the existing hardware and software. Once more SISP is involve and related with this situation in order to develop a database since by applying SISP the organization could understand and ensures the alignment between organizational business goals and objectives with the information system (IS) activity. (Acumen Insights, 2009). SISP also help in defining scope and boundaries in database development because in conducting SISP it will involve the budget allocation also. Moreover, SISP activities will take into account the business strategy of the corporation, and variety of external factors such as positioning of competitors and suppliers. (Rogerson & Fidler, 1994).

SISP Assist In Ensure the Database Design Meet the End User Need

The second phase in DBLC is database design. At this phase the designer must create the conceptual design, process of selection of DBMS, create the logical design and create the physical design. This phase is the most critical phase in DBLC phases and need high concern because it has to make sure that the final product of the database is meet the end user’s needed and systems requirements. That is why the proper and detail analysis of planning must be done correctly and accurately especially in SISP stages. It is because if the design of the information system is not align with the organizational goals and objectives, it will result in wasting of time and budget allocation. Furthermore the investment in information systems is quite high especially when involve the development of database. Therefore at this stage, it is required the concentration of the data characteristics which will be used in database model later. Process of collecting the data characteristic will need SISP since with the help of SISP in could align the view of manager (top management) and database administrator. Moreover, the objective of SISP is to improve communication between information system analyst and user, to increase top management support, and better forecast resources requirement and allocates resources. (Lederer & Sethi, 1988). Figure 5 shows the different view of manager (top management) and designer (eg: database administrator), and those views could be settle by using IS and in order to put IS strategically in the organization therefore SISP is needed.

Source: Rob & Coronel, (2007). Database Systems: Design, Implementation, and Management.

Figure 5

Two views of data: business manager and designer

SISP Support Conceptual Design in Database Development

The first stage in database design is conceptual design. In this stage, there is a need for data analysis and requirement. In this step the designer should gather all particular data and information that is needed in developing databases. How to gather all particular data needed? The answer is through the conducting of SISP by top management level since top management support is a key determinant of SISP success (Kearns, 2004). They have to obtain the characteristics of the data elements which focus on the type of information that the organization need; types of users; types of sources of information that will be used; and constitutions of information. (Rob & Coronel, 2007). Information needs describes on the type of the information that are needed by the organization such as the output result that generates by the databases; eg: reports and queries. Type of information users also have to determine by the designer in order to ensure the database is successfully use and effective in helping the organization reach their objectives and goals. To develop an accurate data model, the designer should have a thorough understanding about the data types that is used in that particular organization. By doing this the designer could defined the business rules from all the data gathered. A business rule is a brief and precise narrative description of a policy, procedure, or principle within a specific organization’s environment. When designer had recognized the business rules in the organization and write it properly will assist them to define the entities, attributes, relationships, connectivity, cardinalities, and constraints. (Bozarth, 2006). Example of business rule within the organization are; a student can register many courses; a course can be registered by many students; a student can take a program; a program can be taken by many students; a lecturer may teach many students; and others. Preferably, business rules is derived from description of operations which is s document that provides precise, detailed, up-to-date, and thoroughly reviewed descriptions of activities that define an organization’s operating environment. The description of operations could be getting from company managers, policy makers, department managers, and written documentation. (Compu Mentor, 2001). This situation shows the existence of the relationship between SISP and database development since the importance of implementing SISP is to improve internal coordination in an organization. When the data element and characteristic are defined and gathered, it is easier for the designer to understand what kind of the data are needed in each department hence help them to produce a good relationship in Entity Relationship (ER) diagram later. If the developed database cannot be linked with other department (eg: Financial Department and Human Resources Department) it create a poor information sharing among the organization. Moreover the activities in SISP will involve defining the Information Architecture (in BSP methodology) which will lead to database design when the particular classes have determined according to business process. Then, the designer or team prepares the system and subsystem for the databases according to data gathered. (Lederer & Sethi, 1988).

The second step in conceptual design is creating the entity relationship modeling and normalization. 8 steps involve in developing the conceptual model using ER diagram are;

Identify, analyze, and refine the business rules;

Identify the main entities;

Define the relationship among entities;

Define the attributes, primary keys, and foreign keys for each of the entities;

Normalize the entities;

Complete the initial ER diagram;

Have the main end users verify the model in step 6 against the data, information, and processing requirements;

Modify the ER diagram

(Sandifer, & Halle, 1991)

ER diagram is very important in order to ensure the database will work successfully. Wrong relationship in the diagram can cause the database cannot perform as desired by the organization hence could make the information unable to retrieve and share.

The second stage in database design is the DBMS (Database Management System) software selection. DBMS software selection is important in order to have a smooth operation in developing the database later. Therefore a critical analysis and studying must be conducted by the designer to ensure the best DBMS will be selected to develop the database. This situation also involves SISP process in order to ensure the database that will be developed can improve the strategic position of IS in the organization and also could gain competitive advantage. Methodology that can be used in SISP in order to ensure the organization could gain competitive advantage from the use of Information System is impact methodologies. (Pant, & Hsu, 1995).

Implementation and Loading

The third phase in DBLC is implementation and loading. At this phase, the system administrator can install the selected DBMS software in order to implement the logical design and create the databases. When the databases have been created, then the data must be loading into the database tables. Another criteria that must to taken into consideration in this phase is database performance, security of the database, backup and recovery, data integrity, and company standards. (Bozarth, 2006). Bear in mind that the database cannot be implemented if there is no proper planning in SISP. Agree with the Lederer and Sethi (1988) that SISP is the process for the organization to planning properly in determines the best and suitable computer system and application for the organization to support the business operations. At this stage, database administrator also has to get agreement from end user in order to run the database through the organization.

Therefore, to conclude the overall explanation above, it shows that there exist a relationship between SISP and database development and implementation. There also exist correlation between information system analyst or programmer and end-user in the organization because the programmer have to gather all related data about the organization from end-user to develop database; and the end-user (include manager, operational staffs, etc.) need programmer to assist them in developing information system for the purpose of gain competitive advantage for their organization. The medium used in conveying the idea from both different parties will need SISP.

Information Engineering and Database

Another relationship among SISP and database development and implementation could be explained in term of SISP methodologies. An example of SISP methodologies is Information Engineering. Information Engineering (IE) is an integrated set of methodologies and products used to guide and develop information processing within an organization. This methodology provides techniques for building enterprise, data and process models. (Pant & Hsu, 1995). Figure 6 shows process involve in the IE. It can be assume that there are exist a relationship between IE and DBLC.

Source: Pant & Hsu, 1995

Figure 6

The database development which include database design is involve in the logical level and physical level. While database implementation involve in platform level which the implementation of the databases.

Conclusion

SISP is a process to establish the alignment between strategic organizational goals and objectives with the IS plan. SISP is important in order to ensure the organization reach what their need. Proper use of SISP may lead to success implementation of IS. SISP also important in developing database and implement it in the organization because there is interrelated relationship among them especially when determine the business operations. As a result the particular organization could gain competitive advantage by conducting SISP. Furthermore, SISP is a proper planning which suitable in our time that most of the chores activities are conducting by using information technologies and systems. Without SISP, the organization cannot determine the best and suitable information system for the organization since SISP has the approaches or methodologies used. Also without SISP, information system analyst cannot develop a suitable system to the organizations. Therefore, SISP plays an important role in order to maintain, control, manage and increase productivity of services in the organization in this information age parallel with the development of the information sys