Information Systems 1

Report
IMS5042
Information Systems Strategic Planning
Week 4: Elements of IS planning Theory:
1. Stages of Growth Models
Copyright 2004 Monash University
Agenda
1. Introduction to Stages Theories
2. Nolan’s ‘Stages of Growth’
3. Further Stages Models: McFarlan
4. More Stages Models: Earl, Galliers and
Organisational Theory
5. Stages of Growth and Their Implications for IS
Planning
2
Copyright 2004 Monash University
1. Introduction to Stages of
Growth Models
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These are the first significant theoretical models
of what IS planning is about and how to do it
Started as theories about computers in
organisations, then led in to links to theories of
organisational management, innovation, etc;
Note links to SIS and Alignment approaches
Copyright 2004 Monash University
2. Nolan’s ‘Stages of Growth’
Model
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The original evolutionary ‘stages of growth’ model
for organisational computing
Now looks a bit out-dated, but its influence was/is
very strong
Copyright 2004 Monash University
Origins of Nolan’s Model
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Originally a Harvard University academic; then a
principal of Nolan Norton Consulting; then back to
Harvard; now at Washington University
Stages model was developed in a series of papers
published chiefly in HBR through the 1970s
Was one of the most widely-cited research articles on
IS and regarded by many as a key development in
adding some ‘science’ to the task of IS planning and
management
Formed the foundation of various planning
methodologies
Copyright 2004 Monash University
Basis of Nolan’s Stages Model:
(1) The Problem
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EDP is a very complex and technical activity which
executives outside the IT area find hard to
understand
Organisations get worried about the apparently
never-ending increases in EDP budgets
Organisations find it hard to know what strategies to
adopt for managing their EDP expenditure
IT managers find it hard to explain to executive
groups how their budgetary needs should be
handled
Copyright 2004 Monash University
Basis of Nolan’s Stages Model:
(2) Nolan’s View of the Situation
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Organisational use of IS/IT involves a blend of
external knowledge (computing theory) and internal
knowledge (how the organisation uses it)
The internal knowledge is mainly experiential
Experiential learning requires a blend of
organisational ‘slack’ and control
IS/IT expenditure will follow an S-curve. There is no
need to get worried about periods of rapid
expenditure growth because they show that things
are happening; they will flatten out eventually
Copyright 2004 Monash University
Basis of The Model
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IT within an organisation goes through several
stages of growth
Each stage has its own distinctive applications,
rewards, and problems
Each stage has to be managed in a way which is
sensitive to the issues in that stage and with an eye
for the issues which will arise in the next
Only by going through these stages will an
organisation be able to get maximum benefit from
IS/IT
Copyright 2004 Monash University
Development of the ‘Stages of
Growth’ Model (1)
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Version 1 (see diagram from Gibson & Nolan,
1974)
S-curve for expenditure: Slow growth during
initiation; rapid growth during expansion;
reducing growth during formalisation; slow
growth during maturity
Changes in applications portfolio, personnel
specialisation and appropriate management/
control measures
Copyright 2004 Monash University
Development of the ‘Stages of
Growth’ Model (2)
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Version 2 (see diagram from Nolan, 1979)
Same basic expenditure curve
Two extra stages
Benchmarks to define stages
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Indicators/Benchmarks for each Stage (1)
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Key indicators can be used to identify the stage of
development of an organisation’s data processing
Individual benchmarks may be misleading, but
taken together they are reliable
Benchmarks should be assessed for all major
business units, though they may not be applicable
in every case
A large company may have different divisions at
different stages, but ….
“…every division that I have studied has its DP
concentrated in a particular stage” (Nolan, 1979)
Copyright 2004 Monash University
Indicators/Benchmarks for each Stage (2)
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See diagrams
First level benchmarks
• Shape of DP expenditure curve; rate of growth vs
company sales
• Nature of technology used for data processing
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Second level benchmarks
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•
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•
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Applications portfolio
DP organization
DP planning and control
User awareness
Copyright 2004 Monash University
Using the Stages Model
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Use the model to explain to executive management
what is happening - ie model is for communication
Use the model to identify the current stage of IT/IS
usage in the organisation - ie model is for analytical
purposes
Use the stages to understand the current set of IT
management problems - ie model is for action purposes
Use the stages to predict how the organisation’s use of
IS/IT will evolve over time - ie model is for predictive
purposes
Copyright 2004 Monash University
The Validity/Generalisability of the Model:
(According to Nolan)
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The problems which arise at each stage and the
management techniques to solve them are very
similar regardless of variations in the EDP
installation and the type of company
The model is a simplified picture and may need to
change somewhat as IT evolves with new
technologies and new applications
Copyright 2004 Monash University
Comments on Nolan’s Model:
Consistency and Clarity
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Multiple versions, variations; inconsistencies
Uncertainty over language and meaning
Uncertainty over details of application (proprietary
control!)
Copyright 2004 Monash University
Comments on Nolan’s Model:
Experimental Verification
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Considerable doubt over the empirical basis of Nolan’s
original work (How many organisations? How reliable
was the data?)
Attempts at verification by subsequent studies
Suitability of benchmarks
Vagueness of language and problems of measurement
Copyright 2004 Monash University
Comments on Nolan’s Model:
Questions
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One S-curve or many?
Descriptive or normative?
Budget growth or learning growth?
Technological validity (batch vs on-line; mainframe vs
mini, database, etc)?
Only a DP-to-MIS transition (no concept of SIS)?
Copyright 2004 Monash University
3. Further ‘Stages’ Models:
McFarlan
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McFarlan worked at Harvard with Nolan
His work clearly ties in closely with Nolan’s
(don’t know who was influencing whom!)
Theory developed in three papers published
in HBR (see references)
Copyright 2004 Monash University
Basis for McFarlan’s Work
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In most organisations, the key information
technologies - office automation, telecommunications
and data processing - have evolved as separate
“islands” of technology
Historical, technological and organisational factors
have driven this
These technologies should now be treated under the
single title of Information Services
These services must be co-ordinated and integrated
to improve their efficiency and effectiveness
Copyright 2004 Monash University
Problems in Managing IT
Integration
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Merging technologies is difficult, because management
approaches to new information technologies should be
different to those for established technologies
Organisations change more slowly than technology
Therefore an organisation’s use of a technology will go
through some evolutionary stages
These stages relate both to Nolan’s stages and also to
theories of organisational change
Each organisation must map its own paths towards
successful integration of technologies
Copyright 2004 Monash University
McFarlan’s ‘Phases of Assimilation’
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(See diagram)
Phase 1: Investment or project initiation
Phase 2: Technology learning and adaptation
Phase 3: Management control
Phase 4: Widespread technology transfer
Copyright 2004 Monash University
Managing the Assimilation
Phases
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Merging “islands’ of technology must be sensitive to the
different phases which each island is in; each phase
needs a different management/planning approach
Separation of Phase 1&2 from Phase 3&4 technologies
may be needed to ensure that effectiveness and efficiency
goals do not collide
Full integration may take a long time; disorder and
‘inefficiency’ may be a necessary part of learning
The right balance between centralised and user-based
control is crucial - balance should change over time
Copyright 2004 Monash University
McFarlan’s ‘Strategic Impact’ of IT
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Planning must not only be sensitive to the phase of a
technology, but also its impact on the organisation
As technology, environment and organisation change,
so too must the priorities which organisations give to
their IS portfolios.
The strategic impact of IS/IT on an organisation will
vary over time
Organisational approaches to ISP must reflect the
contribution which IT/IS can make to the organisation
Copyright 2004 Monash University
McFarlan’s Strategic Grid
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(See diagram)
ISP must first seek to get agreement about
where in the grid the organisation fits
(perceptions may differ)
Different organisational units may be in
different grid positions
Grid position is central to deciding the
planning and management approach which is
needed for each business unit
Copyright 2004 Monash University
Comments on McFarlan’s Model
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McFarlan’s work points to links in two directions:
• assimilation phases link to theories of diffusion of innovation;
• strategic grid links to business planning
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The ‘assimilation’ work is a re-development and
extension of the ‘experiential learning’ aspect to
Nolan’s model.
The ‘strategic grid’ work incorporates the concept of
SIS which was missing from Nolan
Each of these areas opens up a a whole new set of
literature
Copyright 2004 Monash University
Comments on McFarlan’s Model:
Questions
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To what extent are McFarlan’s stages descriptive or
normative?
Subjectivity of the stage descriptions (benchmarks)?
Organisational status vs organisational unit status?
Copyright 2004 Monash University
4. Further Evolution of Stages Theories:
Sullivan, Earl and Galliers
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These writers come more from the organisation and
management side of things
Focus now on SIS, not DP; management and
organisational context, not budgets
As with Nolan, these theories have gone through
multiple versions over time
Initially combined Nolan and Mcfarlan approaches,
then developed their own specialised flavours
Eventual transition (in my view) to the
“Organisational Alignment” approach
Copyright 2004 Monash University
Sullivan’s Model
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Reviewed IS planning effectiveness in 37 major US
companies
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Argued that there are only two key determinants of
IS planning success:
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Infusion (impact/importance of IS/IT)
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Diffusion (decentralisation/spread of IS/IT)
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Strong correlation between these factors and the
type of planning approach which is effective (see
diagrams from Sullivan (1985) p6) (Note similarity
to McFarlan’s Strategic Grid)
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Organisations need to adapt their planning strategy
to the quadrant they occupy at that time
Copyright 2004 Monash University
Earl’s Model
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Developed from Sullivan’s model (“… sympathetic,
... but more complex”)
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Explicitly focuses on planning and organisational
maturity in regard to planning
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Tries to give more specific direction about what
actions an organisation should be taking at each
phase
Copyright 2004 Monash University
Earl’s Stages
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(See diagram from Earl, 1989)
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Stage 1: The organisation lacks IS resources and
experience
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Stage 2: The IS department lacks understanding of
the business and where IS can contribute
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Stage 3: Growing demand for IS creates a need for
prioritisation and control
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Stage 4: Business units starts to seek to use IS for
competitive advantage
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Stage 5: IS/IT becomes a key aspect of
organisational business planning and directions
Copyright 2004 Monash University
Galliers: IS Planning & Organisational Theory
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Another version of Earl’s approach (see diagram
from Galliers & Sutherland, 1991)
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Key organisational elements are taken from
McKinsey & Co:
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Strategy; Structure; Systems; Staff
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Style; Skills; Super-ordinate goals
Stages of IS growth and maturity are:
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Ad Hocracy
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Starting the foundations
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Centralised dictatorship
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Democratic dialectic and co-operation
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Entrepreneurial opportunity
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Integrated harmonious relationships
Copyright 2004 Monash University
Stages: Note changing focus as to what the
stages relate to
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Stages in level of experience in using IS/IT (Norton)
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Stages in organisational impact of IT (McFarlan,
Sullivan)
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Stages in organisational maturity for IS planning
and management (Earl, Galliers)
Copyright 2004 Monash University
5. Stages and Their Implications for IS
Planning
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The concept of stages has been a very popular
element of IS planning approaches
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Models described in this lecture are merely some
important examples; many others exist involving
variants of these or introducing new aspects
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Many methodologies contain some elements of
stages theory of some kind
Copyright 2004 Monash University
Common Elements of Stages Models
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The need for planning to cope with the rapidly (and
unpredictably) changing nature of IS and IT
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The nature and importance of processes of
evolution, diffusion of innovation, etc; (to be
discussed later as emergent strategy)
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The nature and importance of organisational IS
maturity to its ability to deal with innovation and
change
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The need for management strategies sympathetic
to the problems of innovation and change
Copyright 2004 Monash University
Some General Thoughts on Stages Models
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Intuitively very appealing; conform to concept of
stages in a person’s learning/understanding/
application/etc of something new
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Suit our desire for orderliness and classification
(stereotypes)?
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Make use of some very simplified (simplistic?)
versions of organisation and innovation theory
Copyright 2004 Monash University
Some General Questions of Stages Models
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How do you recognise and measure ‘stages’ so you
can identify which stage you are in? (Can we even
agree what constitutes a stage and agree on
whether we are in it?)
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Can you categorise an entire organisation as being
in a ‘stage’? (If not, what are the implications for
planning approach(es)?)
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Do you have to go through the stages or can you
skip some? Can you get through them faster?
Should you try?
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Do stages iterate as technologies change?
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Does it ever really end happily ever after (maturity,
harmony, integration, nirvana etc)??
Copyright 2004 Monash University
6. Implications of Stages Models:
Planning philosophy??
Comprehensive
Dictatorial
Rational
Pluralist
Deterministic
Pragmatic
Directed
Ad hoc
Emergent
Formalised
Contingent
Utopian
Political
Unified
Democratic
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Incrementalist
Copyright 2004 Monash University
Implications of Stages Models: Planning
purpose
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What is planning for? Note the transition in what
ISP is about:
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managing budgets
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managing innovation
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business planning
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managing organisational processes
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Note the implied position about the predictability of
the future
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Note the importance of vision, positioning, etc
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Note the varying relative positions of business
strategy and IS strategy
Copyright 2004 Monash University
Implications of Stages Models: Planning
outcomes
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What do we finish up with as a result of the
planning process? How closely tied to action is the
strategy? What does this tell us about what these
approaches define as being “strategic”?
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Note focus on general management strategies,
organisational directions, links between business
and IS, etc
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Note lack of focus on specific actions - systems,
technology, infrastructure, skills, etc
Copyright 2004 Monash University
Implications of Stages Models: Planning
Process
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How do we plan?
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What are the steps/tasks to be undertaken by the
planner?
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Different ISP processes for different stages?
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Who plans? Who identifies the stages for the
business and for each business unit?
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When do we plan?
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… before the stages happen?
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… during each stage?
Copyright 2004 Monash University

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