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An integrated approac h toward strategic informationsystems planning

S.K. Min a, E.H. Suhb, S.Y. Kim b,*

aKnowledge Information Centre, Electronics and Telecommunications Research Institute, 161 Kajong-dong,

Yusong-Gu, Taejon, South KoreabDepartment of Industrial Engineering, Pohang University of Science and Technology, san 31 Hyoja-dong,

Namgu, Pohang, Kyungbuk, South Korea

Received 1 October 1999; revised 1 June 2000; accepted 5 July 2000

Abstract

Within the competitive global environment, information has become a key resource for increasing

a corporation s competitiveness by changing the nature or conduct of business. Accordingly,

corporation s are now seeking a method for information systems planning to maximize their strategic

effectiveness.

Strategic Information Systems Planning (SISP) refers to the process of creating a portfolio for the

implementation and use of IS to maximize the effectiveness and efficiency of a corporation , so that it

can achieve its objectives. An investigation of SISP, however, showed that only 24% of planned

applications were actuall y developed (Int. J . Comput. Appl. Technol., 8 (1995), 61; MIS Quarterly,

September (1988), 445). This figure clearly shows that enhancements are required for current SISP

processes. In particular , this paper focuses on SISP methodologies, which provide support for overall

SISP processes.

The paper initially identifies four general SISP methodology problems: lack of support for Infor-mation TechnologyArchitecture, under-emphasis on information technology opportunities, duration

of SISP, and lack of support for business process reengineering. Next, it proposes an integrated SISP

methodology which solves the above problems while retaining the advantageous qualities of current

SISP methodologies. Finally, a case study is added to show how the methodology actually works in

practice. 1999 Elsevier Science B.V. All rights reserved.

Keywords: Strategic information systems planning; Information systems; Business process reengineering; Infor-

mation technology architecture ; Strategy; Strategic information systems; Information technology

Journa l of Strategic Information Systems 8 (1999) 373394

0963-8687/99/$ - see front matter 1999 Elsevier Science B.V. All rights reserved.

PII: S0963-8687(00)00029-9

www.elsevier.com/locate/jsis

* Corresponding author. Tel.:82-54-279-5920; fax: 82-54-279-2870.

E-mail address: [email protected] (S.Y. Kim).


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1. Background

1.1. Strategic information systems

Strategic systems are essential for a corporation to gain a competitive advantage to

attain its goals. In order for a system to be called strategic, it must significantly change

business performance, the means the business employs to attain a strategic goal, the way a

corporation does business, the way it competes, or the way it deals with customers or

suppliers (Ernst and Chen, 1994).

The difference between strategic information systems and other Information System

(IS) such as Transaction Processing System (TPS), Management Information System

(MIS), Decision Support System (DSS) is that the new focus is on strategy.

However, the competitive advantage that a corporation may gain by using strategic

information systems is not risk-free. A corporation using strategic information systemsmay lose competitive advantage by shifting the basis of competition in an unfavorable

direction, lowering entry barriers, bringing on litigation or regulation, or increasing the

power of suppliers and customers relative to the corporation (Tan et al., 1995). Therefore,

it is vital to consider all factors surrounding the development of strategic information

systems in order to achieve substantial competitive advantage, which makes the planning

phase imperative.

1.2. Strategic information systems planning

In order for a corporation to develop a strategic plan, it needs to answer the following

three questions.

What position is the corporation taking at present? (current status)

What position does it plan to take in the future? (objective)

What path should it take to reach the objective? (implementation)

Strategic Information Systems Planning (SISP) is the process of answering the above

questions specifically in relation to IS. Information systems planning is the process of

creating a plan for the implementation and use of IS to maximize the effectiveness of

corporate resources to achieve its goals.

SISP has become an accepted part of the overall corporate strategic planning process.

By using SISP, a corporation is involved in finding a way to manage effectively in a

complex and dynamic environment. A study on satisfaction using SISP showed that

corporations adopting a specific SISP method were more satisfied with the planning

process and outcome than those not using a specific SISP method (Rogerson and Fidler,

1994).

The process of SISP is quite intriguing because if developed quickly, the output is likely

to be insufficient; if developed flawlessly over a comparatively long period of time, it is

likely to become ineffectual by the time it gets to the stage of implementation (Lederer and

Sethi, 1996).The development of the plan involves many participants working cooperatively, not

independently. If business specialists develop the plan independently, the plan is likely to

S.K. Min et al. / Journal of Strategic Information Systems 8 (1999) 373394374


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become technologically infeasible, and if the information specialists develop the plan by

themselves, the plan is likely to become excessively technical. The participation of top

management is also crucial since the IS will inevitably become the core of the corporation

in the future.

2. Strategic information systems planning

2.1. Overview of SISP methodologies

An SISP methodology provides support for the overall SISP process. By proceeding in

accordance with effective SISP methodologies, corporations can establish the basis for IS

that would assist management to improve performance and aid the corporation in propos-

ing, planning and prioritizing proposed IS for short- and long-term development in direct

association with the business plan (Karababas and Cather, 1994).

SISP methodologies offer a structured approach for carrying out the IS planning process

in a short time, and with maximum effectiveness. Basically, SISP methodologies provide

the following (Rowley, 1994).

Overview. A way of obtaining an overview or top-down view of the area to be studied.

Consistency and flexibility. A consistency will be achieved between overall philosophy

and methodology.

Communication. Communication between team members and their user community

and between individual team members within the team are facilitated. Documentation. The principal end product of the process is a report.

Rational Decisions. The methodology should form a vehicle to help management make

rational decisions.

2.2. An analysis of contemporary SISP methodologies

As each corporation requires a different perspective in planning, each methodology also

has a unique approach for the planning phase in terms of direction, input, output and

management. Hirschheim divided SISP approaches into two categories: IS-led vs. Infor-

mation Technology (IT)-led directions (Flynn and Arce, 1995). The IS-led approach is

top-down, focusing on information needs and flows which support decision making

processes. The IT-led approach is bottom-up with the focus on searching for productivity

improvements based on IT utilization. Lederer and Sethi, on the other hand, divided SISP

approaches into alignment and impact planning approaches (Flynn and Arce, 1995;

Lederer and Sethi, 1988). Alignment approaches focus on IS as a way to assist business

goals, and impact approaches emphasize the analysis of business processes to identify

strategic opportunities for applying IS to optimize business performance, modify the

corporations current practices, or add new practices.

Differences between SISP methodologies can clearly be shown when SISP methodol-ogies are compared. Although it is difficult to show that one methodology is better than

another, it is relatively easy to determine if one methodology is more fit than another for

S.K. Min et al. / Journal of Strategic Information Systems 8 (1999) 373394 375


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a particular purpose. For example, SUMMIT-S, an SISP methodology used by Coopers

and Lybrand, allows for the definition of detailed plans for organizational change while

4Front, an SISP methodology used by Deloitte and Touche, includes all phases from

strategic planning to implementation.Generally, corporations select or develop their SISP methodologies according to six

major circumstances surrounding the corporation:

The sophistication of the current applications portfolio (Rowley, 1995).

The development stage of the corporation (Rowley, 1995).

The immediate problems facing the corporation and its managers (Rowley, 1995).

The amount of resources available for the planning phase.

The corporations sector in business.

The importance the corporation places on its IS.

2.3. SISP problems

The biggest loss resulting from an inadequate output from the SISP process is not

financial; it is the possibility of overlooked opportunities. The SISP phase, therefore,

needs to be flawless, with cautious analysis at each stage. Due to the rapid development

in IT and changes in the market environment, nevertheless, it is getting more difficult to

successfully plan for strategic information systems.

Although much research has been done on SISP both in consulting companies and in

academic institutions, there still remain numerous general problems that need to be solved.

The following are the top nine problems found in a well-known US study by Lederer and

Sethi (1988).

(1) Difficult to secure top management commitment.

(2) Post-analysis required after study completed (additional IT information required).

(3) No training plan for IT development.

(4) Success dependent on the IT leader.

(5) Difficult to find a team leader meeting proper criteria.

(6) Lack of sufficient computer support.

(7) Ignores plan implementation issues.(8) No analysis of IT department strengths/weaknesses.

(9) No analysis of technology environment.

These nine problems can be categorized into that relate to methodologies (2,3,7,8,9) and

those that do not (1,4,5,6). Problems such as the difficulty in finding a team leader meeting

proper criteria or the difficulty to secure a top management commitment are unrelated to

SISP methodologies they relate to the corporate culture. Since the focus of this study is

on SISP methodology problems, problems unrelated to methodologies will be disregarded.

Problems 2, 3 and 7 must deal with the fact that SISP methodologies are rather ignorant

of implementation issues. Indeed, the Information Technology Architecture (ITA) processis completed separately from SISP in most corporations. Problems 8 and 9 concern the

fact that IT opportunities are under-emphasized, which is also the reason that most IS are



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non-strategic. Alignment forms the chief focus of SISP processes for over 80% of corpora-

tions (Lederer and Sethi, 1996).

Another problem is the duration of SISP (Lederer and Sethi, 1996). Considering the fast

evolution of IT, the duration of SISP is too long. Finally, the fact that business processreengineering is being accomplished separately from SISP causes substantial problems

since IS is an enabler of business process reengineering for improving efficiency and

effectiveness in business processes. The following is a more descriptive explanation of

the four SISP methodology problems identified above.

2.3.1. Lack of support for ITA

ITA, the identification of the set of IT principles, standards, guidelines and statements of

direction to facilitate and promote the design and purchase of interoperable systems, has

been neglected in SISP methodologies; SISP methodologies have neglected implementa-

tion issues related to ITA. A study shows that only 24% of planned applications areactually developed due to unresolved implementation issues (Flynn and Arce, 1995).

Even when the process for setting the ITA was performed, it was accomplished separately

from SISP in most corporations. This causes inconsistency and confusion between the

outputs of ITA and SISP, which could make one or the other valueless.

2.3.2. Under-emphasis on IT opportunities

The majority of contemporary methodologies employ an impact planning approach.

Information Engineering (IE), an SISP methodology developed by James Martin Associ-

ates (1990), focuses on IS to augment business strategies rather than on the creation of IS

strategies. An investigation shows that 80% of corporate SISP processes focus on align-ment and another study shows that only a small number of companies gained a competitive

advantage from IS although they performed the SISP process (Lederer and Sethi, 1988).

Insufficient analysis of the IT environment for opportunities is the reason for this result. In

todays fast changing IT environment, the IT environment needs to be carefully surveyed

to understand what it is actually possible to achieve. How can SISP succeed without

knowing what the IT opportunities are?

2.3.3. Duration of SISP

This problem is another reason for the low rate of implementation of SISP. IE, for

example, takes 1012 months (Flynn and Arce, 1995). Today, the business and IT envir-

onment is very unstable; in 10 months, a totally new and improved IT could emerge in

todays fast-changing technological environment.

2.3.4. Lack of support for business process reengineering

Business process reengineering, the fundamental rethinking and radical redesign of

business processes to achieve dramatic improvements in critical, contemporary measures

of performance such as cost, quality, service and speed (Hammer, 1990), is prevalent in

corporations today. Business process reengineering may change the functional structure of

the corporation and may require IS to incorporate certain features. If SISP is achievedwithout considering such changes and needed features, the IS is likely to become

incapable of supporting altered processes. In the same way, business process



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reengineering cannot be effectively accomplished without knowing what the prospective

IS is based on.

3. An integrated SISP methodology

3.1. Objectives of integrated SISP methodology

We propose a methodology to solve all of the problems identified in the previous section

while retaining the positive qualities of existing SISP methodologies; the methodology

concentrates on maximizing strategic effectiveness while minimizing the use of corporate

resources, especially time.

Overall, the SISP methodology differentiates and improves previous SISP methodolo-

gies with three sub-objectives.

Accentuate information systems strategy formulation in both technological and busi-

ness perspectives. Integrate business process reengineering and ITA into the SISP methodology

Design the methodology to minimize the time duration of SISP.

In terms of dimensions and qualities the methodology is both IS-led and IT-led with a

strategic direction, focusing on information needs and searching for productivity improve-

ments in IT utilization. The approach towards methodology will be both alignment based

and impact based, focusing on IS as a way to assist business goals as well as identifying

strategic opportunities enabled by IT.

3.2. New features of integrated SISP methodology

The integrated SISP methodology, in comparison to conventional SISP methodologies,


Table 1

A comparison of the integrated SISP methodology and other SISP methodologies

Integrated SISP

methodology

IE Summit-S

Impact/Alignment Both Alignment Both

Objectives (1) Information needs Information needs

to be linked to a

business plan

(1) Information

needs

(2) IT plan (2) IT plan

(3) Specific implementation

plan

(3) Implementation

plan

(4) Change management

Top-down/bottom up Both Top-down Both

Time Horizon (months) 35 1012 610

Support for ITA Yes No NoSupport for process changes Yes No No


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consists of supplementary sub-processes with a different overall structure. Altogether, it

embodies four features that differentiate the integrated methodology from other general

SISP methodologies. Table 1 shows how the new features differentiate the integrated SISP

methodology from other SISP methodologies.

First, two sub-processes are added to emphasize IT opportunities in the process of

generating IS strategies. In the first sub-process, the currently used IS is carefully assessed

and the IT environment is analyzed to identify IT opportunities. In the second sub-process,

the identified IT opportunities are integrated with the business strategies to establish

overall IS strategies. The overall IS strategies are used at the next sub-processes to set

the information architecture and to determine the specific plans for IS implementation as

well as for business process reengineering.

Second, the methodology incorporates ITA into the information systems specification

sub-process. The ITA is concerned with many activities and outputs that are directly

related to SISP, which causes a problem when the two are performed separately. By

incorporating and integrating ITA into the information systems specification sub-process,

the confusion disappears and the output of the SISP process will be more beneficial since it

will contain more detailed plans ITA plans in addition to conventional SISP process

outputs for the implementation of IS.Third, a sub-process is added for operational analysis and business process reengineer-

ing. Business process reengineering, accomplished separately from SISP, is closely related


Fig. 1. Overall framework of integrated SISP methodology.


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to the process of planning for IS since a key factor for business process reengineering is IS.

SISP is likely to become fruitless if the business processes are reengineered (after the SISP

process is over) in such a way that IS need to play a different role in the reengineered

processes in contrast to the conventional business processes. With a sub-process for

operational analysis and business process reengineering in the integrated SISP methodol-

ogy, the result of SISP will have a higher chance of being implemented along with an

enhanced output.

Finally, the methodology is based on concurrent engineering. Present methodologies, in

general, do not consider whether the stages can be accomplished concurrently. They may

include a step for creating a workout plan, but because the methodology is designed in asequential form, it is difficult to work out a plan to carry out different stages at the same

time. By designing the framework for SISP under the concept of concurrent engineering,

the duration of the SISP process is significantly reduced.

3.3. Framework of integrated SISP methodology

The integrated SISP methodology consists of seven main sub-processes: establishment

of the planning process, strategic business planning, IT opportunity identification, infor-

mation strategy formulation, operational analysis and business process reengineering,

information systems specification, and documentation for implementation. Of the seven

sub-processes, three remain to some extent unchanged from traditional SISP methodolo-

gies (establishment of planning process, strategic business planning, documentation for

implementation) while the other four sub-processes are fundamentally redesigned or new.

The overall framework of the integrated SISP methodology is shown in Fig. 1. The

framework is designed in sequence starting from level 1 and completed in level 5

and sub-processes that can be completed concurrently are placed at the same level.

This, however, does not mean that sub-processes on the same level are accomplished

independently. Strategic business planning, for example, provides certain informationfor the identification of IT opportunities.

The seven sub-processes, by accomplishing each task, generate the overall backbone for


Fig. 2. Framework of establishment of planning process.


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the implementation of strategic information systems. A detailed explanation of the sevensub-processes follows.

3.3.1. Establishment of planning process

The establishment of the planning process is essential to set the development of SISP

into action. The objective is to get the support of top management, gather a chief project

team to carry out the SISP process and to create a formal description of the SISP study.

This sub-process can be divided into three stages: the establishment of the planning

committee, top management commitment, and establishment of project team. Fig. 2

shows the basic flow of this sub-process and the following is a description of the three

stages.

Establishment of planning committee. The planning committee is not established here to

carry out the SISP process, but by members who shall determine whether the SISP can

bring about a competitive advantage. The planning committee gains top managements

commitment by showing the benefits to be obtained from the SISP.

Top management commitment. Difficulty in securing top management commitment is a

major SISP problem. An SISP process should not be initiated unless a top executive

sponsor and some executives are committed to being involved in it. The planning commit-

tee needs to clearly show the executives that the SISP process is required by the

corporation.Establishment of project team. After gaining the top managements commitment, the

project team for carrying out the overall SISP process is established. A team leader, an


Fig. 3. Framework of strategic business planning.


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executive who will work full time in the study and direct team activities, needs to be

selected at this stage to communicate with other executives throughout the SISP process

(IBM, 1984). Other members should include a representative from each department along

with IS analysts. The project team, then, should make a formal description of the SISPstudy with an explanation of the exact nature of the study, the objectives, each members

responsibilities, expected targets and a brief of the techniques that will be followed in

conducting the project (Karababas and Cather, 1994).

3.3.2. Strategic business planning

This is the sub-process for identifying the overall business strategies of the corporation.

The result of the establishment of the planning process (formal description of the SISP

study) is the input, and the outputs are the business strategies. The business strategies,

along with the IT opportunities identified in the IT opportunity identification sub-process,

are integrated to produce the overall information systems strategies in the informationsystems strategy formulation sub-process. The strategic business planning sub-process can

be divided into five stages: establishment of corporate vision and objectives, analysis of

business environment, identification of Critical Success Factors (CSF), identification of

Key Performance Indicators (KPI), and identification of business strategies. The basic flow

of this sub-process is shown in Fig. 3 and following is a description of the five stages.

Establishment of corporate vision and objectives. Whether a firm is developing a new

business or reformulating a direction for an ongoing business, it must determine the vision,

objectives and philosophies that will shape its strategic posture (Pearce and Robin-

son,1994). The vision and objectives are critical to the corporation because it is the

basis for the formulation of strategies.Analysis of business environment. Next, the business environment needs to be analyzed

to identify the current status of the corporation. The business environment can be classified

into a remote environment, an industry environment, and an operating environment. The

remote environment includes economic, social, political, technological and ecological

factors (Pearce and Robinson, 1994). The industry environment, includes factors such

as entry barriers, supplier power, buyer power, substitute availability, and competitive

rivalry (Porter and Millar, 1985). Finally, the operating environment includes the compe-

titors, creditors, customers, labor and suppliers.

Identification of critical success factors. Based on the analysis of the business environ-

ment of the corporation, the critical success factors concerning the firm are identified.

Critical success factors refer to the limited number of areas in which results, if satisfactory,

will ensure successful competitive performance for the organization. They are the few key

areas where things must go right for the business to flourish (Rockart, 1979). Thus, the

factors that are critical for accomplishing the objectives are identified at this stage.

Identification of KPI. The KPI are identified to measure success in accomplishing the

identified critical success factors. The KPI identified at this stage are used not only for

identifying the business strategies, but also in the assessment of the current IS in the IT

opportunity identification sub-process.

Identification of business strategies. Based on the previous analysis of the businessenvironment, critical success factors and KPI, the distinct business strategies are identified

at this stage. Business strategies are remarkably important, as they will guide the



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corporation in a direction that will lead to a competitive advantage, which will eventuallyhelp achieve corporate objectives.

3.3.3. IT opportunity identification

This is the sub-process where IT opportunities are identified to emphasize technological

factors in the identification of information systems strategies. This sub-process differenti-

ates the integrated SISP methodology from other methodologies by putting equal empha-

sis on technological factors and business factors. This sub-process is designed to first

assess the points that do not require results from strategic business planning. The sub-

process can be distinguished into five stages: current information systems system evalua-

tion and information quality evaluation, evaluation of current IS in relation to strategy,

evaluation of current IS using KPI, analysis of IT environment, and identification of IT

opportunities. The basic flow of this sub-process is shown in Fig. 4 and following is a

description of the five stages.

Current information systems system evaluation and information quality evaluation. At

this stage, first, a clear picture of all the hardware, software and data the organization uses

needs to be created. Next, a system evaluation is accomplished concerning such factors as

data currency, turn around time, response time, data accuracy, reliability and system

flexibility. Finally, information quality is evaluated, considering factors such as informa-

tion accuracy, output timeliness, completeness, relevance and precision.Evaluation of current IS in relation to strategy. At this stage, the current IS is evaluated

to show its role in creating a competitive advantage. Factors such as individual impact,


Fig. 4. Framework of IT opportunity identification.


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organizational impact and user satisfaction are evaluated at this stage. An evaluation of

how the current IS has supported the objectives set at the previous SISP process should

also be evaluated.

Evaluation of current IS using KPI. At this stage, the current IS is evaluated to see how

it can support the critical success factors identified in the strategic business planning sub-

process; based on the identified KPI, the current IS is evaluated. Advantages, disadvan-

tages, problems and other specifics should also be described at this stage as this is the last

stage for current IS assessment.Analysis of IT environment. Based on the results of the assessment, the IT environment

is analyzed to identify IT trends in similar business environments and new capabilities of

IT. IT breakthroughs that have a potentially dramatic effect on the corporate environment

should also be identified. Naturally, the analysis should be performed on relevant circum-

stances concerning the critical success factors.

Identification of IT opportunities. After the analysis of the IT environment is accom-

plished, specific IT opportunities that can support the critical success factors are identified

at this stage. The IT opportunities, along with the business strategies, are crucial as they

shall be used on the next sub-process for forming the final information systems strategies

along with the business strategies.

3.3.4. Information systems strategy formulation

The identified business strategies and IT opportunities are integrated to formulate the

specific information systems strategies in this sub-process. Some business strategies may

need to be reformulated and some IT opportunities may be abandoned in the process of

integration due to infeasibility or insufficient resources, but the integration should enhance

the overall strategies of the corporation. The sub-process can be divided into two stages:

comparison and analysis of business strategies and IT opportunities, and establishment of

information systems strategies. Fig. 5 shows the basic flow of this sub-process. A descrip-tion of the two stages follows.

Comparison and analysis of business strategies and IT opportunities. IT opportunities,


Fig. 5. Framework of information systems strategy formulation.


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although derived on the basis of the critical success factors, are likely to differ from

business strategies. They may provide additional strategies for impact and, at other

times, may support business strategies for alignment. A descriptive analysis of IT oppor-

tunities must be accomplished at this stage to check if the cost of procuring the IT

opportunities can bring about desired results. A cautious comparison and analysis of the

business strategies and IT opportunities is accomplished here to set the basis for the

formulation of information systems strategies.Establishment of information systems strategies. Based on the analysis of business

strategies and IT opportunities, Information systems strategies are established at this

stage. The strategies formulated here may be classified into those that are based on the

business strategies set in the strategic business planning sub-process and those that are

derived from IT opportunities. The new strategies, identified from IT opportunities, will be

added to the business strategies for the corporation.

3.3.5. Operational analysis and business process reengineering

Based on the IT environment information, critical success factors and information

systems strategies identified in the previous sub-process, the analysis of operations and

business process reengineering are accomplished. The result of the operational analysis is

used not only for business process reengineering, but also for defining the information

architecture in the information systems specification sub-process. Specifics set while

accomplishing business process reengineering will also be used for defining the specific

requirements and identifying specific IT components for IS development. The operational

analysis and business process reengineering sub-process can be divided into four stages:

operational analysis, identification of processes requiring change, understand and measure

existing processes, identification of IT enablers. The stages of business process reengi-

neering are based on Davenports Business Process Redesign framework (Davenport andShort, 1990). Fig. 6 shows the basic flow of the sub-process and the following is a

description of the four stages.


Fig. 6. Framework of operational analysis and business process reengineering.


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Operational analysis. At this stage, the functional structure of the corporation is

identified (Karababas and Cather, 1994). Inefficiencies in functional operations are

discovered at this stage to set a basis for business process reengineering and for

defining the information architecture in the information systems specification sub-

process. Opportunities for more effective departmental (structural) operations may

also be identified. The functions most critical to the critical success factors and

strategy are also matched.

Identification of processes requiring change. Due to practical limitations, not all

processes can be improved in most corporations. Therefore, the processes most in need

of change are selected. The selection process is based on three criteria: the processes

critical to accomplishing the critical success factors and strategies, processes that are

most problematic, and those that are most likely to be successfully redesigned. At this

stage, the current organizational culture also needs to be evaluated in light of the impend-

ing change to be brought about by reengineering.

Understand and measure existing processes. Existing processes need to be understoodand measured for two reasons. First, problems need to be understood clearly so that they

are not repeated. Second, accurate measurement can serve as a baseline for future


Fig. 7. Framework of information systems specification.


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improvements (Davenport and short, 1990). Flowchart and other diagrams may be used to

evaluate current performance capabilities.

Identification of IT enablers. The awareness of IT capabilities can and should influence

process redesign (Davenport and Short, 1990); IT is an enabler of the reengineeringprocess as the use of IT has now become a core competency expected from all companies.

Creative applications to redesign existing processes must be identified at this stage. The IT

enablers are linked to the information systems specification sub-process because they are

essential to the process of identifying specific components for implementation.

3.3.6. Information systems specification and documentation for implementation

Based on the IT environment information and information systems strategies identified

in the previous sub-processes, the specifics for the documentation for implementation

(level 5) of strategic information systems are defined in the information systems specifica-

tion sub-process. In addition to the stages existing in other methodologies, additionalstages are added to cover the ITA. The information systems specification sub-process

can be distinguished into six stages: define information architecture, derivation of

common IT solutions, set principles and policies, set specific requirements for IS devel-

opment, identification of specific components for implementation, creation of sequence

for IS development. The specifics identified in each of the six stages are the actual contents

of the documentation for implementation. The basic flow of the information systems

specification sub-process is shown in Fig. 7 and following is a description of the six stages.

Define information architecture. Based on the result of the operational analysis and

identified information systems strategies, the information architecture is developed, which

is the overall framework of the IS, providing details such as sub-system areas, informationcreated, controlled and used in each sub-system, relation between the sub-systems and the

functions each sub-system is responsible for.

Derivation of common IT solutions. Based on the information architecture, solutions for

supporting the information systems strategies using current IT are derived at this stage.

The solutions are derived on three sides: the server side (application specific services such

as Administrative applications, intermediate level common solutions such as database

management, infrastructure solutions such as security), middleware side (network support

services), and client services side.

Set principles and policies. For the derived solutions, principles and policies are derived

to provide directions. For example, if e-mail is selected as a common IT solution, a

principle may be the e-mail package should provide a secure authentication mechanism

and a policy may be e-mail is considered private to the fullest extent permitted by law.

Set specific requirements for IS development. Based on the principles and policies, the

specific IS requirements are derived at this stage for each of the common IT solutions

derived to support the information systems strategies. To set requirements, IT enablers

identified in the operational analysis and business process reengineering sub-process are

also considered.

Identification of specific components for implementation. The specific components for

implementation are identified at this stage to fulfill the IS requirements. Componentsinclude specific standards and guidelines for implementation as well as specific products.

The components can be divided into six categories: computing platform (hardware



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platforms and operating systems), communication (data, voice and video technologies),

data (database and information exchange standards), interfaces/services (user and

programming interfaces, network services), applications (enterprise, workgroup and indi-

vidual applications and development tools), management processes (technologies, policies

and procedures for the management of networked systems).

Creation of sequence for IS development. The actual sequence for the IS development is

created at this stage. The tasks can be ranked against three criteria: technical importance,

some tasks need to be completed before others, benefits and competitive advantages.

4. Case study K bank

4.1. Project overview

Recently, rapid changes have taken place in the Korean financial environment. Restruc-

turing in the financial services industry and pursuing a competitive advantage at the

national level have begun to make the Korean financial services industry more efficient.

The growth of national income increases savings and this savings surplus makes the

financial market more customer-driven. To survive rapid changes in the financial industry,

K bank performed a SISP project.

This project was performed in conformance with the SISP methodology described

above. Since it has been demonstrated that an integrated methodology solves many

problems encountered in previous methodologies, the methodology was well received

by developers and end users. The suggested methodology enabled developers to deduce

a better information systems specification by analyzing not only the business strategy but

also IT opportunities. Business process reengineering was performed in a compact manner

so that business areas requiring improvement were identified. Concurrent execution ofSISP procedures reduced the project period dramatically. It took only four months to

perform the project, including all documentation activities.


Table 2

Business strategy list

Category Business Strategy

Product Product development at the enterprise level

Reflection of customer voice in developing product

Periodical market research

Collaboration with other banks in developing the product

Communication with customers Harmony of product ads. and corporate image ads.

Product and service differentiation (Private banking)

Database marketing based on customer information

Branch Autonomous marketing activity of branch

Additional branch establishment


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Table 3

Evaluation of current IS

Categorya Functionb

BIZ_PLNN

(%)

MKT

(%)

DPST

(%)

LOAN

(%)

CRE_CARD

(%)

FOR_EXCH

(%)

INT_FNCE

(%)

FUND

(%)

HRM

(%)

S High 33 17

Middle 8 20 33 33 20 17

Low 92 80 67 100 34 83 80 83 100

P High 6 17 30

Middle 19 18 78 33 50 10 45 17 17

Low 81 82 22 61 33 60 55 83 83

M High 15 15 10 63 60 15

Middle 19 46 50 60 38 64 25 55

Low 67 39 50 30 40 36 75 30

O High 8 37 21 100 25 80 23 21

Middle 4 44 79 50 40 36 29

Low 88 19 25 20 60 41 50

TOTAL High 7 18 8 10 36 57 9 16

Middle 13 35 65 39 44 1 46 27 34

Low 80 47 27 51 20 42 54 64 50

a Category: S (Strategy), P (Planing), M (Management), O (Operation).b Function: BIZ_PLNN, Business Planning; MKT, Marketing; DPST, Deposit; LOAN, Loan; CRE_CARD, Credit

INT_FNCE, International Finance; FUND, Funds; HRM, Human Resource Management; IS, Information System; GEN_A


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4.2. Project procedures

4.2.1. Strategic business planning

Mid- and long-range strategic business planning was established to cope with the new

business environment, such as changes in customer needs and deregulation by the govern-

ment. Mid and long-range planning included the following activities:

Gathering outcomes of previous innovation activities.

Analyzing the business environment, industry regulations, customers, and competitors.

Establishing business strategies in the main business areas, such as branch manage-

ment, organization, IT, risk management, and HRM.

Table 2 shows the business strategy in marketing function identified in the SBP

procedure.

4.2.2. IT opportunity identification

To identify some business opportunities to be gained from IT, current IS were

evaluated in a strategic perspective. As a result, the IS used by computerized

business functions such as foreign exchange and credit cards are much more satis-

factory than those of non-computerized business functions. Table 3 shows the results

of IS evaluation.

The survey showed that systems at the strategic and planning level are more unsatis-

factory than those at the operational level. Above all, the business planning system needs

to be improved. To accomplish this improvement in the system, a data warehousemust be built based on operational systems, and a Decision Support System (DSS)

and Executive Information System (EIS) must be implemented to support the deci-

sion making and strategic planning activities of top management. IT such as data

mining, Online Analytical Processing (OLAP) and end user computing can support

this procedure.

Adoption of an electronic banking system is essential to efficient marketing. As

networks connect corporations, government, and home, network-based transactions will

increase quickly. To confront the proliferation of network-based transactions, an electro-

nic banking system should be adopted. Electronic banking systems not only enlarge

customer connection channels but also reduce transaction costs.

4.2.3. Information systems strategy formulation

Information strategies were established to set the long-range direction of IS develop-

ment. An information systems strategy was derived, based on the business environment,

IT environment, and IT opportunities. Information strategies can suggest criteria for

decision support in the process of constructing and operating target systems. Fig. 8 repre-

sents the information strategy configuration of K bank.

4.2.4. Operational analysis and BPRBPR in this project focused on using its results to produce information systems

specifications rather than a detailed analysis of each process. We identified major areas



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requiring reengineering at the enterprise viewpoint. The following are business areasrequiring business process reengineering:

Product development area. As the financial environment is changing towards a custo-

mer-driven one, the conventional business paradigm banks create a new product

without considering any customer needs is gradually replaced by new paradigm

banks invent new products reflecting customers needs in advance. Banks should adopt

a flexible product model to cope with the paradigm shift.

Organization area. As the boundaries of business areas in the financial industry become

obscure, entering the industry becomes easier. Organization structures need to be

flexible enough to confront changes in the financial market. In other words, banksshould be able to select and adopt an appropriate organization structure as required.

Moreover, support for the evaluation of organizational performance in the various

perspectives is needed.

IT area. Since it is not efficient to have all the required IT within the company, further

outsourcing is necessary.

4.2.5. Information systems specification

The information systems specification includes deliverables such as information archi-tecture, common IT solutions, and project definition. The project definition compares the

target system architecture with current system architecture, and then specifies project


Fig. 8. Information strategy configuration.


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requirements for new system development. In this project, 56 systems were defined

through the business system architecture definition. Priorities of target systems are calcu-

lated using weighted average of strategy, importance, difficulty, and urgency. The result ofsetting priorities is shown in Table 4.

4.3. Lessons learned

Lessons learned in this project can be summarized as followings:

Adoption of methodology. Systems to be developed by the information strategy should

be implemented with a more systematic and efficient structure. Moreover, development

standards are necessary since many developers participate in implementation projects.

Therefore, the establishment of a unique methodology considering the IS environmentand the adoption of the methodology is essential to successful implementation.

Improvement of project management skill. If a company has little experience in

performing a large project, project management skill is crucial for successful imple-

mentation. Project risk can be minimized and the time duration of implementation can

be shortened by improving project management skills such as progress control, quality

assurance, and development coordination.

Introduction of proven IT. Adoption of the latest IT can lengthen the period of time to

use the implemented system. If one uses old-fashioned technology, practical use of that

technology will be greatly reduced as the life cycle of the technology finishes. But,

unproven technology may cause trouble in the adoption process, so risks increase. Acompany should employ advanced and proven IT.

Top management support. Since BPR requires many changes in business flow and the

information environment, a strong commitment from top management is necessary to

minimize organizational resistance and preserve a consistent direction in the overall

perspective of the project.

5. Conclusions and future research

This study, motivated by the need for improvements in the Strategic Information

Systems Planning (SISP) process, focused on SISP methodologies in particular. It


Table 4

Priorities of systems (top 5)

Target System Strategy Importance Difficulty Emergency Score

Business planning system 100 100 90 80 91

Credit control and

management system

5 55 80 100 70

Risk management system 15 41 80 100 66

Customer management system 17 36 80 100 65

Deposit results management

system

2 23 90 100 61


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identified four SISP methodology problems and proposed an integrated SISP methodology

for their solution while retaining the advantageous qualities of current SISP methodolo-

gies. The methodology places emphasis on maximizing strategic effectiveness while mini-

mizing the use of corporate resources, especially time.The integrated SISP methodology is different to conventional SISP methodologies in

four ways. First, it puts more emphasis on IT opportunities. IS, in this methodology, are

used not only for assisting business strategies, but also for the creation of new strategies.

Second, the output of the SISP process has become more specific and detailed with the

incorporation of an Information Technology Architecture (ITA). ITA, which has been

conducted separately from SISP in most corporations, is concerned with many activities

that are directly related to SISP. Third, business process reengineering, which has also

been accomplished separately from SISP, is designed to be accomplished alongside SISP

in the integrated SISP methodology. By accomplishing business process reengineering

along with SISP, the resulting SISP will have a better chance of being implemented.Finally, the design of the methodology is based on concurrent engineering to minimize

time duration.

Our study, however, had some constraints due to its limited focus. First, the SISP

methodology did not deal with specific factors which concern particular corporations.

The methodology was proposed in a general form so that it could be easily changed to

fit particular circumstances. Second, the study did not deal with SISP problems which are

not directly related to the SISP methodology; problems such as difficulty in securing top

management commitment or difficulty in finding a team leader meeting desired criteria

were considered outside our scope.

Future research will concentrate on SISP problems that are indirectly related to themethodology. Because the SISP process involves many corporate resources, including

human resources, it cannot be optimized solely through improvements in the SISP meth-

odology. The SISP methodology is limited to providing support for the SISP process; it

does not create an output by itself. In order to optimize the output of the SISP process,

therefore, other SISP problems must also be solved.

Acknowledgements

The authors would like to thank the Ministry of Education of Korea for its financialsupport toward the Electrical and Computer Engineering Division at POSTECH through

its BK21 program.

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