Strategic Planning for Management Information Systems

MIS Strategic Planning

Strategic Planning for Management Information Systems

By: William R. King

Abstract

Planning for the information systems in an organizationgenerallyhasnot beenclosely related to the overall strategic planningprocessesthrough whichthe organizationpreparesfor its future. An M/Sstrategic planning processis conceptualized and illustrated as onewhich /inks the. organization's "strategyset" tb anMIS"strategyset. "

The literature of managementinformation systems (MIS) concentrates largely on the nature and structure of MIS's and on processes for designing and developing such systems. The idea of "planningfor the MIS"is usually treated as either one of developing the need and the general design conceptfor such a system, or in the context of project planning for the MIS developmenet ffort.

However,strategic planning for the informational needsof the organization is both feasible and necessaryif the MISis to support the basic purposesand goals of the organization. Indeed, one of the possible explanations [6] for the failure of manyMIS's i~-that they have been designed from the same"bottom up" point of view that characterized the developmenot f the data processingsystemsof an earlier era. Such design approachesprimarily reflect the pursuit

of efficiency, such as through cost savings, rather than the pursuit of greater organizational effectiveness.1

The modernview of an MISas an organizational decision support systemis inconsistent with the design/development approaches which are appropriate for data processing. The organization's operatingefficiency is but oneaspectfor consideration in managemendtecision making. The achievement of greater organizational effectiveness is the paramounctonsideration in most of the managemendt ecisions which the MISis to support; it also mustbe of paramount importancein the design of the MIS.

Thereis an intrinsic linkage of the decisionsupporting MIS to the organization's purpose, objectives, and strategy. While.this conclusion mayappearto be straightforward, it hasnot been operationalized as a part of MIS design methodology. There are those who argue that the MISdesigner cannot hopeto get involved in such things as organizational missions, objectives, and strategies, since they are clearly beyondhis domainof authority.

This article describesan operationally feasible approach for identifying and utilizing the elementsof the organization's "strategy set" to plan for the MIS. Whetheror not written state-

Keywords: MIS planning. MtS design and implementation Categories: 2.4. 2.41

1,,Efficiency,, maybe thoughtof in termsof a ratio of output to input. "Effectiveness" relates output to the goals which are being sought.

MIS Quarterly / March 1978 27

MIS Strategic Planning

ments of these strategic elements -- e.g., missionso, bjectivese, tc. -- exist, it still oftenwill be necessaryto performthe identification phase of the analysis, since suchwritten statementsare frequently outdated,or maybe of the variety that are commonlyproduced for public relations purposes rather than for strategic management purposes. If credible statements of organizational purposeand strategy do exist, only that portion of the processwhich deals with transforming organizational strategy into MIS strategic parametersneed be implemented.

MIS Strategic Planning -An Overview

Figure t abstractly showsthe overall processfor performing MIS strategic planning. This figure shows an "MIS Strategic Planning" process which transforms an "Organizational Strategy Set," madeup of organizational mission, objectives, strategy, andother strategic organizational attributes, into an "MISStrategySet," madeup of system objectives, constraints, and design principles.

Figure . 1 describes an information-based approachto strategic planningfor the MISin that it identifies an information set -- the "MIS Strategy Set" -- which will guide the designand developmentof the MIS. While the elements of this MiS Strategy Set -- system objectives, constraints, and design principles -- are not usually thought of in this context, they are generally recognized to be the guiding

considerations in developing the MIS design (e.g., [10]).

Howeverwell recognizedthe elementsof the MIS Strategy Set are, Figure 1 shows the MrS Strategy Set as emanatingdirectly from another information set, the "Organizational Strategy Set." This direct relationship betweenthe two information sets is neither well recognizednor operationalized. It is this linkage whichis the province of MISStrategic Planning and it is on the operationalizing of the transformation processbetweenthese two information sets that this article focuses.

It will proveuseful to describeboth the "Organizational Strategy Set" and the "'MIS Strategy Set" in somedetail, before describing an operational process for accomplishing the MIS Strategic Planning function which is described conceptually in Figure 1.

The Organizational Strategy Set

The "Organizational Strategy Set" is composed of those elementsof organizational purposeand direction which are developedas a result of the organization's strategic planning process-- the organization's mission, objectives and strategy -- as well as certain other strategic organizational attributes whichare of particular relevance to the MIS.

Since the terminology which is applied to these strategic planning outputs generally varies from

ORGANIZATIONAL STRATEGY SET

Mission Objectives Strategy Other Strategic Organizational

Attributes

MIS Strategic

Planning Process

MIS STRATEGY SET

SystemObjectives SystemConstraints SystemDesign Strategies

FIGURE 1. Overall MIS Strategic Planning Process 28 MIS Quarterly / March 1978

MIS Strategic Planning

company to company and between business firms andpublic agencies,it is useful to define andillustrate the elementsof the organizational strategy set usedin this article. Noinference should be drawnthat these are proposedas the "correct" descriptions, or that the definitions usedhere are universally appropriate; rather, the delineations are useful for fully developing the MISStrategic Planning process.

The organization's mission

The broadest strategic planning which must be doneby an organizationis that of its mission. An organization'smissionstatementtells whatit is, whyit exists, and the uniquecontribution it can make. The mission answersthe organization's basic question, "What business are we in?" Somepeople consider such questions idle academicnonsense;to them, their mission --the businessthat they are in mis clear: "Wemake widgets," or "Werun railroads."

It becameincreasingly apparent during the 1960's that such thinking was too limited. Organizations which felt that they knewtheir business disappearedin vast numbersfrom the scene. Today's business, however bright its growth prospects mayappear, maynot exist in its current form in only a few years.

Conversely, during the 1970's, it also became apparent that firms which slavishly followed expansiveviews of their mission could encounter serious problems. Broad mission statements wereopeninvitations to get into newbusinesses solely on the criterion of "potentialprofitability. '" Sucha criterion doesnot take into accountvital factors such as expertise -- technological, market, and otherwise; neither doesit take into account the uncertainty which is inherent in potential profit. Manyof the companieswhich got into new"growth" businesseson this basis in the 1960'sfoundthemselvesin the position of selling off unprofitable ventures in the 1970's [12]. Theseproblemshaveled to the conclusion that the mission statement for an organization mustcarefully define whatit doesnot do, as well as whatit does.

The values of such a clearly defined mission statementcan be illustrated with the "business statement" of one medium-sizedfirm:

weare in the businessof supplyingsystem componenatnsdservicesto a worldwide, nonresidentiaal ir conditioninmg arketA. ir conditioningis definedasheatingc,oolingc, leaning, humiditycontrol, andair movement.

While such a statement mayat first seemto be the same as "We make widgets," it clearly specifies by exclusion manythings that the firm doesnot do: it doesnot supply air conditioning systems ~ rather it focuses on system components;it does not address itself to the residential marketfor air conditioners; etc.

The organization's objectives

Once the organization's mission has been determined, its objectives -- desired future positions or "destinations" that it wishes to reach mshould be selected. Thesedestinations maybe stated in either quantitative or qualitative terms, but they should be broad and timeless statements,as opposedto specific, quantitative goals, or targets.

For instance, amongthe stated objectives of PPGIndustries are:

"1) . . . to increaseearningsper shareto attain a continuing return of 14.5%ormore on stockholder's equity and to provide consistently increasing dividends [the prime objective].

"2) . . . to employthe least numberand highest quality of people necessary to accomplish the prime objective and to provide them with the opportunities to developandapplytheir fullest abilities.

"3)... to have the companyacceptedas dynamic, responsible, professionally managed, profit oriented corporation engageidn exciting and importantfields of business, with the ability to meet successfully the economic and social challengesof the future." [5]

While such statementsmayat first appear to be "motherhoodand sin," they say very important things about the company. For instance, the "image" objective, #3? says that PPGcares greatly howit is thoughtof in society. This serves to clearly constrain other choiceswhich mustbe madein the planning process, e.g., strategies which may be followed to attain the prime objective.

MIS Quarterly / March 1978 29

MIS Strategic Planning

The organization's strategy

The organization's strategy is the general direction in which it choosesto movein order to achieve its goals and objectives. For instance, one companhyas stated that it:

"... has heavyinvestment, a goodreputation, great skills andexperience,a viable organization, and, in someinstances, a .special situation in the.., industries." andthat it will: "... exploit these strengths and .... not diversify at the presenttime, into unrelated industries."

A more detailed strategy for another firm includes the following:

"... increase U.S. market penetration through the development of a regional manufacturingcapability and the developmentof secondarydistribution channels."

Anothercompany'sstrategy calls for a: "... low-price, low-cost product achieved through product standardization..."

together with: "... the developmenot f newproducts on a similar basis in a posture of defensive innovation against the technological progress of competitors."

Again, as with a missionstatement, the strategy is as important for whatit doesnot say, as what it does say. By excluding numerous,possibly valid waysof achieving a stated objective, it ensures a focusing of organizational resources and precludes a "scatter-gun" approach which is likely to be ineffective andwhichis likely to result if numerousmanagersare permitted to makedecisions without strategy guidance.

Other strategic organizational attributes

Other strategic attributes of the organization should also influence the strategic planning for the MIS. These"miscellaneous" attributes are difficult to categorize, but they may be extremely important. For instance, if the sophistication of managemenist low and their familiarity with computers, models,and interactive systems is limited, such factors must obviously be explicitly taken into account in

planning for the MIS. If they are not accounted for, an MIS better suited for sophisticated computer-skilled managersmight be developed by technicians whonaturally desire the systems that they develop to be as "modern" and sophisticatedas is possible.

Admittedly, such organizational attributes as the sophistication of managementth,e readiness of the organization to accept change, and the familiarity of managemenwtith the values and limitations of computersystemsare difficult to measureH. oweve[i,f strategic MISplanning is to be performed, such strategic organizational attributes mustbe incorporated into the organizational strategy set and used as a basis for developingthe MISstrategy set.

The MIS Strategy Set

The MIS strategy elements, which are the substanceof strategic planning for the MIS, are system objectives, system constraints, and systemdesign strategies.

System objectives

Systemobjectives define the purposewhich the MISis to serve. For instance, systemobjectives maybe stated in terms that are similar to, but much more specific than, organizational objectives -- e.g., "to permit the paymenot f 98% of invoices by the duedate" is a systemobjective stated in activity terms. Also, systemobjectives maybe stated in direct information and communication terms-- e.g., "to collect, andprocessall routing and cost information and provide it in a timely fashion to the dispatcher." The most sophisticated variety of systemobjectives are stated in decision-oriented terms -- e.g., "to permit the determination of the best routing no morethan one hour after the tentative routing choice has been implemented."

System constraints

Both internal and external constraints must be identified if MISplanningis to be effective. These constraints will emanateboth from outside and within the organization.

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MIS Strategic Planning

The most obvious forms of external MIS constraints are government and industry reporting requirementsand the needfor the MIS to interface with other systems, such as the ordering and billing systemsof suppliers and customers.

Internal constraints emanatefrom the nature of the organization, its personnel, practices, and resources. Themostobvious internal constraint is the MIS budget; however, many other organizational characteristics serve to limit the MIS'sscopeandnature. For instance, the degree of complexity with which the systemis incorporated may be constrained because of the limited sophistication of managementth, e lack of experience within the managemegnrtoup with computers,or demonstrateddistrust of sophisticated information systems.

System design strategies

The strategies which guide the MIS design effort are important MISstrategy elements, as are the organizational strategies whichguide its progress. While m,anydesign strategies appear to be of the "motherhoodand sin" variety, their value may be demonstrated by virtue of the number of unsuccessful systems which have been developedin the abscenceof such underlying strategic principles.

Amongthe strategies which might guide an MIS design effort is one dealing with parsimony-e.g., "the systemshould be designedso that the user is provided with the minimumamount of relevant information which is necessary to achieve his managerial objective." Another often useful designstrategy dealswith the nature of the system -- e.g., "the system should operate primarily in an exception-reporting modein accomplishing its credit monitoring objective." Other possible designstrategies have to do with the criteria which will be used to evaluate the system-- e.g., "the systemwill be evaluatedbothin termsof its pe~'ceivedutility to usersas well as its technicalcapability.'" [9]

The MIS Strategic Planning Process

Theprocessfor MISstrategic planning is one of ? transforming the Organizational Strategy Set

into an appropriate, relevant, and consistent MIS Strategy Set.

Explicating the organization's strategy set

Thefirst step in MISstrategic planning is the identification and explication of the organizational strategy set. Somelementsof the organizational strategy set mayexist in written form. Theorganization's strategic, or long-range,plan is the mostobvious source of such material. So too are various pronouncementsmadeby chief executive officers in reporting to their various constituencies: stockholders, unions, government, etc.

However,existing plans maybe deficient if the planning process is not a sophisticated one which explicitly gives consideration to such broad choices as that of the organization's objectives. Other documentaryevidence maybe deficient in that it is prepared for a "public relations" purposerather than for the purposeof guiding managerial choice. If so, an explicit processof identifying strategy set elementswill be required of the MISdesigner.

Sucha processmaybe thought of in terms of a numberof steps: 1. delineating the claimant structure of the

organization, 2. identifying goals for each claimant group,

and 3. identifying the organization's purposesand

strategy relative to eachclaimant group.

Delineatingtheeorganization'sclaimant structure The organization's purpose, objectives, and strategy mustnecessarily relate to its various clientel, or claimants ~ those whohavea claim on it. Theseclaimants, sometimerseferred to as "stakeholders"to distinguish themfrom the legal owners of corporations, have a stake in the activites and future of the organization. Thus, mostbusiness firms will delineate its owners,

MIS Quarterly / March 1978 31

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