ELEMENTS OF THE SYSTEMS PLANNING PHASE OF THE SDLC (STUDY OBJECTIVE 3)
Systems planning is a managerial function of the IT governance committee. The IT governance committee must constantly monitor the IT system through feedback about network utilization, security breaches, and reports on the operation of the system. This constant monitoring allows the IT governance committee to determine whether the current system meets organizational needs. When the committee determines that a part or parts of the IT system are not meeting organizational needs, it should begin the process to study and evaluate the feasibility of modifying or updating those parts of the system. The IT governance committee will also receive specific requests from those who use the IT systems to modify or upgrade parts of the system. This means that at any one time the IT governance committee may be considering not only modifications or upgrades that they have noted need attention, but also upgrades or modifications requested by users. Usually, it is not possible to simultaneously modify or upgrade all of these areas. The IT governance committee must have procedures to follow that will assist it in prioritizing the most important needs of the IT system for immediate modification or upgrade.
THE REAL WORLD
Before Allstate Insurance Co. formed a capital spending committee with IT governance responsibilities, the process of prioritizing IT projects typically was decided by “whoever spoke the loudest or whoever had the biggest checkbook,” said Chief Technology Officer Cathy Brune.4
Now Brune and some top Allstate executives, including the chairman and CEO and the chief financial officer, collectively decide how to prioritize IT initiatives based on business needs. “They help me decide where to spend our money,” Brune said, noting that the new approach to IT governance gives the business executives a better understanding of the IT spending process.5
Exhibit 6-3 Systems Planning Process Map
The old approach at Allstate did not lead to selecting the IT systems that best empowered the company to achieve its strategic objectives. A better approach is to follow a system for prioritizing IT changes. To prioritize these projects, the IT governance committee should consider two broad aspects: (1) the assessment of IT systems and their match to strategic organizational objectives, and (2) the feasibility of each of the requested modifications or upgrades. In addition, the IT governance committee must plan and manage the design, implementation, and use of those IT systems. Exhibit 6-3 details the systems planning process.
THE MATCH OF IT SYSTEMS TO STRATEGIC OBJECTIVES
The IT governance committee must evaluate proposed changes to IT systems in terms of their usefulness in assisting the organization to achieve its objectives. Evaluating the match of proposed IT changes to strategic objectives will allow the IT governance committee to begin prioritizing the desired changes. For example, suppose that a company has decided that a main strategic objective is to improve customer satisfaction. If the IT governance committee has received requests to begin modifications of the customer order entry system and the payroll system, they are likely to place a higher priority on the customer order entry system, since it will affect the service and satisfaction of customers. The payroll system modifications may be of a lower priority because such a change does not match as well with the strategic objective of improved customer satisfaction.
This need to match IT systems to organizational objectives also highlights the need for the IT governance committee to include as its members top management such as the CEO, CFO, CIO, and other high-level managers. Since these managers establish strategic objectives, they are in the best position to assess the fit of IT systems to those objectives. In addition, top management has the authority to allocate resources and time to these projects that will modify or upgrade IT systems. Lower-level managers would not have the authority or gravitas within the organization to push through IT changes.
Recently, the top management at Anheuser Busch Companies, Inc., became very determined to use IT to improve beer sales. This was a major change for the company and would require significant investments of time, effort, and money to achieve the goal.
“As recently as six years ago, the beer industry was a technological laggard. Distributors and sales reps returned from their daily routes with stacks of invoices and sales orders, which they would type into a PC and dial in to breweries. They, in turn, would compile them into monthly reports to see which brands were the hottest. But Anheuser changed the rules in 1997, when chairman August Busch III vowed to make his company a leader in mining its customers' buying patterns.”6
This data-mining example is discussed in more detail in Chapter 10 but is included here to emphasize that the use of sophisticated IT systems to do data mining was a strategic objective of the company championed by the chairman, August Busch III. Such initiatives can not be successful without the support of high-level managers, who control the resources necessary to successfully implement IT systems. Top-level managers must become strong supporters of improved IT systems if problem-solving systems are to be successfully integrated into the organization.
FEASIBILITY STUDY
In addition to examining the match of IT systems to strategic objectives, the IT governance committee should evaluate the feasibility of each competing proposal. Feasibility refers to the realistic possibility of affording, implementing, and using the IT systems being considered. There are four feasibility aspects that should be considered—remember them by the acronym TOES:
- Technical feasibility—assessment of the realism of the possibility that technology exists to meet the need identified in the proposed change to the IT system.
- Operational feasibility—assessment of the realism of the possibility that the current employees will be able to operate the proposed IT system. If the operation will require new training of employees, this assessment should include an evaluation of the feasibility of providing enough training to existing employees.
- Economic feasibility—assessment of the costs and benefits associated with the proposed IT system. Is it realistic to conclude that the benefits of the proposed IT system outweigh the costs?
- Schedule feasibility—assessment of the realistic possibility that the proposed IT system can be implemented within a reasonable time.
As the IT governance committee studies and assesses each of these aspects of feasibility, it can come to a better understanding of which proposed changes should have higher priorities. As an analogy to this process, think about how you chose your major in college. There are several majors that might have been possible for you. Perhaps you were considering an accounting major, a marketing major, and future law school as potential choices. To narrow your alternatives, you had to think about which major best fit your skills, talents, knowledge, and abilities. You had to assess the realistic possibilities of each major. It was probably true that you could rule out some majors as not at all feasible. But there may have been three or four that were realistically possible for you. You had to assess each of those potential majors from several aspects and decide which single major was best for you. Likewise, the IT governance committee may rule out some proposed changes to the IT system as not feasible at all. Among those that remain, some IT changes are more feasible than others. The studies of technical, operational, economic, and schedule feasibility allow the IT governance committee to decide which proposed IT changes should have the highest priority.
Using both the strategic objective match and the feasibility study, the IT governance committee can prioritize the various proposed changes to the IT system.
PLANNING AND OVERSIGHT OF THE PROPOSED CHANGES
After the IT governance committee has prioritized the proposed changes, it must decide which of the changes can be undertaken at the current time. Basing its decisions on the budget, resources, and time available, the IT governance committee may find that there are only one or two proposed changes that can be undertaken. Those proposed changes that must be delayed may be reviewed again in the future when the IT governance committee reassesses the strategic match of IT and feasibility. These processes are ongoing.
For the sake of further analysis, let us assume that the IT governance committee has decided that only one proposed IT system change can be undertaken at this time. The committee should do several things to initiate the next phases of the SDLC:
- Formally announce the project they have chosen to undertake.
- Assign the project team that will begin the next phase, the systems analysis.
- Budget the funds necessary to complete the SDLC.
- Continue oversight and management of the project team and proposed IT changes as the remaining SDLC phases occur.