Journal of Computing and Information Technology - CIT 10, 2002, 3, 241–247 241

Strategic Planning of InformationSystems (SPIS) — a Survey ofMethodology

Josip Brumec, Neven VrcekFaculty for Organisation and Informatics, Varazdin, Croatia

The usage of modern information technologies will besuccessful only if information system development isaligned with the business system development strategy.Such an approach is usually regarded as the strate-gic planning of information systems (SPIS). A unifiedmethodology for SPIS does not exist yet, although severalmethods, techniques and templates might be inventivelyintegrated to develop a new IS for each particular busi-ness system. This paper presents how this integrationcould be performed to obtain a consistent methodologynamed SPIS. Such a methodology has been developedby the authors and applied to six large-scale projectsin very different business environments. In this way atheoretical approach was confirmed and extended by newexperiences, which are presented in this article.

Keywords: Strategic planning, information systems, de-velopment methodology.

1. The Present State of SPISMethodologies

The strategic planning of information systemshas become a very challenging subject for sci-entists and practitioners in recent years. Re-search conducted by Berndt and Morrison [1]shows that investments in information technolo-gies (IT) gives much lower ROI than initiallyexpected. Therefore, information system (IS)planning and the application of modern IT can-not be exclusively performed by IT experts butbecomes the fundamental problem of enterprisemanagement.

In the early nineties Earl [7 and 8] determinedcertain rules in IS/IT planning and presentedthem as a five-phased evolution model. Differ-ent authors, as in [6], [9] and [16], expounded a

problem related to the useful implementation ofIS/IT in enterprises. Therefore, it might be con-cluded that by 1995 the problem of efficient ITusage was recognised, while published paperspresented techniques, methods and directionswhich might be used during the process of ISplanning. However, we did not have a consis-tent methodology for the strategic planning ofIS.

Another approach to increase the efficiencyof business systems appeared in the secondhalf of the nineties with the famous book byMichael Hammer [10], introducing BusinessProcess Reengineering (BPR). Other authors[20] emphasised the relationship between busi-ness strategic planning and information systemdevelopment. At the same time, several meth-ods and techniques were published [17] and [21]in order to enhance successful IS/IT planningin enterprises that have a strategic vision oftheir development [12] and [15]. These meth-ods might be gathered in three groups. In thefirst group are the methods dedicated to specificproblems related to IS planning, such as BSPor CSF analysis. The second group of meth-ods were previously used in business planningand were simply modified for SPIS, e.g. the 5Fmethod, SWOT or BCG [14]. The third group ofmethods was based on BPR (e.g. Value Chain).

The problem of poor IT/IS efficiency has alsobeen recognised in Croatia. Therefore, in 1996our faculty launched a new scientific project“Strategic Planning of Information Systems De-velopment”, which was supported by the na-tional Ministry of Science and Technology. In

242 Strategic Planning of Information Systems (SPIS) — a Survey of Methodology

this project we conducted research whose re-sults might be briefly summarised as follows:

� A generic definition of IS was establishedand used for the development of a new tax-onomy [2]. In this way, the relationship be-tween business systems and correspondingIS might be explained, thus leading to a bet-ter understanding of SPIS.

� Empirical research was carried out on thecurrent state of the IS/IT planning proce-dure. Research was performed through ques-tionnaires presented to 196 members of top-level management in 23 companies.

� A new SPIS methodology was developedand theoretically elaborated [2], [3], [4] and[5].

� Six large-scale projects were conducted inorder to evaluate the performance of thenew methodology. Experiences from theseprojects were used to extend and improve themethodology.

� Several seminars concerning SPIS metho-dology were held and a new subject in Ph.D.study was introduced at our faculty.

For the successful implementation of the newSPIS methodology, a definition of the strate-gic planning of information systems should beadopted. Based on an analysis presented in ourpreviously published works we used the fol-lowing definition: Strategic planning of infor-mation systems (SPIS) is the long-term plan-ning of effective IS/IT implementation, alignedwith the strategic planning of the overall busi-ness system. The result of SPIS should be adocumented project that includes:

� Business process models for an existing andreengineered organisation,

� Business data models

� Models of programs and procedures,

� Technical resources models,

� A development activity plan for new IS.

According to this definition, a new SPIS method-ology was developed and theoretically elabo-rated. At the same time, the methodology waspractically implemented in various enterpriseswith significant results. A brief description ofthe SPIS methodology, and the general charac-teristic of the projects in which it was applied,

are presented in the following sections of thepaper.

2. SPIS Methodology Framework

A great number of methods and techniques forplanning and designing have been discussedtheoretically and applied practically, but a con-sistent SPIS methodology has not been devel-oped until now. The authors of this paper devel-oped procedures for choosing and linking ex-isting and well-known methods in a new andconsistent methodology, as shown in Table I.

The proposed SPIS methodology consists ofspecially chosen and specifically interrelatedmethods and techniques that are gradually ap-plied to perform individual steps while mod-elling the entire information system. The basicSPIS methodology propositions are:

� The reason for business reengineering is toimprove system performances,

� The new IS should support the goals of thecompany, and those goals should be wellplanned before and easily measurable.

The component parts of the SPIS methodologyare discussed in more detail in previously pub-lished papers [2], [3] and [4]. Here we wouldlike to point out only the major characteristicsof SPIS methodology:

� The starting point of SPIS methodology is ananalysis of the present business system anda definition of its future mission and goals;

� The second methodological step examinesthe function areas where new IT could makethe best contribution to the efficiency of busi-ness processes;

� Step 9 (central in relation to all other steps)presents an evaluation of the effects of thenew IS on future business processes. Thisevaluation should be performed on a simula-tion model before starting the long-term andcomplex project of maintaining the IS.

� The 16th step controls and confirms the ef-fects of investment in the new IS/IT.

During the second step (Evaluation of the im-pact of new IT on BS) the influence of IT on theoverall system performances and on each partic-ular business process is evaluated. In addition,

Strategic Planning of Information Systems (SPIS) — a Survey of Methodology 243

the information needed for the top-managementto realise their business goals is defined. Theseissues are the basis for the redefinition of busi-ness processes, supported by modern IT.

The 9th step (Evaluation of new IS effects)presents measurement of the satisfaction of theeffects of the proposed IS conceptual model andgenerates the guidelines for the improvement of

business processes. If the new IT increases theeffectiveness of the business system sufficiently,the project of choosing or developing the newIS can start.

The first item of step 16, Implementation andnew IS validation, deals with the implementa-tion of specially developed new IS or of a cho-

Problem/step in IS

design

Methods and techniques (§ -strategic,

# -structured,

¤ -object oriented

Inputs and deliverables Inputs / Outputs

UsabilityVery powerful

Powerful,

Useful

1. Description of business

system (BS)

Interviewing Missions and goals of current BS / Business strategy;

Business processes (BP)

2. Evaluation of the impact

of the new IT on

business system

§ Balanced Scorecard

§ BCG-matrix

§ 5F-model

§ Value-chain model

BP / Performances of existing BS

Business strategy / IS development priorities

Business strategy / Information for top-management

BP / Primary and Supporting business processes (BBP)

V

P

U

V

3. Redefinition of business

processes

# BSP-decomposition

# Life cycle analysis for the

resources

BBP / New organisational units (OU)

Basic system resources / Business processes portfolio

P

P

4. Business system

reengineering

§ BPR

§ SWOT

Business Processes Portfolio / New business processes

(NBP)

Business Processes Portfolio/ SWOT analysis for NBP

P

V

5. Estimation of critical

information

§ CFS analysis (Rockart)

# Ends-Means analysis

NBP / Critical information for NBP

NBP / Information for efficiency and effectivity

improvement

P

U

6. Optimisation of the new

IS architecture

# Matrix processes-entities

# Affinity analysis, Genetic

algorithms

NBP / Business process relationships

Business processes relationships / Clusters; Subsystems

of new IS

V

P

7. Modelling of the new

“Business Technology”

(BT)

# Work flow diagram (WFD)

# Organisational flow diagram

(OFD)

# Activity flow diagram (AFD)

NBP / Responsibility for NBP

New OU / Flows between new OU

NBP / Activities for NBP

V

P

U

8. Modelling of the new

business processes,

supported by IT

# Data flow diagram (DFD)

# Action diagram (AD)

NBP / NBP supported by IT (IS processes); Data flows;

Business Data

IS processes / Internal logic of IS processes

V

P

9. Evaluation of IS effects # Simulation modelling IS processes / Guidelines for BP improvements U

10. Business data modelling # ERA-model

¤ Object-model

Business Data / ERA model

Business data / Objects model

V

P

11. Software design # HIPO- diagram

¤ Transition diagram

IS processes / Logical design of programs (SW)

Data flows / Events and transactions

V

P

12. Detail design of

programs and procedures

# Action diagram

¤ Object scenario

Logical design of program procedures (SW) / Model of

program logic

Object model; Events / Objects behaviour

P

P

13. Data model development # Relational model;

Normalisation ERA model / Relational model V

14. Software development # CASE tools and 4GL

¤ OO-CASE tools

Model of program logic; Relational model / Programs

and procedures

Object behaviour / OO-procedures

P

P

15. Implementation of IS Case-study; Business games Programs and procedures / Performances of the new IS P

16. Evaluation of the new BS

performances

# Balanced scorecard Performances of existing BS; Performances of the new

IS / Measure for success

V

Table 1. SPIS methodology as connections between problem solving steps and used methods.

244 Strategic Planning of Information Systems (SPIS) — a Survey of Methodology

sen standard software package of a known SWproducer. So, the stage Detailed design of IScould be provided for or avoided by choosinga proper standard software package during itsimplementation, e.g. for ERP in [11], [18] and[19]. Validation of the effects of the new IS willresolve the question whether the proper actionwas or was not performed to reach the necessaryimprovements. The second item, Evaluation ofnew BS performances, deals with the measur-ing of the performances of the new businesssystem. The performances of the new businesssystem are measured after the implementationof the new IS/IT and compared to the businesssystem performances that existed before invest-ment in BPR and before the implementation ofthe new IS/IT.

3. SPIS Methodology Meta-Model

The problem solving steps, as described in Ta-ble 1, form four main stages, which are: (1)Formalisation of business model, (2) Concep-tual Design of IS Model, (3) Detail Design ofIS Model and (4) Implementation of the new IS.

The content of these stages (activities and theirsequence, inputs, interrelationships and deliver-ables) is described in Fig. 1 and represents theso-called SPIS Meta-Model.

The stage Formalisation of the business modeldeals with the redefinition and reengineering ofthe business processes, based on the new busi-ness strategy and modern IT solutions, and isthe essential step in strategic IS/IT planning.

To support the redefined business system (asa main stage issue) with the new IS (maintask at this stage), it is necessary to developa conceptual model, which will be carried outin the following stage - Conceptual design of IS.This stage is critical for the further planning ofthe IS and will offer proper support in providingbusiness processes in both cases: the organisa-tion’s own IS development or, in the case ofpurchase, IS as a standard program package.The quality of the conceptual model of the newIS depends on the quality of the performance ofthe activities of the earlier stage.

The new IS software is a result of the Detail de-sign of IS. The activities in this stage could be

Fig. 1. SPIS Methodology Meta-Model.

Strategic Planning of Information Systems (SPIS) — a Survey of Methodology 245

avoided if the previous decision, about how toachieve the proper software, favours purchaserather than independent development. For bothalternatives, the model of the business systemand conceptual IS model are the basis for mea-suring SW performances. Appropriate perfor-mances (measured as in [13]) of the new IScould be reached in the Implementation of thenew IS stage, only if the business processes werepreviously specified during the reengineering ofthe business system and in developing the ISconceptual model.

The critical points of the above process (i.e.those to which computer experts usually paytoo little attention or disregard completely) aresteps 2, 3, 6 and 9. Additional difficulties arisefrom the fact that entities and concepts in dif-ferent methods are not the same. For example,a business technology matrix works with dataclasses, DFDs with data flows and storage, anERA model works with objects and relations,a relational model with relational schemes andkeys, and an object scheme works with classes.These constructs are interrelated, but their se-mantics is different. The transfer from one con-cept to another is difficult and for that job anIS designer should have necessary knowledge,experience and inventiveness. This is the rea-son why we still do not have a complex CASEtool that fully covers SPIS. We believe that ourSPIS methodology could be the frame for thedevelopment of such functions of an ICASE inthe future.

4. Case Studies

The methodology presented in this paper hasbeen confirmed in different projects conductedby the authors. We applied the described SPISmethodology to different businesses and manu-facturing systems to determine how alignmentbetween the new IS and the reengineered organ-isation can be maximised, and which methodsare most effective with respect to the type of or-ganisation. Here we present a short descriptionof six of the most important projects:

1. A medium-sized chemical and pharma-ceuticalindustry, which represents a classical exam-ple of a process type with the continuousproduction of standard products. The man-agement of this company wanted to use in-

formation technology in order to optimise itssupply chain management. After the SPISproject was finished, the management de-cided to realise the new system for improv-ing the distribution channel for its products.

2. A very big glass factory, which is a sub-sidiary of a large international glass com-pany. This is a very specific industry thatmight be regarded as a process type with thecontinuous production of standard products.However, closer examination of productionreveals that production is a combination of acontinuous and discrete type of manufactur-ing. This discontinuity in production makesit very complicated to follow with an in-formation system. The management of thiscompany wanted to use a new informationsystem to optimise and monitor productioncosts and support controlling functions. Af-ter the SPIS study, the company started todevelop a new ERP-system, based on thefunctional connection between the standardprogram package and its own solutions.

3. A big international food company which alsorepresents a type involving the continuousproduction of standard products. The aimof this company was to streamline produc-tion by introducing an ERP system. Afterthe SPIS study a decision was made to buycritical SW modules.

4. National employment service (NES) is anon-profit institution, offering various ser-vices to unemployed persons. The valuechain analysis does not apply here, becauseNES does not work to maximise profit mar-gins, but to satisfy various stakeholders (un-employed persons, companies, government,etc.). The aim of NES was to use modernICT (Internet) to get closer to the public andto offer fast and reliable services. The sec-ondary aim was to reduce the amount of ad-ministrative work, which occupied person-nel and blocked their advisory work, whichgave them a negative image. The project isnow in the development stage, following ex-actly the recommendations and general so-lutions obtained from the SPIS study.

5. County administration is also a governmen-tal and non-profit institution influenced byseveral stakeholders. They also wanted toreduce the amount of administrative work

246 Strategic Planning of Information Systems (SPIS) — a Survey of Methodology

in order to achieve a faster response to dif-ferent public requests. After the SPIS, theproject was postponed, because the SPISstudy showed an unexpected amount of changesnecessary in administrative work.

6. The National Railway Company, which hadentered a radical and long-lasting processof business transformation, from a govern-ment owned non-profit organisation towardsa modern, private and profit-oriented trans-portation services company. Its manage-ment wanted to use information technologyto make this transition easier and more effec-tive. The SPIS study was accepted, but theimplementation was postponed for financialreasons.

Despite the fact that there are great differencesamong the presented systems, the results of ourmethodology lead to the conclusion that a suc-cessful information system should be tightlyaligned with the business system and its strat-egy. This cannot be achieved without a fun-damental rethinking of all business processes,their streamlining and transformation in orderto reach the strategic goals. The best results areachieved with a clean-sheet approach in whichwe have to determine the appropriate use ofinformation technology without the counterbal-ance of so-called legacy information systems.Those systems are not oriented towards thefuture reengineered organisation, and in mostcases present an obstacle to the success of theproject.

5. Summary

The usage of modern information technologieswill be successful only if information systemdevelopment is aligned with the business sys-tem development strategy. In order to succeedin IS/IT implementation, the companies have tochange their perception of IT as a way by whichold processes might be automated. The real ap-proach is to perform strategic planning of theinformation system and to streamline the usageof IT with the business strategy. The whole busi-ness system must be analysed and reengineeredto synchronise the information system and busi-ness processes. To achieve such a highly tar-geted performance, significant efforts must be

made. The challenge is even greater if a com-pany introduces standard application software,since its ability to change is limited.

A great number of methods and techniques usedin planning and designing information systemsare discussed theoretically and applied practi-cally by a number of authors. However, theset of methods does not constitute a consistentmethodology. Our contribution in resolving thisproblem is presented as a new SPIS Methodol-ogy. The proposed SPIS methodology consistsof specially chosen and specifically interrelatedmethods and techniques that are gradually ap-plied to perform individual steps while mod-elling the entire information system.

The presented methodology has been confirmedin projects conducted by the authors in differ-ent business systems. Our experience showsthat professionals in different organisations canadopt and use the proposed methodology, work-ing in a project team together with IS/IT pro-fessionals. Moreover, the attitude of top man-agement in organisations where the new SPISmethodology was implemented was predomi-nantly positive. The top-management profes-sionals know that they cannot avoid their re-sponsibility for the strategic planning of busi-ness activities. They also recognise that theimplementation of information and communi-cation technology can improve the overall per-formances of their organisation. At the sametime, they know that the implementation ofmodern IS/ICT must be planned carefully, ex-tensively and with proven methodology. Thewhole process of the strategic planning of in-formation systems could be improved by a con-sistent SPIS methodology. It is our belief thatthis new methodology will be equally usefulfor both IS/IT professionals and for enterprisemanagement.

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Received: June, 2002Accepted: September, 2002

Contact address:

Josip Brumec, Neven VrcekUniversity of Zagreb,

Faculty for Organisation and Informatics,Pavlinska 2, Varazdin, Croatia

Phone: +385 042 213777e-mail: jbrumec@foi.hr; nvrcek@foi.hr

DR. JOSIP BRUMEC is a professor at the Faculty for Organizationand Informatics, University of Zagreb, where he currently teaches IS-Development Methodologies at the undergraduate studies and coursesInformation Engineering and Strategic Planning of Information Sys-tems at the postgraduate level. His main research interests are strategicplanning of information systems, ERP-systems, business systems im-provement using IS/ICT and evaluation methods for success in IS/ICTimplementation. He published over 60 scientific and professional pa-pers, and was a leader of several research and application - orientedprojects. Before university career he worked more than 20 years inindustry, as a developer and CIO in a big electrical manufacturingcompany. As a periodical consultant for industrial and non-profit or-ganizations he transfers the results of his theoretical research to thepractiocioners. Professor Brumec is a member of CROSSIM, Associ-ation for Information Systems (AIS) and of the Croatian Academy ofEngineering (ATZH).

DR. NEVEN VRCEK is an assistant professor at the Faculty for Organiza-tion and Informatics, University of Zagreb, where he currently teachescourses Software Engineering and Electronic business at the undergrad-uate and postgraduate levels. His main research interests are strategicplanning of information systems, ERP-systems, and electronic busi-ness tools, solutions and strategies. He published over 20 scientificand professional papers. He has worked on one scientific and severalprofessional projects.