Nature of the relationship between the business plan and the IS plan

What should be the nature of the relationship between the business plan and the IS plan?

On these two different aspects we can see the common factor of it, which is Plan. To make things clear, I will first define what is plan and the importance of planning in the two said aspect or to any activity or process.

A plan is typically any procedure used to achieve an objective. It is a set of intended actions, through which one expects to achieve a goal.
Plans can be formal or informal:
Structured and formal plans, used by multiple people, are more likely to occur in projects, diplomacy, careers, economic development, military campaigns, combat, or in the conduct of other business. In most cases, the absence of a well-laid plan can have adverse effects: for example, a non-robust project plan can cost the organization time and money.
Informal or ad-hoc plans are created by individuals in all of their pursuits.
The most popular ways to describe plans are by their breadth, time frame, and specificity; however, these planning classifications are not independent of one another. For instance, there is a close relationship between the short- and long-term categories and the strategic and operational categories.
It is common for less formal plans to be created as abstract ideas, and remain in that form as they are maintained and put to use. More formal plans as used for business and military purposes, while initially created with and as an abstract thought, are likely to be written down, drawn up or otherwise stored in a form that is accessible to multiple people across time and space. This allows more reliable collaboration in the execution of the plan.

Importance of Planning

The importance of the planning function should be clear to everyone. An outline of the importance of planning function are as follows:

Provides Direction: Planning provides a clear sense of direction to the activities of the organization and to the job behavior of managers and others. It strengthens their confidence in understanding where the organization is heading and what for, how best to make the organization move along the chosen path, and when should they take what measures to achieve the goals of the organization.

Provides opportunity to analyze alternative courses of action: Another source of importance of planning is that it permits managers to examine and analyze alternative course of action with a better understanding of their likely consequences. If managers have an enhanced awareness of the possible future effects of alternative courses of action, for making a decision or for taking any action, they will be able to exercise judgment and proceed cautiously to choose the most feasible and favorable course of action.

Reduces uncertainties: Planning forces managers to shake off their inertia and insular outlook; it induces them to look beyond those noses, beyond today and tomorrow, and beyond immediate concerns. It encourages them to probe and cut through complexities and uncertainties of the environment and to gain control over the elements of change.

Minimizes impulsive and arbitrary decisions: Planning tends to minimize the incidence of impulsive and arbitrary decisions and ad hoc actions; it obviates exclusive dependence on the mercies of luck and chance elements; it reduces the probability of major errors and failures in managerial actions. It injects a measure of discipline in managerial thinking and organizational action. It improves the capability of the organization to assume calculated risks. It increases the freedom and flexibility of managers withing well-defined limits.

King-pin function: As stated earlier, planning is a prime managerial function which provides the basis for the other managerial functions. The organizational structure of task and authority roles is built around organizational plans. The functions of motivation, supervision, leadership and communication are addressed to implementation of plans and achievement of organizational objectives. Managerial control is meaningless without managerial planning. Thus, planning is the king-pin function around which other functions are designed.

Resource Allocation: Planning is means of judicious allocation of strategic and scarce resources of the organization in the best possible manner for achieving strategic goals of the organization. The strategic resources include funds, highly competent executives, technological talent, good contacts with government, exclusive dealer network and so on. If the organization enjoys a distinct advantage in possession of such resources, a careful planning is essential to allocate them into those lines which would strengthen the overall competitive position of the organization.

Resource use efficiency: For an ongoing organization, planning contributes towards a more efficient functioning of the various work units. There is better utilization of the organization's existing assets, resources and capabilities. It prompts managers to close gaps, to plug loopholes, to rectify deficiencies, to reduce wastage and leakages of funds, materials, human efforts and skills so as to bring about an overall improvement in resource use efficiency.

Adaptive responses: Planning tends to improve the ability of the organization to effectively adapt and adjust its activities and directions in response to the changes taking place in the external environment. An adaptive behavior on the part of the organization is essential for its survival as an independent entity. For a business organization, for example, adaptive behavior is critical in technology, markets, products and so on.

Anticipative action: While adaptation is a behavior in reaction and response to some changes in the outside world, it is not enough in some situations. In recognition of this fact, planning stimulates management to act, to take hold initiatives, to anticipate crises and threats and to ward them off, to perceive and seize opportunities ahead of other competitions, and to gain a competitive lead over others. For the purpose, some enterprises establish environmental scanning mechanism as part of their planning systems. Thereby such enterprises are able to direct and control change, instead of being directed and controlled by the pervasive external forces of change.

Integration: Planning is an important process to bring about effective integration of the diverse decisions and activities of the managers not only at a point of time but also over a period of time. It is by reference to the framework provided by planning that managers make major decisions on organizational activities, in an internally consistent manner.

Business Plan

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
The business goals may be defined for for-profit or for non-profit organizations. For-profit business plans typically focus on financial goals, such as profit or creation of wealth. Non-profit and government agency business plans tend to focus on organizational mission which is the basis for their governmental status or their non-profit, tax-exempt status, respectively—although non-profits may also focus on optimizing revenue. In non-profit organizations, creative tensions may develop in the effort to balance mission with "margin" (or revenue). Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. A business plan having changes in perception and branding as its primary goals is called a marketing plan.
Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit's services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the IMF, the World Bank, various economic agencies of the UN, and development banks.
Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.

Information System Plan

Today, most organizations in all sectors of industry, commerce and government are fundamentally dependent on their information systems. Thus, organizations or companies are increasingly looking toward the application of technology not only to strengthen existing business operations but also to create new opportunities that provide them with a source of competitive advantage.
Planning for information systems, as for any other system, begins with the identification of needs. In order to be effective, development of any type of computer-based system should be a response to need--whether at the transaction processing level or at the more complex information and support systems levels. Such planning for information systems is much like strategic planning in management.
An Information System Plan or ISP, on the other hand, is basically a plan concentrated on aligning the information systems of an organization to its business plan as a whole. An information system is comprised of the hardware, software and peopleware of an organization. Usually, the term information system is related to using technology as a crucial part of an organization. The term is also used to identify the computer-based system that an organization is using.
According to Michael M. Gorman, the information systems plan project determines the sequence for implementing specific information systems. The goal of the strategy is to deliver the most valuable business information at the earliest time possible in the most cost-effective manner. The end product of the information systems project is an information systems plan (ISP). Once deployed, the information systems department can implement the plan with confidence that they are doing the correct information systems project at the right time and in the right sequence. The focus of the ISP is not one information system but the entire suite of information systems for the enterprise. Once developed, each identified information system is seen in context with all other information systems within the enterprise. Gorman has also identified some of the characteristics that an ISP should have and these are the following:
An ISP should be timely. An ISP that is created long after it is needed is useless. In almost all cases, it makes no sense to take longer to plan work than to perform the work planned.
The ISP must be useable. It must be so for all the projects as well as for each project. The ISP should exist in sections that once adopted can be parceled out to project managers and immediately started.
The ISP must be maintainable. New business opportunities, new computers, business mergers, etc. all affect the ISP. The ISP must support quick changes to the estimates, technologies employed, and possibly even to the fundamental project sequences. Once these changes are accomplished, the new ISP should be just a few computer program executions away.
While the ISP must be a quality product, no ISP is ever perfect on the first try. As the ISP is executed, the metrics employed to derive the individual project estimates become refined as a consequence of new hardware technologies, code generators, techniques, or faster working staff. As these changes occur, their effects should be installable into the data that supports ISP computation. In short, the ISP is a living document. It should be updated with every technology event, and certainly no less often than quarterly.
The ISP must be reproducible. That is, when its development activities are performed by any other staff, the ISP produced should essentially be the same. The ISP should not significantly vary by staff assigned.

Relationship between the Business Plan and the Information System Plan

Before, the relationship between the business strategy or plan and the information function was not made interest and awareness of the Top Management of the companies or firms. At that time, information systems were thought to be synonymous with the company data processing and were treated as some back-room operation in support of day-to-day ordinary tasks.
In the 80’s and 90’s, however, there has been a growing realization of the need to make information systems of strategic importance to an organization. As a result, strategic information systems planning (SISP) is a important issue. In many industry surveys, improved SISP is often mentioned as the most serious challenge facing by the Information System managers.

With this, strategic information system planning is the analysis of a corporation’s information and processes using business information models together with the evaluation of risk, current needs and requirements. The result is an action plan showing the desired course of events necessary to align information use and needs with the strategic direction of the company. Also, an article has emphasized the need to note that SISP is a management function and not a technical one. This is consistent with the earlier distinction between the older data processing (this was first era of three-era model information system application of John Ward) views and the modern strategic importance view of Information Systems. SISP thus is used to identify the best targets for purchasing and installing new management information systems and help an organization maximize the return on its information technology investment. A portfolio of computer-based applications is identified that will assist an organization in executing its business plans and realize its business goals. There is a growing realization that the application of information technology (IT) to a firm’s strategic activities has been one of the most common and effective ways to improve business performance.

The task of strategic information systems planning is difficult and often time organizations do not know how to do it. Strategic information systems planning is a major change for organizations, from planning for information systems based on users’ demands to those based on business strategy and plan.

Conclusion….
Business plan and information system plan are different in definition, but in a sense they should be align to each other for the common good and to one goal and objective of each aspect to achieve. One is made for other, and the other can’t survive without it. An ISP is part of the business plan in general. One of the best strategies in making a business plan is developing a plan on how to effectively and efficiently use IS to its highest potential for the benefit of the organization as a whole. This is where information system planning comes in. An information system plan is developed in order to effectively manage the IS resources without compromising the business plan of an organization.



Wikipedia.com
http://hubpages.com