System Dynamics Modeling Oriented Strategic Information System Planning
Yi-Ming, Tu, Associate Professor
Wei-Young, Wang, Doctoral Student
Department of Management Information System
National Sun Yat-sen University, Kaohsiung, Taiwan, R.O.C.
Abstract
Organization strategic information system planningSISPis the guide for organizational information systems
development. The purpose of SISP is to satisfy managerial information requirements. However, there is large gap
between the demand side and supply side of management information. To eliminate this gap, the system dynamics
approach was used to develop a new method for organizational SISP. This new method is based on an
organizational system dynamics model. We use the model to identify organizational information requirements and to
design a systems architecture for future management. Simultaneously, it can be used to explore the contradictions
between information systems and corporate policies. It also provides an evaluation of IS alternatives and a guide for
system ordering, the implementation of alternatives. Finally, the implementation steps of the method are discussed.
1.Introduction
The effectiveness of using information technology is a core competency of today's organizations. For application of
the concept there are some questions that all organization must answer, a priori. These include: "Should the
information technology or systems be applied? What kind of IT/IS is needed? When should IT/IS be implemented?"
Importantly, all of these considerations must be coordinated and linked to the organizational objectives.
To address these questions, many researchers have focused on organizational strategic information system
planning to facilitate organizational IT/IS development and to satisfy managerial needs (Bowman, Davis and
Wetherbe 1983; Martin 1989; Henderson and Sifonis 1988). Their work helped direct and apply for organizational
strategic information system planning to facilitate organizational IT/IS development and to improve managerial
effectiveness. However, some problems are left unsolved if organizations want to improve the effectiveness of
IT/AS(King 1978, Lederer and Sethi 1988, and Lederer 1991). Why? First, organizations are negligent of the direction
of ITS development should take in satisfying organization needs. The cause of this problem arises because
managers are not sure early what information they need. Second, throughout the processes of SISP, itis to
introduce distortions from step to another step.
This research first reviews the existing SISP methodologies and then proposes a system dynamics approach to
create an organizational information system architecture. Finally, this research also proposes the implementation
steps of the method.
2.Review of Strategic Information System Planning Methodologies and Assumptions
Several studies have been conducted to develop the processes or steps of SISP. For example, Bowman et al.(1983) proposed a three stage
SISP methodology; Martin(1986,1989) suggested a framework for SISP called information engineering; and Handerson et al-(1988) proposed
a planning model for organizational SISP. Each of these has two common in two aspects. The first is that the organizational SISP activities
they described can be divided into three phases:organizational strategic planning stage, information system strategic planning stage, and
information systems implementation stage. The second is that all approaches are based on the same assumptions.
2.10rganizational Strategic Planning Stage
The organizational strategic planning stage the translation of organizational strategies into the strategies of the organization's information
system. The purpose is to ensure that the organization's information systems support the organization's strategies. The basic assumptions of
this stage are:1 organizational strategic planning should has been done; 2.the organization's functional systems can be defined clearly; 3.the
goals and responsibilities of the departments must be clarified explicitly.
However, some distortions are likely within the process of translation . The ultimate reason for distortion is that some
of the basic assumptions of organizational strategic planning will be revealed during the transformation process and
these may be in conflict with existing procedures and goals. Besides, some distortions may arise because some
goals or objectives are difficult to perceive or measure. When the measurement are difficult, organizations often
neglect or distort them. Thus the important points are shifted.
2.2 Information System Strategic Planning Stage
The purpose of this stage is to identify the strategies for information systems and the information requirements of
departments. The outcomes here are the definition of an organization's fundamental databases, information system
architecture, and the high-level entity-relationship model. All the processes proceed in topdown decomposition
sequences.
A problem arises because of the inability to validate the information requirements acquired in this stage which is,
indeed, the information that can help the managers. Though this process can be improved through extensive
monitoring, itis costly and its potential contribution is very limited.
2.3.Information Systems Implementation Stage
In this stage the organizational resources of IS including finance, personnel, hardware, software, database, etc. are
allocated. The essential purpose is to develop criteria to arrange the implementation priorities of information
systems.
However, the greatest limitation of existing methods results from static and linear thinking which makes it difficult to
evaluate system effectiveness. These impediments often result in neglecting the development and adoption of the
activities needed. For example, itis very likely that the schedule of development priority is processed according to
political considerations or the managers’ intuition.
System dynamics can solve a major part of the above problems. It can be used to examine basic assumptions
hidden at different levels of organization and to design organizational policy effectively. Besides, in the process of
model building, it can explore the important and relevant information, thus influencing and informing the key
information requirements of managers. All the advantages are expectations of organizations, but itis not possible to
provide these simultaneously with present methodologies.
3.System Dynamics Modeling Oriented SISP Methodology
There are three stages contained in this methodology as shown in figure 1. Step 1 is to express the organizational
operating diagram in terms of six basic "flows" prevalent in organizationsForrester, 1961. The presentation of this
diagram is by system dynamics model symbols. With the diagram , the operating processes and decision making
mechanisms of an organization may be visualized.. Besides, it also illustrates the existing design rules of
information systems. After understanding the overall configuration of present information systems, one can go further
to lower or upper level planning as necessary.
Output
Theories and Tools Stepl.
Constructing Organizational |
Operation processes ae.
System
Dynarnics
Step 2.
System Dynamics Modeling Dynes Model
Busic Dasbase
Step 3. 35 Ache
1S Development Sequence
Information Systems ate
Architecture coat oak
MIS
Figure 1 System Dynamics Modeling Oriented SISP
The next step is to establish a system dynamics model. The model constructed here is a strategic model. Because it
also contains the programmed rules of the information system. The impacts of information systems on the model
behaviors can be investigated. According to the modeling processes, itis possible to redesign policy for advanced
management.
There are several activities that are necessary in the final step. One is to define the database and to analyze the
developmental architecture of the information systems. Besides, it is necessary to evaluate the information systems
impacts to determine resource allocation and implementation priorities.
In this section, we described the overall structure of the methodology. Thus focusing primarily on step 3. The
organizational information systems developmental architecture will be discussed further.
4. Architecture of Information Systems
4.1.Organizations Basic Database
First, the system dynamics model developed in step 2 is used to transform different flows or levels into different
databases. Next, the states and sub-flows within each database are categorized according to their differentiation of
management nature, and the states and sub-flows are transformed into the organizational sub-database.
As to the contents of each database and sub-database, there are two major components. One of the components is
the data flow. The other is the data for operations and management. If it is necessary to plan and to analyze in more
detail, the basic databases acquired should be combined with the previous organizational operating diagram.
Additionally, other factors should also be taken into account, such as the geography of operations, the channels of
communication, size of the data set, etc...
4.2.Organizational Information System Architecture
After completing the previous step, there are some remaining variables that are uncategorized and not included in
the data bases. They are the transformations of original data and the mechanisms for management requirements.
These variables can be classified into three types. Each of these stands for one kind of information system. The first
has direct control over the levels of corresponding databases. The second contains information whose purpose
cannot be placed into a specific database. However, this kind of information offers important indices of an
organization's performance. The third kind of information system includes information that comes from outside of the
organization. This kind of information may play a major role in system behaviors. From the perspective of such
information, some strategic advantages may be derived.
A new issue arises when defining each kind of information system. Interactions among each information system and
database constitutes the interfaces to be developed. So far, we have defined the information system and interfaces
among them. When linked to the information system architecture, it also informs the basic development strategy of
information systems.
4.3.Integrating Existed Information Systems and Database
Previous steps have defined the information systems needed by organizations. It must be integrated with the
existing information systems. There are some guidelines to direct this integration process. First, one must check and
correct if the operating rules of existing information systems are in conformity with the strategies of organizations.
Second, one must check the existing databases to see if all the data defined in the organization's basic databases is
available. Third, one must check the existed interfaces of information systems to confirm that all the information that
is defined in the information systems architecture can be transformed and satisfied. Fourth, one must consider the
existing databases and the information system's ability and flexibility for further extension. If necessary, new systems
or databases should be created.
After completing the questions above, we can determine the revision plan of the present information system
according to our original planning principles. The ordered principles of the overall plan can be used to advise the
work.
4.4.The Guidelines of Systems Development Sequence
Several researchers have proposed principles of the priority of systems development. Some guidelines are
suggested in this research from the perspective of system dynamics. One of the guidelines is that information
systems that have the greatest influence on system behavior should be developed first. The other is to analyze the
influence of resources allocation on information systems. All of these items should be evaluated by simulation.
5.Conclusion
This research proposed a SISP methodology derived from system dynamics models. The procedure of this
methodology included three major steps: 1)Understanding the basic operation and management mechanisms of an
organization, with the concepts and symbols of levels, rates, and auxiliary variables for investigating the
configuration and rules of present information systems; 2)establishing the strategic systems dynamics model and
exploring the consistency of policies hidden in the information systems; 3)analyzing the organization's information
requirements according to the model developed earlierly. The content includes the basic database, information
system architecture, and the interfaces among information systems. In the implementation stage, this approach also
suggests a method to evaluate and to understand the impact of information systems by the simulation of previous
system dynamics model.
Reference
Bowman, B. & G. Davis, 1983, "Three Stage Model of MIS Planning,” Information & Management, Vol. 6.
Forrester, J. W., 1961, Industrial Dynamics, MIT Press.
Henderson, J. C. & J. G. Snifonis, 1988, "The Value of Strategic IS Planning: Understanding Consistency, Validity,
and IS Markets," MIS Quarterly, June.
King, W. R., 1978, "Strategic Planning For Management Information Systems,” MIS Quarterly, 2:1, March.
Lederer, A. L.& V. Sethi, 1988, "The Implementation of Strategic Information Systems Planning Methodologies," MIS
Quarterly Sep.
Lederer, A. L.& V. Sethi, 1991, "Application and Implementation Critical Dimensions of Strategic Information
Systems Planning," Decision Science, Vol. 22.
Martin, J., 1989, Strategic Information Planning Methodologies, second edition," Prentice-Hall.
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