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Navigation Menu IT management | The Information Archipelago—Plotting a Course Subscribe Sign In Account Menu Account Menu Hi, Guest Search Menu Close menu Search CLEAR * * * * * * * SUGGESTED TOPICS * * * Explore HBR * Latest * The Magazine * Ascend * Podcasts * Store * Webinars * Newsletters Popular Topics * Managing Yourself * Leadership * Strategy * Managing Teams * Gender * Innovation * Work-life Balance * All Topics For Subscribers * The Big Idea * Data & Visuals * Reading Lists * Case Selections * HBR Learning * Subscribe My Account * My Library * Topic Feeds * Orders * Account Settings * Email Preferences * Log Out * Sign In * * * * Subscribe Latest Podcasts The Magazine Ascend Store Webinars Newsletters All Topics The Big Idea Data & Visuals Reading Lists Case Selections HBR Learning My Library Account Settings Log Out Sign In YOUR CART Your Shopping Cart is empty. Visit Our Store Guest User Subscriber My Library Topic Feeds Orders Account Settings Email Preferences Log Out Reading List Reading Lists Latest Magazine Ascend Topics Reading Lists Podcasts Store The Big Idea Data & Visuals Case Selections HBR Learning IT management THE INFORMATION ARCHIPELAGO—PLOTTING A COURSE A major manufacturing company eliminates its five-person information systems planning staff, reassigning three to other jobs in the IS organization and letting two go. The vice president for finance explained: “We just didn’t seem to be getting a payoff from this. After three years of trying, we decided to find a better place to spend […] by * F. Warren McFarlan, * James L. McKenney, and * Philip Pyburn by * F. Warren McFarlan, * James L. McKenney, and * Philip Pyburn From the Magazine (January 1983) * Post * Post * Share * Annotate * Save * Get PDF * Buy Copies * Print Leer en español Ler em português * Post * Post * Share * Annotate * Save * Get PDF * Buy Copies * Print * A major manufacturing company eliminates its five-person information systems planning staff, reassigning three to other jobs in the IS organization and letting two go. The vice president for finance explained: “We just didn’t seem to be getting a payoff from this. After three years of trying, we decided to find a better place to spend our money.” * For a large financial institution, a recently completed business systems plan was the key to setting a new direction for the amount of IS expenditures and how they should be invested over the next five years. “We would be lost without this plan,” the executive vice president for operations noted. * The head of IS planning of a major financial services organization, in discussing his recent disillusionment with planning, noted: “When I started IS planning two years ago, I was very enthusiastic about its potential for invigorating the company. It worked for a while, but now the effort seems to have gone flat.” The first and third comments are typical of a number of organizations that, after launching an IS planning effort with great hopes and apparent good results, find the plan running into difficulty. This article shows how companies can get better results from IS planning. IS includes the technologies of computers, telecommunications, and office automation. In the early 1970s, these could be planned and managed as largely separate entities. By 1983, however, increasingly they are being managed together—first because more and more new applications require the interconnection of all three technologies, and second, because the project management problems of applications using any one of these technologies are now quite similar. Many information systems applications continue to have the characteristics of computer projects in the early 1970s: large cost, technical complexity, and long systems development lead times. As these applications have grown in both size and complexity over the past two decades, the challenge of ensuring the availability of the needed staff, hardware, and financial resources has made the job of planning the types and amounts of IS applications and services increasingly important. The best approach to planning the use of a certain IS technology depends on the organization’s familiarity and experience with that technology. Technologies new to the company require quite different approaches from those with which it is familiar. Further, it is becoming clear that the impact of IS technologies on strategy varies widely from one company to another, and these differences influence significantly how IS planning can best be done. Finally, a number of factors peculiar to a business, such as size, complexity of product lines, and approach to corporate planning, help determine the best way to approach IS planning. PRESSURES TO PLAN A variety of pressures make planning necessary in the information systems field. The most important are rapid changes in technology, scarcity of skilled people and other corporate resources, the trend toward integrated systems, and the importance of IS to corporate goals. Rapid changes in technology. The technical and cost characteristics of both hardware and software have evolved rapidly, offering very different and more profitable approaches to applications development. For example, microcomputers, executive support systems, and end user programming systems have all brought changes. This situation necessitates frequent meetings of the IS staff and management groups to discuss developments that might help the company and to generate plans to deal with them. In addition, potential users, such as office managers or analysis staffs (often different from the traditional users of data processing systems), must be made aware of the implications of any changes as well as of potential problems so that they can try to find profitable new applications in their areas of responsibility that might not occur to the IS staff. As the technology changes, planning becomes important to avoid a proliferation of incompatible systems and to permit a long lead time for acquiring and updating equipment. Also, integration of new equipment into a company’s existing technical configuration and administration procedures often takes up to four years. For example, one regional bank has a three-year installation program to manage its transition from 140 on-line terminals to more than 1,600 terminals on completion of its on-line teller network. A detailed plan was absolutely essential to develop senior management’s confidence in the installation program and to ensure sound operations during the implementation period. Scarcity of corporate resources. The shortage of skilled, perceptive analysts and programmers, coupled with the long training needed to make them fully effective, often restrains IS development and necessitates careful planning. These problems do not appear to be temporary but are rather long-term difficulties that will last through the 1980s. To meet the shortage of technicians, a growing number of U.S. companies are looking overseas for English-speaking analysts and programmers—and they are willing to pay well to get them. Riding the crests of IS technology This chart shows the waves of technology as they might appear in a company. While the company’s use of a specific technology evolves over time, a new wave, that is, a new technological advance, is always beginning, so that the process is continually repeated. Also, as costs of a particular technology drop, overall costs rise because of the new waves of innovation. Profits, however, tend to increase because of the resulting new strategic opportunities. Another factor critical to IS is the limited availability of financial and managerial resources. Managers will have to make tough decisions on the allocation of these resources. IS is, of course, only one of many strategic investment opportunities for a company, so cash invested in it is often obtained at the expense of other areas. Since most U.S. companies charge IS expenditures directly against the current year’s earnings, reviews of both the effectiveness and the efficiency of these expenditures can limit new projects, especially in companies under profit or cost pressures. Scarcity of IS middle managers, particularly on the development side, is also a constraint. This has forced either large reductions in many application development portfolios or the undertaking of projects that are unduly risky because of inadequate human resources. Also, companies are likely to have to obtain increasing amounts of software from outside. Trend to integrate systems. An increasing percentage of many companies’ project portfolios involves the design of data bases to support a variety of applications. A long-term view of the evolution of applications is vital for managers when selecting the content of data bases and the protocols for updating them. Importance of IS to corporate goals. In many organizations, new marketing programs, new product design, and implementation of strategy depend on the development of IS support programs. Managers need to understand these dependencies and, if the corporate strategy is infeasible owing to IS limitations, they must receive this message and resolve the problem while alternatives are still workable. Understanding this linkage is more important in organizations in which IS is integral to the corporate strategy than where IS plays a supporting role. For example, a large paper company recently had to abandon major new billing discount promotions, a key element of its marketing strategy, because the staff lacked the skill to translate the ideas into computer programs. Coordination with IS in planning sessions would have identified the problem and fostered satisfactory solutions. TECHNOLOGY ASSIMILATION At different points in the evolution of an IS technology, the balance among planning pressures shifts, and planning serves different purposes. One can identify four phases of technology assimilation, each of which poses its own challenge. PHASE 1: IDENTIFICATION & INITIAL INVESTMENT The focus of planning in the initial phase of a new technology is oriented toward learning about the technology and how to apply it. Critical planning considerations include deciding on an appropriate technology for study, preparing the site, building staff skills, and supervising development of the first applications using this technology. In this phase, short-term technical problems are so critical and managers’ experience with the technology so limited that they often are unable to perceive its long-term implications. This is to be expected. As the organization gains experience, the technical issues involved in applying this technology become better understood and the company moves into the second phase. PHASE 2: EXPERIMENTATION & LEARNING Planning in this phase focuses on making users conscious of the new technology and of the types of problems it can solve as well as on sequencing projects and coordinating them. User-supported pilot projects are the key to success. This phase includes decisions on the numbers of staff members and kinds of skills to acquire, the equipment to get, and the financial data to obtain to support those projects. At this stage the plan should not seek to set the pace of events because the company has not yet learned enough. Our observations of successful practice at this phase suggest clearly that: (1) planning for new technology best starts with a “rough and dirty” test to educate IS staff and users rather than a long period of introspection concerning design and potential benefits; (2) the critical success factors in phase 2 include attracting the interest of potential users of the technology. For example, a major food processor is issuing microcomputers to all middle and senior managers for use at home. Success here should lead to more clearly articulated requests for service. Phase 2 technology planning has a heavy strategic thrust. However, as rapidly growing companies in new industry sectors have found, such planning lacks precision because both users and developers lack familiarity with the technology and how it can best be applied. Hence planning in this phase does not have the same predictive value as does planning for technology in a later phase. What the technical developer thinks are the implications of the new technology often turns out to be quite different after the users have experimented for a while. Since technology evolves, there will usually be a phase 2 flavor to some part of a company’s IS development portfolio. PHASE 3: CONTROL In contrast to phase 2, where planning has a long-range, if not terribly accurate, scope, planning in phase 3 is dominated by short-term (one- to two-year) efficiency and organization considerations. These include getting troublesome development applications straightened out and completed, upgrading staff to acceptable knowledge levels, reorganizing to develop and implement further projects, and using the new technology efficiently. During this phase, the planning objective is to decide on the types of applications that are appropriate with this technology and to ensure their cost-effective implementation. In phase 3, planning has more of a management-control and operational-control emphasis and less of a strategic thrust. PHASE 4: WIDESPREAD TECHNOLOGY TRANSFER The final phase is one of managing the spread of technology to other systems applications within the organization. In this phase, with organizational learning essentially complete and a technology base installed with appropriate controls in place, managers can afford to look more intensively at the future and plot longer-term trends. The risk here is that if they are not careful, they can extrapolate too rigidly from current business and technological trends; unexpected quirks often invalidate the outcomes of phase 4 planning. Because of the dynamic state of IS technology, a mix of technologies in various phases can be found in a typical organization (see the ruled insert). In most companies, the planning for business batch data processing, for example, is in phase 4, while that for word processing and office automation is in phase 2. This suggests that uniformity in planning is inappropriate because the organization has a different degree of familiarity with each technology. The planning approach must evolve independently for each one. For example, one manufacturing company we studied was in phase 4 in its ability to conceptualize and deal with improvements in its batch systems. At the same time, it was in phase 3 in developing control over its on-line inquiry and data input systems, whose growth had exploded in the past several years. Finally, it had made an investment in several word processing systems and was beginning to examine several different methods of office automation, and it was clearly in phase 1 with respect to this technology. In summary, the mission of IS planning varies from one technology to another. Similarly, the approach to IS planning for different organization units within a company should vary, since each often has quite a different familiarity with particular technologies. CHALLENGES IN IMPLEMENTATION PLANNING As new products appear, as the competitive environment shifts, as new laws are enacted, as corporate strategies change, and as mergers and spin-offs take place, the priorities a company assigns to its various applications should evolve. New applications or some projects earlier seen as having low priority may become critically important, while others previously seen as vital will diminish in importance. This volatility places a premium on building a flexible framework to permit orderly and consistent change to match evolving business requirements. FORECASTING INACCURACIES Every information systems planning process must make some assumptions about the nature and role of technological evolution. If this evolution occurs at a different rate from the one forecast (as is often the case), large segments of the plan may have to be reworked both in scope and in thrust. For example, if the speed of access to a 100-million character file were suddenly increased by an order of magnitude beyond expectations with no change in cost, most organizations’ plans would require careful reexamination, not just concerning the priority of applications but also, and more important, their very structure. Some managers have used this necessity for reexamination as a reason not to plan but rather to be creatively opportunistic on a year-to-year basis. We have found the evidence supporting this viewpoint unconvincing. PLANNING AS RESOURCE DRAIN Every person’s time, or part of that time, assigned to planning diverts resources from systems and program development. What financial resources should be devoted to planning is still very much in question. Not only will the style of planning evolve over time as parts of the organization pass through different phases with different technologies but the amount of commitment to planning will also shift accordingly. This suggests an incompatibility between the notions of stability in an IS planning process and a creative view of the future. If not carefully directed, IS planning tends to evolve into a mind-numbing process of routine changing of the numbers as opposed to stimulating a sensitivity to the company’s real problems. STRATEGIC IMPACT For some organizations, IS activities represent an area of great strategic importance, while for others they will always play a cost-effective and useful, but distinctly supporting, role. Organizations of this latter type should not expect senior management to devote the same amount of strategic thinking to the IS organization as will companies of the former type. In some organizations, however, the IS function’s strategic role may greatly increase, and thus the involvement of senior managers in planning becomes very important. The opposite, of course, could also be true, where the strategic role of IS in the company’s operations may diminish. Here a less intensive focus on strategic planning is in order involving different people from the previous case. Exhibit I identifies the following four different IS environments and shows where some companies fit in this scheme. Exhibit I Position of information systems in various types of companies STRATEGIC. Some companies, like many banks and insurance companies, are both critically dependent on the smooth functioning of the IS activity for their daily operations and have applications under development that are vital to their competitive success. These companies need to do a considerable amount of planning, and the organizational distance between IS and senior management is very short. In fact, in some of these companies, the head of the IS function, broadly defined, sits on the board of directors. Comments by the CEO of a large financial institution to his senior staff capture this perspective: “Most of our customer services and much of our office support for those services involve some kind of systematic information processing. Without the computer hardware and software supporting these processing efforts, we would undoubtedly drown in a sea of paper—unless we were first eliminated from the market because our costs were so high and our services so inefficient that we had no customers to generate the paper. Either way, it’s clear that information systems are critical to our survival and our success. In our businesses, the resources that determine our marketing and our operating performance are people and systems.” TURNAROUND. Although some companies may receive considerable IS operational support, they are not absolutely dependent on the uninterrupted cost-effective functioning of this support to achieve either short-term or long-term objectives. The applications under development, however, are absolutely vital for the company’s strategic objectives. A rapidly growing manufacturing company is a good example of this. The IS technology embedded in its factories and accounting processes, while important, was not essential to its effectiveness. The rapid growth of the domestic and international installations in number of products, sites, staff, and so on, however, severely strained the company’s management control systems. To improve them, the company strengthened IS leadership, placed IS higher in the organization, and increased its commitment to planning. Other changes the company can make to enhance senior management’s overview of IS include a revised reporting structure, increased top-level participation in IS steering committees, and more intense user involvement in establishing priorities. FACTORY. These companies depend heavily on IS support for smooth operations. Their application development portfolios, however, contain maintenance work and applications that, while profitable and important in their own right, are not fundamental to the particular company’s ability to compete. Planning thus has a shorter-term, more operational character and balances service, cost, and efficiency. Some manufacturers, airlines, and retailers fall neatly into this category. In these organizations, even a one-hour disruption in systems impairs the performance of the business unit. SUPPORT. However large the IS budgets of some companies are, their operations are not fundamentally dependent on the smooth functioning of the IS activity nor are their application portfolios critical for the company’s strategic success. A large manufacturing company fits this category perfectly. With a budget of nearly $30 million a year for IS activities and a staff of more than 500, the company was clearly getting a good return on its investment. It could operate, albeit unevenly, in the event of major IS operational difficulties, and the strategic impact of the application portfolio under development was limited. Not surprisingly, IS was at a much lower organizational level than in many other companies, and the commitment to planning, particularly in upper management, was quite low. The director of corporate planning noted: “There is no payoff in my spending time here. Any conceivable improvements in this department’s performance will have a negligible impact on the company as a whole.” Our research reveals a surprisingly large number of companies in this category. Though the planning approach should differ for each of these environments, a gap often exists between where an organization actually lies in the grid and where senior management believes it to be. The following example describes a large financial institution where managers had such a misconception. The institution’s senior executives were comfortable with the company’s IS performance, although it came up only infrequently on their agenda. Its IS management team, however, was deeply concerned over the lack of information on the company’s goals and projected products four to five years in the future; it needed that information to provide the necessary support. The institution is a multinational with a very sophisticated corporate planning activity. In a world where financial institutions need constant shifts in strategy, top executives of the company were concerned about the confidentiality of such information, and only four or five persons knew the full scope of any possible change. At one point recently, neither the IS manager nor his boss was included in this group. Consequently, they could only crudely assess the future direction of the organization by trying to guess why some projects were funded while others were not. Reporting to the IS manager was a full-time IS planning manager with three assistants. For the preceding two years, the IS planners had worked closely with middle management users and DP technologists to devise strategies and applications portfolios that both sides saw as relevant to their needs. But because there was little direct linkage, either formal or informal, between the IS planning activity and the corporate planning department, the IS staff worried. Although plans and strategies they developed might be technically sound and meet the needs of users in middle and senior management, they could be unproductive or even counterproductive in their ability to support the corporate thrust. They also feared that plans developed by the company’s four or five top executives, who were isolated from IS, might unwittingly place onerous or crippling pressures on IS that would prevent the department from meeting future support requests. At this stage, senior managers saw IS as a factory, believed it was staffed and managed well, and had no concern about its planning process. IS saw itself as having a strategic role but was unable to sell the concept to anyone. An outside review of the institution’s overall strategy resolved this frustration by convincing senior managers that they had misunderstood the role of IS and that they should treat it as strategic. Unfortunately, through all of this, IS managers were seen as being able to run a factory but unable to tackle this new challenge. Consequently, they failed to survive the transition. In this company, IS planning had looked good on paper. In fact, however, it had not taken account of the corporate environment and had left the organization at risk of being unprepared. These failures were fatal to IS management because top management only belatedly saw IS activities as indispensable to the organization’s achievement of its product and productivity goals. Determining the role of IS (see Exhibit I) is useful not just for categorizing a company as a whole but also for characterizing the position of the various business units inside the company, which can be at very different positions on the grid. The actual positions of the units and the perception of where they should be, from the perspectives of both IS management and senior management, represent vital inputs to the design of IS planning. Exhibit II contains a questionnaire used by one company to analyze the strategic thrust of the development portfolio for each of its organizational units. The answers to these questions should reveal whether the development work being done is critical to the company’s future competitive posture or is useful but not at the heart of what the company must do to be competitive. Similarly, Exhibit III contains a questionnaire used by the same company to analyze the importance of the systems for achieving the operating objectives of an organizational unit. The company uses the sets of questions as rough diagnostic tools. Other companies will, of course, raise different questions. Exhibit II Portfolio analysis of projects Note: The relative weighing of these questions varies depending on the unit’s strategic basis of competition. Exhibit III Degree of operational dependence on IS Exhibit IV suggests that a company’s placement in this matrix not only influences how IS planning should be done but also has implications for the role of the executive steering committee, organizational placement of IS, and the appropriate type of IS management control system. Further, since different units within a company may be at different points on the grid, the planning organization and control approach suitable for one unit may be quite inappropriate for another. Finally, since a unit’s position on the grid changes over time, the planning and control approach suitable at one point may be unsuitable at another. Exhibit IV Strategies for IS in support and strategic roles IS MANAGEMENT CLIMATE In an environment of great management turmoil, turnover, and reassessment, the effort to plan IS will probably be less intense than that in a stable environment where turnover in key positions is low. While an unstable environment makes execution of planning complex, it does not eliminate the need for it. A planning approach should be tailored to the needs of a particular situation. In no case is a general-purpose planning approach likely to be successful. IS PLANNING & CORPORATE STRATEGY In thinking about the role IS should play in an organization, managers must understand the nature of the competitive position of the company or business unit and how it competes. The position and competitive weapons significantly influence the degree to which IS is strategically important to a unit, the way investments in IS technology should be considered, and the way IS planning should be executed. To illustrate, we will discuss one of the most widely used frameworks for competitive analysis in terms of its implications for IS strategy. This is Michael Porter’s view as communicated in his well-known book on competitive strategy.1 Following are the three strategies a company can adopt, according to Porter, together with a discussion of their impact on IS as a component of corporate strategy: BE THE LOW-COST PRODUCER. This strategy is appropriate for a standardized product. Maintaining operating costs well below those of the competition can produce healthy profit increases and a huge boost in market share. IS can have strategic value in this environment if, for example, it can: * Lower labor costs—and thus the unit cost—by reducing production and clerical staff. * Reduce fixed-asset expense for each production unit by improving the use of manufacturing facilities through better scheduling. * Reduce interest and facilities costs by allowing reductions in inventory, accounts receivable, and so on. * Permit lower overall costs by reducing waste (through better matching of orders, materials, and machines) and making better use of lower-grade materials in settings where quality is not an issue. If the company’s manufacturing and distribution technologies do not permit these types of saving, IS is unlikely to be of strategic interest for long-term competitiveness. PRODUCE A UNIQUE, DIFFERENTIATED PRODUCT. Differentiation can be created along a number of dimensions, such as quality, special design features, availability, and special services that offer end consumer value. For example, IS offers strategic value to this corporate environment if: * It is a significant component of the product and its costs and hence an important differentiable feature, as in banks, brokerage houses, and credit card operations. * It has great impact on the lead time for product development, customization, and delivery, as do CAD/ CAM systems in many industries. * It permits customizing of a product to the customer’s needs in a way not possible before—for example, CAD/CAM in specialized textile made-to-order operations like men’s suits. * It gives a visibly higher and unusual level of customer service and need satisfaction that can be built into the end price, e.g., special-order inquiry status for key items. If IS cannot produce such differentiable features for companies and business units that compete on this basis, it is unlikely to be of long-term strategic importance. ABILITY TO IDENTIFY AND FILL NEEDS OF SPECIALIZED MARKETS. Such markets could be geographic or have very specialized end user needs. IS offers strategic value for these companies if it permits better identification of special customer needs and subtle variations in the market—that is, if IS has the ability to analyze company or industry sales data bases to spot unusual trends. Greeting card companies, for example, could determine that three-line verses, primarily red cards, or contemporary designs are selling well in the Midwest and focus their sales effort accordingly. IS is also of strategic value to companies that sell IS-intensive products, such as banks or publishing companies. In general, the role of IS for companies that compete in this way is harder to identify than for those that compete under one of the first two strategies. CORPORATE INFLUENCES Recent research has identified four factors that influence how companies must structure IS planning to improve their chances of success. Status of IS manager. The IS manager’s status must suit the role IS plays or should play in the company’s operation and strategy-formulation process. Where IS is in a strategic or turnaround role, if its managers have low status (in reporting level and/or compensation), they may find it hard to get the information needed from general managers for planning. Lack of formal communication at the top is likely to be fatal in such a setting, as IS is outside the key communication loop. If corporate communication is formal, appropriate committees and processes can improve the lines of communication. For companies where information services are—and should be—in the support role, lower status of the IS director is appropriate and less effort needs to be made to ensure alignment of IS and corporate strategy. Further, a lower level of investment (in dollars and in staff) in IS planning is appropriate for these companies. The comments of a director of strategic planning for a large process-oriented manufacturing company illustrate such a situation: “We relate to IS by giving them insight on what the corporate goals are and what the elements and forms are of a good planning system. Because of their role in the company, we do not solicit feedback from them as to what the possibilities are. The nature of their operation is such that they can provide no useful input to the selection of corporate strategy.” Proximity of systems group and general management team. For organizations in which many important decisions are made informally in ad hoc sessions and IS is playing a strategic or turnaround role, key IS management staff should be physically close to senior line managers. Regardless of the systems manager’s status, he or she cannot be an active member of the team in this type of organization if he or she is physically distant. One manager in such a company remarked, “When a problem surfaces, those people who are around and easily accessible are those who solve it, and we don’t wait to round up the missing bodies.” When management communications are more formal, proximity becomes less important. In informal organizations where IS plays a strategic or turnaround role, even if the systems groups must be located many miles from headquarters, IS managers, and preferably a small staff, must be at corporate headquarters. Where IS plays a support or factory role in informal organizations, location at corporate headquarters is much less important. Corporate culture and management style. In organizations where the management culture is low key and where an informal relationship exists between the systems managers and senior management, formal IS planning procedures do not appear to be a critical determinant of systems effectiveness. This relationship can be enhanced (as already mentioned) by the proximity and higher status of the IS manager. As an organization becomes more formal in its business practices, the role of formal IS planning disciplines becomes more significant, even for systems environments that are not complex. Size and complexity. As organizations increase in both size and complexity and as applications of information systems technology become wider and more complex, companies need more formal planning processes to ensure the broad-based dialogue that is essential to the development of an integrated vision of IS. Of course, greater size and complexity often lead to more formal practices in general. Where the business units are small and simple, formal planning approaches become less important, irrespective of other factors. The same holds for the systems environment. These characteristics of corporate culture reveal why selection of a planning approach is so complicated and why recommendations on how to plan for IS in general are almost always too inflexible and prescriptive for any particular situation. With a better understanding of the factors that affect the formulation of IS strategy, managers can now plan more effectively. A single methodology that fails to take into account differences in culture, strategic impact of technology, and organizational assimilation of IS technologies between divisions of a company as well as between companies will not do the job. Effective IS strategy is best described by the words “planned clutter.” 1. Michael E. Porter, Competitive Strategy (New York: Free Press, 1980). A version of this article appeared in the January 1983 issue of Harvard Business Review. MORE FROM THE AUTHOR * CAN CHINA LEAD?: REACHING THE LIMITS OF POWER AND GROWTH Book Buy Now Read more on IT management * FM F. Warren McFarlan is the Albert H. Gordon Professor of Business Administration, Emeritus, Harvard Business School. He is a guest Professor at Tsinghua University and Co-Director of Tsinghua’s Case Development Center. * JM James L. McKenney are professors of business administration at the Harvard Business School, where they teach management information systems administration. * PP Mr. Pyburn is assistant professor of management information systems, director of the Information Systems Research Center, and senior research associate of the Asian Management Center at the Boston University School of Management. He is the author (with F. Warren McFarlan and James L. McKenney) of “The Information Archipelago—Plotting a Course” (HBR January–February 1983). * Post * Post * Share * Annotate * Save * Get PDF * Buy Copies * Print Read more on IT management RECOMMENDED FOR YOU PODCAST HOW DO I GET RESULTS WITHOUT FEELING BURNED OUT? 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View details | Privacy policylaunch ConsentLegitimate interesthelp_outline SMADEX, S.L.U. Cookie duration: 365 (days). Data collected and processed: Device identifiers, Device characteristics, Probabilistic identifiers, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent BOMBORA INC. Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline EASYMEDIA GMBH Cookie duration: 365 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent REMERGE GMBH Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses more Uses other forms of storage. View details | Privacy policylaunch ConsentLegitimate interesthelp_outline ADVANCED STORE GMBH Cookie duration: 365 (days). Data collected and processed: Device identifiers more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline MAGNITE CTV, INC. Cookie duration: 366 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline DELTA PROJECTS AB Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline USEMAX ADVERTISEMENT (EMEGO GMBH) Cookie duration: 365 (days). Data collected and processed: Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent EMETRIQ GMBH Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent PUBLICIS MEDIA GMBH Cookie duration: 1825 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Privacy policylaunch Consent M.D. PRIMIS TECHNOLOGIES LTD. Cookie duration: 25 (days). Data collected and processed: Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices more View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline ONETAG LIMITED Cookie duration: 396 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent CLOUD TECHNOLOGIES S.A. Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Privacy policylaunch Consent SMARTOLOGY LIMITED Doesn't use cookies. Data collected and processed: IP addresses more Uses other forms of storage. View details | Privacy policylaunch ConsentLegitimate interesthelp_outline IMPROVE DIGITAL Cookie duration: 90 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline ADOBE ADVERTISING CLOUD Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, IP addresses, Privacy choices more View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline BANNERFLOW AB Cookie duration: 366 (days). Data collected and processed: Device characteristics, Non-precise location data, IP addresses, Privacy choices more View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline TABMO SAS Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Uses other forms of storage. View details | Privacy policylaunch Consent INTEGRAL AD SCIENCE (INCORPORATING ADMANTX) Doesn't use cookies. Data collected and processed: Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more View details | Privacy policylaunch Legitimate interesthelp_outline WIZALY Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent WEBORAMA Cookie duration: 393 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline JIVOX CORPORATION Cookie duration: 30 (days). Data collected and processed: Device identifiers, Precise location data, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent SAGE+ARCHER BV Doesn't use cookies. Data collected and processed: Non-precise location data more View details | Privacy policylaunch Consent ON DEVICE RESEARCH LIMITED Cookie duration: 30 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data more View details | Storage details | Privacy policylaunch Consent ROCKABOX MEDIA LTD Doesn't use cookies. Data collected and processed: Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses more View details | Storage details | Privacy policylaunch Legitimate interesthelp_outline EXACTAG GMBH Cookie duration: 180 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, IP addresses, Privacy choices more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent CELTRA INC. Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Precise location data, IP addresses more Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent MAINADV SRL Cookie duration: 30 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices more Uses other forms of storage. View details | Privacy policylaunch Consent GEMIUS SA Cookie duration: 1825 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent THE KANTAR GROUP LIMITED Cookie duration: 914 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more Cookie duration resets each session. Uses other forms of storage. View details | Privacy policylaunch Consent NIELSEN MEDIA RESEARCH LTD. Cookie duration: 120 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, IP addresses, Privacy choices more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline SOLOCAL SA Cookie duration: 396 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline PIXALATE, INC. Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses more View details | Storage details | Privacy policylaunch Consent ORACLE ADVERTISING Cookie duration: 180 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent NUMBERLY Cookie duration: 180 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent AUDIENCEPROJECT A/S Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline DEMANDBASE, INC. Cookie duration: 730 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent EFFILIATION / EFFINITY Cookie duration: 2 (days). Data collected and processed: Device characteristics more Cookie duration resets each session. View details | Privacy policylaunch Consent ARRIVALIST CO. Cookie duration: 365 (days). Data collected and processed: Non-precise location data, IP addresses more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent SEENTHIS AB Doesn't use cookies. Data collected and processed: Device characteristics, IP addresses more View details | Privacy policylaunch COMMANDERS ACT Cookie duration: 365 (days). Data collected and processed: Device identifiers, IP addresses more View details | Storage details | Privacy policylaunch Consent TRAVEL AUDIENCE GMBH Cookie duration: 397 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Privacy policylaunch Consent HUMAN Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Probabilistic identifiers, Non-precise location data, IP addresses more View details | Privacy policylaunch Legitimate interesthelp_outline ADLUDIO LTD. Doesn't use cookies. Data collected and processed: Device characteristics more View details | Privacy policylaunch Consent BLENDEE SRL Cookie duration: 366 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent INNOVID LLC Cookie duration: 90 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more Cookie duration resets each session. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline PAPIRFLY AS Doesn't use cookies. Data collected and processed: Device characteristics more View details | Privacy policylaunch Legitimate interesthelp_outline NEUSTAR, INC., A TRANSUNION COMPANY Cookie duration: 365 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Privacy policylaunch ConsentLegitimate interesthelp_outline VERVE GROUP EUROPE GMBH Doesn't use cookies. Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Precise location data, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Uses other forms of storage. View details | Privacy policylaunch Consent OTTO (GMBH & CO KG) Cookie duration: 365 (days). Data collected and processed: Device identifiers, Browsing and interaction data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline ADOBE AUDIENCE MANAGER, ADOBE EXPERIENCE PLATFORM Cookie duration: 180 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent LOCALSENSOR B.V. Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Precise location data, Non-precise location data, IP addresses, Privacy choices more Uses other forms of storage. View details | Privacy policylaunch Consent ONLINE SOLUTION Cookie duration: 365 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Privacy policylaunch Consent RELAY42 NETHERLANDS B.V. Cookie duration: 730 (days). Data collected and processed: Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, IP addresses, User-provided data, Privacy choices, Users’ profiles more View details | Storage details | Privacy policylaunch Consent GP ONE GMBH Cookie duration: Uses session cookies. Data collected and processed: Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices more Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline THE MEDIAGRID INC. Cookie duration: 365 (days). Data collected and processed: Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent MINDTAKE RESEARCH GMBH Cookie duration: 180 (days). Data collected and processed: Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, IP addresses, Users’ profiles more Uses other forms of storage. View details | Privacy policylaunch Consent CINT AB Cookie duration: 730 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, IP addresses, Privacy choices more Uses other forms of storage. View details | Privacy policylaunch Consent GOOGLE ADVERTISING PRODUCTS Cookie duration: 396 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Uses other forms of storage. View details | Storage details | Privacy policylaunch ConsentLegitimate interesthelp_outline GFK GMBH Cookie duration: 730 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, User-provided data, Privacy choices, Users’ profiles more Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent REVJET Cookie duration: 730 (days). Data collected and processed: Device identifiers, Non-precise location data, IP addresses, Privacy choices, Users’ profiles more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent PROTECTED MEDIA LTD Doesn't use cookies. Data collected and processed: Device identifiers, Device characteristics, Probabilistic identifiers, Browsing and interaction data, IP addresses more View details | Privacy policylaunch Legitimate interesthelp_outline ORACLE DATA CLOUD - MOAT Doesn't use cookies. Data collected and processed: Non-precise location data, IP addresses more View details | Privacy policylaunch Legitimate interesthelp_outline HEARTS AND SCIENCE MÜNCHEN GMBH Cookie duration: 60 (days). Data collected and processed: IP addresses more Cookie duration resets each session. View details | Privacy policylaunch Consent AMAZON ADVERTISING Cookie duration: 396 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices, Users’ profiles more Cookie duration resets each session. Uses other forms of storage. View details | Storage details | Privacy policylaunch Consent MOLOCO, INC. Cookie duration: 730 (days). Data collected and processed: Device identifiers, Device characteristics, Non-precise location data, IP addresses more Cookie duration resets each session. Uses other forms of storage. View details | Privacy policylaunch ConsentLegitimate interesthelp_outline ADTRIBA GMBH Cookie duration: 730 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Browsing and interaction data, Non-precise location data, IP addresses, Privacy choices more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent OBJECTIVE PARTNERS BV Cookie duration: 90 (days). Data collected and processed: Device identifiers more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent ENSIGHTEN Cookie duration: 1825 (days). Data collected and processed: Device identifiers, Device characteristics, Browsing and interaction data, IP addresses, Privacy choices more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Legitimate interesthelp_outline EBAY INC Cookie duration: 90 (days). Data collected and processed: Device characteristics, IP addresses, Privacy choices more View details | Storage details | Privacy policylaunch Consent HURRA COMMUNICATIONS GMBH Cookie duration: 366 (days). Data collected and processed: Authentication-derived identifiers, Device identifiers, Device characteristics, Precise location data, Probabilistic identifiers, Browsing and interaction data, Non-precise location data, IP addresses more Cookie duration resets each session. View details | Storage details | Privacy policylaunch Consent Ad partners help_outline GSKINNER Privacy policylaunch Consent AKAMAI Privacy policylaunch Consent META Privacy policylaunch Consent AUNICA Privacy policylaunch Consent BOOKING.COM Privacy policylaunch Consent C3 METRICS Privacy policylaunch Consent IBM Privacy policylaunch Consent EVIDON Privacy policylaunch Consent CUBED Privacy policylaunch Consent OPTOMATON Privacy policylaunch Consent INTELLIAD Privacy policylaunch Consent ANALIGHTS Privacy policylaunch Consent DSTILLERY Privacy policylaunch Consent MEDIAMATH Privacy policylaunch Consent ZMS Privacy policylaunch Consent DENTSU AEGIS NETWORK Privacy policylaunch Consent IGNITION ONE Privacy policylaunch Consent OMNICOM MEDIA GROUP Privacy policylaunch Consent DIGISEG Privacy policylaunch Consent RESONATE Privacy policylaunch Consent SOJERN Privacy policylaunch Consent HAENSEL AMS Privacy policylaunch Consent BDSK HANDELS GMBH & CO. KG Privacy policylaunch Consent TRADEDOUBLER AB Privacy policylaunch Consent TRUSTARC Privacy policylaunch Consent TRUEFFECT Privacy policylaunch Consent MARKETING SCIENCE CONSULTING GROUP, INC. Privacy policylaunch Consent DENTSU Privacy policylaunch Consent KOBLER Privacy policylaunch Consent TRAVEL DATA COLLECTIVE Privacy policylaunch Consent ADVOLUTION.CONTROL Privacy policylaunch Consent WIDESPACE Privacy policylaunch Consent LIFESTREET Privacy policylaunch Consent VIMEO Privacy policylaunch Consent BATCH MEDIA Privacy policylaunch Consent VODAFONE GMBH Privacy policylaunch Consent MAGNITE Privacy policylaunch Consent SCENESTEALER Privacy policylaunch Consent NETQUEST Privacy policylaunch Consent MANAGE.COM Privacy policylaunch Consent CLOUDFLARE Privacy policylaunch Consent SALESFORCE DMP Privacy policylaunch Consent NETFLIX Privacy policylaunch Consent MACROMILL GROUP Privacy policylaunch Consent EBUILDERS Privacy policylaunch Consent APPLOVIN CORP. 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