Ass.2 MIS2

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

Business Plan
There are two ways to start a business. One is on a shoestring; the other, with financial backing. There is no in-between.
Starting on a shoestring means working part-time out of your garage, basement, or kitchen while continuing to work full time at your regular job. For the shoestring operation, a business plan is advisable, but not essential.
Starting with financial backing means obtaining enough money from investors to sustain you for at least one to two years before your business ever earns a profit. For a well-financed operation, the business plan is the means by which capital is acquired.
Starting a business along the in-between path means withdrawing your savings from the bank, mortgaging your house, quitting your job, and going for broke on the new venture. For one out of three entrepreneurs, however, broke and out of business is the result twelve months later. A business plan will not prevent you from failing, but it might make you think twice before taking that fateful first step—such as mortgaging your house or quitting your job.
Why a Business Plan?
Writing a business plan clarifies and concretizes your thoughts about the new venture. It forces you to think explicitly about issues you might not otherwise have considered and makes real to you what up to the time of writing has only been an idea or dream. The business plan objectifies your dream.
In addition, a business plan can be used to persuade prospective investors to give you money. To obtain financial backing—even from friends or relatives—you must prove to your prospective investors that you will be able to make money for them, by proving that you are competent to run a business and that your idea is sound. A business plan is your sales tool for raising debt and equity capital.
Existing firms also need business plans—as control devices to clarify management’s thoughts about what must be done tomorrow, next week, next month, next year, and next decade, and as tools for raising capital, for example, for major expansions of the business.
The Components of a Business Plan
I. Cover Page
A cover page goes first. On it are the name of the business, a brief phrase describing the nature of the business, the name of the founder and/or writer of the plan, and the date the plan was written.
II. Executive Summary
The summary also capsulizes your thoughts about the business. The art of summarization is the art of thinking in essentials. The summary, therefore, forces you to separate what is important from what is secondary.
The summary is written after the rest of the plan has been completed.
III. Contents
A table of contents, of course, listing the major sections of the plan and their page numbers should be included.
IV. The Business and Its Mission
This section states the essence of the business—in one sentence. A two- to three-paragraph elaboration follows.
The mission statement answers these questions: What is the nature and scope of your business? or What do you foresee it to be? Who is your prospective customer? What are his needs? and How do you propose to satisfy them? How do you differ from the competition? In what direction do you propose to grow and expand?
V. Market Review
The market review identifies and evaluates the opportunities and problems your business will face on opening day (or on the day your existing firm’s major expansion begins). It describes the past behavior of the market (at least five years’ worth of data), projects its future (for one, five, ten, and even twenty-five years), and states where the market stands in the present. The objective of the market review is to state why, given the nature of the competition and the motivation and behavior of your prospective customer, you think there is a niche in the marketplace for your business.
A. The General Environment
B. Competition
D. Strengths and Weaknesses of the Business
E. Opportunities and Threats Facing the Business
VI. Marketing Plan
The marketing plan states how your business will take advantage of the opportunities and overcome the problems identified in the market review; the marketing plan describes your product and your strategy for selling it.
A. Objectives and Goals
An objective is a general statement of the end result you intend to achieve with your business or with specific strategies.
A goal is a quantified objective; it specifies magnitude and a time frame.
The objectives and goals should be specified in detail for the first year of operation and sketched out for the next two to four years.
B. Strategy
Your marketing strategy is the means by which you will achieve your objectives and goals. The objectives state what you intend to accomplish; the strategies state how you intend to accomplish the objectives.
C. Action Program
Your action program, or tactics, spells out how you will implement the strategies. It states the who, what, when, and how much?
VII. Financial Plan
The financial plan shows in detail how and when your venture will turn a profit. It presents profit and loss, cash flow, and balance sheet projections for three to five years. It predicts the breakeven point and lists the sources of capital that you will use to finance the business.
A. Profit and Loss Statement
The profit and loss statement should give your best estimates of sales and expenses over the first three to five years of operation. The first year should present the numbers on a month-by-month basis. The estimates for the remaining years may be presented by quarters.
B. Cash Flow Statement
This statement is your most important financial projection. The cash flow statement specifies when, and how much, the new business will need cash over the first three to five years. Again, projections should be made on a monthly basis for the first year, quarterly for the remaining years. The cash flow statement tells the entrepreneur how much initial capital he will need, as well as working capital, once the business is going.
C. Balance Sheet
The balance sheet shows what assets are required to start and operate the business and how those assets are to be financed (i.e., through owner’s equity and/or creditors’ loans). Balance sheet numbers should be provided for opening day, the end of each quarter for the first year, and the end of each of the first three to five years.
D. Breakeven Point
The breakeven point is the level of sales at which sales covers all costs; it is the point of zero profit and zero loss.
E. Sources of Capital
This section spells out how your business will be financed. You should give the names of all equity investors, amount invested, and shares of ownership received.

VIII. Operating Plan
The operating plan describes how you will run the business; it can be viewed as the execution of your marketing and financial plans. The operating plan describes your facilities, your method of producing the product, your labor force, and your time schedule for launching the business and implementing the business plan.
A. Geographic Location
B. Facilities
C. Operating Strategy
D. Management
E. Time Schedule

IX. Attachments
This final section of the business plan is where you put the supporting documentation that is required to aid readers in their understanding of your claims. No more, no less.





Rationale for an Information Systems Plan

Every year, $300-700 million dollar corporations spend about 5% of their gross income on information systems and their supports. That's from about $15,000,000 to $35,000,000! A significant part of those funds support enterprise database, a philosophy of database system applications that enable corporations to research the past, control the present, and plan for the future.
Even though an information system costs from $1,000,000 to $10,000,000, and even through most chief information officers (CIOs) can specify exactly how much money is being spent for hardware, software, and staff, CIOs cannot however state with any degree of certainty why one system is being done this year versus next, why it is being done ahead of another, or finally, why it is being done at all.
Enterprises do not have model-based information systems development environments that allow system designers to see the benefits of rearranging an information systems development schedule. Questions that cannot be answered include:

•What effect will there be on the overall schedule if an information system is purchased versus developed?
• At what point does it pay to hire an abnormal quantity of contract staff to advance a schedule?
• What is the long term benefit from 4GL versus 3GL?
• Is it better to generate 3GL than to generate/use a 4GL?
•What are the real costs of distributed software development over centralized development?
•If these questions were transformed and applied to any other component of a business (e.g., accounting, manufacturing, distribution and marketing), and remained unanswered, that unit's manager would surely be fired.

We not only need answers to these questions NOW!, we also need them quickly, cost effectively, and in a form that they can be modeled and changed in response to unfolding realities. This paper provides strategies for developing answers to these questions. Under this same title, Whitmarsh provide a book, course, and ISP software creation components.
Too many half-billion dollar organizations have only a vague notion of the names and interactions of the existing and under development information systems. Whenever they need to know, a meeting is held among the critical few, an inventory is taken, interactions confirmed, and accomplishment schedules are updated.
This ad hoc information systems plan was possible only because all design and development was centralized, the only computer was a main-frame, and the past was acceptable prologue because budgets were ever increasing, schedules always slipping, and information was not yet part of the corporation's critical edge.
Well, today is different, really different! Budgets are decreasing, and slipped schedules are being cited as preventing business alternatives. Confounding the computing environment are different operating systems, DBMSs, development tools, telecommunications (Lan, Wan, Intra-,
Inter-, and Extra-net), and distributed hard- and software.
Rather than having centralized, long-range planning and management activities that address these problems, today's business units are using readily available tools to design and build ad hoc stop-gap solutions. These ad hoc systems not only do not interconnect, support common semantics, or provide synchronized views of critical corporate policy, they are soon to form the almost impossible to comprehend confusion of systems and data from which systems order and semantic harmony must spring.
Not only has the computing landscape become profoundly different and more difficult to comprehend, the need for just the right--and correct--information at just the right time is escalating. Late or wrong information is worse than no information.
Information systems managers need a model of their information systems environment. A model that is malleable. As new requirements are discovered, budgets modified, new hardware/software introduced, this model must be such that it can reconstitute the information systems plan in a timely and efficient manner.



Reference:

http://faculty.ed.umuc.edu/~meinkej/inss690/larock.pdf
http://www.csupomona.edu/~jkirkpatrick/Grad/BusinessPlan.html