Determination of information system development priority using quality function development

Computers ind. Engng Vol. 35, Nos 1-2, pp. 241-244, 1998

Pergamon PII: S0360-8352(98)00074-6

© 1998 Elsevier Science Ltd. All rights reserved Printed in Great Britain 036o-8352/98 $19.o0 + 0.00

Determination of Information System Development Priority Using Quality Function Development Chang Hee Han', Jae Kyeong Kim", Sang Hyun Choi', SoungHie Kim" • Graduate School of Management, Korea Advanced Institute of Science and Technology 207-43 Cheongryangri, Dongdaemun, Seoul 130-012, Korea

•, Department of Management Information Systems, Kyonggi University San 94-6, Yiui, Paldal, Suwon, Kyonggi 442-760, Korea

ABSTRACT: This paper suggests a method that is to determine the development priority of information system. The method is based on QFD and considering alignment between business strategy and information system. The proposed QFD process is applied to the real world case of H-motor company in K o r e a . © 1998 Elsevier Science Ltd. All rights reserved.

KEY WORD: Quality Function Deployment, Information System Planning, Information Technology Investment INTRODUCTION In a competitive environment, selecting and effectively pursuing the right information system investment/development can be a key factor in sustaining corporate viability and prosperity. Criteria such as the support of business objectives/strategies, financial criteria and technical/system requirement are important in selecting information system development (Bacon, J.C. ,1992). Financial criteria used by most organization can be analyzed in normative way such as internal rate of return, etc. Also, technical/system requirement can be obtained from engineering analysis. Although business objectives/strategies is more important than other criteria in view of taking oompefitive advantage, there is few method which can analysis the degree of contribution of information system to business objectives/strategies in normative way. This paper suggests a method that can determine the development priority of reformation system. The method is based on Quality function deployrnent(QFD) which was introduced as a product development process for getting high-quality products to customers in a timely manner. QFD is accomplished through a series of charts, usually called a house of quality (HOQ), which are a conceptual map, providing the means for interfunctional communications (Moskowitz H. and Kim K. J. ,1997). Recently, QFD is used as a tool for business reengineering, software development (Haag.et al, 1996) and strategic planning. QFD is a useful communication tool for cross-functional team when QFD is used as a strategic planning tool. In order to establish QFD process that is to be applied to determination of information system development, in the first place, we propose a new information system plannmg(ISP) model considering alignment between business strategy and information system. Secondly, we propose three step of QFD process based on the ISP model. Each step is proceeded sequentially and uses HOQ chart. Finally, proposed QFD process is applied to real world case. We determine the information system development priority in H-motor company in Korea using the QFD process. INFORMATION SYSTEM PLANNING MODEL In this section, we propose a new information system planning model. The model is based on the model which was suggested by Henderson and Sifonis 1988. Henderson's model focus on the consistency in the 241

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planning process and alignment between business strategy and information system (Henderson and Sifonis 1988). The following represent our model proposed in this research. The model is composed of 3 phases, strategic business planning, information system planning and information system investment planning. Strategic BusinessPlanning

Core Competence

Information System Planning

Information Syotm Investment Planning

II I

Business Strategy I

~.= "-[

Critical Success Factors

~ l Information v system

Enviorment

The information system planning model The ISP model integrates the concepts, competitive environment, core competence, business strategy and critical success factor. Business strategy is established to from competitive environment and core competence of the corporation. Considering the competitive environment is to guarantee the validity of information system planning and to confront external environment. Considering the core competence means that the planning is to reflect internal strength in the business strategy. We select information system that is regarded as supporting business strategy, we use critical success factor as a concept that can link business strategy to information system. Critical success factor assure consistency between business strategy and information system. Therefore we can establish the information system planning which is to support the internal capability and to cope with external environment.

QFD PROCESS In this section, we propose three phases of QFD process base on the suggested ISP model. Each phase is proceeded sequentially and uses HOQ chart. Now first phase, building the first HOQ in , is described in detail. 1) Review the competitive environment and business strategy. The reviewed competitive environment and business strategy is arranged in the HOQ and determine the relative importance of competitive environment. 2) Analysis the relationships between competitive environment and business strategy and mark the strength of relationships in relationship matrix, Correlation of business strategy is also checked in the roof of HOQ. 3) Compute the weight, relative importance, of business strategy. The weight is to be calculated by simple weighted sum method. Also, we can consider the deployment normalization (Wasserman 1993)concept. Now, we have built the first HOQ in . To build the second HOQ, review the critical success factor and mark the relationship between business strategy and critical success factor. Using the relative importance of business strategy obtained from the first HOQ, we can compute the relative importance of critical success factor. The same procedure is applied to the third HOQ

23rd International Conference on Computers and Industrial Engineering

Business

Eiritical Succes,,

Strategy

Competitive Enviroment

Relationship Matrix

243

Information System

Factor

Relationship Matrix

Business

Strategy

Relative

Ciritical Success Factor

Relationship Matrix

Relative Importance

Importance

Relative Importance

QFD process considering the competitive Environment Applying the QFD to the ISP model in , we need another QFD process considering the core competence. The same procedure used in is also applied to the three HOQ in . Accordingly, we can obtain two relative importance weights of business strategy critical success factor and information system. The importance weight obtained from means the degree in which information system is able to confront competitive environment. The importance weight obtained from means the degree in which information system is able to reinforce core competence.

Business

Ciritical Success,

Strategy Coi'e

Competence

Information

Factor

Relationship Matrix

Business

Strategy

Relationship Matrix

System Ciritical Success

Factor

Relative Importance

Relative Importance

Relationship Matrix Relative Importance

QFD process considering the core competence Two different importance weights are to be obtained from the above QFD processes. So, we need to combine the two importance weights for determining the information system development priority. Using the following equation, we can compute the final weight of information system, w , from the importance weight derived from competitive environment, w e , and the importance weight of Information system derived from core competence, w ¢. w= a'we +(1-a).w

¢

,

0_
The value of ct means the relative importance of competitive environment to core competence. With changing the value of a , we can analysis the various information system development priority. Determination of the value of a depend upon the characteristics and situation of company. A CASE STUDY

Proposed QFD process is applied to real world case. We determine the information system development priority in H-motor company in Korea using the QFD process. Each component of HOQ charts is obtained from the reports made in the company and interviews with information system department and other management supporting departments. We determine the value of a with 0.5 from the interview. When we review the components of all HOQs, competitive environment, business strategy and information system, we decompose each components into a few concepts for convenience. For example,

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we decompose the competitive environment into Porter's five competitive forces, customers, suppliers, new market entrants, substitute products and traditional competitor(Porter 1980). Business strategy is decomposed into price strategy, product strategy, marketing strategy, etc. Based on the business process in manufacturing company, information system is decomposed into six sub-component, material flow, ordering/delivery, manufacturing, supply chain management, research/development and financial/ personnel management. Critical success factor and core competence may be decomposed into some concepts. But, we have not decompose critical success factor and core competence in our case. Information systems that have high priority are mainly related with the research and development(R&D). This result means that high-valued product required long-term research and development is able to give competitive advantage to H-motor company. Also, Information systems that is related with supply chain management have high priority. Because the motor company needs a number of outsourcing company, it is important to manage the component supplied from outsourcing company and to manage the supply chain. On the other hand, information systems related with financial and personnel administration have relative low importance weight.

CONCLUSION This paper suggests a normative method that is to determine the development priority of information system. The method is based on QFD and considering alignment between business strategy and information system. The use of QFD has some advantages when we determine information system development priority. QFD process guarantee cooperative work among cross-functional team. HOQ prevent the loss of information obtained in the planning process and provide team with visible storage of content of QFD process. Because the results(weights) of previous HOQ is provided as the input of the following HOQ, QFD process guarantee consistency between the importance of business strategy and that of information system.

REFERENCES

Bacon, J.C. (1992). The Use of Decision Criteria in Selecting Information Systems/Technology Investments, MIS Quarterly, September, pp. 335-350. Haag, S., Raja, M.K., and Schkade, L.L., (1996) Quality Function Deployment Usage in Software Development, Communications of the ACM, January, Vol. 39, No. 1, pp. 41-49 Henderson, J.C., and Sifonis, J.G. (1988). The Value of Strategic IS Planning: Understanding Consistency, Validity, and IS Markets, MIS Quarterly, June, pp. 187-200. Moskowitz H. and Kim K. J. (1997). QFD optimizer: a novice friendly quality function deployment decision support system for optimizing product designs, Computer and Industrial Engineering, vol 32, no.3 pp 641-655. Porter, M. (1980) Competitive Strategy, The Free Press, New York Wasserman G.S. (1993). On how to prioritize design requirements during the QFD planning process, IIE Transactions, Vol. 25, No.3, pp. 59-65