Chapter 8

Information Systems – A Business ApproachSteve Benson & Craig Standing

Information SystemsA Business Approach

Strategic IS Management


Strategy and Information Systems

Strategy works at different levels in the organisation

There should be a corporate strategy

There should be an information systems strategy

The IS strategy should be aligned with the corporate strategy

Much of this section may seem to focus on general strategy but these techniques can be used for IS strategy formulation


StrategyA strategy is a plan for achieving medium and long term goals

A strategic plan includes the goals, means (strategies) and metrics (measurements e.g. critical success factors) and addresses the mission and vision statement of the organisation

The more mature an organisation the better defined its plans are

Strategic plans can date very quickly in a changing environmentmany businesses opt for a loose fitting general framework rather

than a detailed plan as a result


Advantages Of A Strategic PlanProvides the organisation with a focus - this should be communicated

to staff, suppliers and customers.

People are more effective when they know what they are supposed to be doing - their activities are more focussed … also decision making should improve.

The production of a strategic plan involves SWOT analysis finding out where strengths and weaknesses lie and

developing/maintaining a competitive advantage.NB. Planning is like cutting the grass, you can do a great job today but

it will need doing again fairly soon and on a regular basis.


Components Of Corporate Strategy

Skills Capital

MISSION

Environment

Politics Economy

GrowthGrowth

DefensiveDefensive

Business

Functional

StabilityStability

Strategy ImplementationStrategy Implementation

Resources

Markets

Corporate

SWOTAnalysis Porter's Competitive

ForcesInformationArchitecture

Value Chain Analysis

Levels of Strategy

Strategic Analysis

Outsourcing

Organisational Culture and EnvironmentAlliances

Competition


Level of organisational strategy


Strategic Analysis

SWOT Analysis

A form of competitive analysisStrengths – of the organisationWeaknesses – of the organisationOpportunities – in the environment Threats – in the environment


Example SWOT AnalysisInternal to Organisation External to Organisation

Strengths Weaknesses Opportunities Threats

Sound

management

Poor administrative

procedures

Growth market Skills shortage

Greatest market

share

Low profit margin New government

legislation

Recession in

economy

Latest

technology

infrastructure

High staff turnover Take advantage of

new technology

New product

developments -

obsolescence

Highly skilled

staff

Market image Expand into new

markets

Increasing

competition

Low cost

product

development

High cost product

development

Niche product New legislation


Porter’s Competitive Forces

Porter’s competitive forces another form of competitive analysisnever intended for IS use but often applicable in

a general sensePorter’s 5 competitive forces are:

• New entrants• Increased bargaining power of buyers• Increased bargaining power of suppliers• Threat of other industries offering substitutes• Rivalry between competing sellers


Value Chain Analysis Value chain analysis

a lower form of analysis than SWOT in which the organisation is viewed as an input output system

resources (inputs) are brought into the organisation, processed and then sold (outputs)

Improvements can be made in the each of the primary & secondary activities in the value chain

Primary activities - Inbound logistics, Operations, Outbound logistics, Marketing, Service

Secondary activities – administration, research and development, human resource management and information systems development


Example Value Chain

Primary activities are key tasks that return most value, secondary activities are support tasks (e.g. admin) … here Web applications add value to both.


Aligning IS With Business GoalsThe IS strategic plan must be conformant with the business plan (top down).

For some organisations, the IS is the business plan.

Care must be taken to avoid developing systems which:Take too much time and money to develop because they do not have the full

backing of senior people.Do not provide a significant return to the organisation because they are

peripheral to the core business needs.Displace other, perhaps more worthwhile, projects from being developed as

they consume organisational resources.Are not maintained effectively and eventually become a problem for the

business. The information systems may be poorly perceived by the customers and/or employees.


Traditional vs. Dynamic Companies

Traditional Company Dynamic Company

Hierarchy and bureaucracy Flatter, dispersed personnel and outsourcing

Optimising existing processes Innovation - create new processes

Slow and methodical Speed as a competitive edge Conflict covered up Openness Clear boundaries between functions

Few boundaries, knowledge sharing

Knowledge "silos" Networks and alliances Computers play support role Computer systems and networks essential Product and structure define company

Service and innovation define company

Precise and certainty Live with uncertainty Avoid risk Take risks Centralised decision making and ideas

Decentralised innovation - ideas come from anywhere


Knowledge ManagementKM consists of creating, storing, managing, accessing and sharing tacit

knowledge (personal knowledge) and explicit knowledge (documented in books, intranets, etc.)

A wide range of companies are effectively developing knowledge management programmes for: cost reductionprocess improvement improving productivity improving time to marketand increasing innovation

The types of application include: Frequently Asked Questions (FAQs), reuse, best practices, problem solving software, decision support systems, resource management systems, and asset management systems


Types Of Knowledge

Know-why - explanatory knowledge, scientific knowledge of principles (laws of nature)

Know-how - skills, the ability to organise resources to achieve desired outcomes

Know-who - social knowledge, refers to specific social relations - e.g. who controls the resources needed in a particular situation.

Know-when/Know-where - economically useful knowledge about markets

Know-what - catalogue knowledge


The Learning Organisation

Peter Senge (1990) coined the term to describe companies whose ability to learn will provide them with a competitive advantage

A company which creates new knowledge may not manage it effectively

The learning organisation and knowledge management should go hand in hand.

How many companies can you think of which have a feedback mechanism in the systems and processes for learning?


The Real Challenge

The reward structures in most companies often conspire against good knowledge managementPay and conditions are related to status which in turn

relates to knowledge and skillsWhy would employee A help employee B to become

a rival in the promotion and pay stakes?Information systems can play a key role in helping

people share knowledge, store knowledge, and find knowledge


Summary A strategy is a medium to long term plan outlining the goals of the

organisation The information systems plan should be aligned with the

organisation's strategic plan IS managers can employ one or a number of strategic planning

methods, such as Porter's Competitive Model and SWOT Analysis There are occasions when the information technology can act as a

strategic driver in its own right The Information Architecture is a plan for the organisation's

information and technology infrastructure Creating an effective knowledge based organisational environment

is a strategic direction facilitated by information systems

Chapter 8

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