1. Chapter 1. The Information Systems Strategy Triangle
Managing and Using Information Systems: A Strategic Approach by Keri Pearlson
PowerPoint Slides prepared by Gene Mesher
Copyright © 2001 John Wiley & Sons, Inc.

2. Copyright ã 2001 John Wiley & Sons, Inc. All rights reserved
Copyright ã 2001 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the United States Copyright Act without the express written consent of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. Adopters of the textbook are granted permission to make back-up copies for their own use only, to make copies for distribution to students of the course the textbook is used in, and to modify this material to best suit their instructional needs. Under no circumstances can copies be made for resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

3. Intro: National Linen Svc.
Motivated by increased competition and the weak economy,
Brought in new IS system (Boss) to lower costs.
Boss dropped expired accounts without notifying the contract department.
Effect was to worsen company’s bottom line.

4. Figure 1.1 The Information Systems Strategy Triangle
Business Strategy
Organizational
Strategy
Information
Strategy

5. The Information Systems Strategy Triangle
Successful firms’ business strategy drives both their organizational and IS strategies.
Firms must seek to balance business, organizational, and IS strategies.
IS Strategy is affected by the other strategies a firm uses. Changes in IS strategy must be accompanied by changes in the other two.
IS strategy has (sometimes unintentional) consequences on the business and organizational strategies.

6. BRIEF OVERVIEW OF BUSINESS STRATEGY FRAMEWORKS

7. Business Strategy Frameworks
Porter’s Generic Strategies Framework (and its variants)
Hypercompetition and the New 7-S’s framework (D’Aveni)
Co-opetition (Brandenburg and Nalebuff)

8. Figure 1.2 Three strategies for achieving competitive advantage
Uniqueness Perceived
By Customer
Low Cost Position
Industry
wide
Overall Cost
Leadership
Differentiation
Focus
on narrow
market
segment
Particular
Segment
Only

9. Porter’s Competitive Advantage Strategies
Cost leadership: be the cheapest
Differentiation: focus on making your product stand out for non-cost reasons
Focus: occupy narrow market niche where the products/services can stand out by virtue of their cost leadership or differentiation.

10. Variants on Differentiation Strategy
Shareholder value model: create advantage through the use of knowledge and timing (Fruhan)
Barriers to entry model: firms create barriers to entry to keep competitors out of their markets
Unlimited resources model: companies with a large resource can sustain losses more easily than ones with fewer resources

11. Hypercompetition and the New 7-S’s framework (D’Aveni)
Sustained competitive advantage is not possible
Only temporary advantages exist, created by a company’s speed and aggressiveness.
Assumes:
Every advantage becomes eroded
Sustaining an advantage uses too much time and resources.
Instead, companies must seek to stay ahead of its competitors by creating temporary advantages
These are done in small steps over short competitive cycles. Focus on creating the next temp. advantage.

12. Figure 1.3 Disruption and the new 7-S’s
Vision for Disruption
Create temporary advantage through
understanding stakeholder satisfaction
or strategic soothsaying
Market
Disruption
Capability for Disruption
Sustaining momentum through speed and surprise can create temporary advantages
Tactics for Disruption
Gain advantage by: shifting the rules, signaling, simultaneous and sequential strategic thrusts

13. Figure 1.4 D’Aveni’s new 7-S’s
Superior stakeholder satisfaction: maximize cust. satisfaction by adding value strategically
Strategic soothsaying: use new knowledge to predict new windows of opportunity
Positioning for speed: prepare the org. to react as fast as possible
Positioning for surprise: surprise competitors
Shifting the rules of competition: serve customers in novel ways
Signaling strategic intent: communicate intensions in order to stall competitors
Simultaneous and sequential strategic thrusts: take steps to stun and confuse competitors in order

14. Co-opetition More about forming alliances to better compete.
Companies, competitors, customers and suppliers are participate in (and compete in) “the value net”.
Key concept is “complementors”, companies that sell complementary products and services.
These can often gain advantage by forming an alliance to provide a more competitive

15. Why are strategic advantage Models essential to planning?
Giving up authority on IS decisions is giving up IS strategy
Poorly chosen IS infrastructure undermines strategy
Business strategy needs to address:
What is the business goal or objective?
What is the plan for achieving it? What is the role of IS in this plan?
Who are the crucial competitors and cooperators,and what is required of a successful player in this value net?

16. Figure 1.5 Summary of key strategy frameworks
Generic Strategies: CA through low cost, differentiation or focus
Hypercompetition: CA is temporary, created through speed and aggression in the market
Co-opetition: companies create alliances of firms with complementary outputs to better compete

17. BRIEF OVERVIEW OF ORGANIZATIONAL STRATEGIES

18. What is Organizational Strategy?
How to organize to implement corporate goals and business strategy.
Organizational Strategy includes the design choices that:
define,
set up,
coordinate, and
control corporate work processes.

19. Figure 1.6 The Business Diamond (Hammer and Champy)
Processes
Values and
Beliefs
Jobs and
Structures
Management
and Measurement systems

20. Fig. 1.7 Conventional IT Design Variables (Lucas and Baroudi)
Complements Business Diamond
Structural: defs. of org. subunits, reporting, linking controlling mechanisms, staffing
IT Design vars: Virtual components, e-banking, tech. leveling
Work Process: Tasks, Workflows, Dependencies, Output of process, Buffers
IT Design variables: Production automation, e-workflows, virtual components
Communications: formal, informal communications
IT Design variables: group support systems
Interorganizational: make vs. buy decisions, exchange of materials, communications
IT Design variables: e-SCM

21. Figure 1.8 Managerial Levers
Organization
Business
Processes
Org.
effectiveness
Formal
Reporting
Relationships
Decision
Rights
People,
Information and
Technology
Data
Informal
Networks
Planning
Control
Values
Performance
Measurement
And evaluation
Strategy
Incentives
And Rewards
Culture

22. Figure 1.9 Organizational Design Variables
Organizational Variables
Decision rights
Business processes
Formal reporting relationships
Informal networks
Control Variables
Data
Planning
Performance and evaluation measurement
Incentives
Cultural Variables
Values

23. Understanding Organizational Strategy Means answering the following:
1. What are the important structures and reporting relationships within the organization?
2. What are the characteristics, experiences and skill levels of the people within the organization?
3. What are the key business processes?
4. What control systems are in place?
5. What is the culture of the organization?

24. Figure 1.10 Summary of organizational strategy frameworks
Usefulness of IS
Discussions
Key Idea
Business
Diamond
4 key organizational components: 1) business processes, 2) values and beliefs, 3) management control systems, and 4) tasks and structures.
Using IS in an organization will affect each of these components. Use this framework to identify where these impacts are likely to occur.
Managerial
Levers
Organizational variables, control variables, and cultural variables are the levers managers can use to affect change in their organization.
This is a more detailed model than the business diamond and gives specific areas where IS can be used to manage the organization and to change the organization.

25. BRIEF OVERVIEW OF INFORMATION SYSTEMS STRATEGY

26. Figure 1.1 IS Strategy Matrix
Hardware: physical components in a physical location. Used by system users and system managers.
Software: programs, applications and utilities that reside on the hardware. Used by system users and system managers.
Networking: hardware and software that interconnects other IS components located where the networks and cables are. Used by system users and system managers, networking services also obtained from outside sources.
Data: information stored in the system. Used by individuals who own the data. Managed by system managers.

27. FOOD FOR THOUGHT
1. Business strategy drives organizational strategy and IS strategy. It is important to design the organization and its IS they support clearly defined business goals and objectives.
2. Org.strategy must complement business strategy. Business organization either supports business strategy or gets in the way.
3. Likewise, IS strategy must complement business strategy. When IS support business goals, the business appears to be working well.
4. Org. strategy and info. strategy must complement each other. They must be designed so that they support, rather than hinder each other.
5. If a decision is made to change one corner of the triangle, it s necessary to evaluate the other two corners to ensure that the balance is preserved. Changing business strategy without about thinking about the effects on org. and IS strategies will cause the business to struggle until balance is restored. Likewise, changing IS or the organization alone will cause an imbalance.

28. End of Chapter 1