Chapter 9 Information Systems for Strategic Advantage

Strategic Information Systems Information systems that support and shape the competitive strategy of and organization Includes DSS, MIS, ES, TPS, etc. Survival and success depend on strategies to confront the five forces (fig. 9.2)

Five Forces Cost leadership - low cost producer, control of all facets of the supply chain Differentiation - develop products or services that offer some sort of advantage over competitor’s offerings Innovation - development of new ways to do business, development of fringe (niche) markets

Five Forces (cont) Growth strategy - expand capacity to gain market share, expanding into new markets, vertical and horizontal integration Alliance strategy - establishing new business relationships with partners, suppliers, joint ventures

How do we use IT strategically Reduce costs by streamlining business processes Use IT to reduce competitors advantage Focus on specific markets Create new products and services that have a proprietary IT component Target integration (vertical and horizontal) with IT processes

cont Create virtual organizations Use IT to improve quality Use IT to build barriers to entry into the industry Develop knowledge of industry unavailable to competitors Create switching costs by using proprietary IT systems

Five Levels of IT deployment Strategic –It viewed as a competitive differentiator –IT supports transaction processing, decision making, key business processes. –Modification of processes to offer time, cost, quality, and customization advantages

Cont Offensive –IT viewed as a leverage point –Implememtation of information systems via networks, pc’s etc –Organizational commitment to IT benfits

cont Defensive –It growth dependant on growth of other functional business areas –IT investments follow industry averages –Not the best mindset to have concerning IT. Leads to ‘following’ competitors into new areas, markets, etc

cont Cost-Justified –Very tight control over IT –Use of older technology –ROI done on a project by project basis –No expansion or upgrade plans –This is also a poor IT mindset. Only organizations that want to fail should follow this strategy

cont Controlled –IT is viewed as an expense –Management unwilling to invest in IT –This is the worst strategy concerning IT. A very ‘old school’ attitude –Based on fear

BPR Business process reengineering differs from process improvement –radical redesign of processes –IT and organizational shifts –Mindset shift (more high tech positions versus general labor) –High risk proposition for most organizations

Total Quality Management TQM Strategic approach to improving business performance Defined as meeting or exceeding the requirements and expectations of customers –customers can be business partners, employees, end users, traditional customers –see fig 9.14 (p.355)

Agile Competition Business agility is the ability to react and perform in rapidly changing markets and environments There are four basic strategies for agile competition see fig 9.15 (p.457)

Agile Competition Strategies Offer solutions to customers problems Leverage the impact of people and information Enhanced competitiveness with cooperation Organize to master change and uncertainty

Virtual Companies Use information technology to link employees, resources, ideas Organizational form is a network structure (see fig 9.17 p359) Six distinct characteristics of successful virtual companies Six core benefits

Characteristics Able to adapt to a fast changing environment Opportunistic attitude (get in:get out) Strive for excellence Technically proficient in IT Ability to merge competencies with partners High levels of trust among participants

Benefits to virtual companies Able to share infrastructure and risk Merge competencies Reduce development life cycle Increase market coverage Access new markets Solution based focus

Knowledge Management Systems KMS Goal is to manage organizational knowledge and enable ‘brains’ to develop better processes, procedures, strategies, metrics, best practices, etc Also called Adaptive Learning Systems

Next Week Finish chapter 9 (Internet Business Strategies) Chapter 10