Strategic Information Systems for Competitive Advantage
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1 Strategic Information Systems for Competitive Advantage
2 Learning ObjectivesDescribe strategic information systems (SIS) and explain their advantages.Describe Porter’s competitive forces model & how IT helps companies improve their competitive positions.Describe Porter’s value chain model and its relationship to information technology.Describe several other frameworks that show how IT supports the attainment of competitive advantage.
3 Learning Objectives (cont.) Describe and understand the role of web-based SIS and the nature of competition in the digital age.Describe global competition and its SIS framework.Describe representative strategic information systems and the advantage they provide to organizations.Discuss implementation issues including possible failures of SIS.
4 Strategic Information Systems (SISs) Characterized by its ability to significantly change the manner in which business is done.It can also change the goal, processes, products, or environmental relationships to to help an organization gain a competitive advantage.An organization competitive strategy is the search of a competitive advantage in an industry.Cost, quality, or speed.
5 Strategic Information Systems (SISs) SIS DefinitionSystems that organizations totally depends onSystems that has very impact on organization business processes, operation, and the bottom line.Internally focused or externally focusedCan be applied within the organization or across the organization
6 Strategic Information Systems (SISs) Sustaining Strategic AdvantageThis systems are design from the beginning to facilitate competitive advantage.Today it is more difficult to sustain a competitive advantage with the use of IT for a long period of time.
7 The Role of ITIT creates applications that provide strategic advantages to companiesE.g. Federal Express was the first to company to use the tracking systemIT is a competitive weaponIT supports strategic change, e.g, re-engineeringCycle time reduction,streamlining, CASE, etc.IT networks with business partnersB2BIT provides cost reductionIT provides competitive business intelligence
8 Porter’s 5 Competitive Forces The threat of entry of new competitors.The bargaining power of suppliers.The bargaining power of customers (buyers).The threat of substitute products or services.The rivalry among existing firms in the industry.
10 Response Strategies (Porter, 1985) COST LEADERSHIPProviding products and/or services at the lowest cost in the industry.DIFFERENTATIONBeing unique in the industryFOCUSSelecting a niche market and achievingcost leadership and/or differentation.
11 Response Strategies (added by Porter and others) GROWTHIncreasing market share, acquiring more customers or selling more productsIMPROVE INTERNAL EFFICIENCYTo improve employee and customer satisfactionALLIANCESWorking with business partners to create synergy & provide opportunities for growthCRMCustomer-oriented approaches, e.g. the customer is king (queen)INNOVATIONDeveloping new products & services
12 The Value Chain Support activities Primary activities Inbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input
13 VALUE SYSTEMA firm’s value chain is part of a larger stream of activities, which Porter calls a “Value System”.Includes the suppliers that provide the necessary inputs AND their value chains.Applies to both products & services, for any organization, PUBLIC or PRIVATE.Is the basis for the Supply Chain Management.
14 The Value Chain Model The Value System Model is used to: Evaluate a company’s process and competencies.Investigate whether adding IT supports the value chain.Enable managers to assess the information intensity and the role of IT.
15 Strategic Information Systems Frameworks A framework for SIS is a descriptive structure that helps us understand and clarify the relationships among strategic management and IT.E.g.Bakos and Treacy FrameworkMcFarlan Application Portfolio Analysis Framework
17 McFarlan’s Portfolion Framework (1984) For Analyzing Existing, Planned & Potential Information Systems
18 Categories of Strategic Relevance and Impact A contingency appropriate to IT management.HighFactoryStrategicIT are important but theyare not fundamental to thefirms ability to compete.Totally depending on itStrategic Impact ofexisting IT systemSupportTurnaroundStrategic Impact of ITon operations and futurestrategy is low.Not absolutely depending ontotally uninterrupted,fast response-time.LowLowHighStrategic Impact of IT applications under development
19 SIS Implementation Major Issues to be Considered: Justification Justifying SIS may be difficult due to the intengible nature of their benefits.Risks & FailuresThe magnitude, complexity, continuous changes in technology and business environment may result in failures.Finding appropriate SISIdentifying appropriate SIS is not a simple task.
20 Sustaining SIS & Strategic Advantage A Major problem that companies face is how to sustain their SIS competitive advantage.3 Major approaches =Create inward systems which are not visible to competitors.Provide a comprehensive, innovative & expensive system that is difficult to duplicate.Combine SIS with structural changes. This would include business processes, reengineering & organizational transformation.
21 Managerial IssuesImplementing SIS Can Be Risky.The investment involved in implementing Strategic Information Systems (SIS) is high.Strategic Information Systems Requires Planning.Planning for an SIS is a major concern of organizations.
22 Managerial Issues (cont.) Sustaining Competitive Advantage Is Challenging.As companies become larger and more sophisticated, they develop resources to duplicate the systems of their competitors quickly.Ethical Issues.Gaining competitive advantage through the use of IT may involve unethical or even illegal actions.Companies can use IT to monitor the activities of other companies and may invade the privacy of individuals working there.