1. Chapter 12
IT & Business Strategy

2. Overview for Today What is a Strategic Information System
Strategic Advantage & IS
Porter’s Competitive Forces
For Next Time
Critical Success Factors
Porter’s Value Chain Analysis

3. What is a Strategic IS?
System that significantly improves the manner in which business is conducted:
Control a market
Larger than average profit margins
Significant increases performance/productivity
Contributes to strategic goals (responses to busn pressures from Ch1)

4. Two Views of SIS Outwardly Focused SIS Inwardly Focused SIS
Easy to copy or duplicate, Why?
Inwardly Focused SIS
Not as easy to copy or duplicate, Why?
Both can focus on new product/service
Which can be sustained longer?

5. Role of IT in Strategic Mgmt
Enabler for change!
Allows creation of new applications for strategic advantage: (Fed Ex, SABRE)
Supports strategic changes: BPR
Improved communication (FDA)
New product development cycles (jeep liberty…)
Increases Competitive Intelligence (next)
Benefit comes from being FIRST, everyone else is just keeping up! But - hard to sustain!

6. Competitive Intelligence
Gathering information about competition
Increases market knowledge, improves internal relationships, raise quality of strategic planning
Frito Lay and Hertz examples…
Gathering internal information (BI)
About products, customers, suppliers, …
Organizational memory or knowledge base
What makes these so easy today?

7. BI: Been to Disney Recently?

8. Strategic Alignment Problems
Recent surveys highlight mismatches:
~90% IS critical to strategic success
<35% IS is very involved with busn strategy
<30% busn strategists work with IS division
What are the likely results?
Inadequate IS

9. Tools for Aligning IS & Strategy
Various tools and methodologies for aligning IS with corporate strategy
Porter’s Competitive Forces
Critical Success Factors
Value Chain Analysis
Many more in text – we don’t have time to discuss all of them…

10. Porter’s Competitive Forces Model
Used to develop strategies to increase competitive advantage
5 Components to the model:
Threat of entry of new competitors
Bargaining power of suppliers
Bargaining power of customers
Threat of substitute products/services
Rivalry among existing industry firms

11. Porter’s Model Applied
List the players in each force
Relate the determinants of each force with the players listed above
Devise a strategy to defend against these forces
Use IT to support the strategy

12. Another Question…
Some argue that an SIS gives a company an unfair advantage and may even cause the demise of smaller, weaker companies that cannot afford to build similar systems.
What is your opinion on the fairness of such systems?

13. Critical Success Factors (CSFs)
Mission Statement - clear, concise, believable, repeatable!
Business Goals - broad, derived from mission
Business Objectives - tangible milestones: growth, roi
Critical Success Factors - make the milestones happen
attractive style of product line, efficient dealer organization, effective cost control in manufacturing
Identify what is most important to performance, then develop good indicators of this performance: information needs

14. Determining CSFs: Lets identify CSFs specifically for:
Bank?
Ice Cream Manufacturer?
Discount Retail Chain?
Shipping Firm?
Any observations about these?

15. Discovering Critical Success Factors
AKA: Things you might ask for your projects:
What objectives are central to your organization?
What factors are essential to meeting these objectives?
What decisions or actions are key to these critical factors?
What variables underlie these decisions, how are they measured?
How can I use IS to supply these measures?

16. Porter’s Value Chain Model, I
1: Primary Value Activities (creation, sale, & support of a product)
Inbound logistics
Operations
Outbound logistics
Marketing & Sales
Service
Each activity adds value to product

17. Porter’s Value Chain, II
2: Support Value Activities (each supports Primary Value)
Organizational infrastructure
Human resource management
Research & Development
Procurement
3: Margin
Revenue generated by above activities minus costs of each activity

18. Value Chain At Work

19. A Few Questions: What is the purpose of the Value Chain?
What types of things might you learn?
What do you do with this new knowledge?
Why might this be important?
What category of CI does this fall into?

20. Important Concepts to Know
What is a Strategic Information System
Role of IT Strategic Management
Critical Success Factors
Porter’s Competitive Forces
Porter’s Value Chain Analysis
How do they all fit together?

21. For Next Time… Prepare minicases for Ch 12 Milestone #2 due on Friday
Will send via
We will discuss these on Friday
Milestone #2 due on Friday
EXAM#1 Coming Soon!