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This book is concerned with information systems and information technology, and the
prioritisation of both areas on the management agenda, so that a cohesive strategy can be
formulated to add value and improve business performance.
The book presents a tool kit of techniques with which to identify and analyse the business
and its environment, and then appropriately devise strategies. It takes the reader through
the entire process of developing an IS/IT strategy, including all the elements that need to
be considered in an organisational context.
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evolving
role
of
information
systems
and
technology
in
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The authors begin by explaining that every organisation is fundamentally dependent on its
information systems (IS) or the application of its information technology (IT). Over the
years this dependency has increased in light of e-commerce and globalisation. Although IS
and IT can be used simply to maintain business operations, significantly they can also be a
source of competitive advantage.
Although many people use the terms IS/IT interchangeably there are important differences
between them:
IS existed before IT, it is the means by which people and organisations gather,
process, store, use and disseminate information. It can be understood in terms of
language and communication.
IT is the actual technology, for example the hardware or software. It facilitates the
gathering, processing, storing, delivery and sharing of information.
the conventional view that business strategy drives IS strategy, which in turn drives IT strategy is not
sufficient for the expanding role of IS/ITIf IS/IT is to make a genuine contribution to business strategy, a
different model and logic is required that allows the capabilities of IS/IT to be an intrinsic component of
strategy rather than one of its consequences
Hence although in the past organisations may have dealt with IS/IT in a tactical short-term
manner, managers must understand that many advantages can stem from developing a
future-orientated strategic approach to IS/IT. If managers apply a different attitude to IS/IT
by viewing it strategically, they can uncover opportunities and develop a real competitive
advantage for the firm that cannot be easily replicated by competitors through simply
purchasing the same technology.
How can managers use IS/IT strategically?
Usually IS/IT is internally focused to address the organisations processes and issues.
Instead look externally to the customers, competitors, markets, and suppliers
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Develop, produce and market new or improved products and services based on
information. For example internet banking, or adding value to a tangible product,
such as on-line support.
Provide managers with quality and timely information about markets, customers,
technology, competitors etc. to support the development and implementation of
strategy.
Focus on the value added that can be generated from IS/IT, rather than viewing it as
a mechanism to reduce overheads.
Share benefits gained from systems throughout the organisation, and even with
customers and suppliers. This can be a strong advantage over competition as they
cannot re-create the relationships which the information has allowed to be built.
Understand what the customer wants and what value means to them, to match
products and services to the requirements of the marketplace.
Pursue business driven innovation, not technology driven. Do not simply follow the
most innovative technology, because there may not be a market for it. Ensure that
customers will buy it and that it fits with the purpose of the organisation.
Use information gained on customers to build the business, for example knowledge
of purchasing patterns can be used to develop targeted special offers.
An IS/IT strategy is one that makes a contribution to business value. To do this there needs
to be an alignment between the business strategy and IS/IT strategy. The IS/IT managers
must understand the external environment (competition, customers, suppliers), and the
affect this has on the organisation. Developing a knowledge of the business is essential as
otherwise it will only be viewed from an IS/IT perspective, and this will limit the implications
of any strategy from being determined. Business strategies should be shaped on this
information, while also being driven by information from IS/IT. In tandem the IS/IT strategy
needs to develop from business strategy. From there the managers must evaluate what
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IS strategy deals with what to do with information, systems and technology and how to manage the
applications from a business point of view
It is therefore concerned with aligning information and systems to support business needs,
and identifying and exploiting competitive opportunities for IS/IT. It is based in the strategy
of the business and considers the competitive impact of IS/IT, by identifying the
investments needed to accomplish the organisations objectives, exploring what benefits will
be produced, and if any changes have to occur to make it fit current systems.
IT strategy designates how technology is to be applied in delivering information and how the technology
resources are managed to meet the range of business needs
This is how the organisations demand for information and systems is supported by
technology. It is understood by the provision of IT capabilities, resources and services.
The consequences of not having a IS/IT strategy may include:
Potential business advantage from IS/IT are not identified and exploited
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External
business
environment
External
IS/IT
environment
Internal
IS/IT
environment
Internal
business
environment
IS/IT
STRATEGY
PROCESS
Business
IS
strategies
IS/IT
management
strategies
Current
application
portfolio
IT
strategies
Future
application
portfolio
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to
understand
its
current
situation,
strengths,
weaknesses,
Buyers: how will IS/IT increase the power of customer, will this change relationships
with the customers
New entrants: how new entrants enter the industry based on IS/IT, or can IS/IT
build a barrier to their entry
Suppliers: how can IS/IT change the balance of power and relationships with
suppliers
What skills and training the employees have and how this relates to the
organisations purpose
R&D ability
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How critical is the information in the systems, how can it be used, obtained, altered
Understand the role of information in the value chain, and what it needs to do, for
example exploit opportunities or decrease complexity
There will also need to be a review of the current and future IS/IT situations. IS/IT
managers and business managers should perform this together because their perception on
the role and effectiveness of IS/IT will be different and useful, for example determining if
the organisation has a negative perception of them that would need to be altered before any
commitment would be given to a IS/IT strategy. The trends and opportunities that are
emerging from new technology should be assessed, as should how and whether competitors
will apply it in their organisations. A managerial awareness of the position the organisation
is at regarding IS/IT will show how far it needs to move to get to IS/IT being integrated
with business strategy.
The internal IS/IT environment should also be assessed to evaluate if the infrastructure,
devises etc., work effectively enough to respond to the way things are needed to be done in
the IS/IT strategy. The fitness of the IS/IT team should also be assessed to determine if it
can properly implement the strategies. Therefore it needs to be considered how effective it
was in the past and currently, what weaknesses or strengths the team has, what managers
and general employees think of IS/IT. To improve performance and the perception of the
role of IS/IT in the business, authors recommend:
1. Get basics right: ensure can deliver basic IT services. Get commitment from all IS/IT
employees to understand the importance of the business focus; move the team from
thinking in terms of tactical work and towards improving customer service or
increasing productivity and how IS/IT can answer these issues.
2. Enlist key influencers: key individuals in the organisation who can act as advocates
for IS/IT or who need persuading to smooth issues later.
3. Build credibility: build a dialogue with the rest of the organisation, earn trust and
respect, and demonstrate the business value of IS/IT.
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Once information on the external and internal environment has been analysed, creative
thinking as a brainstorming exercise can be performed to develop strategies that can exploit
opportunities, use strengths, address weaknesses and defend against threats. The authors
suggest posing a series of questions as a basis for creative thinking:
How can IS/IT affect the nature and value of the products and services
How can IS/IT affect the demand for products and services, segment markets more
effectively, extend them geographically or provide new distribution channels to reach
the market
Can IS/IT let us reach more customers or get closer to the marketplace
How can IS/IT affect the cost base of the key processes in the industry
In building strategies the authors recommend following one specific focus of either:
Low cost: identify the lowest-cost approach to the activities of the business, and
minimise all expenses, to drive down the cost charged to customers. IS/IT can help
bring in efficiency and the flexibility and integration of systems. For example Airlines
have tickets booked via the internet and self-service check in.
Niche: low cost or differentiation strategies are followed in a market niche. IS/IT is
predominantly used in identifying, understanding and holding on to customers.
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It is useful to have a business level person and IS/IT person creating the
strategy, as this ensures it makes sense from both perspectives. It also makes it
more relevant and allows swifter adoption.
From here future strategies can be planned and should be assessed on:
Degree new capabilities of the organisation and employees are needed to fulfil them
Prioritise strategies to decide which to implement, for example some may be too ambitious.
Often the IS/IT strategy will be depicted as an architectural model (below), this helps:
The architectural model shows the business processes, and inter-linked activities and roles.
Key entities are the areas of importance to a business process, which could include people,
places or events. Once created the models can be discussed to see how far they can go to
achieve meeting business needs. It helps in understanding the organisation in terms of
structure, relationships, and people, pertinent to the IS/IT strategy and business strategy.
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Architecture model
Business model
Business data model
R
C
IS model
Entity life history
IS process model
App 1
IS/Entity
matrix
App 2
IS data model
IS functional
model
App 1
App 2
It must be assessed whether the current culture, management style, and values of the
organisation are in line with the direction of the IS/IT strategy. This is especially critical if
there has never been an IS/IT strategy linked to business strategy before, as it needs to be
determined if any of the elements should be altered to fit the strategy or vice versa. This is
important because if there is not harmony between the two then it will hinder the strategies
successful implementation.
A common problem many organisations face in pursuing IS/IT strategy is that there is not
enough management commitment behind IS/IT strategy plans or implementation. One way
to overcome this is through building strong relationships between IS/IT managers and
business managers. It may also be useful to have an executive management level sponsor
of the IS/IT strategy as this reinforces commitment and reinforces the allocation of
resources etc. Even if buy-in is gained from business managers to develop the strategies, it
cannot just be left to IS/IT to implement the plans, there needs to be commitment in order
for it to work and activities be supported throughout the organisation. This commitment is
difficult to get if top management do not understand the impact IS/IT can have or how it
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can create competitive advantage. Some of them may not be able to see past
computers; this needs to be addressed or the organisation will never move
forward.
One way of achieving buy-in is to communicate the IS/IT strategy. This gives
a clear sign of commitment across the organisation, and highlights what changes will be
made and what resources utilised. Communication of the strategy also stops rumours about
what is happening; especially if the message is reinforced in a consistent manner.
Furthermore in presenting the strategy across the organisation, problems that were not
originally identified can be highlighted by those individuals who were not involved in any of
the planning stages, they may also have ideas as to how to develop the strategy further.
Once the IS/IT strategy has been built managers will need to use it to develop the
applications portfolio. The applications portfolio brings together the existing, planned and
potential IS/IT strategies and assesses their business contributions, and the role and value
of the set of applications. Much of this information will have been generated to develop the
IS/IT strategy. This includes:
Existing applications: those in place and for the near future. Assesses their
contributions to existing business and how well they support future requirements.
Are they strengths or weaknesses in current and future scenarios
Potential application: what might be valuable in future, if feasible to deliver and give
some benefits
Potential applications can be separated into four types in order to gauge which to support:
High potential: applications that may be important in achieving future success: new
business ideas and technical opportunities
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There needs to be a balance between these types of application. The portfolio cannot just be
full of high potential applications because they are often the most costly and risky, in both
finances and resources, which could damage the organisation if they do not succeed.
Instead time and money need to be invested in resources that generate the best business
results in achieving organisational aims. The different types of application will need,
different processes and development tools, different degrees of involvement from
executives, line managers and IS/IT, and different IS/IT organisational structures and
therefore justification. All the users, i.e. strategic, IS/IT business, line managers, need to
discuss the portfolio to reconcile differences and understand which applications to prioritise
so as to get maximum benefits.
Every application should be assessed on a number of key questions:
Why: is the investment being made, what contribution is needed, how does it tie in
with the business strategy and IS/IT strategy
What: is required
The business and IS/IT implications of these should be considered. The authors also suggest
evaluating the applications in terms of their benefits:
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It is obviously important to devise appropriate business-driven IS strategies and then appropriate ITsupply strategies. But having a strategy is not going to lead to business success! Implementing and then
updating that strategy as the business progresses is how success will occur
Therefore whatever processes managers use to analyse situations and assess opportunities
must be periodically reviewed to readdress and change the IS/IT strategy. If there is no
review then the strategy being implemented may not fit with the actual environment. To do
this the strategy must be flexible enough to cope with change, this could be external
business factors or external technological factors, either as opportunities or threats, new
products in IS/IT, or a regulations change. Internal business factors can also alter, for
example a takeover, new CEO or staff restructuring. Or it could be if the implementation
does not work in reality. Business and IS/IT strategies have to be re-aligned when new
opportunities or constraints are identified, otherwise finances, time and resources will be
wasted in pursing strategies that are redundant. In such cases it is better to stop and
redirect strategies and implementation than follow a course that cannot succeed. This
means that all elements of the strategy must be understood so that if anything which
impacts upon them alters, it can be addressed. This means that the external environment,
business needs, opportunities and benefits accrued from the strategy need to be monitored.
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Outsourcing
Some organisations may choose to outsource some or all of their IS/IT provision. Care must
be taken if following this path as:
May be inflexible if contracted to do one thing and then want to make changes
following strategic decisions
Gain IS/IT knowledge, but have difficultly integrating it with the system
Access to specialist knowledge, that would take years for employees to learn
Quicker results, especially if they are under pressure to fulfil contractual deadlines
IS/IT may fluctuate in demand, therefore only have outsourcing when you need it
Using multiple vendors for outsourcing can minimise risks and maximise benefits, however
it increases the time and resources needed to manage them all. There needs to be a person
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in the organisation who has the knowledge of IS/IT and business to track,
assess and interpret changing IS/IT capabilities and relate to organisational
needs, work with business managers to define IT requirements over time,
and monitor and manage contractual relationships. These elements cannot be
outsourced. Further consideration has to be made as to whether it is worth
skilling up the gap in employees knowledge that is making the organisation
use outsourcers.
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