Strategic Frameworks for
Project Justification
PSC 5170
Organization Goals
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Business
Vision
Mission
Objective
Tactic
= Business
Justification
IS
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Vision
Mission
Objective
Tactic
= Project
Contribution
Roles
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Sponsor: funds and champions the
project in the organization
Client: reviews the project milestones
and decision points from the business
point of vies
User: works with the system on a
regular basis
Strategic Information
Systems
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IS that help gain strategic advantage
Significantly change manner in which
business supported by the system is
done
Outwardly aimed at direct competition
Inwardly focus on enhancing the
competitive position
Create strategic alliances
Value Chain Model
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Chain of basic activities that
add to firm’s products or
services
Primary activities
Secondary activities
Value Chain
Value Chain Primary
Activities
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Inbound
Outbound
Operations
Marketing and Sales
After-Sale Services
Value Chain Support
Activities
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Technology development
Procurement
Human Resources Management
Management Control
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accounting/finance
coordination
general management
central planning
Porter’s Competitive Forces
Model
The model recognizes five major forces that could
endanger a company’s position in a given industry.
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The
The
The
The
The
threat of entry of new competitors
bargaining power of suppliers
bargaining power of customers (buyers)
threat of substitute products or services
rivalry among existing firms in the industry
External Competitive Forces
Competitive Forces
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Threat of entry of new
competition
Bargaining power of suppliers
Bargaining power of buyers
Threat of substitute products
or services
Rivalry among existing firms
Strategies for
Competitive Forces
Note - strength of force is
determined by factors in industry
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Gain a competitive edge
Build defenses against forces
Formulate actions to influence
forces
Three Generic Strategies
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Cost leadership (lowest cost in
industry)
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Differentiation (of
products/services/quality)
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Focus (finding a specialized niche)
Be Low Cost Producer IT strategic if it can:
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Help reduce production costs &
clerical work
Reduce inventory, accounts
receivable, etc.
Use facilities and materials better
Offer interorganizational
efficiencies
Produce Unique Product
- IT strategic if it can:
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Offer significant component of
product
Offer key aspect of value chain
Permit product customization to
meet customer’s unique needs
Provide higher/unique level of
customer service/satisfaction
Fill Market Niche - IT
strategic if it can:
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Permit identification of special
needs of unique target market
Spot and respond to unusual
trends
Strategic Questions
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Can IT create barriers to entry?
(new entrants)
Can IT build in switching
costs? (buyers)
Can IT strengthen customer
relationships? (buyers)
Strategic Questions
(cont)
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Can IT change the balance of power
in supplier relationships? (suppliers)
Can IT change the basis of
competition? (competitors)
Can IT generate new
products?(competitors, substitutes)
Risks of IS Success
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Change the Basis of Competition
Lower Entry Barriers
Promote Litigation or Regulation
Awake Sleeping Giant
Reflect Bad Timing
Are Too Advanced
Transformational Information
Systems
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Radical changes in an
organization’s business
processes
Radical changes in an
organization’s structure
Radical changes in an
industry’s value streams
Business Process
Reengineering (BPR)
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Completely changes manner in which
business is done
Fewer steps, shorter cycle times
Complete, more expert handling of
events
Not incremental improvement
Typically uses IT as an enabler
Involves discontinuous thinking
Characteristics of BPR
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Combining jobs
Empowering employees
Jobs done simultaneously
Customizing product/service
Work performed where most
logical
Single point of customer contact
Transformational Information
Systems
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Radical changes in an
organization’s structure
 reduce layers of management
 empower front-line workers
 loosely couple work units
Radical changes in an industry’s
value streams
 disintermediation
 creating new markets