Business Systems:Strategy & Application
CM322 BMIBT
Material supplied by:
Richard Bertram
Babak Akhgar
Strategy definitions
Quinn
Pattern or plan that integrates organization’s
major goals, policies and actions into
cohesive whole
Strategic decisions
Those that determine direction, goals, limits,
use of key resources
Purpose of strategy
To position or set direction within environment
To focus effort within the organization
To define the organization, to give meaning to the
organization’s activities
To provide consistency
For efficiency & focus
Thinking Strategically:
The Three Big Strategic Questions
1. Where are we now -- what is our situation?
2. Where do we want to go?
3. How will we get there?
What Is Strategy?
Concept
Competitive moves and business approaches
management employs in running a company
Management’s “game plan” to
Please customers
Position a company in its chosen market
Compete successfully
Achieve good business performance
A. Thompson, Jr. & A. J. Strickland, (1998)I
The Five Tasks
of Strategic Management
Task 1
Task 2
Task 3
Task 4
Task 5
Develop a
Strategic
Vision
& Mission
Set
Objectives
Craft a
Strategy
to Achieve
Objectives
Implement
& Execute
Strategy
Evaluate &
Make
Corrections
Revise as
Needed
Revise as
Needed
Improve/
Change
Improve/
Change
Recycle
as Needed
Missions vs. Strategic Visions
A mission statement
focuses on current
business activities
For example:
Customer needs
currently being
served
A strategic vision
concerns a firm’s future
business path
The kind of company it
is trying to become
Customer needs to be
satisfied in the
future
Developing a Strategic Vision
A strategic vision is a
roadmap of a company’s
future -Direction it is headed
Business position it intends
to stake out
Capabilities it plans to
develop
Customer needs it intends to
serve
Examples: Mission and
Vision Statements
Otis Elevator
Our mission is to provide any customer a means of
moving people and things up, down, and sideways
over short distances with higher reliability than any
similar enterprise in the world.
Microsoft Corporation
One vision drives everything we do: A computer
on every desk and in every home using great
software as an empowering tool.
TERM
DEFINITION
Mission
Overriding purpose in line with
the values or expectations of
stakeholders
Vision or strategic intent Desired future state: the
aspiration of the organisation
Goal
General statement of aim or
purpose
Core competences
Resources, processes or skills
which provide ‘competitive
advantage’
A DEFINITION OF STRATEGY
Strategy is the direction and scope of an
organisation over the long term which
achieves advantage for the organisation
through its configuration of resources within
a changing environment to meet the needs
of markets and to fulfil stakeholder
expectations.
LEVELS OF STRATEGY (1)
Corporate Level strategic decisions are
concerned with:
overall purpose and scope
adding value to shareholder investment
portfolio issues
resource allocation between SBUs
structure and control of SBUs
corporate financial strategy
LEVELS OF STRATEGY (2)
Business Unit strategy is concerned with:
competitive strategy
developing market opportunities
developing new products/services
resource allocation within the SBU
structure and control of the SBU
LEVELS OF STRATEGY (3)
Operational Strategies are concerned with:
the integration of resources, processes, people
and skills
to implement strategy
Expectations and
Expectations
purposes
and purposes
Resources,
competences
and capability
The
environment
Strategic
analysis
Bases
of strategic
choice
Organisation
structure and
design
Strategic
choice
Strategic
options
Strategy
evaluation and
selection
Strategy
implementation
Managing
strategic
change
Resource
allocation and
control
A summary model of the elements of strategic management
Information Systems Eras
Evolution of Information Systems
1950-2000 (Time Frame)
Working Definition of IS:
A system for the most efficient and effective means of identifying the "real"
needs of users, and developing information processing systems for satisfying
these needs; ensuring that the resulting information processing systems
continue to satisfy changing user needs by the most efficient means of
acquiring , storing, processing, disseminating and presenting information; by
providing facilities and a learning environment for users and information
systems specialists to improve the effectiveness of their decision models; and
by supporting operational. Control and strategic organisational objectives."
(Jayaratna p:21)
Understanding and Evaluating Methodologies (NIMSAD)
Working Definition of IT
The term Information Technology is is used to
emphesize the use of computers for
information processing, storage,
transmission and presentation with a clear
need for satisfying user needs.
Jayaratna 1994
Also See P. Checkland Information Systems and Information Systems Chapter
one
Working definition of ISS
An information system strategy is about creating a fit among
information system activities.
To us this means a three way fit between business needs, current
IT systems and new opportunities offered by technology.
The need for an information system strategy will depend upon an
organisation's size and line of business. The larger an organisation
and the greater the information content of the product or value
chain then the greater the need for an enterprise-wide information
system strategy.
M. Porter (IS Strategy and business Fit, 1998)
3- 5
Era
Era II Data
Data Processing
Processing
Primary
Objective
Justification
Irwin/McGraw-Hill
Support of
Operations
Large
Company
Units
Efficiency
Single
DP/IS
Department
Primary
“Clients”
Source
©The McGraw-Hill Companies, Inc., 1998
3- 4
Era
Era IIII MIS
MIS
Primary
Objective
Justification
Irwin/McGraw-Hill
Management
Support
Individual
Managers
and
Professionals
Primary
“Clients”
Management
Effectiveness
Information
Systems Units
and End
Users
Source
©The McGraw-Hill Companies, Inc., 1998
Era
Era III
III of
of Organisational
Organisational Computing:
Computing: Support
Support
of
of Business
Business Transformation
Transformation && Competition
Competition
Primary
Objective
Entranced
Competitive
Position
Line of
Business
Units
Justification
Market Share
and
Profitability
Coordinated
Organizational
End User
Computing
Irwin/McGraw-Hill
3- 3
Primary
“Clients”
Source
©The McGraw-Hill Companies, Inc., 1998
3- 1
Era
EraIV
IV of
of Organisational
Organisational Computing:
Computing:
Primary
Objective
Justification
Irwin/McGraw-H ill
Electronic
Integration
Collaborating
Teams
Primary
“Clients”
Organizational
Effectiveness
Owned and
Outsourced
Computing
Infrastructure
Source
©The McGraw-Hill Companies, Inc., 1998
Six Major types of Systems
TPS: Transaction Processing Systems
MRS: Management Reporting Systems
DSS: Decision Support Systems
EIS: Executive information systems
PSS: Professional Support Systems
OIS: Office Information Systems
1.TPS transaction processing systems
operational level
perform and record daily routine transactions
necessary to conduct the business
2.MRS Management Reporting Systems
Used by managers responsible for specific
functions or processes in a firm
provide routine summary and exception reports
managers use these reports to help control their
area of responsibility
3.DSS decision support systems
Designed to support individual and collective
decision making
often use information from external sources
more analytical power than other types of systems
4.EIS executive information systems
strategic level of the organization
support long-term, strategic view
used by senior executives
easy access to summarised company data
incorporate external information on industry and
economy
5.PSS Professional Support Systems
Support performance of tasks specific to a given
profession
For example
lawyers doing legal research
architects designing buildings
designers modeling a new automobile
student C&P system (cut and paste
system) !!
6.OAS office information systems
support and help coordinate knowledge work in
an office environment
emphasis on increased productivity
systems include e-mail, scheduling systems, word
processing
Analysis Frameworks Overview
What are frameworks for?
They help us to understand and classify the
relation between competitive strategy and
information technology. (Neumann)
They are a means of viewing, analysing and
reaching meaningful conclusions about the role
of information systems in helping achieve
desired organisational performance.
Framework of Frameworks
Framework > Awareness
Opportunity
Positioning
Vision
Ends
Means
Scope
Possibility
Probability
Capability
Use
Education
Analysis
Implementation
Purpose
Source: Earl, 1989
Awareness Framework
Refocusing
Framework
Purpose
Example
Impact Model
to change mind to indicate scale
sets
of possible
change
Strategic
Opportunities
Framework
Strategic Impact
of IT
Scoping Model
to identify
possible scope
for IT
Information
Intensity Matrix
Awareness Framework
Refocusing Framework
Strategic Opportunities Framework
Significant
structural change
Traditional
products and
processes
Source: Benjamin et al.
Competitive
Marketplace
Internal
Operations
Merrill Lynch
Digital Equipment
American Hospital
Supply
United Airlines
Awareness Framework
Impact Model
Degree of Strategic Change
Level of Impact
Effect of IT
Industry level
Changes fundamental nature of the industry
Firm Level
Influences competitive forces facing the firm
Strategy level
Supports the generic strategy of the firm
after Parsons
Awareness Framework
Scoping Model
Information Intensity Matrix
Information Intensity
of the Value Chain
Information Content of the
Products
LOW
HIGH
HIGH
Oil Refining
Newspapers
Banking
Airlines
LOW
Cement
Source: Porter and Millar
Opportunity Framework
Systems
Analysis
Frameworks
Purpose
Example
Applications
Search Tools
Technology
Fitting
Frameworks
Business
Strategy
Frameworks
to provide
to examine
to examine IT for
to examine
analytical
application areas for application area fit business strategy
techniques for
IT fit
for IT
business
opportunities
Value Chain
Customer
Resources Life
Cycle
AMT Framework
Industry and
Competitive
Analysis
Framework
Opportunity Framework
System Analysis Framework
Support activities
The Value Chain
Firm
infrastructure
Human resource
management
Technology
development
Procurement
Marketing
Inbound
Outbound
Operations
and Sales Margin
logistics
logistics
service
Source: Porter & Millar
Primary activities
Opportunity Framework
Applications Search Tool
Customer Resource Life-Cycle
Requirements
Establish requirements
Specify requirements
Acquire
Select source
Order
Authorise and pay for
Acquire
Test and accept
Stewardship
Integrate
Monitor
Upgrade
Maintain
Retirement
Dispose of
Account for
Source: Ives and Learmonth
How much of the resource is required?
What are the required resource’s particular attributes?
From whom will the customer obtain the resource?
How will the customer order the product?
How will the customer pay for the product?
How, where and when will the customer take possession of
the resource?
How does the customer ensure the resource conforms to
specifications?
How is the resource merged with inventory?
In what ways can the customer monitor the resource?
How will the resource be enhanced if conditions change?
How will the resource be repaired if it becomes necessary?
How will the customer move, return, sell or dispose of the
resource when it is no longer needed?
How much is the customer spending on the resource?
Opportunity Framework
Applications Search Tool
Marketing Opportunity Search Framework
Perceived product
differentiation
Sector channel
structure
Relationship
between need
and product
Frequency of
purchase decision
Frequency of
delivery within
contract
Buyers access to
IT resources
Source: Feeny
Low
Prime positioning
Service provision
Direct
Sales support
Retail alliances
Unclear
Consumer guidance
High
Fastest source
Service provision
High
Build partnership
Customer relationship
status
Poor
Fastest source
Consumer guidance
Service provision
Benefit selling
Medium
Product information
System specification
Dedicated
Sales support
High
Market analysis
Benefit selling
Shared
Prime positioning
Service provision
Clear
Low
Customer tracking
Low
Good
Build partnership
Opportunity Framework
Business Strategy Framework
Generic Strategy Options
Competitive Scope
Competitive Advantage
Lower Cost Differentiation
Broad
Target
Cost
Leadership
Differentiation
Narrow
Target
Cost Focus
Differentiation
Focus
Source: Porter
Opportunity Framework
Business Strategy Framework
Strategic Option Generator
What is the strategic target?
Supplier
Customer
Competitor
What is the strategic thrust?
Differentiation
Cost
Innovation
Growth
What is the mode?
Offensive
Defensive
What is the direction?
Use
Source: Wiseman
Provide
Alliance
Positioning Framework
Scaling
Frameworks
Spatial
Frameworks
Temporal
Frameworks
Purpose
to indicate the
importance of IT
to a business
to indicate the
character of IT
applications in
different
businesses
to help assess the
evolutionary
position of a
business with
respect to IT
Example
Strategic Grid
Sector Framework
Assimilation of
Technology Model
Positioning Frameworks
Scaling Frameworks
Strategic Grid
Strategic impact of application
development portfolio
Strategic
impact
of existing
operating
systems
LOW
HIGH
LOW
Support
Turnaround
HIGH
Factory
Strategic
Source: McFarlan and McKenney
Three - level IT Strategy
IS Strategy
What
?
• Division/SBU/function based
• Demand oriented
• Business focused
IM Strategy
Wherefore
?
• Organisation based Management
• Relationships oriented
• Management focused
IT Strategy
How? • Activity based
• Supply oriented
• Technology focused
Source: Earl
Delivery
A Multiple Methodology
Business plans
and goals
Current systems
Analytical
Top
down
Methodology
Teamwork
Evaluative
Bottom
up
Surveys and
audits
Users and
specialists
Application strategic plan
Source: Earl
IT opportunities
Creative
Inside
out
Techniques,
processes and
environment
Brightsparks
and product
champions
Reference
•
•
•
•
•
Information Systems evolution; Strategic Planning for
Information Systems, by John Ward and Pat Griffiths 1997,
pp:6-34
Strategic Information systems; SISPby DSJ Remenyi 1992,
pp:46-77
ISS and IM strategy; Information Management by, Earl 1998
ISS frameworks; Strategic Management of IS; Wendy Robson
1998, pp:48-74, 96, 128, 142, 155,166-170, 179-180, 188-189, 193,
299-305
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