06. Information Systems (IS) in Management
& Strategic Information Systems (SIS)
Rev: Feb, 2013
Euiho (David) Suh, Ph.D.
POSTECH Strategic Management of Information and Technology Laboratory
(POSMIT: http://posmit.postech.ac.kr)
Dept. of Industrial & Management Engineering
POSTECH
Contents
1
2
3
Information Systems in Management
1)
The role of IS in Management
2)
Hierarchy Level of IS in Management
Strategic Information Systems
1)
Introduction
2)
Competitive Strategy & IT
3)
Evaluation of SIS
Case Study
1. Information Systems in Management
3-Axis MSS Model
1) The role of IS in Management
Model
IS Type = f(m, d, i)
a?
c?
Intelligence
b?
Ex)
TPS = f(0.1, 0.9, 0)
DSS = f(0.5, 0.3, 0.2)
Data
3
1. Information Systems in Management
The view of Information Systems
1) The role of IS in Management
View Point 1
Data
Information
Statistical
Analysis
Decision Aids
Math
Analysis
Knowledge
Reasoning
View Point 2
View Point 3
H
Top
EIS/ESS
E
R
P
DSS
IPS
Middle
low
TPS
Extreme low
OAS
Strategic Value
Extreme top
?
?
L
L
4
IS Expansion
H
1. Information Systems in Management
Role of IS
1) The role of IS in Management
View Point 4
Helper
Management
A Function
Financing
IS
Accounting
IS
IS
Management
Financing
Marketing
Marketing
IS
Controller
Melting Pot
IS
Financing
IS
Marketing
Marketing
Accounting
Accounting
Financing
Accounting
All Functions are melted
5
1. Information Systems in Management
Management Hierarchy Level (1/2)
2) Hierarchy Level of IS in Management
Management Triangle
Extreme
top
Types of
management
Problem types
to be dealt with
Political
strategic
Unstructured
Strategic
Top
Middle
Tactical
low
Operational
Semi –
Structured
and
Structured
Structured
Extreme low
Clerical
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1. Information Systems in Management
Management Hierarchy Level (2/2)
Management
Triangle
2) Hierarchy Level of IS in Management
Use of data&
Quality
Types
Information
of Data
of IS
Extreme
top
Political decision &
High-degree
strategic
decisional aids
Top
Mathematical analysis
of information
Decisional aids
Middle
low
Statistical
Analysis of data
Information
Retrieval & use for
Operational purpose
EIS/ESS
DSS
IPS
MIS(s)
Roles of IS
Controller
Strategic driver
Extreme low
Very
important
(Strong SIS)
Function
TPS
Helper to
(EDPS)
Each function
Little
OAS
7
Importance
Controller
Raw data
Data processing
Strategic
Assistant to helper
to each function
importance
(Weak SIS)
2. Strategic Information System
Strategic IT
1) Introduction
■ Technology is no longer an afterthought in business strategy, but the cause and driver
■ IT can change the way businesses compete
■ A strategic information system is any information system that uses IT to help an
organization…
– Gain a competitive advantage
– Reduce a competitive disadvantage
– Or meet other strategic enterprise objectives
Information System (IS)
Definition
Characteristics
•
Support activities to the
business
•
Mechanizes operations for
better efficiency, control, and
effectiveness
Simply provides sufficient
dependable information
Doesn’t increase corporate
profitability in itself
•
•
Strategic Information System (SIS)
8
•
Integral and necessary part of the
business
•
Directly influences all aspects of
marketplace profitability such as market
share and earnings
•
Directly affects the competitive stance of
the organization
2. Strategic Information System
Overview of SIS
1) Introduction
Paradigm Shift
Globe-driven
Information-driven
Customer-driven
Technology-driven
MIT(Management Innovation Technology)
 Dramatic Profit
 Competitive Advantage
SM(Super Set)
SIS(Subset)
OAS
KM
TPS (EDPS)
CRM
IPS & MIS
EC
9
DSS
ERP & BPR
EIS & ESS
SA
MOT
2. Strategic Information System
Strategy Tree (1/2)
1) Introduction
■ Use of Information
Automation
Information
(IT, IS)
Innovation
■ Automation
Work Automation
Automation
Manufacturing Automation
■ Strategic Use of Information
Strategic Information System(SIS)
Strategic
Use of Information
(IT, IS)
Non-strategic Information System (NSIS)
10
2. Strategic Information System
Strategy Tree (2/2)
1) Introduction
■ Strategic Management
Strategic Management (SM)
Strategic
Management
Non-strategic Management (NSM)
■ Information Strategy Tree
Work Automation
Automation
SIS
SM
Manufacturing
Automation
Information
Innovation
NSIS
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NSM
2. Strategic Information System
Competitive Strategies (1/2)
2) Competitive Strategy & IT
Competitive Forces and Strategies
•
Businesses can develop
competitive strategies to counter
the actions of the competitive
forces they confront in the
marketplace.
■ Using Competitive Strategies
– These strategies are not mutually exclusive
• Organizations use one, some, or all
• A given activity could fall into one or more categories
– Not everything innovative serves to differentiate one organization from another
• Likewise, not everything that differentiates organizations is innovative
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2. Strategic Information System
Competitive Strategies (2/2)
2) Competitive Strategy & IT
■ Cost Leadership Strategy
– Reducing their costs or increasing the costs of
competitors
■ Differentiation Strategy
Five Competitive Strategies
Cost
Leadership
– Developing ways to differentiate a firm’s
products and services from those of its
competitors
Differentiation
■ Innovation Strategy
– Developing unique products and services or
entering unique markets or market inches
Strategies
■ Growth Strategy
– Expanding a company’s capacity to produce
goods and services, expanding into global
markets, diversifying into new products and
services, or integrating into related products
and services
■ Alliance Strategy
– Establishing new business linkages and
alliances with customers, suppliers,
competitors, consultants, and other companies
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Alliance
Innovation
Growth
2. Strategic Information System
Ways to Implement Basic Strategies
2) Competitive Strategy & IT
Basic Strategies in the Business Use of Information Technology
Lower Costs
▶ Use IT to substantially reduce the cost of business processes.
▶ Use IT to lower the costs of customers or suppliers
▶ Develop new IT features to differentiate products and services.
Differentiate
▶ Use IT features to reduce the differentiation advantages of competitors.
▶ Use IT features to focus products and services at selected market niches.
▶ Create new products and services that include IT components.
Innovate
▶ Develop unique new markets or market niches with the help of IT.
▶ Make radical changes to business processes with IT that dramatically cut costs;
improve quality, efficiency, or customer service; or shorten time to market.
Promote
Growth
Develop
Alliances
▶ Use IT to manage regional and global business expansion.
▶ Use IT to diversify and integrate into other products and services.
▶ Use IT to create virtual organizations of business partners.
▶ Develop interenterprise information systems linked by the Internet and extranets that support
strategic business relationships with customers, suppliers, subcontractors, and others.
Other Competitive Strategies





Lock in customers and suppliers
Create switching costs
Raise barriers to entry
Build strategic IT capabilities
Leverage investment in IT
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2. Strategic Information System
Evaluation of SIS
3) Evaluation of SIS
■ When you evaluate a SIS…
1.
Process automation or innovation
2.
If innovation, which Hammer’s principle?
3.
Which competing forces to e affected
4.
Value chain activities to be reinforced
5.
Type of IS
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Note
■ MIT PPT material (SIS)
– http://ocw.mit.edu/courses/sloan-school-of-management/15-565j-integrating-esystems-globalinformation-systems-spring-2002/lecture-notes/lecture02.pdf
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Reference
■ O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”,
McGraw – Hill, Chapter 1
■ O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”,
McGraw – Hill, Chapter 2
■ Euiho Suh, “Information & Management (PPT Slide)”, POSMIT Lab.
(POSTECH Strategic Management of Information and Technology Laboratory)
■ Euiho Suh, “Role of Information Systems (PPT Slide)”, POSMIT Lab.
(POSTECH Strategic Management of Information and Technology Laboratory)
■ Euiho Suh, “Strategic Information Systems (PPT Slide)”, POSMIT Lab.
(POSTECH Strategic Management of Information and Technology Laboratory)
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