Business Systems:Strategy & Application

Strategy definitions
Quinn Pattern or plan that integrates organizations 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 organizations 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 Managements 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
Develop a Strategic Vision & Mission

Task 2
Set Objectives

Task 3
Craft a Strategy to Achieve Objectives

Task 4
Implement & Execute Strategy

Task 5
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 firms 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 companys 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
Mission

DEFINITION
Overriding purpose in line with the values or expectations of stakeholders

Vision or strategic intent Desired future state: the aspiration of the organisation Goal Core competences General statement of aim or purpose 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

The environment Strategic analysis

Resources, competences and capability

Bases of strategic choice

Organisation structure and design

Strategic choice

Strategy implementation

Strategic options

Strategy evaluation and selection

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)

Era II Data Processing Era Data Processing

3- 5

Primary Objective

Support of Operations

Large Company Units

Primary Clients

Justification

Efficiency

Single DP/IS Department

Source

Irwin/McGraw-Hill

The McGraw-Hill Companies, Inc., 1998

Era II MIS Era II MIS

3- 4

Primary Objective

Management Support

Individual Managers and Professionals

Primary Clients

Justification

Management Effectiveness

Information Systems Units and End Users

Source

Irwin/McGraw-Hill

The McGraw-Hill Companies, Inc., 1998

Era III of Organisational Computing: Support Era III of Organisational Computing: Support of Business Transformation & Competition of Business Transformation & Competition

3- 3

Primary Objective

Entranced Competitive Position

Line of Business Units

Primary Clients

Justification

Market Share and Profitability

Coordinated Organizational End User Computing

Source

Irwin/McGraw-Hill

The McGraw-Hill Companies, Inc., 1998

Era IV of Organisational Computing: Era IV of Organisational Computing:

3- 1

Primary Objective

Electronic Integration

Collaborating Teams

Primary Clients

Justification

Organizational Effectiveness

Owned and Outsourced Computing Infrastructure

Source

Irwin/McGraw-H ill

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 Purpose Scope Use

Source: Earl, 1989

Opportunity Ends Probability Analysis

Positioning Means Capability Implementation

Vision Possibility Education

Awareness Framework

Refocusing Framework

Impact Model

Scoping Model

Purpose

to change mind to indicate scale sets of possible change Strategic Opportunities Framework Strategic Impact of IT

to identify possible scope for IT Information Intensity Matrix

Example

Awareness Framework

Refocusing Framework

Strategic Opportunities Framework

Competitive Marketplace Internal Operations

Significant structural change

Merrill Lynch

Digital Equipment

Traditional products and processes

Source: Benjamin et al.

American Hospital Supply

United Airlines

Awareness Framework

Impact Model

Degree of Strategic Change

Level of Impact Industry level

Effect of IT Changes fundamental nature of the industry

Firm Level

Influences competitive forces facing the firm

Strategy level
after Parsons

Supports the generic strategy of the firm

Awareness Framework

Scoping Model

Information Intensity Matrix

Information Content of the Products

Information Intensity of the Value Chain

LOW HIGH Oil Refining

HIGH Newspapers Banking Airlines

LOW

Cement

Source: Porter and Millar

Opportunity Framework
Systems Analysis Frameworks Applications Search Tools Technology Fitting Frameworks Business Strategy Frameworks

Purpose

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 Customer Resources Life Cycle AMT Framework Industry and Competitive Analysis Framework

Example

Value Chain

Opportunity Framework

System Analysis Framework

The Value Chain

Support activities 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 resources 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 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

Source: Feeny

Opportunity Framework

Business Strategy Framework

Generic Strategy Options

Competitive Advantage

Competitive Scope

Lower Cost Differentiation Broad Target Narrow Target

Source: Porter

Cost Leadership Cost Focus

Differentiation Differentiation Focus

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 Alliance

What is the mode? Offensive Defensive

What is the direction? Use

Source: Wiseman

Provide

Positioning Framework

Scaling Frameworks Purpose

to indicate the importance of IT to a business

Spatial Frameworks
to indicate the character of IT applications in different businesses Sector Framework

Temporal Frameworks
to help assess the evolutionary position of a business with respect to IT Assimilation of Technology Model

Example

Strategic Grid

Positioning Frameworks

Scaling Frameworks

Strategic Grid
Strategic impact of application development portfolio

LOW
Strategic impact of existing operating systems

HIGH Turnaround Strategic

LOW HIGH

Support Factory

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

Delivery

Source: Earl

A Multiple Methodology

Business plans and goals

Analytical Top down Methodology

Current systems
Evaluative Bottom up Surveys and audits

IT opportunities
Creative Inside out Techniques, processes and environment Brightsparks and product champions

Teamwork

Users and specialists

Application strategic plan

Source: Earl

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 CMS Forum / CMS Learning Environment / CMS Courses /CM303-ISBS FT