Business Systems:Strategy & Application

CM322 BMIBT

Material supplied by:Richard BertramBabak 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?

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

Concept

A. Thompson, Jr. & A. J. Strickland, (1998)I

Craft aStrategy

to AchieveObjectives

SetObjectives

Develop aStrategic

Vision& Mission

Implement& ExecuteStrategy

Evaluate & Make

Corrections

Improve/Change

Revise asNeeded

Revise asNeeded

Improve/Change

Recycleas Needed

Task 1 Task 2 Task 3 Task 4 Task 5

The Five Tasksof Strategic Management

Missions vs. Strategic VisionsA 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 andVision Statements

Otis ElevatorOur 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 CorporationOne vision drives everything we do: A computer

on every desk and in every home using great software as an empowering tool.

DEFINITION

Overriding purpose in line with the values or expectations of stakeholders

Desired future state: the aspiration of the organisation

General statement of aim or purpose

Resources, processes or skills which provide ‘competitive advantage’

TERM

Mission

Vision or strategic intent

Goal

Core competences

A DEFINITION OF STRATEGY

Strategy is the direction and scope of anorganisation 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

Strategicanalysis

Strategicchoice

Strategyimplementation

A summary model of the elements of strategic management

Expectations and purposesExpectations

and purposes

Organisationstructure and

design

Managingstrategicchange

Resourceallocation and

control

Strategicoptions

Basesof strategic

choice

Strategyevaluation and

selection

Resources,competencesand capability

Theenvironment

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 1994Also 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)

©The McGraw-Hill Companies, Inc., 1998

3- 5

Irwin/McGraw-Hill

Era I Data ProcessingEra I Data Processing

Support ofOperations

LargeCompany

Units

SingleDP/IS

DepartmentEfficiency

PrimaryObjective

Justification

Primary“Clients”

Source

©The McGraw-Hill Companies, Inc., 1998

3- 4

Irwin/McGraw-Hill

Era II MISEra II MIS

ManagementSupport

IndividualManagers

andProfessionals

InformationSystems Units

and EndUsers

ManagementEffectiveness

PrimaryObjective

Justification

Primary“Clients”

Source

©The McGraw-Hill Companies, Inc., 1998

3- 3

Irwin/McGraw-Hill

Era III of Organisational Computing: Supportof Business Transformation & Competition

Era III of Organisational Computing: Supportof Business Transformation & Competition

EntrancedCompetitive

Position

Line ofBusiness

Units

CoordinatedOrganizational

End UserComputing

Market Shareand

Profitability

PrimaryObjective

Justification

Primary“Clients”

Source

©The McGraw-Hill Companies, Inc., 1998

3- 1

Irwin/McGraw-Hill

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

ElectronicIntegration

CollaboratingTeams

Owned andOutsourcedComputing

Infrastructure

Organiza-tional

Effectiveness

PrimaryObjective

Justification

Primary“Clients”

Source

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

Purpose Vision Ends Means

Scope Possibility Probability Capability

Use Education Analysis Implementation

Source: Earl, 1989

Awareness Framework

Awareness Framework

Refocusing FrameworkStrategic Opportunities Framework

CompetitiveMarketplace

InternalOperations

Significantstructural change Merrill Lynch Digital Equipment

Traditionalproducts andprocesses

American HospitalSupply

United Airlines

Source: Benjamin et al.

Awareness Framework

Impact ModelDegree 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 ModelInformation Intensity Matrix

Information Content of theProducts

LOW HIGH

HIGH Oil RefiningNewspapers

BankingAirlines

LOW Cement

Source: Porter and Millar

Info

rmat

ion

Inte

nsity

of

the

Val

ue C

hain

Opportunity Framework

Opportunity Framework

System Analysis FrameworkThe Value Chain

Sup

port

act

iviti

es

Firminfrastructure

Human resource management

Technology development

Primary activities

Margin

Procurement

Inboundlogistics

OperationsOutboundlogistics

Marketingand Sales

serviceSource: Porter & Millar

Opportunity Framework

Applications Search ToolCustomer Resource Life-Cycle

Opportunity Framework

Applications Search ToolMarketing Opportunity Search Framework

Opportunity Framework

Business Strategy FrameworkGeneric Strategy Options

Lower Cost Differentiation

BroadTarget

CostLeadership

Differentiation

NarrowTarget

Cost Focus DifferentiationFocus

Source: Porter

Competitive Advantage

Com

petit

ive

Sco

pe

Opportunity Framework

Business Strategy FrameworkStrategic Option Generator

Use

Offensive

Supplier Competitor

Differentiation Innovation Alliance

Source: Wiseman

GrowthCost

What is the strategic thrust?

Defensive

What is the mode?

Provide

Customer

What is the strategic target?

What is the direction?

Positioning Framework

Positioning Frameworks

Scaling FrameworksStrategic Grid

Strategic impact of applicationdevelopment portfolio

LOW HIGH

Strategicimpact

of existingLOW Support Turnaround

operatingsystems HIGH Factory Strategic

Source: McFarlan and McKenney

Three - level IT Strategy

• Division/SBU/function based• Demand oriented• Business focused

IS Strategy

• Organisation based• Relationships oriented• Management focused

IM Strategy

• Activity based• Supply oriented• Technology focused

IT Strategy

What?

How?

Wherefore? Management

Applications

Delivery

Source: Earl

A Multiple Methodology

Business plansand goals Current systems IT opportunities

Application strategic plan

Source: Earl

Topdown

Bottom up

Inside out

Analytical

Methodology

Teamwork

Evaluative

Surveys andaudits

Users andspecialists

Creative

Techniques,processes and environment

Brightsparksand productchampions

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