Business Systems:Strategy & Application

CM322 BMIBT

Material supplied by:

Richard Bertram
Babak Akhgar

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

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 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

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-Hill

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

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

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

Opportunity Framework

Applications Search Tool

Marketing Opportunity Search Framework

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

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 Application

s
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

Deliver
y

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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