Using Information

Technology for
Competitive Advantage

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Copyright 2001, Prentice-Hall, Inc.
 What is a Firm?

 Physical System
– Closed-loop : sumber yg hanya dimiliki
perusahaan.
– Controlled by management
– Uses feedback to ensure objectives met
– Open because of environmental interaction
 Managed through use of a conceptual
system

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 Importance of Environment

 Very reason for a firm’s existence

 Firm takes resources from environment,
transforms them, and returns goods and
services to environment

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 The Firm’s Environment
Society
Government
Financial Global
Community Community

Suppliers The Customers

Firm
Labor
unions Competitors
Stockholders
or owners 2-4
 The Firm Is Connected to Its
Environment by Resource Flows

 Physical and conceptual

 Some flows are major
 Some should not occur at all
 All resources that enter the firm from the
environment eventually return to the
environment
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 Competitive Advantage

 Computer field perspective

– Use of information to gain leverage in
marketplace
– Relies on more than physical resources
 Addressed with strategic objectives

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 A Value Chain

Firm Infrastructure

Support Human resource management

Activities Technology development
Procurement

Inbound Operations Outbound Marketing Service

logistics logistics and
sales

Primary Activities
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Source : Michael E. Porter
 A Value System

Supplier Firm Channel Buyer

value value value value
chains chain chains chains

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Source : Michael E. Porter
 The Information Resources
Two views of information management

1. Manage data by implementing computer-

based database management systems
(DBMS)
2. Manage resources that produce the
information

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 The Information Resources

Hardware
Software Database

Information
Specialists Information
Users
Facilities 2-10
 The Information Resource
Manager -- the CIO
 Chief Information Officer (CIO) is not
simply a title, but role
 Manager of information services
 Contributes managerial skills
– Solves information resources problems
– Solves problems in other areas of firm’s
operations

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 The CIO Attitude

 The business is what counts

 Build partnerships/ties with the rest of the
firm
 Improve basic business processes
 Communicate in business terms, not IS
jargon
 Provide reliable IS services
 Be positive, not defensive
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 Strategic Planning

 Long-range planning
– Intends to give firm most favorable position in
its environment
– Specifies strategies for achieving objectives
 Need for each business area to create its
own strategic plan

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 The Functional Areas Should Cooperate
in Developing Their Strategic Plans
Strategic
planning for
information resources

Strategic Strategic
planning for planning for
marketing financial resources
resources

Strategic Strategic
planning for planning for
manufacturing human
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resources resources
Strategy Set Transformation
Organizational MIS
strategy set strategy set
Mission System
objectives
Objectives
System
Strategy constraints
MIS
Other strategic System
strategic planning design
organizational process strategies
attributes
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 Strategy Set Transformation:
Basic Flaw
 Business areas do not always have the
resources to ensure accomplishment of
strategic objectives

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 SPIR

 Strategy set transformation; support the

firm’s objectives
 Strategic planning for information resources
(SPIR) develops firm and IS strategic plans
concurrently
– SPIR content
» 1. What is to be achieved
» 2. What will be required
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 Strategic Planning for
Information Resources

Influence on
Information
Resources Information
Business resources
strategy and
Influence on IS
Business strategy
Strategy

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 Strategic Plan Framework for
Information Resources
Strategic Plan
for Information
Resources

Virtual Knowledge-
AIS MIS DSS
Office based systems
Objectives Objectives Objectives Objectives
Objectives

Required Required Required Required Required

Information Information Information Information Information
Resources Resources Resources Resources Resources

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 The Strategic Implications of
End-User Computing (EUC)
 Levels of end users in terms of capabilities
– menu-level end users
– command-level end users
– end-user programmers
– functional support personnel
 EUC application considerations
– shifts workload so that end-users and
information specialists’ talents are better used
– reduces communications gap 2-20
 EUC Risks

 Poorly aimed systems

 Poorly designed/ documented systems
 Inefficient use of information resources
 Loss of data integrity
 Loss of security
 Loss of control

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 Information Resources
Management (IRM) Concept
 Realization that firm’s information
resources go far beyond the information
itself
 Activity pursued by managers at all levels
 Identifying, acquiring, and managing
information resources needed to satisfy
information needs

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 IRM - Required Elements

 A recognition that competitive advantage

can be achieved by means of superior
information resources
 A recognition that information services is a
major functional area
 A recognition that the CIO is a top-level
executive

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 IRM-Required Ingredients (cont.)

 A consideration of the firm’s information

resources when engaging in strategic
planning
 A formal strategic plan for information
resources
 A strategy for stimulating and managing
end-user computing

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 The IRM Model
The environment of the firm
ENVIRONMENTAL INFLUENCES
The firm’s executives
CIO Other executives
Internal influences Firm’s strategic plan
FUNCTIONAL AREAS
Information Finance Human Manufacturing Marketing
services resources
INFORMATION RESOURCES
Central computing Disbursed computing
resources resources

DATA AND INFORMATION

Users engaged in
end-user computing Other users
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 IRM Model: Firm Environment

 Provides setting for achieving competitive

advantage
 Executives are aware of need to manage
resource flows to meet needs of
environmental elements

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 IRM Model: Firm’s Executives

 Includes CIO
 Guides firm toward objectives
 Key activity is strategic planning

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 IRM Model: Business Areas

 Information services is a major business

area
 Each area develops own strategic plans
 One business area strategic plan is for
information resources

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 IRM Model: Information
Resources
 Strategic plan for information resources
details acquisition and management
 Information resources
– Centralized
– Dispersed throughout firm

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 IRM Model: Users

 Details data and information flows between

resources and users
 Some users engage in end-user computing

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 Summary
 Environment of a firm consists of eight
elements
 Firms attempt to achieve competitive
advantage
– Margin - value of products and services over
cost
– Value chain
 Information resources
– Hardware, software, facilities, database,
information specialists, information, and users
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 Summary [cont.]
 Executives perform strategic planning
– SPIR
 All firm’s managers need to engage in IRM
– Recent revelation
– Integrating concept

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