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Strategic Information Systems for Competitive Advantage

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Describe Porter's competitive forces model & how IT helps companies improve ... Describe Porter's value chain model and its relationship to information technology. ... – PowerPoint PPT presentation

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Title: Strategic Information Systems for Competitive Advantage


1
  • Strategic Information Systems for Competitive
    Advantage

2
Learning Objectives
  • Describe strategic information systems (SIS) and
    explain their advantages.
  • Describe Porters competitive forces model how
    IT helps companies improve their competitive
    positions.
  • Describe Porters value chain model and its
    relationship to information technology.
  • Describe several other frameworks that show how
    IT supports the attainment of competitive
    advantage.

3
Learning Objectives (cont.)
  • Describe and understand the role of web-based SIS
    and the nature of competition in the digital age.
  • Describe global competition and its SIS
    framework.
  • Describe representative strategic information
    systems and the advantage they provide to
    organizations.
  • Discuss implementation issues including possible
    failures of SIS.

4
Strategic Information Systems (SISs)
  • SIS
  • Characterized by its ability to significantly
    change the manner in which business is done.
  • It can also change the goal, processes, products,
    or environmental relationships to to help an
    organization gain a competitive advantage.
  • An organization competitive strategy is the
    search of a competitive advantage in an industry.
  • Cost, quality, or speed.

5
Strategic Information Systems (SISs)
  • SIS Definition
  • Systems that organizations totally depends on
  • Systems that has very impact on organization
    business processes, operation, and the bottom
    line.
  • Internally focused or externally focused
  • Can be applied within the organization or across
    the organization

6
Strategic Information Systems (SISs)
  • Sustaining Strategic Advantage
  • This systems are design from the beginning to
    facilitate competitive advantage.
  • Today it is more difficult to sustain a
    competitive advantage with the use of IT for a
    long period of time.

7
The Role of IT
  • IT creates applications that provide strategic
    advantages to companies
  • E.g. Federal Express was the first to company to
    use the tracking system
  • IT is a competitive weapon
  • IT supports strategic change, e.g,
    re-engineering
  • Cycle time reduction,streamlining, CASE, etc.
  • IT networks with business partners
  • B2B
  • IT provides cost reduction
  • IT provides competitive business intelligence

8
Porters 5 Competitive Forces
  • The threat of entry of new competitors.
  • The bargaining power of suppliers.
  • The bargaining power of customers (buyers).
  • The threat of substitute products or services.
  • The rivalry among existing firms in the industry.

9
Porters Model in Action
10
Response Strategies (Porter, 1985)
FOCUS Selecting a niche market and achieving
cost leadership and/or differentation.
DIFFERENTATION Being unique in the industry
COST LEADERSHIP Providing products and/or
services at the lowest cost in the industry.
11
Response Strategies (added by Porter and others)
GROWTH Increasing market share, acquiring more
customers or selling more products
IMPROVE INTERNAL EFFICIENCY To improve employee
and customer satisfaction
ALLIANCES Working with business partners to
create synergy provide opportunities for growth
CRM Customer-oriented approaches, e.g. the
customer is king (queen)
INNOVATION Developing new products services
12
The Value Chain
Support activities
Primary activities
Inbound logistics Materials receiving, storing,
and distribution to manufacturing
premises Operations Transforming inputs into
finished products. Outbound logistics Storing
and distributing products Marketing and
Sales Promotions and sales force Service Servic
e to maintain or enhance product value Corporate
infrastructure Support of entire value chain,
e.g. general management planning, financing,
accounting, legal services, government affairs,
and QM Human resources management Recruiting,
hiring, training, and development Technology
Development Improving product and manufacturing
process Procurement Purchasing input
13
VALUE SYSTEM
  • A firms value chain is part of a larger stream
    of activities, which Porter calls a Value
    System.
  • Includes the suppliers that provide the
    necessary inputs AND their value chains.
  • Applies to both products services, for any
    organization, PUBLIC or PRIVATE.
  • Is the basis for the Supply Chain Management.

14
The Value Chain Model
  • The Value System Model is used to
  • Evaluate a companys process and competencies.
  • Investigate whether adding IT supports the value
    chain.
  • Enable managers to assess the information
    intensity and the role of IT.

15
Strategic Information Systems Frameworks
  • A framework for SIS is a descriptive structure
    that helps us understand and clarify the
    relationships among strategic management and IT.
  • E.g.
  • Bakos and Treacy Framework
  • McFarlan Application Portfolio Analysis Framework

16
Bakos Treacy Framework
17
McFarlans Portfolion Framework (1984)
  • For Analyzing Existing, Planned Potential
    Information Systems

18
Categories of Strategic Relevance and Impact
A contingency appropriate to IT management.
High
Factory
Strategic
Totally depending on it
IT are important but they are not fundamental to
the firms ability to compete.
Strategic Impact of existing IT system
Support
Turnaround
Strategic Impact of IT on operations and
future strategy is low.
Not absolutely depending on totally
uninterrupted, fast response-time.
Low
Low
High
Strategic Impact of IT applications under
development
19
SIS Implementation
  • Major Issues to be Considered
  • Justification
  • Justifying SIS may be difficult due to the
    intengible nature of their benefits.
  • Risks Failures
  • The magnitude, complexity, continuous changes in
    technology and business environment may result in
    failures.
  • Finding appropriate SIS
  • Identifying appropriate SIS is not a simple task.

20
Sustaining SIS Strategic Advantage
  • A Major problem that companies face is how to
    sustain their SIS competitive advantage.
  • 3 Major approaches
  • Create inward systems which are not visible to
    competitors.
  • Provide a comprehensive, innovative expensive
    system that is difficult to duplicate.
  • Combine SIS with structural changes. This would
    include business processes, reengineering
    organizational transformation.

21
Managerial Issues
  • Implementing SIS Can Be Risky.
  • The investment involved in implementing
    Strategic Information Systems (SIS) is high.
  • Strategic Information Systems Requires Planning.
  • Planning for an SIS is a major concern of
    organizations.

22
Managerial Issues (cont.)
  • Sustaining Competitive Advantage Is Challenging.
  • As companies become larger and more
    sophisticated, they develop resources to
    duplicate the systems of their competitors
    quickly.
  • Ethical Issues.
  • Gaining competitive advantage through the use of
    IT may involve unethical or even illegal actions.
  • Companies can use IT to monitor the activities
    of other companies and may invade the privacy of
    individuals working there.
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