ISYS123 week 6 lecture 2 Strategic Information Systems

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ISYS123 week 6 lecture 2 Strategic Information
Systems

• Matthew Mansour

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The opportunities for strategic application of
information systems are being limited by your
imagination rather than by computing power
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Strategic Management

• Strategic systems are one of organisations key
  responses to business pressures.
• Provides the organisation with a focus - this
  should be communicated to staff, suppliers and
  customers.
• Enables organisation to identify its strengths.
• Strategic Management Way an organisation maps
  the strategy of its future operations.
• Involves long range planning.
• Supports response systems and Innovation.

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Strategic Information Systems (SIS)

• SIS Support or shape a business units
  competitive strategy.
• SIS has ability to change significantly the
  manner in which business is done.
• Contribution to strategic goals.
• Increase performance and productivity Delivery,
  shipment, dealer services etc.
• SIS helps to form Strategic Alliances.
• Creation of application that provide direct
  strategic advantage.

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Strategy and Information Systems

• Strategy works at different levels in the
  organisation
• There should be a corporate strategy
• There should be an information systems strategy
• The IS strategy should be aligned with the
  corporate strategy
• Much of this section may seem to focus on general
  strategy but suitable examples are illustrated to
  show the role of IT to help meet strategic goals.

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Strategic Analysis Approaches

• Strategic Analysis Takes into account the
  competition in business environment and potential
  of using IS and technology to gain competitive
  advantage over other companies.
• Several Versions of strategic Analysis
• SWOT Analysis.
• Porters Competitive Forces Model.
• Environmental Scanning Using the Web.

A context
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SWOT Analysis

• SWOT Analysis A form of competitive analysis
• Strengths (S) of the organisation
• Weaknesses (W) of the organisation
• Opportunities (O) in the environment
• Threats (T) in the environment
• Yields different results for each business
  examined.
• S and W are internal whereas O and T are
  external.

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Example SWOT Analysis
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SWOT Analysis Toyz2Pleez
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SWOT Analysis Mervs Gardening
Internal to Organisation
External to Organisation
Strengths
Weaknesses
Opportunities
Threats
Poor administrative
Growth market
procedures
Low technology usage
Market image
Recession in
economy
Take advantage of
new technology
Develop new services
Increasing
competition
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Porters Competitive Forces Model

• Porters competitive forces
• Another form of competitive analysis
• Never intended for IS use but often applicable in
  a general sense
• Porters 5 competitive forces are
• New entrants
• Increased bargaining power of buyers
• Increased bargaining power of suppliers
• Threat of other industries offering substitutes
• Rivalry between competing sellers

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Porters Competitive Forces Model
New Entrants
Substitutes
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Data Mining

• Analysis of large pool of data for decision
  making and predicting future.
• Find patterns for decision making.
• Example If potato chips are purchased, 65 of
  time soda is also purchased.
• Better sales promotion
• Identifying individual customers.
• Identifying product combinations purchased.
• Predicting customer loyalty.
• Customer characteristics identification

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Using IT for Porters Competitive Forces Model
Value chain

• Use of Extranets and EDI
• Proper supplier interface.
• Shrinks order time and costs.
• Supplier can also be involved in design phase.
• Extranet Secure network that allows business
  partners to access portions of each others
  networks.
• Electronic Data Interchange (EDI)
  Computer-to-computer direct communication of
  standard business transactions among business
  partners.

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Value Chain Analysis

• Value Chain Analysis A powerful tool for
  analysing activities within an organisation that
  bring product and services to market.
• Determines profit margin.
• Note Value chain primarily deals with internal
  factors unlike competitive forces model which
  deals with external factors.
• Key Questions
• Specific activities to create new
  products/services
• Specific activities to enhance market penetration

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Value Chain Analysis

• Resources (inputs) are brought into the
  organisation, processed and then sold (outputs)
• Improvements can be made in the each of the
  primary secondary activities in the value chain
  

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Value Chain Analysis

• Primary activities Activities most directly
  related to the production and distribution of a
  firms products and services.
• Inbound logistics,
• Operations,
• Outbound logistics,
• Marketing, Service

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Value Chain Analysis

• Secondary/Support activities Activities that
  make the delivery of the primary activities of a
  firm possible.
• Administration,
• Research and development,
• Human resource management and
• Information systems development

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Strategic Analysis of Dell using Value Chain

• Assembles computers on customer request.
• Direct interface to customer.
• Inbound Logistics critical for Dell.
• Handled by Just in Time Inventory SystemStocking
  of small amount of raw material.
• Marketing/sales deal directly with customers.

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IS and Value Chain

• Primary activities are key tasks that return most
  value, secondary activities are support tasks
  (e.g. admin) here Web applications add value to
  both.

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Frito Lay uses IT and Value Chain

• Frito Lay Worlds largest snack food producer.
• Centralised SIS.
• Sales information collected store by store
• Information on competing products/new product
  launches.
• Fed electronically into the central system.
• Field data data from chain improves product
  development/placement strategies.

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Environmental Scanning Using Web

• Companies must have effective methods for
  obtaining information about changing Business
  Environment.
• Market research /analysis via third party
  expensive.
• Web Cost effective tool for gathering
  competitive intelligence.
• Note Environmental scanning not a form of
  competitive analysis in its own right.
• University Example Information about
  competitors courses, pricing strategy etc.

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Outsourcing as a Strategy

• Outsourcing The practice of contracting computer
  centre operations, telecommunication networks, or
  application development to external vendors.
• For cost savings.
• Benefits
• Savings on IS/IT
• Better planning.
• Better decision making.
• Access better skills.
• Access better hardware/software.
• Knowledge transfer

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When to Use Outsourcing

• To reduce costs or offload some of the work of IS
  department.
• When the firms existing IS capabilities are
• Limited.
• Ineffective.
• Technically inferior.
• To improve the contribution of IT to business
  performance.
• To create new sources of revenue and profit.

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Aligning IS With Business Goals

• The IS strategic plan must be conformant with the
  business plan (top down). For some organisations,
  the IS is the business plan.
• Care must be taken to avoid developing systems
  which
• Time consuming/ High Cost.
• No significant returns to Organisation.
• Displacing more worthwhile projects
• Poorly perceived by the customers and/or
  employees.

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Using IS to Enable Change

• Business Process Improvement (BPI) Improvement
  of existing Business Processes.
• Business Process Reengineering (BPR) Fundamental
  rethinking and redesign of business processes to
  achieve dramatic improvements in critical,
  contemporary measures of performance.
• Eliminate Wastes, repetition
• Improve cost, quality, service.

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Process of making Peanut Butter
BPI Introducing Automation
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Sustainable Competitive Advantage

• IT leading to competitive advantage often not
  sustainable
• Competitors implement the same technologies.
• For sustainable advantage
• Create barriers to entry through patents,
  monopoly.
• Be the first to develop systems with high
  switching costs.
• Develop technologies that change underlying
  nature of industry.
• Cultivate/hire people with excellent IS
  management skills.
• Knowledge management

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Knowledge Management and Competitive Advantage

• Knowledge asset
• Exists in employee minds as well as in tangible
  form.
• Knowledge Management Extracting value from
  knowledge assets.
• Knowledge has 2 forms
• Explicit Formalised
• Tacit Informal.
• Extracting value from tacit challenging for an
  organisation. Why??
• Aim of IS To convert tacit knowledge to Explicit
  knowledge

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Knowledge Management using IS

• Northrup Grumman Air Combat Systems (ACS)
  Primary contractor for designing combat
  aircrafts.
• Losing experts frequently Skilled engineers
  leaving the organisation.
• ACS identified 200 subject matter experts in 100
  knowledge cells Armaments, software,
  Manufacturing.
• Created a web site for each cell identifying the
  expert and relevant information (FAQs)
• Central repository to gather and disseminate
  useful files in particular area of expertise.

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Knowledge Management Systems (KMS)

• KMS Information technologies that enable
  exchange of knowledge among employees and storage
  of knowledge in directories called Knowledge
  repositories.
• Sharing of knowledge Web based discussion
  boards.
• Knowledge repository Databases with Web
  interfaces.
• Knowledge representation Expert Systems.

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The Learning Organisation

• Peter Senge (1990) coined the term to describe
  companies whose ability to learn will provide
  them with a competitive advantage.
• Learning Organisation An organisation that
  learns and encourages learning among its people.
• Promotes exchange of information
• Produces a very flexible organisation

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The Learning Organisation

• A company which creates new knowledge may not
  manage it effectively
• The learning organisation and knowledge
  management should go hand in hand.
• How many companies can you think of which have a
  feedback mechanism in the systems and processes
  for learning?