Strategic Information Systems SIS

1
Chapter 13

• Strategic Information Systems (SIS)

2
Overview for Today

• What is a Strategic Information System
• Strategic Advantage IT
• Porters Competitive Forces
• For Next Time
• Critical Success Factors
• Porters Value Chain Analysis
• Examples of SISs

3
What is a Strategic IS?

• System that significantly improves the manner in
  which business is conducted
• Control a market
• Larger than average profits
• Significantly increase performance/productivity
• Contributes to strategic goals (remember critical
  responses to busn pressure)
• ... or (to a lesser extent) play catch up

4
Two Types of SIS

• Outwardly Focused SIS
• Easy to copy or duplicate, Why?
• Inwardly Focused SIS
• Not as easy to copy or duplicate, Why?
• Both can focus on new product/service
• Which provide best benefit? Why?

5
A Few Questions

• Can off-the-shelf software be a SIS?
• Why or why not?
• Typically, business owners develop more
  successful SISs than do consultants.
• What are some possible reasons?
• Why continue to hire consultants?

6
Competitive Intelligence

• Gathering information about competition
• Increases market knowledge, improves internal
  relationships, raise quality of strategic
  planning
• What are some examples? (Frito Lay, Hertz)
• Gathering internal information
• About products, customers, suppliers,
• Organizational memory or knowledge base
• What makes this so easy today?

7
Role of IT in Strategic Mgmt

• Enabler for change!
• Allows creation of new applications for strategic
  advantage (Fed Ex, SABRE)
• Increases Business Intelligence
• Supports strategic changes (BPR)
• Improved communication
• New product development cycles (jeep liberty)
• Benefit comes from being FIRST, everyone else is
  just keeping up! But - hard to sustain!

8
Porters Competitive Forces Model

• Used to develop strategies to increase
  competitive advantage
• 5 Components to the model
• Threat of entry of new competitors
• Rivalry among existing industry firms
• Bargaining power of suppliers
• Bargaining power of customers
• Threat of substitute products/services

9
Porters Model Applied

• List the players in each force
• Relate the determinants of each force with the
  players listed above
• Devise a strategy to defend against these forces
• Use IT to support the strategy

10
Another Question

• Some argue that an SIS gives a company an unfair
  advantage and may even cause the demise of
  smaller, weaker companies that cannot afford to
  build similar systems.
• What is your opinion on the fairness of such
  systems?

11
Critical Success Factors (CSFs)

• Mission Statement - clear, concise, believable,
  repeatable!
• Business Goals - broad, derived from mission
• Business Objectives - tangible milestones
  growth, roi
• Critical Success Factors - make the milestones
  happen
• attractive style of product line, efficient
  dealer organization, effective cost control in
  manufacturing
• Identify what is most important to performance,
  then develop good indicators of this performance
  information needs

12
Determining CSFs

• Lets identify CSFs specifically for
• Bank?
• Ice Cream Manufacturer?
• Discount Retail Chain?
• Shipping Firm?
• Any observations about these?

13
Discovering Critical Success Factors

• AKA Things you might ask for your projects
• What objectives are central to your organization?
• What factors are essential to meeting these
  objectives?
• What decisions or actions are key to these
  critical factors?
• What variables underlie these decisions, how are
  they measured?
• How can I use IS to supply these measures?

14
Porters Value Chain Model, I

• 1 Primary Value Activities (creation, sale,
  support of a product)
• Inbound logistics
• Operations
• Outbound logistics
• Marketing Sales
• Service
• Each activity adds value to product

15
Porters Value Chain, II

• 2 Support Value Activities (each supports
  Primary Value)
• Organizational infrastructure
• Human resource management
• Research Development
• Procurement
• 3 Margin
• Revenue generated by above activities minus costs
  of each activity

16
Value Chain At Work
17
A Few Questions

• What is the purpose of the Value Chain?
• What types of things might you learn?
• What do you do with this new knowledge?
• Why might this be important?
• What category of CI does this fall into?

18
Strategic IS Applications

• Cost Leadership MCI first introduced online bill
  paying, saved 1 per transaction
• Differentiation Merrill Lynch combined monthly
  statements for brokerage, savings, checking,
  credit card, money markets, etc.
• Growth Geisinger intranet to integrate services
  after mergers, Tel-a-Nurse for direct patient
  support
• Innovation Otis self-diagnosing elevators,
  maintenance history stored for each elevator

19
Strategic IS Applications

• Alliances Toys-R-Us and Amazon joint web site
  for selling toys
• Entry Barriers Airline frequent flier programs,
  Covisint
• Niche JC Penny first to make custom fit mens
  suits using CAD/CAM, dogtoys.com

20
Important Concepts to Know

• What is a Strategic Information System
• Role of IT Strategic Management
• Critical Success Factors
• Porters Competitive Forces
• Porters Value Chain Analysis
• How do they all fit together?

21
For Next Time

• Prepare minicases for Ch 13
• Will send via e-mail
• We will discuss these on Friday
• Milestone 2 due on Friday
• EXAM1 Coming Soon! Wed Feb 25