Strategic information systems is a computer system that implement business strategies;

They are those systems where information services resources are applied to strategic
business opportunities in such a way that the computer systems have an impact on the
organizations products and business operations. Strategic information systems are always
systems that are developed in response to corporate business initiative.

Gaining competitive advantage

Some of the more common ways of thinking about gaining competitive advantage are:

Deliver a product or a service at a lower cost. This does not necessarily mean the
lowest cost, but simply a cost related to the quality of the product or service that will be
both attractive in the marketplace and will yield sufficient return on investment. The cost
considered is not simply the data processing cost, but is the overall cost of all corporate
activities for the delivery of that product or service. There are many operational computer
systems that have given internal cost saving and other internal advantages, but they
cannot be thought of as strategic until those savings can be translated to a better
competitive position in the market.

Deliver a product or service that is differentiated. Differentiation means the

addition of unique features to a product or service that are competitive attractive in the
market. Generally such features will cost something to produce, and so they will be the
setting point, rather than the cost itself. Seldom does a lowest cost product also have the
best differentiation. A strategic system helps customers to perceive that they are getting
some extras for witch they will willingly pat.

Focus on a specific market segment. The idea is to identify and create market
niches that have not been adequately filled. Information technology is frequently able to
provide the capabilities of defining, expanding, and filling a particular niche or segment.
The application would be quite specific to the industry.

Innovation. Develop products or services through the use of computers that are new
and appreciably from other available offerings. Examples of this are automatic credit
card handing at service stations, and automatic teller machines at banks. Such
innovative approaches not only give new opportunities to attract customers, but also
open up entirely new fields of business so that their use has very elastic demand.

Models for strategic information system

Porters competitive advantage

Michael E. Porter, Professor of Business Administration, Harvard Business School, has
addressed his ideas in two keystone books. Competitive Strategy: Techniques for Analyzing
Industries and Competitors, and his newer book, Competitive Advantage, present a
framework for helping firms actually create and sustain a competitive advantage in their
industry in either cost or differentiation. Dr. Porters theories on competitive advantage are
not tied to information systems, but are used by others to involve information services
technologies. In his book, Dr. Porter says that there are two central questions in competitive
strategy:

How structurally attractive is the industry?

What is the firms relative position in the industry?

Both of these questions are dynamic, and neither is sufficient alone to guide strategic
choices. Both can be influenced by competitor behavior, and both can be shaped by a firms
actions. It is imperative that these questions be answered by analysis, which will be the
starting point for good strategic thinking, and will open up possibilities for the role of
information systems. Industry profitability is a function of five basic competitive forces:

the threat of new entrants

the threat of substitute products or services

the bargaining power of suppliers

the bargaining power of buyers and

the intensity of the rivalry among existing competitors

Porters books give techniques for getting a handle on the possible average profitability of an
industry over time. The analysis of these forces is the base for estimating a firms relative
position and competitive advantage. In any industry, the sustained average profitability of
competitors varies widely. The problem is to determine how a business can outperform the
industry average and attain a sustainable competitive advantage. It is possible that the
answer lies in information technology together with good management. Porter claims that the
principal types of competitive advantage are low cost producer, differentiation, and focus. A
firm has a competitive advantage if it is able to deliver its product or service at a lower cost
than its competitors. If the quality of its product is satisfactory, this will translate into higher
margins and higher returns. Another advantage is gained if the firm is able to differentiate
itself in some way. Differentiation leads to offering something that is both unique and is
desired, and translates into a premium price. Again, this will lead to higher margins and
superior performance.

The basic idea is that the firms activities can be divided into nine generic types. Five are the
primary activities, which are the activities that create the product, market it and deliver it; four
are the support activities that cross between the primary activities.
The primary activities are:

Inbound logistics, which includes the receipt and storage of material, and the
general management of supplies.

Operations, which are the manufacturing steps or the service steps.

Outbound logistics, which are associated with collecting, storing, and physically
distributing the product to buyers. In some companies this is a significant cost, and
buyers value speed and consistency.

Marketing and sales includes customer relations, order entry, and price
management.

After-sales services covers the support of the product in the field, installation,
customer training, and so on.

The support activities are shown across the top because they are a part of all of the firms
operations. They are not directed to the customer, but they allow the firm to perform its
primary activities. The four generic types of support activities are:

Procurement, which includes the contracting for and purchase of raw materials, or
any items used by the enterprise. Part of procurement is in the purchasing department,
but it is also spread throughout the organization.

Technology development may simply cover operational procedures, or many be

involved with the use of complex technology. Today, sophisticated technology is
pervasive, and cuts across all activities; it is not just an R&D function.

Human resource management is the recruiting, training, and development of

people. Obviously, the cuts across every other activity.

Firm infrastructure is a considerable part of the firm, including the accounting

department, the legal department, the planning department, government relations, and
so on.

Wisemans strategic perspective view

Charles Wiseman has applied the current concepts of Strategic Information Systems in work
at GTE and other companies, and in his consulting work as President of Competitive
Applications, Inc. His book, Strategy and Computers: Information Systems as Competitive
Weapons, extends Porters thinking in many practical ways in the Information Systems area,
and discusses many examples of strategic systems.
Strategic Thrusts. Wiseman uses the term strategic thrusts for the moves that companies
make to gain or maintain some kind of competitive edge, or to reduce the competitive edge
of one of the strategic targets. Information technology can be used to support or to shape
one or more of these thrusts. Examining the possibilities of these thrusts takes imagination,
and it is helped by understanding what other firms have done in similar situations. There is
no question that there is considerable overlap between conventional information systems
and strategic information systems. Systems are complex and a great deal of data is involved.
The idea is to look at this complexity in a new light, and see where competitive advantage
might possibly be gained. Note that Wiseman takes Porters three generic categories: low
cost producer, differentiation, and focus, and extends them to five categories: differentiation,
cost, innovations, growth, and alliance.
Cost may be move that not only reduces the costs, but also reduces the costs of selected
strategic targets so that you will benefit from better treatment. A strategic cost thrust may
also aim at achieving economies of scale. The examples always seem obvious when they
are described, but the opportunities can usually only be uncovered by considerable search.
Innovation is another strategic thrust that can be supported or shaped by information
technology in either product or process. In many financial firms, the innovative product is
really an information system. Innovation requires rapid response to opportunities to be
successful, but this carries with it the question of considerable risk. There can be no
innovation without risk, whether information systems are included or not. Innovation,
however, can achieve advantage in product or process that results in a fundamental
transformation in the way that type of business is conducted.
Grown achieves an advantage by expansion in volume or geographical distribution. It may
also come from product-time diversification. Information systems can be of considerable help
in the management of rapid growth.
Alliance gains competitive advantage by gaining growth, differentiation, or cost advantages
through marketing agreements, forming joint ventures, or making appropriate acquisitions.

The Strategic Planning Process.

He describes his SIS Planning Process in five phases:

Phase A: Introduce the Information Services management to SIS concepts. Give an

overview of the process describe cases. Gain approval to proceed with an ideageneration meeting in Information Service.

Phase B: Conduct an SIS idea-generation meeting with Information Services middle

management. Test the SIS idea-generation methodology. Identify significant SIS areas
for executive consideration.

Phase C: Conduct an SIS idea-generation meeting with senior Information Services

management. Identify SIS ideas, and evaluate them together with the ideas from the
previous meeting

Phase D: Introduce the top business executives to the SIS concept. Discuss some of
the SIS ideas that were considered for the business. Gain approval to proceed with the
SIS idea-generation meetings with business planners.

Phase E: Conduct an SIS idea-generation meeting with the corporate planners.

Identify some SIS ideas and evaluate them together with the ideas that have emerged
from the previous meeting.

Wiseman points out that the whole idea is designed to introduce the strategic perspective on
information systems, stimulate the systematic search for SIS opportunities, and evaluate and
select a set of projects that are expected to secure the greatest competitive advantage for
the firm.
Wiseman says that typical SIS idea-generation meetings will last for days. Each step takes
about two hours, at least. The process generates many good SIS ideas, and a few will
always be considered well worth implementation. Top management begins to focus their
attention on SIS opportunities. The ideas that are generated can produce significant
competitive advantage.