Business Systems:Strategy & Application

CM322 BMIBT

Material supplied by:

Richard Bertram
Babak Akhgar
Strategy definitions

Quinn
Pattern or plan that integrates organization’s
major goals, policies and actions into
cohesive whole
Strategic decisions
Those that determine direction, goals, limits,
use of key resources
Purpose of strategy

To position or set direction within environment

To focus effort within the organization
To define the organization, to give meaning to the
organization’s activities
To provide consistency
For efficiency & focus
Thinking Strategically:
The Three Big Strategic Questions

1. Where are we now -- what is our situation?

2. Where do we want to go?
3. How will we get there?
What Is Strategy?
Concept
Competitive moves and business approaches
management employs in running a company
Management’s “game plan” to
Please customers
Position a company in its chosen market
Compete successfully
Achieve good business performance
A. Thompson, Jr. & A. J. Strickland, (1998)I
The Five Tasks
of Strategic Management
Task 1 Task 2 Task 3 Task 4 Task 5
Develop a Craft a
Implement Evaluate &
Strategic Set Strategy
& Execute Make
Vision Objectives to Achieve
Strategy Corrections
& Mission Objectives

Revise as Revise as Improve/ Improve/ Recycle

Needed Needed Change Change as Needed
 Missions vs. Strategic Visions
A mission statement A strategic vision
focuses on current concerns a firm’s future
business activities business path
For example: The kind of company it
Customer needs is trying to become
currently being Customer needs to be
served satisfied in the
future
 Developing a Strategic Vision
A strategic vision is a
roadmap of a company’s
future --
Direction it is headed
Business position it intends
to stake out
Capabilities it plans to
develop
Customer needs it intends to
serve
 Examples: Mission and
Vision Statements
Otis Elevator
Our mission is to provide any customer a means of
moving people and things up, down, and sideways
over short distances with higher reliability than any
similar enterprise in the world.

Microsoft Corporation
One vision drives everything we do: A computer
on every desk and in every home using great
software as an empowering tool.
TERM DEFINITION
Mission Overriding purpose in line with
the values or expectations of
stakeholders
Vision or strategic intent
Desired future state: the
aspiration of the organisation
Goal
General statement of aim or
purpose
Core competences
Resources, processes or skills
which provide ‘competitive
advantage’
A DEFINITION OF STRATEGY

Strategy is the direction and scope of an

organisation over the long term which
achieves advantage for the organisation
through its configuration of resources within
a changing environment to meet the needs
of markets and to fulfil stakeholder
expectations.
LEVELS OF STRATEGY (1)

Corporate Level strategic decisions are

concerned with:
overall purpose and scope
adding value to shareholder investment
portfolio issues
resource allocation between SBUs
structure and control of SBUs
corporate financial strategy
LEVELS OF STRATEGY (2)

Business Unit strategy is concerned with:

competitive strategy
developing market opportunities
developing new products/services
resource allocation within the SBU
structure and control of the SBU
LEVELS OF STRATEGY (3)

Operational Strategies are concerned with:

the integration of resources, processes, people
and skills
to implement strategy
 Expectations and
Expectations
purposes
and purposes

Resources,
The
competences
environment
and capability

Strategic
analysis

Bases
Organisation
of strategic
structure and
choice
design

Strategic Strategy
choice implementation

Resource
Strategic allocation and
options Strategy Managing control
evaluation and strategic
selection change

A summary model of the elements of strategic management

Information Systems Eras

Evolution of Information Systems

1950-2000 (Time Frame)

Working Definition of IS:
A system for the most efficient and effective means of identifying the "real"
needs of users, and developing information processing systems for
satisfying these needs; ensuring that the resulting information processing
systems continue to satisfy changing user needs by the most efficient
means of acquiring , storing, processing, disseminating and presenting
information; by providing facilities and a learning environment for users
and information systems specialists to improve the effectiveness of their
decision models; and by supporting operational. Control and strategic
organisational objectives." (Jayaratna p:21)

Understanding and Evaluating Methodologies (NIMSAD)

Working Definition of IT

The term Information Technology is is used to

emphesize the use of computers for
information processing, storage, transmission
and presentation with a clear need for
satisfying user needs.

Jayaratna 1994
Also See P. Checkland Information Systems and Information Systems Chapter one
 Working definition of ISS
An information system strategy is about creating a fit among information
system activities.
To us this means a three way fit between business needs, current IT
systems and new opportunities offered by technology.
The need for an information system strategy will depend upon an
organisation's size and line of business. The larger an organisation and
the greater the information content of the product or value chain then
the greater the need for an enterprise-wide information
system strategy.

M. Porter (IS Strategy and business Fit, 1998)

 3- 5
Era
Era II Data
Data Processing
Processing

Large
Primary Support of Primary
Company
Objective Operations “Clients”
Units

Single
Justification Efficiency DP/IS Source
Department

Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
 3- 4
Era
Era IIII MIS
MIS

Individual
Primary Management Managers Primary
Objective Support and “Clients”
Professionals

Information
Justification Management Systems Units Source
Effectiveness and End
Users

Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
 3- 3
Era
Era III
III of
of Organisational
Organisational Computing:
Computing: Support
Support
of
of Business
Business Transformation
Transformation && Competition
Competition

Entranced Line of
Primary Primary
Competitive Business
Objective Position Units “Clients”

Coordinated
Market Share
Justification Organizational Source
and
End User
Profitability
Computing

Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
 3- 1
Era
EraIV
IV of
of Organisational
Organisational Computing:
Computing:

Primary Collaborating Primary

Electronic
Objective Teams “Clients”
Integration

Organiza- Owned and

Justification tional Outsourced Source
Effectiveness Computing
Infrastructure

Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Six Major types of Systems

TPS: Transaction Processing Systems

MRS: Management Reporting Systems
DSS: Decision Support Systems
EIS: Executive information systems
PSS: Professional Support Systems
OIS: Office Information Systems
1.TPS transaction processing systems

operational level

perform and record daily routine transactions

necessary to conduct the business
2.MRS Management Reporting Systems

Used by managers responsible for specific

functions or processes in a firm

provide routine summary and exception reports

managers use these reports to help control their

area of responsibility
3.DSS decision support systems

Designed to support individual and collective

decision making
often use information from external sources
more analytical power than other types of systems
4.EIS executive information systems

strategic level of the organization

support long-term, strategic view
used by senior executives
easy access to summarised company data
incorporate external information on industry and
economy
5.PSS Professional Support Systems

Support performance of tasks specific to a given

profession
For example
lawyers doing legal research
architects designing buildings
designers modeling a new automobile
student C&P system (cut and paste system) !!
6.OAS office information systems

support and help coordinate knowledge work in

an office environment
emphasis on increased productivity
systems include e-mail, scheduling systems, word
processing
Analysis Frameworks Overview
What are frameworks for?

They help us to understand and classify the relation

between competitive strategy and information
technology. (Neumann)

They are a means of viewing, analysing and

reaching meaningful conclusions about the role of
information systems in helping achieve desired
organisational performance.
Framework of Frameworks

Framework > Awareness Opportunity Positioning

Purpose Vision Ends Means

Scope Possibility Probability Capability

Use Education Analysis Implementation

Source: Earl, 1989
Awareness Framework
Awareness Framework
Refocusing Framework
Strategic Opportunities Framework

Competitive Internal
Marketplace Operations

Significant
structural change Merrill Lynch Digital Equipment

Traditional
products and American Hospital United Airlines
processes Supply
Source: Benjamin et al.
Awareness Framework
Impact Model
Degree of Strategic Change

Level of Impact Effect of IT

Industry level Changes fundamental nature of the industry

Firm Level Influences competitive forces facing the firm

Strategy level Supports the generic strategy of the firm

after Parsons
Awareness Framework
Scoping Model
Information Intensity Matrix

Information Content of the

Products

LOW HIGH
Information Intensity
of the Value Chain

Newspapers
HIGH Oil Refining Banking
Airlines

LOW Cement

Source: Porter and Millar

Opportunity Framework
Opportunity Framework
System Analysis Framework
The Value Chain

Firm
infrastructure
Support activities

Human resource
management

Technology
development

Procurement

Marketing
Inbound Outbound
Operations and Sales Margin
logistics logistics
service
Source: Porter & Millar

Primary activities
Opportunity Framework
Applications Search Tool
Customer Resource Life-Cycle
Opportunity Framework
Applications Search Tool
Marketing Opportunity Search Framework
Opportunity Framework
Business Strategy Framework
Generic Strategy Options

Competitive Advantage

Lower Cost Differentiation

Competitive Scope

Broad Cost Differentiation

Target Leadership
Narrow Cost Focus Differentiation
Target Focus

Source: Porter
 Opportunity Framework
Business Strategy Framework
Strategic Option Generator
What is the strategic target?
Supplier Customer Competitor

What is the strategic thrust?

Differentiation Cost Innovation Growth Alliance

What is the mode?

Offensive Defensive

What is the direction?

Use Provide
Source: Wiseman
Positioning Framework
Positioning Frameworks
Scaling Frameworks
Strategic Grid

Strategic impact of application

development portfolio

LOW HIGH
Strategic
impact LOW Support Turnaround
of existing
operating
systems HIGH Factory Strategic

Source: McFarlan and McKenney

Three - level IT Strategy
IS Strategy
Application
What? • Division/SBU/function based s
• Demand oriented
• Business focused

IM Strategy

Wherefore? • Organisation based Management

• Relationships oriented
• Management focused

IT Strategy

How? • Activity based

• Supply oriented Deliver
• Technology focused y
Source:
Earl
A Multiple Methodology

Business plans
Current systems IT opportunities
and goals

Analytical Evaluative Creative

Top Bottom Techniques,

Methodology Surveys and Inside processes and
down up audits out environment

Teamwork Users and Brightsparks

specialists and product
champions

Application strategic plan

Source: Earl
Reference

• Information Systems evolution; Strategic Planning for

Information Systems, by John Ward and Pat Griffiths 1997,
pp:6-34
• Strategic Information systems; SISPby DSJ Remenyi 1992,
pp:46-77
• ISS and IM strategy; Information Management by, Earl 1998
• ISS frameworks; Strategic Management of IS; Wendy Robson
1998, pp:48-74, 96, 128, 142, 155,166-170, 179-180, 188-189, 193,
299-305
• CMS Forum / CMS Learning Environment / CMS Courses
/CM303-ISBS FT