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1. Introduction .......................................................................................... 6
2. Methodology.......................................................................................... 8
3. Frameworks ........................................................................................ 14
8. Discussion ............................................................................................ 39
9. Conclusion ........................................................................................... 44
We set out to write this paper because we think that information is a strategic asset that needs
proper managing. While information management as a academic domain is relatively well-
established and has been practiced (whether consciously or not) for decades, its strategic
significance seems only to have been recognised in recent years. Throughout the course of
our studies, we learned that companies are struggling with information-related challenges
such as information overload, findability, information quality, information architectures, etc.
At the same time, they realise that information, eg, about customer preference and needs,
brand image and employee satisfaction has become mission-critical to running and sustaining
their business (12th Annual Global CEO Survey, 2009:27).
Figure 1 - Information gap about the critical drivers of business (12th Annual Global CEO Survey, 2009:27)
The 12th Annual Global CEO Survey 2009 conducted by Price Waterhouse Coopers revealed
an information gap in a number of areas that are vital for strategic decision-making (see
figure 1).
Figure 1 displays the discrepancy between the information needed for strategic decision-
making ("critical/important") and the information available ("comprehensive").
The survey showed, for example, that 94% of CEOs asked considered information about
their customers' and clients' preferences and needs as "important or critical to long-term
Operating at a relatively lower cost and making superior decisions are two ways of creating
competitive advantage (Porter, 1986; Barney, 1991; Marchand, 2002). Our examples above
pointed to the strategic value of information in this process. On the other hand, they also
revealed how organisations are struggling to manage their information resources effectively.
We will use the methodology to clarify the research question and elaborate on how we intend
to answer it.
Academic discussion of strategic information management is still in its infancy and little
consensus exists as to what it encompasses. We have selected an existing attempt at defining
the objectives of the field. According to Myburgh (2002), strategic information management
"focuses on corporate strategy and direction. It emphasizes the quality of decision making
and information use needed to improve overall business performance."
We will take a closer look at the relationship between information management and
strategy to gain more detailed insight into what strategic information management actually
involves.
Like Marchand (2001:75), we understand information management as a set of activities
that moves through a logical succession of interdependent phases. According to Choo
(2002:24) these activities are designed to harness "information resources and information
capabilities so that the organisation learns and adapts to its changing environment".
Information management focuses on effectively managing "the use of information in support
of coordination and control, tactical problem solving and strategic decision making"
In this paper, we will discuss strategic information management as the "strategic approach"
referred to in our research question - How can organisations create a competitive advantage
by taking a strategic approach to leveraging the value of their information? In order to discuss
the question adequately, we also think it necessary to elaborate on our view of
"organisations", "information value", and "competitive advantage".
In this paper, we define organisations as "the principal means by which [people] co-
ordinate for collective action" (Douma and Schreuder, 2008:46) towards a common goal.
This common goal, for the purpose of the following discussion, will be economic in nature.
Economic, here, refers to the aims of making a profit or cutting costs. Examples of
organisations with this specific set-up are business companies, governmental institutions and
even non-profit organisations that merely focus on reducing the cost of their operations.
More specifically, with regard to our overall topic of strategic information management,
we understand organisations as informational ecosystems (Davenport, 1997:4). This view
encompasses the organisation's information culture (value and beliefs about information),
stakeholders (politics), information use (behaviour and work processes), and information
systems (technology).
Davenport's definition of organsations as information ecosystems put information at the
centre of organisational activity. Also, the importance of understanding information to the
discussion of strategic information management in this paper is self-evident. We will
therefore elaborate on our understanding of the concept.
2.3 Information
Definitions of information vary greatly across scholarly domains and often people's choice
of a definition will be politically inspired and depend on how it supports their purposes
• information as a resource,
• information as a commodity,
• information as pattern perception, and
• information as a constitutive force.
The commodity view of information explicitly introduces the notion of value. Information
commodities are tradable and imply buyers, sellers and a market (Kirk, 2005:5). The value of
information commodities is essentially economic and represented through a certain price.
Examples information commodities include software packages, information services, etc.
From a business economics perspective, price is only a sufficient statistic where qualitative
dimensions are largely irrelevant. With the enormous amount of information readily available
through the internet and other sources, however, information quality (ie, accuracy, validity,
timeliness (Kirk, 2005:13)) is more important today than ever before.
The commodity definition of information thus only highlights one aspect of the value
information might have - namely its economic, trade value.
Our discussion of the definitions of information showed that the concept of value and how it
pertains to information is a central element in the attempt to define information. It also
illustrated how the value of information is contingent on context.
Although we have examined the general aspects of information value, its specifics are
elusive. It is our view that this is a problem in the world of business where, in the final
analysis, it is bottom-line results that count. Since our focus is on organisations with
economic goals, the question how information is valuable to such organisations is central and
merits closer examination.
Marchand (2001:164) identifies three types of problems in defining the value of
information resources for businesses: first, information value is poorly defined and several
distinct views exist across academic domains; second, the value of information depends on
the business context in which it is employed; and third, how valuable information is for a
business depends greatly on managerial perceptions, as well as success criteria and measures.
This shows that the resource "information" is poorly understood. In fact, through
interviews with leading business information managers, a survey from 2007 found that there
was no "pressure from [...] senior management to establish metrics of value and performance"
for monitoring how information is used in their organisations (Foster, 2007:27). In our view,
this is one more implication that organisations need a strategic approach to information
management and to define clearly how information is valuable to them.
In this paper, we will adhere to the two value dimensions identified in our discussion of the
definition of information - namely, its economic value and its role in uncertainty reduction.
With regards to economic value, what interests us mainly is not the actual money made in
selling information, but the costs incurred in producing it. In fact, much of the research into
the field of information business value focuses on the costs of information-related
inefficiencies (Feldman, 2004; Orna, 2006; Foster, 2007). While we agree with Shapiro and
In this paper, we seek to answer the question how organisations can leverage the value of
their information to create competitive advantages. Having discussed organisations and
information value, the last concept in need of clarification is competitive advantage.
Both dimensions of information value - economic value and uncertainty reduction - are
important also at a strategic level for the creation of competitive advantages.
In business economics, organisations with a competitive advantage implement a "value
creating strategy not simultaneously being implemented by any current or potential
competitor" (Barney, 1991:102). This means that organisations can gain a competitive
advantage if they find better ways of increasing the economic value of their information and/
or using it to make decisions that put them ahead of their competitors. "A firm possesses two
types of competitive advantage: low relative cost or differentiation - its ability to perform the
activities in its value chain either at a lower cost or in a unique way relative to its
competitors" (Porter, 1986:13).
Differentiation from competitors is made possible because of information asymmetries.
These exist "whenever a company leverages information about customers, competitors, and
operations that is unusable or unavailable to its competitors" (Marchand, 2001:214).
In connection with the four definitions of information discussed earlier, Kirk (2005:5)
commented that "if information is to provide competitive advantage, then its full potential
needs to be considered". Since our view of information understands all four definitions as
dimensions of information, and since our rationale for information value and its connection to
competitive advantage is based on this multidimensional view, we regard this condition as
fulfilled.
The discussion so far has drawn on a number of academic disciplines ranging from
information science to business economics. We believe that such an interdisciplinary and
holistic approach to examining the management of information in organisations is necessary
3. Frameworks
In this part, we will briefly introduce and summarise the models we chose to investigate the
research question, as well as our reasons for choosing them.
We will take our point of departure in an adjusted version of Pearlson and Saunders'
Information Systems Strategy Triangle. Based on our interpretation of this model, we will
introduce four different domains that, for us, constitute strategic information management:
business strategy, organisational strategy, information technology and systems, and
information management.
In their book Managing and Using Information Systems (2005), Pearlson and Saunders
propose the Information Systems Strategy Triangle as a model to support decision-making
about information systems.
The model comprises three components: business strategy, organisational strategy and
information strategy (2005:2).
Pearlson and Saunders point out that it is crucially important that more attention be paid at
the corporate level to decisions about information systems. This is because they realise that
Figure 2: The Information Systems Triangle (adapted from Pearlson and Saunders, 2005:2)
We have chosen this model as our point of departure because it complements our view of
interdisciplinarity and its importance in the discussion of strategic information management.
However, within the framework of this paper, we should like to extend their model for our
purposes.
Pearlson and Saunders discuss a tool for strategic decisions regarding information systems.
And while the graphical illustration of their model (see figure 2) refers to "information
strategy", their actual discussion focuses on "information systems strategy" (2005:12). This is
appropriate for their particular unit of analysis, but we find it too narrow to fit our view of
strategic information management.
Based on our definitions of strategic information management and information
management in particular, we think that information systems will indeed inhibit and confuse
information flows in organisations if the information resource managed is not properly
understood. Even though Pearlson and Saunders mention "data" as a part of information
systems strategy (2005:13), they barely touch upon the subject. For the purpose of this paper,
we will therefore modify the model slightly and add a fourth dimension to the triangle:
information management strategy.
The resulting diamond of strategic information management (see figure 3) thus consists of the
following components:
• business strategy
This view of strategic information management prescribes four research domains worth
exploring in answering our research question.
In this paper, it is our objective to develop a tool that has a practical application for managers
involved in strategic information management. That is why, from the field of business
strategy, we have chosen a tool that is widely recognised and well established both
academically and in business practice.
Since its publication in 1986, Michael Porter's value chain model (see figure 4) has become
the de facto strategic framework for creating competitive advantages. Therefore, we have
chosen this model to provide the mould for our own strategic framework.
We see the greatest advantages of Porter's value chain model in its distinction of different
building blocks of which business operations are made up. True to the old principle "divide
and conquer", as well as modern problem solving approaches, this set-up enables managers to
split up a complex problem into discrete manageable parts without losing sight of the whole.
For our own framework, we will therefore adopt this componentised structure.
Kirk (2005:3) points out that "the counterpoint between the organisation and its individual
members has particular relevance to IM [information management]" because while
information management is a concept at the organisational level, it is individuals who use and
process information and are thus especially important to the success of information
management. Kirk goes on to say that "we need to consider both the organisation and its
members in information terms as a starting point for developing strategies for effective
information management" (2005:3). The role of human capital in the health of the
organisation and the success of its information management strategy is therefore a central
topic.
An important aspect in the relationship between the organisation and its individual
members is learning. As Peter Senge, author of The Fifth Discipline - Strategies and Tools
for Building a Learning Organisation, puts it: "without learning about the business as well as
their own tasks, employees cannot make the contributions that they are capable of" (1994:11).
In section 1.5, we defined information management as a "set of activities that moves through
a logical succession of interdependent phases". This set of activities is often referred to as the
information life cycle (Marchand, 2001:75). The original information life cycle concept
consists of five elements: sensing, collecting, organising, processing and maintaining
information (2001:75). In this paper, however, we will use a model proposed by C. W. Choo
in his 2002 book Information Management for the Intelligent Organisation: the process model
of information management.
This model is essentially a derivative of the life cycle, but placed in an organisational
setting. We therefore think it fit for the purpose of our discussion.
However, one of the major points of criticism of the life cycle model is the question "where
does the information life cycle really begin?" (Marchand, 2001:78). Or differently, where
does it end? This is important when it comes to measuring the value of information. When
and where to begin; when and where to end - these are crucial limitations that must be set for
a measurement to be at all possible. Therefore, in this paper, we distance ourselves from the
life cycle model and, instead, embrace the linear value chain construct where information is
analysed under the assumption that in the accumulation of value for a particular purpose it
has a birth, life and death.
We will use the model to examine how information gains value as it moves along the
information value chain.
Figure 5 illustrates the result of the previous discussion by mapping the different models we
will use in the subsequent analysis to the four elements of the strategic information
management diamond.
This is the methodological foundation based on which we intend to discuss our research
question:
In his book Information Management for the Intelligent Organisation (2002), Choo writes
about how information processes are the "intellectual bedrock for building an intelligent,
learning organisation". In his process model of information management (see figure 6), Choo
illustrates the "design and management of these information processes".
We will proceed by discussing each activity with regard to how it adds value and its strategic
implications.
In order for an organisation to identify its information requirements, it has to analyse its
information needs. "Information needs arise from the problems, uncertainties, and
ambiguities encountered in specific organisational situations and experiences" (Choo,
2002:26).
Choo relies on a number of questions and problem dimensions designed by MacMullin and
Taylor (1984:98 in Choo, 2002:26) for the analysis of an organisation's information needs.
1. initial state understood vs initial state not understood - clarify unclear aspects of initial
state vs soft qualitative data to define initial state
This question may assist in defining the goal part of the gap analysis. Decisions here have a
role in establishing critical success factors and their respective key performance indicators.
By defining specific goals (eg reduce IT costs) and describing the information needed to
verify them (eg cost-savings ratio), organisations could distinguish between core elements of
their information management strategy and less defined, more open-ended elements.
3. magnitude of risk not great vs magnitude of risk great - cost-effective search vs best
available information: accurate, complete
This question addresses the types of information needed to achieve a goal. Consequently, the
answer depends on the types of goals an organisation has set for itself and the information
needs associated with them.
5. familiar pattern vs new pattern - procedural and historical information vs substantive and
future-oriented information
Different organisations that operate in different environments will have different ways of
scanning these. In any case, however, "selection of sources to monitor the external
environment must be sufficiently numerous and varied as to reflect the span and sweep of the
external phenomena" (Choo, 2002:30).
Studies have shown that business intelligence can be a decisive determinant of success
(Choo, 2001:3) as more advanced systems for environmental scanning lead to higher growth
and profitability (Choo, 2001:4).
External environmental scanning will be important for the usual analyses associated with
the environment (market dynamics, market trends, industry analysis, competitor analysis,
etc). We argue that these are search modes that support forward-looking strategies aimed at
reducing uncertainty and creating competitive information asymmetries. In this way, they
correspond to variety amplification focused on finding new patterns rather than familiar ones.
Familiar patterns, on the other hand, are analysed during the process of internal
environmental scanning. Here, the main mode of operation will be to monitor internal
operations and processes, with the aim of eliminating inefficiencies and process-loops
thereby reducing costs.
Two foci can be identified: first, organisations can gather information about internal
operations and optimise them; and second, they can focus on information acquisition
activities and optimise them. From an information management strategy perspective, the
second is the more interesting one.
Information acquisition entails costs and risks. Costs are mainly concentrated in hours spent
looking for, collecting, and selecting information through various channels. Risks are
manifested in inaccurate, incomplete, and outdated information that can lead to poor
decisions. Other risks include security hazards and information overload. Choo (2002:29)
points out that to avoid these risks, "information variety must be managed".
Focusing on information acquisition activities, organisations should strive for efficiency
and qualitative excellence by monitoring, evaluating and optimising them. Furthermore, a
governance system is needed which is grounded on accepted rules, organisational policies,
conventions and stipulated requirements for information acquisition (Choo, 2002:29).
Though not explicitly mentioned by Choo (2002), we think that information processing is
very much related to information acquisition. Information processing adds value through the
synthesis or modification of information resources acquired during environmental scanning to
satisfy specific information needs.
Choo (2002:32) emphasises the importance of human agents in information processing:
"While information technology can and should be used to extend the reach of information
foraging, human processing through sampling, filtering, noise reduction, and other value-
adding services remains an indispensable link in the information chain".
"Information products and services, and indeed information systems in general, should be
developed as sets of activities that add value to the information being processed in order to
assist users to make better decisions and better sense of situations, and ultimately to take
more effective action". (Taylor, 1986)
"Information is expensive to produce, but cheap to reproduce" (Varian and Shapiro, 1999:3).
As illustrated by the quote above, information distribution has a major part in increasing the
value of information resources. Varian and Shapiro (1999:8) use the analogy of a single copy
of a film that "would be of little value without a distribution technology".
This, again, points to the importance of IT infrastructure in support of information
management strategy. Distribution - ie the "dissemination or routing of (...) the right
information to the right person in the right time, place, and format" (Choo, 2002:42) - creates
value in two ways.
As people share information, learning is fostered and deeper insight is generated (Choo,
2002:44). This is crucial for organisational innovation to take place in a more speedy and
organisation-wide fashion, and clearly highlights the importance of knowledge management
in exploiting the value of information resources. From a cost perspective, distribution results
is scale economies. Here, the cost of a piece of information is disproportionally related to the
number of people who share that information.
Efficient distribution should thus be part of any information management strategy.
In this final part of the information management cycle, Choo (2002) addresses two ways in
which information resources can be valuable.
He argues that organisational members use information resources to make better sense of
their environment and subsequently engage in purposive action towards it through decision-
making. Choo addresses an important point here. Information resources for decision-making,
essentially, are only as valuable as the action the trigger. That is why information
management strategy should include explicit measures for operationalisation.
Essentially, there are three major activities where value is added to information resources:
Information acquisition, Information Processing and Information Distribution. These
processes furthermore rely on an IT infrastructure, human resources, information governance
and knowledge management for integration and coordination. Ultimately, if all of these
elements function optimally both individually and collectively they will positively affect
information use.
At the beginning of every information management strategy stands the information
requirements assessment which includes an analysis of the gap between the current state and
the desired state of organisational information management. For this purpose, organisations
should identify their information resources, determine the types of information they need as
well as qualitative specification, assign responsibility and set up critical success factors and
key performance indicators in order to measure progress.
In conclusion, based on their information requirements assessment, organisations should
focus on implementing an IT infrastructure with efficient back-end and front-end systems to
affect time and cost savings; enforcing information governance and enabling knowledge
management; supporting the distribution and sharing of information; as well as information
acquisition and, finally, information use and strategy implementation.
In the conclusion of the previous part, we stated that "based on their information
requirements assessment, organisations should focus on implementing an IT infrastructure
with efficient back-end and front-end systems to affect time and cost savings".
In this part, we move on to the next corner of the strategic information management
diamond (cf. figure 3) and discuss how information systems strategy is essential to designing
a solid IT infrastructure that optimally supports the information management strategy. We
will examine the subject based on Marchand's IT Practices Capanbility Framework
(2001:51).
The IT Practices Capability Framework represents a pyramid with four layers: IT managerial
support at the top, followed by IT innovation support and IT business process support.
Finally, IT operational support constitutes the layer at the bottom of the pyramid (cf. figure
8).
This goes back to our argument that IT has to be in alignment with an organisation's
information requirements. The different "types and levels of decisions" mentioned by
Marchand determine what kind of knowledge work the organisation relies upon and how this
work should be supported by an information systems strategy.
At the operational level, information systems can affect economies of scale. For instance,
account opening is one of the most important processes in banking since their business model
relies on this source of revenue. If the decision-making process about creating a customer
account were still manual, the costs would be enormous, errors numerous and waiting times
disastrous. Through investments in the automisation (IT) of the decision-making process, the
cost per account opening can be significantly reduced and scale economies be realised.
Differently put, IT facilitates the reduction of transaction costs.
According to Cordella (2001), however, IT can also lead to an increase in costs. While
transaction costs savings are mainly attributed to the capacity of processing more quickly
IT can support standard business processes (eg account opening) by streamlining inputs,
processing and decision-making. Marchand (2001) mentions enterprise resource planning
systems as an effective IT platform for automating supply chains within and across functions
to "improve coordination, control costs, and increase efficiency" (Marchand, 2001:57).
Cross-functional sharing of information resources capitalises on economies of scope and
saves costs by reducing instances of duplication and redundancy.
A second approach discussed by Marchand (2001) is business process re-engineering
(BPR). Defined as "the fundamental re-thinking and radical redesign of business processes to
achieve dramatic improvements in performance such as cost, service and quality" (Marchand,
2001:56), BPR can benefit from IT based on the monitoring, collection and evaluation of
operational information which then flows into the "fundamental rethinking".
According to Marchand (2001), "both IT for operational support and IT for business process
support focus on institutionalising and formalising "yesterday's strategic decisions". In terms
of information management strategy, this means that these two aspects of information system
strategy are related to information requirements of "familiar pattern - procedural and
historical information ". Backwards-looking as they are, they rely on standardisation, eg
through information governance, and goal operationalisation.
While IT for operational support and business process support strives to reduce information
asymmetries, IT for innovation support and managerial support helps create information
asymmetries and advantages over others by emphasising new patterns and substantive and
future-oriented information.
As a result of better screening and information acquisition supported by IT, organisations
may be able to detect opportunities in their environment by analysing trends and customer
information. Also, the ability to share, develop and update information resources plays an
At the top of the pyramid, IT contributes to more informed strategic decision-making about
risks, future investments and competitive moves. As such, IT supports information
acquisition and environmental scanning which provides managers with information resources
for anticipating market trends, address rapidly changing competitive conditions and respond
effectively to competitive opportunities and threats (Marchand, 2001:63).
Furthermore, environmental scanning activities - ie the collection of internal and external
information resources - can contribute inputs for information needs and requirements
analyses.
Information systems strategy addresses the use of IT at different levels of the organisation
and towards different ends. It should be treated as a support function of information
management strategy - specifically, information acquisition, distribution and processing.
Therefore, information systems strategy must be aligned with information management
strategy and the underlying information requirements. Effective information systems
strategies can lead to time and cost savings through greater speed, accuracy and processing
power. Value is added through the exploitation of economies of scale and scope, lower
transaction costs, as well as decision and innovation support.
6. Organisational Strategy
In this part, we will take a closer look at how organisational strategy can support information
management strategy to make the most of information resources. We will examine this
relationship by looking at Peter Senge's five disciplines of the learning organisation. To put
this into perspective, we will include a brief discussion of stakeholders.
In his 1994 bestseller "The Fifth Discipline", Peter Senge proposed a number of strategies
and tools for building the learning organisation. His idea was that the learning organisation is
contingent upon the interplay of five different disciplines: personal mastery, mental models,
team learning, a shared vision and systems thinking (see figure 9). With these five
disciplines, Senge analyses the relationship between individual learning and organisational
Systems thinking "encompasses a large and fairly amorphous body of methods, tolls, and
principles all oriented to looking at the interrelatedness of forces and seeing them as part of a
common process" (Senge et al, 1994:89). The point is that individual organisational member
must be able to recognise cause and effect relationships between their actions and the
consequences for their organisation and fellow organisational members. The notion of
systems thinking stipulates that the ramifications of anything organisational members observe
and any actions or decision they take, must be considered as part of a system. This means that
consequences of actions do not have a linear effect, but a systemic one.
Systems thinking can significantly increase the value derived from information and its
potential in uncertainty reduction or the creation of information asymmetries. We talked
earlier about analysing information based on familiar patterns or new patters so as to gain
insights into operational, as well as innovative and decision-making processes. All these
"People with a high level of personal mastery live in a continual learning mode. They never
arrive." (Senge, 1990:142). Personal Mastery is an ongoing process and while it includes the
accomplishment of a certain skill or competence, it goes far beyond that. Senge speaks of
mastery in the sense of curiosity, openness, the will to learn and, ultimately, a level of
accomplishment that allows for aspiration and the development of vision (Leonardi, 2007).
Apart from the implications for hiring people, this kind of mindset is important for systems
thinking, and thus for increasing the value derived from information. Of course, organisations
should hire the best people for whatever tasks they need done. On top of that, though, they
will also want people who can recognise opportunities when they see them, use information
to innovate and enhance or take the right decisions.
Mental models are ‘deeply ingrained assumptions, generalizations, or even pictures and
images that influence how we understand the world and how we take action’. Senge argues
that rigidity with respect to mental models hampers learning. Organisations must embrace
and foster openness and overcome political and organisational barriers to learning. Since
mental models determine how information and strategic information management are
understood by organisational members, it is important to nurture a culture that acknowledges
the value of information for the organisation and has a clear focus on managing information
resources on an equal level as any other organisational asset.
Within this kind of organisational culture, information distribution in the form of
knowledge sharing and management will be facilitated and team learning - Senge's fourth
discipline - can thrive. It is also important for information needs analyses in the sense that
organisational members should be encouraged to voice their opinions and concerns in this
respect. Flexibility with regard to mental models may also have a positive impact on the pace
at which new strategic information management approaches are adopted and implemented.
Finally, building a shared vision is about creating a vision that is genuinely embraced by
everyone in the organisation. Senge puts this in contrast to visions that are devised by a single
person (eg the CEO).
This is important to align organisational members' understanding of organisational
objectives. Obviously, information can only be valuable to an organisation if it is used in a
way that drives the accomplishment of organisational goals.
6.1.3 Stakeholders
As we have seen, stakeholders play an important role not only with respect to the learning
organisation, but also regarding strategic information management as a whole. They must be
carefully considered, mapped and managed in order to avoid the problems discussed above.
7. Business Strategy
In this last part, we will examine how business strategy can contribute to the exploitation of
information resources. We will discuss this relationship by means of Michael Porter's
ubiquitous value chain model.
In his seminal book "Changing Patterns of International Competition", Porter describes the
firm as "a collection of discrete activities performed to do business that occur within the
scope of the firm" (Porter, 1986: 13).
With information being the prime production factor (Picot, 1989:238), it seems logical that
it should be considered as part of what is necessary to do business within the scope of almost
any firm today. While Porter's value chain focuses on production processes, we think that
identifying the information value chain can greatly benefit organisations in practising
strategic information management for competitive advantage.
Porter argues that competitive advantage can only really be understood based on the
specific setup of discrete activities in the value chain (Porter, 1986:13). Thus, it is not the
organisation as a whole which constitutes the core of competitive advantage, but the superior
relative performance of particular value chain activities. Based on this argument, the
identification of the information value chain must begin with the definition of discrete value
chain activities.
Porter's value chain consists of primary activities and support (or secondary) activities (see
figure 10).
Primary activities are the ones directly related to "the physical creation of the product or
service, its delivery and marketing to the buyer, and its support after sale" (Porter, 1986:14).
They include inbound logistics, operations, outbound logistics, marketing and sales, and
service.
Discussing information management strategy implications in section 4.8, we argued that there
are "three major activities where value is added to information resources". These activities
were information acquisition, information processing and information distribution. They
constitute the primary activities in the information value chain.
As discussed earlier, information acquisition comprises the discrete activities of internal
and external environmental scanning as well as variety amplification and attenuation to
satisfy the organisation's information requirements optimally. Information processing is the
modification and synthesis of information resources thus acquired and comprises such
processes as filtering, sampling, noise reduction, etc. Finally, information distribution
includes sharing and dissemination activities.
In section 4.8, we identified knowledge management, information governance, human
resources and IT infrastructure as the secondary activities supporting information acquisition,
distribution and use.
Individual value chain activities do not exist in isolation, but depend upon and impact other
elements of the value chain. These relationships are called linkages - "the way one activity is
performed frequently affects the cost or effectiveness of other activities" (Porter, 1986:15).
Despite Porter's argument that competitive advantage springs from individual activities, it
is important to be aware of the way in which value chain activities influence each other. This
awareness can prevent decisions which lead to improvements in one area while affecting
others negatively. Also, it opens up the possibility of managing particular activities both
directly and indirectly (through related activities).
Linkages among value chain activities are not the only important value chain relationship.
In fact, an organisation's value chain is itself part of what Porter calls a "value system" - a
Organisations can create competitive advantages by designing their value chains in unique
ways. Through the two dimensions of configuration and coordination, they can realise the
advantages that put them in front of their competitors.
Configuration describes "where (...) each activity in the value chain is performed" (Porter
1986:17) and there are essentially two options: concentration and dispersion. An organisation
with a value chain based on concentration will typically perform every activity in one
separate location, whereas an organisation applying dispersion will perform every activity in
every location.
For the information value chain, the same applies. We discussed earlier the implications of
economies of scale, learning and coordination (transaction) costs (for example, see 5.2).
Organisations exploiting comparative advantages look for the cheapest location to perform an
information value chain activity. Regarding dispersion, organisations might be forced to
respond to local information requirements. Transport, communication and storage cost
advantages, as well as the political environment are factors that can be highly relevant to the
creation of information value.
For example, an organisation might choose to disperse one of its information acquisition
activities (for example, domestic market intelligence) based on local information
requirements. At the same time, it might try to the reduce costs of information processing by
8. Discussion
The underlying research question of this paper is: How can organisations create a competitive
advantage by taking a strategic approach to leveraging the value of their information. We
discussed the individual elements of this question - competitive advantage, strategic
approach, information value - through the looking glass of four different strategic domains:
information management strategy, organisational strategy, information systems strategy and
business strategy. In this final part of the paper, we will look at all of them in conjunction and
examine what logical conclusions can be drawn from the previous discussion.
Based on Michael Porter's value chain and our discussion of Choo's process model of
information management, Senge's five disciplines and Marchand's IT practice capability
framework, we suggest the following framework for strategic information management:
Like Porter's value chain, the information value chain consists of primary and support
activities.
In the following paragraphs, we will discuss the content and implications of each activity.
The first primary activity in the information value chain is conceptually similar to Choo's
view of information acquisition. It includes the totality of all environmental scanning
processes regardless of their purpose.
Information acquisition is especially important for identifying market trends, opportunities,
evironmental risks, internal process inefficiencies, customer preferences, demand patterns
and a host of other information resources that can be leveraged to create competitive
advantages.
Information technology can facilitate information acquisition. While benefits result from
greater speed and fewer errors, as well as huge amounts of processing capacity, information
overload might counteract these positive forces. It is therefore important to balance variety
amplification and attenuation in information acquisition. For this purpose, clear-cut policies
for information governance can prove extremely valuable.
Information distribution encompasses all activities aimed at the dissemination and sharing of
information resources. Such activities could, for example, be e-mailing, training and
educational sessions, intra/extra-nets, online collaboration or the publication of content
through a website.
Information Distribution adds value based on the principle "Information is expensive to
produce, but cheap to reproduce". It can be especially useful in knowledge management,
enabling organisational members to share their expertise. Other typical areas of application
are marketing, internal and stakeholder communication.
Information technology in combination with information governance policies can also
facilitate this primary activity. While the technology enables the seamless and speedy
dissemination and sharing of information, policies regarding security, privacy, formatting and
compatibility can greatly improve the quality and integrity of the distributed information
resources.
8.1.2.1 IT Infrastructure
Human resources activities include the likes of recruitment and selection, compensation,
training and development, career management, etc.
Human Resources add value by selecting and recruiting organisational members that
understand the importance of information and fit into the learning culture of the organisation.
The effective administration of compensation and incentives can also increase people's
willingness to share their tacit information resources.
Information Governance encompasses the policies and internal guidelines for handling
information resources - ie, their acquisition, processing, distribution, storage, security,
maintenance, disposal, etc.
The value of information governance lies in the development of common organisation-
wide standards for treating information resources based on the organisation's information
requirements. Organisations can thus avoid security issues, litigation because of non-
compliance with external regulatory requirements or compatibility issues and inconsistencies.
It is important to note that, as with all bureaucratic instruments, a reasonable balance has to
be struck between regulating information handling and actually obstructing it.
As illustrated in figure 11, any analysis of the efficiency of a primary or support activity, or
action towards improving it should be preceded by a thorough information requirements
analysis. This analysis can be based on the five generic questions listed in our discussion on
At the outset of this paper, we quoted The Oxford English Dictionary (2009) (OED) to define
a model as "a simplified or idealized description or conception of a particular system,
situation, or process (...), that is put forward as a basis for theoretical or empirical
understanding, or for calculations, predictions, etc."
Now that we have arrived at a model, this definition yields some important implications for
its application. We view the Information Value Chain model as a simplified, idealised
description of how information resources exist in organisations. On the one hand, this means
that in reality organisations may handle information in much more complex ways than the
model suggests. However, we believe that, in principle, the model covers all the information-
related activities that take place in organisations today. In this respect, it is also idealised -
which means that certain processes may also be entirely missing from organisational reality.
In terms of possible applications for the Information Value Chain, we therefore see it as an
analytical tool that allows managers working with strategic information management to
benchmark their organisational reality against the ideal suggested by research from different
domains, and provides them with a way of decomposing a complex problem into manageable
bits. Based on the OED definition we also see the Information Value Chain model as a tool
for measuring the efficiency of information-related processes and predicting up to a certain
degree the impact of actions towards their optimisation.
Perspectives for research are also based on the simplistic and idealised nature of the model.
Its components, the relationship between them and the underlying assumptions of the model
would have to be subjected to empirical testing.
We set out to write this paper based on our view that information is a strategic asset that
needs proper managing. Our overall objective was the development of a framework for
strategic information management by answering the research question: How can
organisations create a competitive advantage by taking a strategic approach to leveraging the
value of their information? We argued that it was necessary to take an interdisciplinary and
holistic approach to managing information in organisations in order to capture accurately the
complexity of the topic. Based on this premise we proposed the diamond of strategic
information management to illustrate our view of what the discpline encompasses. The
diamond consisted of the four academic domains of business strategy, organisational strategy,
information systems strategy, information management strategy.
Based on our discussion of each domain and its relationship to information value, strategy
and competitive advantage, we created the information value chain model. Consisting of
several discrete activities, the information value chain is structured into such processes that
involve the direct handling of information resources in ways that increase their value
(primary activities) and process that ensure that the primary activities can take place
continuously and in the most efficient way possible (support activities). The individual
activities were: Information Acquisition, Information Processing and Information
Distribution (primary), as well as Knowledge Management, Information Governance, Human
Resources and IT Infrastructure (support). The final and most important element in of the
model was Information Requirements. Any analysis of the efficiency of a primary or support
activity, or action towards improving it should be preceded by a thorough information
requirements analysis.
We see the information value chain model as an analytical tool for managers and
researchers working with strategic information management.
Perspectives for future research are based on the simplistic and idealised nature of the
model. Its components, their dependencies and the underlying assumptions of the model
remain to be tested.
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