High potential information systems

Applications that may be important in achieving future business strategy

A small proportion of high potential applications might ultimately provide
strategic opportunities and help to secure the future of the company. A
progressive organisation recognises this, and finds a way to encourage
innovation by investing in the future. Laggardly organisations do not recognise
this, and generally wait until competitors have established a new information
system idea before making the move (by which time the system idea is no
longer “high potential”, nor even “strategic, perhaps). An organisation that
refuses to enable high potential activity will always lag, whereas one that
nurtures and sustains experimentation will never be short of potentially useful
systems ideas.
How does one go about systems development in this quadrant? Not with
meticulous attention to standards, nor even with large teams of specialists
drafted in to assist. Development in this part of the applications portfolio has
to be done by (or in very close conjunction with) the user whose idea it is.

The objective is not to change the world nor even to actually implement a
working system, but to qualify an information system idea as a good one.
Once this qualification is achieved, when everyone agrees that the idea is
important, and when the rest of the company has agreed to take it on board,
then the style of development will have to change. But until it is approved as a
legitimate strategically relevant idea, development needs to be fluid,
exploratory, and as rapid as possible. There is no benefit in protracted
development; every effort should be directed towards the qualification of the
idea, as quickly as possible. If the idea proves to be a good one then it can be
progressed, but if it is not then it can be discarded. Survival in high potential
systems development activity is as much about failure as it is about success.
Strategic information systems
Applications that are critical to sustaining future business strategy
A strategic information system needs to have the support and commitment of
business management and all involved staff. Changes to business practice will
be involved and the management of change requires a high level of
commitment. The specification of requirements must be done with the
business in mind and with more attention to what might be done in the future
than what is done now. Thus, we might say that business analysts are
required, not systems analysts. Good business analysts are difficult to find
because they must straddle the divide between the worlds of technology and
business; some of the best examples of success can be attributed to talented
people who acted in this role and did well, in other cases people have failed in
this role and disaster has ensued. Even the best technical specialist will
probably fail if given responsibility (by design or default) for the conception
and specification of a strategic information system. Business analysis is
difficult in the strategic context because of the need to explore new territory,
where users will not be able to articulate their needs straightforwardly. A
degree of experimentation will be required.
The tools that are used in these cases may be different. The challenge is to
formulate and test new ideas about the business in order that they can be
realised by means of new systems. The ideas may originate from the high
potential quadrant of the portfolio or they may be seeded in corporate
strategy: objectives, critical success factors, and the other stuff of strategic
analysis. It is important therefore that the communication of business ideas
(using appropriate models and possibly prototype systems) is not just
encouraged but driven by means of energetic management activity and
commitment. In this way all those involved will be able to assure themselves
that the proposals are appropriate and stable. Strategic systems are
demanding of management time, principally because of the effort that is
required to grow an idea, test it, and then settle it down to the point where it
can be incorporated into a new system design.

Then the construction of a strategic system needs a particular approach also.

The trick is to work quickly because one is seeking competitive advantage and
always working within a window of opportunity that might be usurped by
competitors. Clearly a new strategic system must work at a functional level
and to some extent it will have to integrate with existing systems, but one can
not afford to let the IT team dwell upon fine points of detail. It is important
that strategic systems are built quickly and competently, but in most cases
they will be re-engineered in due course for efficiency of operation. At the
start, efficiency in operation is not as important as simple functionality, but
nevertheless the development team must try to forecast the workload levels
and ensure that there is enough capacity in the infrastructure to sustain the
system in use, even if it is planned to re-engineer it later to make it more
efficient.
Web sites are a good example. Most large banks have been through the early
stage where the critical objective was to get a web site up and running,
knowing that the demand would actually be quite low but that the important
thing (strategically) was to be able to say that a web site was up and running.
Then, famously, a number of banks were embarrassed by the exceptional level
of interest, leading to overloading of limited infrastructure and seriously
unhappy customers. It is all a balancing act, and we are reminded perhaps
that strategic information systems demand a culture and a context that is
willing and able to deliver change. Without that, an organisation might be
better advised not to even start, but to wait until the merit of a new idea has
been adequately demonstrated by competitors (so as to be a laggard in these
things, not a leader).
Key operational information systems
Applications on which the organisation currently depends for success
Key operational systems are different again. There are fewer mysteries
because the area of application is likely to be well known, it is probably already
common to all the main players in a certain industry (and so not strategic), and
there may well be packages available which provide a suitable vehicle for
implementation (although they are not always cheap – when consultancy
assistance, support and training are taken into account, six- and seven-figure
US$ prices are common for the larger enterprise-wide software packages).
Clearly, there is a pattern here. Larger, more forward thinking companies
often find themselves blazing a trail with new ideas that are, in the beginning
strategic. They put the new strategic systems together the hard way because
only they can afford the very high development and management costs
involved. They can justify the expense on the basis of consolidating their
dominance of a market. When the ideas begin to be adopted by the majority
of players in that market then systems tend to become available from
independent software suppliers (sometimes in the form of a modification of a
system first developed by one of the main market players). At the same time,

these systems can be replicated in competitor businesses more cheaply

because the nature of the application has become well known and there will be
people around who can be hired for their experience and knowledge of the
information systems that deliver it.
Thus, the information systems that comprise the basis of key operational
applications may be found as packages and not require bespoke (in-house)
development. The requirement still needs to be specified, however, because a
good package will provide many options and there will be work to do in setting
it up and configuring it properly. Although a package is the primary vehicle for
implementation, it still has to be evolved into the information system that the
business requires. It is a mistake to confuse the two. If a business decides
that using someone else’s system can solve their problems, then they will
almost certainly have a hard time with it. Even the best packages require
substantial implementation effort because it will have to co-exist with other key
operational systems and interfaces will be needed. As many organisations
have found, adapting an existing system can be much more difficult than
building a new one from scratch.
On the other hand, acquiring a world-class package and then fitting the
business around it can be a quick route to efficiency and effectiveness benefits,
provided that all necessary changes to working practices are made. For
example, for a period of time many large retailing companies around the world
chose to use the same package for their core stock management and purchase
order processing (a US-originated package called “World Wide Chain Stores”).
This does not mean that the businesses have to be the same: the package
just deals with the core information processing requirements at the operational
level. Here competitive edge comes from the ability to implement such
packages well, and to manage the adaptation of the business to make the best
use of it. There is still plenty of scope for competitive differentiation with
other
application areas.
It follows that the key skills for the successful implementation of key
operational systems tend to be technical (concerning the set up and
configuration of the package) and managerial (for the implementation of
operational changes); but senior management do not need to be heavily
involved because we are not changing the world, we are merely optimising it.
Efficiency and reliability in key operational systems are important, and that
requires technical competencies. Depending upon the hardware and software
environment, skilled database and teleprocessing specialists will be needed to
set up the right infrastructure; with mainframes, system programmers are
needed who can tune the environment to give the last percentage point in
efficiency with the very expensive infrastructure that is involved.
Key operational systems are not merely advantageous (as a strategic system
will be) – they are essential. Generally speaking, without the requisite key
operational systems businesses will simply not be able to operate because they

will not have the basic capabilities that are necessary to be a viable player in
their chosen industry.