Strategic Information Systems Knowledge – IST Rationale

Author: Acumen Insights Version: 0.1 Date Published: 11-Jan-2009 http://www.acumen-insights.com

This document and the contents are the sole property of Acumen Insights Ltd. Any referenced material is the property of the original author/publisher of that material and is used as reference material within this document. By downloading a copy of this document you agree to be bound by the terms and conditions stipulated by Acumen Insights Ltd. © Acumen Insights Ltd Copyright 2009

1 acumeninsights . Many surveys have been conducted over the years that present the key prescriptions of IST strategy development (for example. this paper will focus mainly on the industrial analysis perspective of IST strategy development. 1992). the industrial analysis perspective has been the most influential over the years (Ciborra. by providing tools to analyse an organisation’s environment and then adapt the internal capabilities to adopt either a low-cost or differentiation strategic stance.Strategic Information Systems Knowledge – IST Rationale Introduction In this paper. the main elements that comprise the rationale behind an Information Systems and Technology (IST) strategy will be discussed. In fact: “Conventional wisdom says that if you’re looking to develop and IT strategy. you start with the business strategy and go from there. Key ideas and theories have been utilised to conceptualise the area of concern. the need to plan adequately. the need to plan implementation and the overall focus in delivering business applications. As the impact of IT evolved and organisations embraced technology. Discussion Underlying the development of any IST strategy or strategic initiative will be the rationale of why the strategy is being devised – i. not meeting SISP objectives and the linkage between architecture and business objectives (Lederer and Sethi. Such prescriptions include the importance of the fit between IST capabilities and the business. Although there is evidence of other perspectives being adopted (such as the competence perspective). 1996). Key ideas and theories have been utilised to conceptualise the area of concern. Since the publication of the models in the 1970’s and 1980’s. By determining the current situation.” Gomolski (2004: 31) Porter’s work throughout the late 1970’s and the 1980’s on competitive advantage not only helped shape the general strategy field but has had a major influence on the IST strategy field as well. Porter argued that organisations are able to develop their strategy by focusing on a number of key areas – such as the external industry and the internal value chain. It is beyond the scope of this review to provide a detailed account of the organisational economics school. What is important is the huge influence of this area on the IST strategy field with many of the concepts and theories being simply translated into the IST strategy domain. However. 1992 and 1996). opportunities and threats. Whichever approach or particular model to Strategic Information Systems Planning (SISP) is taken. they have been adopted within the IST strategy field and IST is seen to have many capabilities that can assist in delivering a generic strategy. they have not been as widely adopted as the industrial analysis perspective. The industrial analysis perspective of IST strategy has emerged from the general business strategy field that in turn has been influenced by the organisational economics school of thought. In order to understand the rationale behind IST strategy development in organisations. see Lederer and Sethi. Undoubtedly. By adopting an industrial analysis approach to strategy development. Less important prescriptions include concerns with data architecture. For detailed insights see for example Mcfarlan (1984). The essence of Porter’s work focuses on using a number of strategic models that help to structure the strategy debate taking place within an organisation. 1994). what are we trying to achieve? In the early years of IST knowledge the focus (taken from a Computer Science perspective) was mainly on the technical aspects of IST planning. which incorporates ideas from authors such as Porter (1985) and McFarlan et al (1983). Porter’s work throughout the late 1970’s and the 1980’s on competitive advantage not only helped shape the general strategy field but has had a major influence on the IST strategy field as well. Undoubtedly. the focus moved towards IST in an organisational setting and thus a more business perspective developed within the literature. what lies behind these prescriptions is the rationale and justification for the chosen strategic activity. previous knowledge has tended to ‘borrow’ from other disciplines – especially business strategy. the IST strategy needs to deliver value to the organisation through investment into IST and other resources (Earl. the industrial analysis perspective has been the most influential over the years.e. For this reason.

Using IST to identify and create niches directly in the marketplace. IST enhances the ability to reduce costs. As technology became more widespread and proprietary IST (early 1980’s). can generate new products or can change the basis of competition within their markets (Robson.Strategic Information Systems Knowledge – IST Rationale strategists are able to determine whether IST can build barriers to industry entry. the focus was on not only gaining a competitive advantage. 1997) The competitive advantage stems from the discrete activities within an organisation’s value chain (and value system). the role of IST and its impact can be postulated in a two-bytwo matrix model called the ‘Strategic Grid’.5.) can be used to classify and determine the direction and role of IST in organisations by considering both the existing and future IST capabilities within the business context. As technologies matured and became easily adopted the focus then changed to gaining a second mover advantage (1990’s). the future competitive position of the business will depend on IST. Importantly. In the ‘support’ quadrant. The use of this model is important in that: “This model provides a valuable tool in ensuring that IS strategies reflect real business value. Knowing where an organisation or systems sits on this matrix gives an indicator of an appropriate IS strategy. Differentiation Focus Table 1: Generic Strategies (Adapted from Robson. the strategic rationale declared with the business strategy must match the rationale declared in the IST strategy. can change the balance of power with the suppliers. 1997). Although technology was widespread. an organisation is able to utilise IST to gain a competitive advantage by performing the strategically important activities more cheaply or better than its competitors. IST enhances the ability to differentiate. For organisations in the ‘factory’ quadrant. in the ‘strategic’ quadrant. Clarke (1994) documented the changing strategic role and impact of IST (from an industrial analysis perspective) within organisations over the last three decades. Therefore. Therefore competitors were able to copy the systems (at a lower cost) and reap the advantages. their business currently depends on IST for a competitive advantage but will not be dependent on it in the future. Finally. Generic Strategy Cost Leadership Characteristics IST seeks to reduce the costs of producing and selling products/services. the costs involved to develop bespoke systems out-weighed the benefits gained. the business depends on IST for its competitive position. Whilst in ‘turnaround’. For McFarlan et al (1983). but the necessity to have a competitive advantage was paramount. IST adds new unique features to the product/service. As the field of enquiry matured. current and future IST is not competitively important. by focusing on these activities and their interactions. as illustrated in Table 1. as follows. but the necessity to have a competitive advantage was paramount. can build in switching costs with suppliers and customers. IST enhances the ability to create niches in the marketplace. As technology became more widespread and proprietary IST (early 1980’s). the concern was with using IST to deliver a competitive advantage. as argued by Glasser (2004).” Robson (1997: 123) 2 acumeninsights . the focus then moved on to ensuring that not only was a competitive advantage gained but that advantage could be sustained over a long period of time to ensure business value will be delivered by the technology. Following the early publications of Porter’s insights (in the late 1970’s). the focus was on not only gaining a competitive advantage. The model (illustrated in figure 2.

we must also consider its operational importance. its generic strategy) but also the business operations as well (Lacity et al 1996). the mass of literature and attention given to the delivery of a competitive advantage through IST is based only a selection of real world cases (Ciborra. They have also led to the development of a common strategic language for both academics and practitioners. However. 1991) has allowed the field of IST strategy to move forward and a common language of debate has emerged as a backdrop to rationalising IST strategic moves. the strategic grid suggests what is expected to be the case with an organisation’s IST capabilities. 1994). one cannot deny the impact authors such as Porter and McFarlan have had on the field of IST strategy. Finally. 1994). The use of models such as the strategic grid and Porter’s models have proved extremely useful in that they can be used as part of a tool-kit in organisations to assist them in developing their strategies.” Sambamurthy et al (2003: 237) With the advent of e-business technologies. More importantly. Without useful business applications that support the business processes. 1997). 1991). Determining the impact of the above models and concepts upon IST strategic development is still debatable and in reality strategists tend not to adopt such rational. leading to much of our thinking about IST strategy (Ciborra. the focus of this model is purely on business applications of IST and does not necessarily incorporate issues such as the strategic importance of the IST architecture and infrastructure (discussed later). more recent research highlights the true impact of IST on organisations: “…we draw attention to a significant and reframed role of IT as a digital generator in contemporary firms. Although the arguments critiquing the concepts such as the strategic grid and generic strategies are great. the simplification of real-world situations into 2x2 matrixes is always problematic in that reality is never that simple (Doyle. 1983) As a normative model. Critically.Strategic Information Systems Knowledge – IST Rationale High Strategic importance of planned IST Turnaround Strategic Support Low Low Factory High Strategic importance of current IST Figure 1: The Strategic Grid (McFarlan et al. we now see a more IST centric business model developing across organisations. the IST strategy will not deliver strategic or operational value. They have also led to the development of a common strategic language for both academics and practitioners. More importantly this type of model leaves the strategic value of IST as something to be assessed after the position on the matrix has been determined (Robson. Strategic decisions about IST must consider not only the strategic competitive position (e. 1991). These selected cases have led many years of debate and research into this area. formal approaches to IST strategy development (Galliers. As well as the strategic importance of IST. The use of models such as the strategic grid and Porter’s models have proved extremely useful in that they can be used as part of a tool-kit in organisations to assist them in developing their strategies. This means that not only can IST lead to 3 acumeninsights .g. The development and evolution of such models and concepts (also being extended by the work of authors such as Galliers.

From this perspective the business needs do not just necessarily direct the IST strategic rationale but could in fact be influenced by technological capabilities. 4 acumeninsights . 2003).Strategic Information Systems Knowledge – IST Rationale improved efficiencies and deliver generic strategies but can in fact enable organisations to deliver strategic agility and open up new ‘digital options’ (Sambamurthy et al.

Problems with Strategic Information Systems Framework. Earl. R.. V. reality and guidelines for successful implementation. M. V. Mar. Global Information Technology Outsouring. Putting IT in its place: a polemic for the nineties. Journal of Management Information Systems. MIS Quarterly. US. European Journal of Information Systems. W. Competitive Advantage: Creating and Sustaining Superior Performance. Going Beyond Strategic Platitudes. Xamax Consultancy.. Root Causes of SISP Problems. and Willcocks. 1991. C. pp 94-98 Gomolski. M. 5 acumeninsights . 1994.. Sambamurthy. 1985. The Path of Development of Strategic Information Systems Theory... J. Key Presriptions for SISP. John Wiley and Sons. and Jelassi. Summer. Robson. Using Vectors to Minmize the mystery if IT Strategy Development. 1992.pp 100-108. European Journal of Information Systems. 2001. Strategic Information Systems Planning: myths. M. and McKenny. 7. London. Shaping Agility Through Digitial Options: Reconceptualising The Role of Information Technology in Contempory Firms. John Wiley and Sons. 1997. Irwin. Lederer... 2003. 1(1).. Porter. B. Vol 27 No 2. USA. pp 237-263. L. and Sethi. London. 2004. No 4.Strategic Information Systems Knowledge – IST Rationale References Clarke. Bharadwaj... pp 31-49 Lacity. R. ComputerWorld. Doyle. A. Ciborra. A. 2nd Edition.. 1992. V. Strategic Management and Information Systems. 1996. V. Strategic Information Systems: A European Perspective. Galliers.. Journal of Management Information Systems. 1983. 2004.. F. pp 55-64. Lederer. Corporate Information Management: The issues facing senior management.. US. and Grover. Prentice Hall. McFarlan. A. and Sethi. T. Healthcare Financial Management. 1991. England. 1994. Glasser.. Summer. Journal of Information Technology .. Macmillan. Mar. J. J.

Sign up to vote on this title
UsefulNot useful