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Tietojärjestelmien peruskurssiStrategic Information Systems &Business Process Reengineering
Malin Brännback
Strategic Information Systems
Management Information Systems (MIS) management strategy strategic management, strategic market management strategic planning
Decision support systems (DSS) decision-making
Executive Information systems (EIS)
SIS
What makes information systems strategic? How are strategic information systems
managed?
What????!?
Management strategy for IT Information technology in a global
environment Strategic Management Support Systems
There is universal confusion on how to define these terms - here is one attempt again to sort things out!
Management
Three possible views: an activity people who direct the organisation role-playing perspective
Activity-oriented
Management is the direction of the firm through the planning, organising, co-ordinating, and controlling of its human and material resources towards the achievement of pre-determined corporate objectives
added to this list comes motivates, develops people, communicates,
measures performance
Human-oriented view
Management is a body of executives collectively responsible for running and enterprise
Anthony (1965): strategic planning; defining the objectives of an
organisation; mission and vision management control; obtaining and deploying and
using the resources effectively operational control; assuring that the specific tasks
are carried out effectively and efficiently
The pyramid
Top
Middle
Bottom
Corporate
Business-unit
Line
Strategic
Tactical
Operational
The role-playing view
General roles adopted by management personnel when performing their work (Mintzberg):
figurehead, liaison, leader monitor, spokesman, disseminator entrepreneur, disturbance handler, resource
allocator, negotiator
Links between perspectives
Activity
Person
Role
Literature
Anthony, R. N.: Planning and Control Systems, a Framework for Analysis, 1965
Mintzberg, H.: The Nature of Managerial Work, 1973 Gorry, G. A., Scott Morton, M.: A Framework for
Management Information Systems, Sloan Management Review, Vol 13, No. 1, pp. 55-70, 1971
Management as: decision making and information handling
Simon (1960)– intelligence
– design
– choice
Long (1989)– set objectives
– identify constraints
– identify alternatives
– gather appropriate information
– choose the best alternative
Three views
Observe/monitor
Recognise problemIntelligence
Set Objectives Set objectives
Understand Problem Understand Problem
Determine Options Determine OptionsDesign
Evaluate Options Evaluate Options
Choice Choice Choice
Implement
Problem-solving Decision-making Simon’s model
Types of situations and associated situations and terminology (decision situations)
Simon, 1960 Gorry & Scott Keen & ScottMorton, 1971 Morton, 1978
Nonprogrammed Unstructured Unstructured
Semi-structured
Programmed Structured Structured
Issues influencing the d.m.
The policies of the company the time available the experience the environment in which the decision is
being made the influence of past and future decisions the difference between individuals
Management support system
A CBIS that supports management via support of decision-making and/or information handling activities
Simon’s model Passive decisionsupport
Active support
Intelligence reports on aspects ofbusiness
report on competitors
Interactive data-analysis concerningcurrent state
forecastingDesign report on an
alternative comparison/bench-
marking
What if/what’s best simulation of
expected outcome ranking and scoring
Choice information toconfirm and justifyselection ofalternative
result of analysis group negotiation
support
Strategic Information Systems
The transaction processing systems did not involve changing the nature of the business
Changes usually concerned the tool by which existing activities were undertaken
computerisation aimed at improving efficiency, thus reducing costs; savings could be quantified, often exaggerated and costs of staff often underestimated or ignored
Cost savings
The costs of a computer with a constant processing power of 4.5 millions of MIPS in three points; 1980, 1990, and 2000.
In 1980 this computer cost $4.5 million = annual salary of 210 employees
In 1990 the decrease was projected to $300 000 = annual salary of 6 workers; the actual cost was closer to $100 000, i.e. 2 workers
In 2000 the cost was estimated to $10 000 = the cost of a fraction of a worker - has been achieved already
The hunt for cost cut
Labour costs have been used as a justification argument for a transfer from existing systems to newer improved (?)
More recently an argument for cost reduction in managerial work, especially middle management
“How information changes the way you compete” (Porter & Millar, 1985)
– Labour costs the largest and easiest part to displace using IT
– Paper and postage costs and some logistics cost have been displaced by electronic data interchange (EDI) and e-mail
– Property costs
– Inventory costs; (JIT)
The efficiency of the cost savings is doubtful IT can be tool for obtaining competitive advantage
IT as basis for competitive advantage
Redefine the boundaries of particular businesses
convergence
Develop new products or services Change the relationships between suppliers
and customers Establish barriers to deter new entrants to
marketplace
IT as basis for competitive advantage
The basic objectives of these IS is to identify better ways of doing things leading to increased revenues greater functionality improved presentation or image improving the competitive positioning
Bargainingpower
of suppliers
A framework of competitive strategy (Porter, 1980)
Competi-torsSupplier
Substitutes
Potentialentrants
Customers
Threats of new entrants
Threat of substitutes
Bargainingpower
of customers
The strategic role of IT
Competitive force Potential of IT Mechanism
New entrants Barriers to entry erect or erode
Suppliers reduce bargainingpower
erode or share
Customers lock in switching costs orcustomer information
Substitute product Innovation New product or addvalue
Rivalry Change of relationship compete or collaborate
What drives competition?
Technology-driven IT-investments will result in business success
Competitor-driven copying competitors
Aligning business strategy and IT strategy
Approach: top-down or bottom-up or creative Techniques: CSFs, SWOT, 5 forces, audit grid People: senior managers, users/professionals,
technical business, line champions
Critical Success Factors
Factors critical to all organisations in the same industry Issues related to the particular organisation and to its
position in the industry environmental factors, such as legal, political, economic
and social aspects Activities within the firm that are proving to be short-term Monitoring and control procedures relating to the
operations of the firm Factors which take into account the changes in the
business environment
Examples
Cortal versus Crédit Commercial France in June 1992 Cortal employed 140 people, 24
working at the IT department, the bank was serving 80,000 customers up from 5,000 in 1985, to whom it offered 12 different products. Total managed deposits was FF11.3 billion in 1991, up from 0,3 in 1984
profile of a typical customer is 55 yrs, quite rich who has a deposit of roughly FF200,000
in 1992 it increased its customer base by 1,000 per week
Access methods
Client
Phone
Customeradvisor
IBMmainframe
ClientServer
Minitel
Credit Cortal
Success of Home Banking in France is because of Minitel Videotex-based access
IT impact on Cortal’s business Process IS influence on 4 customer-related factors: product,
distribution, price, communication
4 factors
Customised information was an integral part distribution was achieved through the IS prices were defined after analysing internal
and external information sets aquired and presented through the IS
communication with the client especially in the form of direct marketing was accomplished via the IS
Cortal’s top management concluded
The IS was strategic and of utmost important in
keeping in touch with customers and sustaining their contracts
using the database effectively, e.g. to target promising customers
analysing the results of direct marketing campaigns providing the flexibility needed to introduce new
products in a timely fashion
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