Strategic Information Strategic Information SystemsSystems

Strategic Advantage and Strategic Advantage and Strategic NecessityStrategic Necessity

Strategic advantage refers to Strategic advantage refers to obtaining a sustainable competitive obtaining a sustainable competitive edge over competitors. The ability to edge over competitors. The ability to obtain a greater than normal return obtain a greater than normal return on investment.on investment.

A strategic necessity is a system that A strategic necessity is a system that must be installed to remain must be installed to remain competitive and stay in business.competitive and stay in business.

The Value ChainThe Value ChainAdministrative Coordination & Support Services

Human Resource Management

Technology Development

Procurement of Resources

InboundLogistics Operations Outbound

LogisticsMarketing

andSales

CustomerService

Com

petit

iveAd

vant

age

Porter’s Value Chain

Primary Activities

Supp

ort

Activ

ities

Strategic Roles for Information Strategic Roles for Information SystemsSystems

Improving business operationsImproving business operations Promoting business innovationPromoting business innovation Locking in customers and suppliersLocking in customers and suppliers

Interorganizational IS, EDI, automatic inventory Interorganizational IS, EDI, automatic inventory replenishment systemreplenishment system

Creating switching costsCreating switching costs make customers dependent on the continued use make customers dependent on the continued use

of innovative IS.of innovative IS. Raising barriers to entryRaising barriers to entry

discourage competitors from entering a marketdiscourage competitors from entering a market

Strategic Information Strategic Information SystemsSystems

““Systems which contribute significantly to the Systems which contribute significantly to the achievement of an organization's overall achievement of an organization's overall objectives.” (Clark, 1994)objectives.” (Clark, 1994)

““The information system to support or change an The information system to support or change an enterprise's strategy.” (Wiseman, 1985)enterprise's strategy.” (Wiseman, 1985)

““Enhance competitiveness of the organization Enhance competitiveness of the organization through the application of IT to business through the application of IT to business processes.” (Davenport)processes.” (Davenport)

A type of Information System that is aligned with A type of Information System that is aligned with business strategy and structure business strategy and structure Can help create a Can help create a competitive advantagecompetitive advantage

Strategic Information Strategic Information SystemsSystems

Technology used to gain an edge over an Technology used to gain an edge over an organization’s competitionorganization’s competition

Can be used at all levels of an organization Can be used at all levels of an organization or just a fewor just a few

Makes a differenceMakes a difference Profoundly alters the way an organization Profoundly alters the way an organization

does businessdoes business Sustained strategic, competitive advantageSustained strategic, competitive advantage

Information Systems forInformation Systems forStrategic AdvantageStrategic Advantage

How can information systems improve the How can information systems improve the value chain?value chain? By reducing the cost of primary and support By reducing the cost of primary and support

activitiesactivities How can information systems change the way How can information systems change the way

an organization reacts to its competitive forces?an organization reacts to its competitive forces? By changing the bargain power of suppliersBy changing the bargain power of suppliers By building closer ties with customersBy building closer ties with customers By increasing or decreasing barriers to entry in a By increasing or decreasing barriers to entry in a

marketmarket By serving as the basis for new products and/or By serving as the basis for new products and/or

servicesservices

Model for Development of Model for Development of Strategic Information SystemsStrategic Information Systems

BusinessProcesses

ITManagement

Commerce

InformationManagement

CustomerManagement

KnowledgeManagement

SISPlanning

Types of Strategic Information Types of Strategic Information SystemsSystems

Customer Relationship Management (CRM)Customer Relationship Management (CRM) Just-In-Time (JIT)/Build-To-Order (BTO)Just-In-Time (JIT)/Build-To-Order (BTO) E-CommerceE-Commerce Operations Support Systems (OSS)Operations Support Systems (OSS) Enterprise Resource Planning (ERP)Enterprise Resource Planning (ERP) Data Mining/Data WarehousingData Mining/Data Warehousing Decision Support Systems (DSS/GDSS)Decision Support Systems (DSS/GDSS) Supply Chain Management (SCM)Supply Chain Management (SCM)

Examples of Strategic Examples of Strategic Information SystemsInformation Systems

American AirlinesAmerican Airlines Fed ExFed Ex CitibankCitibank Wal-MartWal-Mart DellDell Amazon.comAmazon.com eBayeBay

CiscoCisco Yahoo!Yahoo! GoogleGoogle PNC CorporationPNC Corporation PriceWaterhouse PriceWaterhouse

CoopersCoopers Baxter HealthcareBaxter Healthcare