Chapter Two
Strategic Uses of Information Systems
Objectives
- Draw and label Porters Competitive Model
- Explain how information resources can give businesses a competitive
advantage
- List the basic initiatives for gaining a competitive advantage
- Define strategic information system
- State the fundamental requirements for developing strategic information
systems
- List critical SIS success factors
Strategic Systems
- A strategic information system is an information system that can
help seize opportunities.
- A strategy is a plan designed to help an organization outperform
its competition.
- An IS that wins an organization a strategic advantage is called a strategic information system.
Porters Competitive Model 1980
- Strategic Opportunities
- Strategic IS
- Porters Value Chain
- Strategic Critical Success Factors
- Porter Discussion
Two ideas embodied in an SIS
- A potentially winning business move
- An idea of how to harness information technology to implement the
move
Financial Benefits from a SIS
- Difficult to quantify because:
- An SIS can change the way an organization does business.
- An SIS may create a whole new business or service.
- An SIS does not simply reduce cost or marginally increase the effectiveness
of an employee.
SIS Productivity Paradox
When an SIS actually changes the way that a business does business,
traditional productivity measurements may actually go down.
See a MIS Quarterly Article concerning the Productivity Paradox.
Achieving Competitive Advantage
Competitive Strategies
1: Reduce Costs
2: Raise Barriers to Entrants
3: Establish High Switching Costs
4: Create New Products and Services
Fed Ex WWW based tracking service
5: Differentiate Products and Services
6: Enhance Products/Services
7: Establish Alliances
8: Lock in Suppliers or Buyers (Baxter)
Competitive Strategy Examples
- Wall Mart -- Reduce Costs
- Raise Barriers -- Baxter Medical Supplies
- Switching Costs -- Legacy Systems
- Create New Products or Services -- UPS, FedEx
- Differentiate Products and Services -- Nike
- Enhance Products or Services -- Long Warranties
- Establish Alliances -- Frequent Flier Miles
- Lock in Suppliers or Buyers -- Microsoft
Strategic Information as a Competitive Weapon
Creating an SIS
What is the most effective way to gain an advantage?
Would better (more accessible, accurate, or timely) information help?
Can such a system be developed?
Will the development be economically justified?
What are the risks of not developing?
Organizational Change&Re-engineering
Goals are to increase productivity by 100 to 1000%
Business Process Redesign
Example of IBM transition from selling Mainframes to PCs
Cost of Communication vs the cost of Production -- Trends?
Competitive Advantage is Dynamic
A system can only help a company sustain a competitive advantage
if the company continuously modifies and enhances the system
Sources for Strategic ISs
From Automation to SIS
From a New Service
Merrill Lynchs Cash Management Account
From New Technology
American Express and Optical Scanning
From Excess Information
From Vertical Information
Portable Computers and Carrying Cases
Strategic Advantages
Tend to be short lived.
Competitors imitate.
Innovation becomes standard.
Cannot be provided by technology alone
Strategic Advantages and the Law
When can strategic advantages be considered against the law?
When the advantage is against the antitrust laws.
