Lecture
2.
Strategic Management and IS Planning
IS Strategy depends on business strategy
In order for there to be an
IS strategy, there must be a business strategy.
If they’re not developed
together, then the business strategy should be developed first.
Problems emerge when there is
no strategy, and work starts on an IS strategy.
Defining Strategy
‘Strategy concerns creating
a vision of the future and the means and policies which will enable the
organisation to reach that vision’ Edwards et al (1991) The Essence of
Information Systems
It involves the
interpretation of the environment
It helps allocate an
organisation’s resources.
Developing strategy
involves:
Understanding the nature of
competitive forces and how they change over time.
Developing competencies to
mobilise and manage the resources necessary to respond to those forces.
Strategy as it is planned
often never happens due to:
Imposed changes
New opportunities
Unexpected constraints or options
Failed implementation
Organisational /
Competitive Advantage and Information Systems
The key goal of strategy is
Creating Organisational Advantage.
Key aspects of
organisational advantage:
Operational
effectiveness. Performing similar
activities better than rivals.
Strategic positioning: Performing different
activities from rivals
Performing similar
activities differently.
These differences must be sustained.
Red Queen Evolution: Running to keep still
But: competition on
operational effectiveness simply shifts the productivity barrier forward.
If this is all that
happens, gains are obtained by customers and suppliers not by
profitability of the firm.
Organisations exposed to
competition learn as a result.
As one organisation becomes
stronger, rivals learn from it and catch up.
The process starts over
again
‘Red Queen’ evolution
Example:
Electrification and the
altering of business processes to take this into account:
Did
not increase profitability
Benefit
all went to customers in price reduction.
Only
business which did profit were the electricity companies and manufacturers of
electrical equipment (Gary Hamel, In Business Radio 4)
Example:
FedEx
and UPS chasing each other in providing Internet tracking
Successful use of IT can
improve a company's competitive position.
BUT this may be short-lived
because information systems are easily duplicated.
However,
it can be argued that it is not effortless to duplicate IT strategy: IT
infrastructure takes 5-7 years to emulate. Also note that competitive advantage
from IT is dependent on how the IT is managed more than what the technology is.
The Goal : Sustainable competitive advantage
Unique competitive position
Activities tailored to
strategy
Clear trade-offs and
choices
Sustainability from whole
activity system
Operational effectiveness
Innovation
Focussing on core business and core competencies
Which of our products or
services are the most distinctive?
Which of our products or
services are most profitable?
Which of our customers are
most satisfied?
Which customers or channels
are most profitable?
Which of our activities on the
value chain are most effective?
Strategy at the Edge of Chaos
Markets and conditions are
always changing.
Organisation
are adaptive
organisations.
We don’t know what the
future environment will be like
Focused versus robust
Strategies
need to be robust as well as focused.
If
we are too concentrated, we might find ourselves stuck with a dead-end product.
We
need some variety to be able to adapt.
Strategic leap versus
continuous adaptation
Resistance to change versus
over-sensitivity to change
Standardisation versus
diversity
Scale versus flexibility
Approaches to Strategic
Management
A variety of approaches
have been developed over the years. In a recent book, ‘Strategy Safari’, Mintzberg and colleagues identify 10 generic approaches:
For each of these we will
consider their use in Information Systems Planning, the techniques we can adopt
and the consequences for the outcomes of the planning process.
1. Design:
Design business strategy in
the same manner as you might design a building.
2. Planning:
Look at what needs to be
done, probably on a yearly cycle and plan budgets etc., based on forecasts for
the next time period.
3. Positioning:
Examine current position in
market compared with competitors, decide where you want to be and work out how
to get there.
4. Entrepreneurial:
Follow the vision of a
leader or business champion.
5. Cognitive:
Gather all possible
information ( store in decision support system or
executive information system). Analyse and apply objective logic to the
information. Make decisions based on formal models and simulations.
6. Learning:
Look at your core
competencies, identify what you need to learn, try out small ideas and learn from
them. Develop and strengthen knowledge on the basis of successes and failures.
7. Power:
Establish strategy through
conflict, conflict resolution, politics, conspiracy, negotiation, fighting for
number one.
8. Cultural:
Establish a collective
perspective through meetings, committees, concentrating on values and beliefs.
9. Environmental:
React to changing economic
market conditions, evolve strategies in response to external forces, select strategies on basis of best evolutionary fit.
10. Configuration:
Select any approach
dependent on the structure of the organisation and the historical and political
context. Identify a model and lifecycle that suits the organisation. Categorise
wherever possible. Reconfigure, Transform to get a new configuration.
There are as many
approaches to strategy as there are organisations!
However, in recent years
there has been a move away from more classical approaches to strategy (Design,
Planning, Positioning) towards more dynamic and
evolutionary approaches (Learning, Cultural, Environmental).
IT departments tend to
adopt design, planning and positioning approaches. This can result in the
strategic approach of IT differing from that of the organisation. This
misalignment of culture and process contributes to the overall non-alignment of
IT and the business it serves.
In this module we will use
the 10 schools of strategy to organise approaches to SISP. Some schools are
hardly visible in SISP, others are prominently used. Some provide indications
of changes in direction and should become prominent.
SISP uses strategic
management tools and approaches to derive plans for IS implementation. In
studying the techniques for analysing an organisation, whether from a design,
positioning, learning etc. point of view we must ask:
What are the consequences
of a particular understanding of the organisation for IS development,
deployment and usage?
And equally importantly,
how will the use of particular IS affect the
organisation’s strategy?
Last Updated: