INFORMATION SYSTEMS STRATEGY

This is a strategy which allows implementation of the technological implications of the organisation as well as
its subsidiaries.
It is the determination of the most appropriate process and resources to ensure that information provisions
supports business strategy.
An information system strategy is a key document under pinning an organizations strategic plan.
In particular the strategy seeks to deliver and support information systems and to provide information
technology that makes organisations to excel.
There are 3 main perspectives of informaton systems strategy:
1. Strategic Information systems planning
2. Alignment of information systems strategy with business strategy.
3. Using information systems for competitive advantage.
STRATEGIC INFORMATION SYSTEMS PLANNING
a) Strategic information systems
A strategic information system is a system that helps companies to change their business strategy and
structure .
Its typically utilised to speed up the reaction time to environmental changes and aid it in achieving a
competitive advantage.
The key features nof strategic information systems include:
i)
Decision support systems that enable to develop a strategic approach to align information
systems with an organisation business strategy.
ii)
Enterprise resource planning solutions that intergrate the business processes to meet the
enterprise objectives for the optimisation of the enterprise resources.
iii)
Database systems with the datamining capabilities to make the best use of the available corporate
information for marketing, production, promotion and innovation.
iv)
Real time information systems that intends to maintain a rapid response and the quality
indicators.
Strategic information system planning is the analysis of the corporations information and processes using
business information models together with evaluation of risks, current needs and requirements.
The result is and action plan showing the desired course of events needed to align information needs with the
strategic direction of the company.
SISP is based on two co-arguments:
The first is that at a minimum a firms information systems investments should be aligned with the overall
business strategy and in some cases may even become an emerging source of competitive advantage.
The second co-argument is that companies can best achieve information system based alignment or competitive
advantage by following a proactive formal and comprehensive process that includes the development of broad
organisational information requirement.

There are six dimensions that define an excellent strategic information system planning process. They include:
1. Comprehensiveness
This is the extent to which an organisation attempts to be exhaustive or inclusive in making and
integrating strategic decisions.
2. Formalization
This is the existence of structures, techniques, written procedures and policies that guide the planning
process.
3. Focus
This is the balance between creativity and control orientations inherent with the strategic planning
systems.
An innovative orientation emphasises innovative solutions to deal with opportunities and threats.
4. Top-down flow
SISP should be initiated by top managers with the aid of support staff.
5. Broad Participation
Even though the planning flow is top down participation must involve multiple functional areas and as
necessary key stakeholders at lower levels of the organisation.
6. High consistency
SISP should be characterised by frequent meetings and reassessment of the overall strategy.
ALIGNMENT OF INFORMATION SYSTEMS AND BUSINESS STRATEGIES
a) Strategic alignment.
A simple view of strategic alignment suggests a relationship between the business strategy,
organisational strategy and information system strategy where organisation strategy and information
system strategy will drive the overall business strategy.
The three criteria which should be met for aligning information systems for success include:
i)
Successful firms business strategy should drive both the organizational and information systems
strategies.
ii)
Firms must seek to balance business, organisational and information systems strategies.
iii)
Informaton system strategies have consequences on the business and organisational strategies
and thus should not be treated in isolation.
The importance of aligning information systems strategies with business strategies and organisational
strategies is to minimise the risk of organisational failure.
Strategic alignment is a process by which organisations ensure that information system is a good fit for
the business strategy.
Consumer oriented approach to strategic alignment.
The consumer orientation approach to strategic alignment offers the potential of creating and assessement of an
organisational information sytem demands directly from business needs, rather than indirectly from the separate
information systems demand of different users within the organisation.

In customer orientation approach it is important for managers to ensure that:

i)
ii)
iii)

The strategy is driven by customer needs and to expectations.

Processes selected for redesign by information systems create value for the customer.
Information systems support those processes in a way that supports the strategy.

Three organisational or environmental variables that are used in consumer approach to strategic alignment
include:
i)
ii)
iii)

The primary tasks of the organisation.

The degree of interdependency between those doing the tasks.
The business environment of the organisation.

Components of a Business and Information system planning process

1. Strategy development
This concerns developing a strategy that supports a companys vision.
2. Resource Management
This concerns developing strategic plans for managing or outsourcing a companys IT resources
including information systems personnel, hardwares, softwares and network resources.
3. Technology Architecture
This concerns making IT choices that reflect information technology architecture designs to support a
companys e-business and other IT initiatives.
Components of IT Architectures:
The IT architecture that is created by the business IT planning process is a conceptual design that includes the
following major components:
1. Technology platform
This includes all the hardwares, softwares and the networking technologies that provide computing and
communicating platforms which support the strategy.
2. Data resources
They include many types of specialised and operational databases and data warehouses that store and
provide data and information for business processes and decision support.
3. Applications architecture
These are all the applications such as customers relationship management, human resource management
among others that support the development and maintanance of the business processes.
4. IT organisation
This is the organisational structure of the systems department within the company and the strategies of
the business.
USING INFORMATION SYSTEMS FOR COMPETITIVE ADVANTAGE
In alsmost every industry some firms do better than others and there is almost always a standout firm
Firms that do better than others are said to have a competitive advantage over the others.
They either have access to special resources or use resources more efficiently than other organizations.
Organisations can gain competitive advantage through the following ways:
i)
ii)

Differentiation
Cost leadership

iii)
iv)
v)

Focus/specialisation
Innovation
Strategic alliances

1. Cost leadership
Organisations use information to fundamentally shift the cost of doing business or reduce the cost of
business processes and or to lower the cost of customers and or suppliers. E.g. using online business-toconsumer and business-to-business models or e-procurement systems to reduce operating costs.
2. Differenciation
Organisations can use information system to develop differentiated features and or reduce the
competitors differentiation advantages. E.g. using online live chatting systems and social networks to
better understand and serve customers or using technology to create information diaries to offer value
added services and improve customers stickness to the organisations website.
3. Focus
Organisations can use information system to identify particular market segments which are most
profitable to it so that they can concentrate the services in those segments.
The use of data mining tools can help the organisation understand the customers better and satisfy their
needs with more precision.
4. Innovation
Organisations can use information system to identify and create new products and services and or to
develop a new market niche to radically change business process via automation in order to reduce the
cost and time in the market.
These new innovations will lock a customer to a product or service and hence organisations can achieve
competitive advantage.
5. Strategic Alliances
Organisations can use information systems to create and enhance relations with partners via applications
such as developing virtual organisation and interoganisational information system.
Porters Five Forces model
This model can be used to analyse and identify on what contributes to strategic advantage.
In porters competitive model the strategic position of a firm and its strategies are not only determined by direct
competition but also for other forces in the industry.
1. Traditional competitors
All firms share market space with competitors who are continously devising new products and services,
efficiences and switching costs.
Information systems can be used to innovate and creat new dimensions of the product that are not
offered by the competitor.
Innovating new technologies that impact on the business model may provide strategic advantage.
2. New entrants
Technology may make it easier to enter an industry by allowing fewer capital and personnel to be used.
Technology can also make difficult to enter an industry by developing proprietary systems from
suppliers not accessible to new entrants.
The technology can also make expensive for customers to switch to the new entrants.
3. Supplier power
As technology enables more suppliers to enter into the market their bargaining power may decrease.

Suppliers can also use technology to increase the switching costs which may increase the power of
suppliers.
Technology enabled customized products may make switching to other products less attractive.
4. Customer power
When there are many customers it means less power for individual customers.
By the use of the internet an organisation can increase the numbers of customers available and hence
reducing their power.
When there are many choices for the buyers through the same internet the bargaining power of the
buyers increases.
5. Substitutes
Through the internet many more substitutes are readily available.
Technology enables to create effective substitutes which will be available at a lower cost e.g. the
development of Itunes which replace CDs, DVDs and other storage tools.
Benefits of an Information System Strategy
1. Improved productivity and performance of an organisation.
2. It helps a business to achieve competitive advantages for survival in a given environment.
3. It helps in developing appropriate resources and competences to deploy information systems and
information technology successfully across the organisation.
4. Information system strategy when align well with IT and business strategy helps improve a firms
performance considerably.
5. It helps reduce confusion and stress while increasing the understanding of the entire business and
information technology.
6. It helps in balancing effectiveness with efficiency which enables the organisation to priotise properly
and approve projects with more confidence.
7. It makes communication and training easier.
8. It provides a plan against which progress can be measured.
9. It helps in determining the direction of the organisation and knowing how it can achieve its goals.
10. It helps in targeting resources more efficiently as it is clear what will make the most contribution to
business strategy.