Strategic Information
Systems for Competitive
Advantage
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Learning Objectives
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Describe strategic information systems (SIS) and explain
their advantages.
Describe Porter’s competitive forces model & how IT helps
companies improve their competitive positions.
Describe Porter’s value chain model and its relationship to
information technology.
Describe several other frameworks that show how IT
supports the attainment of competitive advantage.
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Learning Objectives (cont.)
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Describe and understand the role of web-based SIS and the
nature of competition in the digital age.
Describe global competition and its SIS framework.
Describe representative strategic information systems and
the advantage they provide to organizations.
Discuss implementation issues including possible failures of
SIS.
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Strategic Information Systems (SISs)
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SIS
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Characterized by its ability to significantly change
the manner in which business is done.
It can also change the goal, processes, products,
or environmental relationships to to help an
organization gain a competitive advantage.
An organization competitive strategy is the search
of a competitive advantage in an industry.
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Cost, quality, or speed.
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Strategic Information Systems (SISs)
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SIS Definition
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Systems that organizations totally depends on
Systems that has very impact on organization
business processes, operation, and the bottom
line.
Internally focused or externally focused
Can be applied within the organization or across
the organization
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Strategic Information Systems (SISs)
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Sustaining Strategic Advantage
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This systems are design from the
beginning to facilitate competitive
advantage.
Today it is more difficult to sustain a
competitive advantage with the use of IT
for a long period of time.
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The Role of IT
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IT creates applications that provide strategic advantages to
companies
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E.g. Federal Express was the first to company to use the tracking
system
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IT is a competitive weapon
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IT supports strategic change, e.g, re-engineering
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Cycle time reduction,streamlining, CASE, etc.
IT networks with business partners
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B2B
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IT provides cost reduction
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IT provides competitive business intelligence
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Porter’s 5 Competitive Forces
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The threat of entry of new competitors.
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The bargaining power of suppliers.
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The bargaining power of customers (buyers).
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The threat of substitute products or services.
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The rivalry among existing firms in the industry.
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Porter’s Model in Action
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Response Strategies
(Porter, 1985)
COST
LEADERSHIP
DIFFERENTATION
Providing products Being unique in the
and/or services at
industry
the lowest cost in
the industry.
FOCUS
Selecting a niche
market and
achieving
cost leadership
and/or
differentation.
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Response Strategies
(added by Porter and others)
GROWTH
Increasing market share, acquiring
more customers or selling more
products
IMPROVE INTERNAL
EFFICIENCY
To improve employee and customer
satisfaction
ALLIANCES
Working with business partners to
create synergy & provide
opportunities for growth
CRM
Customer-oriented approaches, e.g.
the customer is king (queen)
INNOVATION
Developing new products & services
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The Value Chain
Support
activities
Primary activities
Inbound logistics
Operations
Outbound logistics
Marketing and Sales
Service
Corporate infrastructure
Human resources management
Technology Development
Procurement
Materials receiving, storing, and distribution to manufacturing premises
Transforming inputs into finished products.
Storing and distributing products
Promotions and sales force
Service to maintain or enhance product value
Support of entire value chain, e.g. general management planning,
financing, accounting, legal services, government affairs, and QM
Recruiting, hiring, training, and development
Improving product and manufacturing process
Purchasing input
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VALUE SYSTEM
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A firm’s value chain is part of a larger stream of activities,
which Porter calls a “Value System”.
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Includes the suppliers that provide the
necessary inputs AND their value chains.
Applies to both products & services, for any
organization, PUBLIC or PRIVATE.
Is the basis for the Supply Chain Management.
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The Value Chain Model
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The Value System Model is
used to:
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Evaluate a company’s
process and competencies.
Investigate whether adding
IT supports the value chain.
Enable managers to assess
the information intensity and
the role of IT.
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Strategic Information Systems
Frameworks
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A framework for SIS is a descriptive
structure that helps us understand and
clarify the relationships among strategic
management and IT.
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E.g.
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Bakos and Treacy Framework
McFarlan Application Portfolio Analysis
Framework
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Bakos & Treacy Framework
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McFarlan’s Portfolion Framework (1984)
For Analyzing Existing, Planned & Potential Information Systems
Strategic
e-procurement
electronic ticketing
Agents’ management
High Potential
Intelligent data mining
e-mail direct marketing
Key Operational
Scheduling online
Online parts ordering
Maintenance online
Support
Frequent flyer account tracking
Online credit union
Training online
Wireless SMS information
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Categories of Strategic Relevance and Impact
A contingency appropriate to IT management.
High
Factory
Strategic Impact of
existing IT system
IT are important but they
are not fundamental to the
firms ability to compete.
Support
Strategic Impact of IT
on operations and future
strategy is low.
Low
Low
Strategic
Totally depending on it
Turnaround
Not absolutely depending on
totally uninterrupted,
fast response-time.
High
Strategic Impact of IT applications under development
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SIS Implementation
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Major Issues to be Considered:
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Justification
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Justifying SIS may be difficult due to the intengible nature of
their benefits.
Risks & Failures
 The magnitude, complexity, continuous changes in
technology and business environment may result in failures.
Finding appropriate SIS
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Identifying appropriate SIS is not a simple task.
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Sustaining SIS & Strategic Advantage
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A Major problem that companies face is how to sustain their
SIS competitive advantage.
3 Major approaches =
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Create inward systems which are not visible to competitors.
Provide a comprehensive, innovative & expensive system that is
difficult to duplicate.
Combine SIS with structural changes. This would include
business processes, reengineering & organizational
transformation.
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Managerial Issues
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Implementing SIS Can Be
Risky.
The investment involved in
implementing Strategic Information
Systems (SIS) is high.
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Strategic Information
Systems Requires Planning.
Planning for an SIS is a major
concern of organizations.
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Managerial Issues (cont.)
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Sustaining Competitive Advantage Is Challenging.
As companies become larger and more sophisticated, they develop
resources to duplicate the systems of their competitors quickly.
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Ethical Issues.
Gaining competitive advantage through the use of IT may involve unethical
or even illegal actions.
Companies can use IT to monitor the activities of other companies and
may invade the privacy of individuals working there.
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