Information Systems and

Technology

Chapter 7

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Learning Objectives
• distinguish between data and information and explain
how the information age presents new challenges to
managers
• explain what attributes make information useful to
managers
• classify the types of information systems that now
exist
• introduce and discuss the nature of strategic
information systems and demonstrate how they can
add value to the business
• appreciate how to infuse the technical infrastructure
with the strategic intent and aspirations of the
business via IT/IS alignment

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

What are Information Systems?
Information systems
are the systems that
deliver information and
communication services,
and the organizational
function that plans,
develops and manages the
information systems.

Information technology (IT)

refers to hardware, software
and telecommunications
networks technology.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 What do IS do?
1. Contextualization: by examining why the data was collected
and for whom
2. Categorization: by units of analysis, such as product,
process, application or shop
3. Calculation: by analysis using mathematical or statistical
techniques or judgement
4. Correction: by removing errors from the data, via feedback
and control mechanisms
5. Condensing: by summarizing or condensing the data for
another more senior person or function within the
organization.

So information systems can be formal or informal, computer

based or not.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Taxonomy of IS
Ward and Peppard (2003) identify three different eras in the
evolution of the role of information systems and technology in
organizations:

1.Data processing (DP) – from the 1960s onwards

2.Management information systems (MIS) – from the 1970s

onwards

3.Strategic information systems (SIS) – from the 1980s

onwards.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

Strategic Information Systems
Innovative applications (A): Create innovative applications that
provide direct strategic advantage to organisations.

Competitive weapons (B): Information systems themselves are

recognised as a competitive weapon

Changes in processes (C): IT supports changes in business processes

that translate to strategic advantage

Links with business partners (D): IT links a company with its business
partners effectively and efficiently.

Cost reductions (E): IT enables companies to reduce costs.

Relationships with suppliers and customers (F): IT can be used to

lock in suppliers and customers, or to build in switching costs.

New products (G): A firm can leverage its investment in IT to create

new products that are in demand in the marketplace.

Competitive intelligence (H): IT provides competitive (business)

intelligence by collecting and analyzing information about products,
markets, competitors, customers and environmental changes.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Impact of Technology
Before The Strategic Era of IT/IS After The Strategic Era of IT/IS

Geographic Concept Business Concept

Concerned about functionality Processes and adding value

Mechanistic Holistic

Functional Activity Cross-Functional Activity

Managers - Controllers Manages - Connectors

Vertical Communication - key Communication to and from all levels

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

Technology Enabling Innovation
Innovation Type/Category Example of Technology/IT/IS
Product New Apple IPod or Blackberry (which is an example of
technologies converging); or the developing market of domestic
robots.
Process Use of robots in the car and manufacturing industry; MRPII
systems, B2B (Business to Business), B2C (Business to
Consumer)
Organisational New division, business unit, team e.g. call centre customer
support, Voice Over Internet Protocol (VOIP or the unit who
manages service level agreement for outsourced IT functions such
as the purchase, maintenance and cleaning of computer hardware

Management New management systems/philosophy e.g. TQM/BPR, Enterprise

Resource Planning Systems, Enterprise Wide Systems.

Commercialization New approach to marketing/selling e.g. Internet selling, or Digital

cash, or subscription based web sites of and for community of
practices.
Service New type of service-related business e.g. on-line insurance, social
networking, community of practice, blogs, RSS feeds, or pod
casts.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Business IT/IS Alignment
The notion of strategic IT/IS alignment centres on three
arguments (Hirschheim and Sabherwal 2001):

1.Organizational performance depends on structures and

capabilities that support the successful realization of
strategic decisions.

2.Alignment is a two-way process, where business and

IS strategies can act as mutual drivers.

3.Strategic IS alignment “is not an event but a process of

continuous adaptation and change” (Henderson and
Venkatraman 1993).

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Benefits of Alignment
• Organizational agility – if IT/IS develops in an iterative manner without holistic consideration of
current or future business needs, systems are likely to become diverse and incapable of scaling
or adapting over time. In contrast, where systems are planned to align with business needs,
agility is much improved. This improvement comes not only through standardisation, but also
from confidence and success in re-using mature components.
• Operational efficiency – modern business relationships are complex, involving a blend of
customers, suppliers, service providers and other third parties. By effective alignment of IT/IS to
the needs of these relationships, for example in the management and integration of the supply-
chain, businesses can improve their operational efficiency, with consequent competitive
advantage.
• IT cost reduction – where IT/IS is developed in an iterative manner without focus on the
organization’s wider alignment needs, multiple solutions may be developed or procured to similar
business needs, increasing IT capital costs and providing fragmented solutions that are more
difficult and expensive to support. Business costs may also increase, as staff work around the
systems to compensate for their shortcomings. Alignment facilitates standardisation and
consolidation, with consequent reductions in cost.
• Risk management – the discipline of alignment planning forces an organization to consider the
effectiveness of its systems against a diverse range of factors. This highlights potential
commercial or legal compliance risks and promotes thorough system revisions. By improving
visibility, alignment also eases the ongoing management of risk.
Source: Grant, K., and Gardner. M., (2010) IT/IS Alignment (Chapter Five) in Strategic Information
Systems Management, Cengage

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Reading
Bannister, F. and Remenyi, D. (2005) Why IT Continues to Matter: Reflections on Strategic Value of
IT The Electronic Journal Information Systems Evaluation, 8(3), 159-168
Binney, D., (2001) The Knowledge Management Spectrum – understanding the KM landscape,
Journal of Knowledge Management, 5(1), 33–42.
Chan, Y.E., and Reich, B.H., (2007) IT alignment: an annotated bibliography Journal of Information
Technology, 22, 316–396.
Christensen, C.M., (1997) The Innovator’s Dilemma, Boston: Harvard Business School Press.
Galliers, R. D., Leidener, D. E., Baker, B. S. (2003). Strategic information management: Challenges
and strategies in managing information systems. Woburn, MA: Butterworth-Heinemann.
Grant, K; Hackney, R., Edgar, D., (2010) Strategic Information Systems Management: priorities,
procedures & policy, Thompson/Cengage Publishing,
Luftman, J. (2000) Assessing Business-IT Alignment Maturity. Communications of the AIS. 4(14)
Luftman, J., and Brier, T. (1999) Achieving and Sustaining Business-IT Alignment, California
Management Review (Fall), 109-122.
Schilling, M., (2004) Strategic Management of Technological Innovation, McGraw-Hill.
Stacey, R, D., (2005) Experiencing Emergence in Organisations: Local Interaction and the
Emergence of Global Pattern, Routledge, London.
Hershey, PA: Idea Group.

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction

 Review Questions
1. Explain the difference between data and information.

2. Define a knowledge worker and what challenges exist

in the information age for such knowledge workers

3. Describe the different types of information systems

that exist and how an organisation can use them for
competitive advantage

4. Explain why it is important to align IT/IS to the

business purpose, needs and aspirations.

ANSWER THE QUESTIONS ABOVE IN

NOT LESS THAN 300 WORDS EACH QUESTION

David Campbell, David Edgar & George Stonehouse

Business Strategy: an introduction