Chapter Two

Business Exploitation of ICT

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Learning Outcomes
• Appreciate the nature of why
organizations need to exploit ICT
• Develop an understanding of the key
developments and issues when seeking
to exploit via successful implementation of
ICT
• Critically assess the value adding
characteristics of using ICT to support
organizational goals.

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 The relationships between different aspects of a
business and IS strategy

Business Environment

Business Strategy
Information Systems Strategy WHY?
WHAT?
Information Strategy

Information Services Information Technology

Strategy Strategy HOW?

Change Management / WHEN?

Implementation Strategy
(inc IS-related Human Resource Issues) WHO?

Assessment / Review

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Strategic Information Systems
• SIS represents a fundamental
refocusing of the IS activities away from
the previous back room attitudes
towards the market place in which the
organisation works
• A corporate strategy may be defined as
the way the organisation finds, gets and
keeps its clients.

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Characteristics of SIS
• Significantly change business performance
• Contribute to attaining a strategic goal
• Fundamentally change the way a company
does business
– Outward looking – external focus
– Customers, competitors, environments
• Or the way it competes,
• Or the way it deals with its customers or
suppliers
– Inward looking
– Employees, systems, procedures

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 IS/IT changes the rules …
• IS/IT changes industry structure
– Eg Internet bookselling
• IS/IT creates competitive advantage
– by giving companies new ways to outperform their
rivals
– Easyjet
• IS/IT spawns whole new businesses
– often within a company’s existing operations
– Internet banking (old and new players)
• IS/IT permeates the value chain

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
According to Tapscott the trend in Organizational Change is in this way.

Closed Hierarchy Open Networked Organization

Structure Hierarchical Networked
Scope Internal/closed External/open
Resource focus Capital Human, Information
State Static, Stable Dynamic, Changing
Personnel / Focus Managers Professional
Key Drivers Reward and Punishment Commitment
Direction Managment Commands Self-management
Basis of Action Control Empowerment to Act
Individual Motivation Satisfy Superiors Achieve team goals
Learning Specific skills Broader Competence Level
Basis for Compensation Position in Hierarchy Accomplishment
Relationship Competitive Cooperative
Employee Attitude Detachment (It’s a job) Identification (It’s my company)
Dominant Requirements Sound Management Leadership

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
What makes an SIS strategic?
• Unique
• First of its kind
• Hard to imitate
• Raises entry barriers
• Creates new dependencies (Porter’s 5F
Model)

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
How does an SIS remain strategic?
•Use of patentable technology
•Links with organisational culture
•Links with core competencies
•ie use IS/IT to build on existing strengths or
develop new strengths
•Links to internal organisational structure
and politics

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Information Technology –
Supports Strategic Management
• Innovative applications: Create innovative
applications that provide direct strategic advantage to
organizations.
• Competitive weapons: Information systems
themselves are recognized as a competitive weapon
• Changes in processes: IT supports changes in
business processes that translate to strategic advantage
• Links with business partners: IT links a company
with its business partners effectively and efficiently.

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
• Cost reductions: IT enables companies to reduce costs.
• Relationships with suppliers and customers: IT can be used
to lock in suppliers and customers, or to build in switching costs.
• New products: A firm can leverage its investment in IT to
create new products that are in demand in the marketplace.
• Competitive intelligence: IT provides competitive (business)
intelligence by collecting and analyzing information about
products, markets, competitors, and environmental changes.

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Successful Form of Organisations
• Decentralised way of operating
• Flatter organisational hierarchy
• Interorganisational networking
• Cross functional teams
• Globalisation of operation
• Enterprise Wide Systems
– To improve quality (i.e., have full transaction information for
each business/service transaction)
– To provide a platform for process innovation
– To ensure efficient operation of work flow across the
whole business/enterprise

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 ERP and Supply Chains
ERP or enterprise systems control all major business
processes with a single software architecture in real time.
• It is comprised of a set of applications that automate routine back-
end operations:
– such as financial management
– inventory management
– Scheduling
– order fulfillment
– cost control
– accounts payable and receivable,
• It includes front-end operations such as:
– POS
– Field Sales
– Service
• It also increases efficiency, improves quality, productivity,
and profitability.
For use with Strategic Information Systems Management
by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Some enterprise wide issues
• Ethical
• How much to integrate
• Role of IT/IS
• Organisational adaptability
• Organisational agility
• Project Management
• Technical considerations
• Organisation change and culture
For use with Strategic Information Systems Management
by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
 Continued.
• Role and involvement of end users
• Trying to predict and measure
intangible benefits and costs on the
enterprise wide system

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning
Steps to improve the exploitation
of enterprise wide based systems
• See the implementation of such systems as continuous
process
• Ensure that the new system can allow users what they
could do in the old legacy system with extra and value
adding features
• Encourage effective dialogue and engagement with users
• Allow they to play with the enterprise wide system
• See resistance as source of ideas, innovation and creativity
• Understand the essence is information not information
technology
• Try and not control and plan all aspects, it will take a life of
its own

For use with Strategic Information Systems Management

by Kevin Grant, Ray Hackney and David Edgar
1408007932 © 2010 Cengage Learning