Information Systems Strategy Triangle

The relationship among business strategy, organizational strategy, and information strategy.

Business strategy:

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Where a business wants to go and how it’s going to get there.

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Derived from market forces, customer demand, and organizational capabilities.

Competitive Advantage

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Doing something well that customers value and competitors can’t do well.

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If a capability is going to provide competitive advantage, it must be:
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rare

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valuable

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inimitable

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Competitive advantage produces “super-normal” profits.

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It is often the result of many small decisions, which, in totality, create a “system” that has competitive advantage over other “systems.”

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First-mover advantage – being the first to implement a particular strategy can “distance” one firm from the others, at least temporarily.

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Sometimes, moving first allows a firm to develop a large enough market share that the competitive advantage can be sustained for a long period.

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Threshold variables – not reaching this minimum level (or not having this capability at all) puts the firm at a competitive disadvantage.

Organizational goal (e.g., increase market share, etc.)

Strategy – plan for meeting goal

Org Culture

Org Capabilities and processes

IT

Fit/Alignment

Figure A: An alternative view of the relationship between business strategy, organizational strategy, and information systems

Porter’s strategies for achieving competitive advantage:

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Low cost

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Differentiation

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Focus (niche)

Hypercompetition Framework

Assumptions:

  1. Every advantage is eroded, they only last until competitors catch up. Once something is no longer an advantage it becomes a cost of doing business.

  2. Sustaining an advantage is less important than creating new ones.

  3. Advantages should be used to cause disruption; you should not try to sustain them. A series of “disruption” advantages can be used to erode competitors’ positions.

  4. Initiatives should be started before the benefits of a current advantage erode.

Reflection question: How can a firm use information systems to

  1. become a low cost leader

  2.  differentiate its products in the marketplace

Organizational strategies

How will the business organize itself to implement its business strategy?

Consists of: (See Figure 1.7 in text)

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Organization
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Business processes

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Formal reporting relationships (structure)

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Informal networks/communication

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Decision processes/authority

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Control
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Decision processes/authority

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Data (availability and use)

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Planning processes

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Performance measurement and evaluation

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Culture
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Values

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Incentives and rewards

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Informal networks/communication

Information Systems strategy

What IS capabilities would assist the organization in implementing its business strategy and fit with the organization strategy?

Alternative view - IT-oriented business strategy approach: What business strategy would allow the business to use a unique implementation of IT to gain competitive advantage (e.g., the Amazon approach).

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Specifically, what IT architecture (hardware, software, network capabilities, and data) will allow the implementation of the chosen business strategy?

Understanding business strategy’s relationship to information systems:

  1. What are the business goals and objectives?

  2. What are the plans for achieving these goals? What is the role of IS in the plans?

  3. Who are the crucial competitors and partners? What is required to be a successful member of the value chain?

Understanding organizational strategy’s relationship to information systems:

  1. What are the important structures and reporting relationships within the organization?

  2. What are the characteristics, experiences, and skill levels of the people within the organization?

  3. What are the key business processes?

  4. What control systems are in place?

  5. What is the culture of the organization?

Case 1-1 Roche’s New Scientific Method 

  1. Apply the IO model to this case. Map the information given in the case to the various components of the model.

  2. Apply the Hypercompetition model to the case.

  3. How are information systems used to support Roche’s strategy?