Technologia informacyjna (IT) moe by efektywnie wykorzystana w tworzeniu i implementacji skutecznej strategii organizacji. Najnowsze podejcie zakłada wrcz, e IT staje si zasadniczym czynnikiem wszelkich zmian strategicznych, a bezporedni aplikacj IT s coraz nowoczeniejsze systemy informacyjne (IS). Zjawisko to jest odzwierciedlane przez coraz czciej spotykan konwergencj technologii, wizji i misji wielu firm. Podejciem uzupełniajcym jest równoległe tworzenie dynamicznego rodowiska wewntrznego firmy, zmierzajcego do kreowania organizacji opartej na wiedzy. Równie to podejcie byłoby niemoliwe do realizacji bez nowoczesnej technologii informatycznej.
Information technology (IT) can be effectively used in the creation and implementation of an organizational strategy. The most recent approach even assumes that IT has become a decisive factor in all strategic changes, and the widest application of IT is the new range of information systems (IS). This phenomenon is reflected by a convergence of technology, vision and mission of many firms. A complementary approach is the creation of a dynamic organizational environment, which leads to a knowledge-based organization. This concept would be undoable without modern IT, either.
1. Introduction
Cutting-edge IS/IT (information system/information technology) strategies rarely happen by accident. IS managers have the responsibility for developing IS strategy and managing the day-to-day IS operations of the organization. There are a number of ways to go about developing IS strategic plans. The aim of this article is to explore some examples of IS strategic thinking to provide insights into the ways that IS can be maximized for organizational advantage.
2. IT-enabled Strategic Planning
A “strategy” is a plan for achieving medium and long-term goals. When this is specified for an organization in a document that covers such things as the vision and mission of the business, the organization's goals and how it will achieve them, then it is
called a “strategic plan” (Bartol et al. 1998). A strategic plan provides the organization with a focus and clear mission, which can be communicated to employees, suppliers and customers. Thus, strategic planning enables a company to focus on what is important. IS strategic planning is concerned with helping the organization achieve its strategy. If a business had a strategy to tap into global markets, then IS management would look at how the IS could support this. One option would be to look at how the Internet could be used to reach new markets. This would need to be specified in the IS strategic plan. As an example, one of the best known current business strategies is Customer Relationships Management (CRM). It is a business strategy to manage customer relationships on a long-term basis in order to add value. CRM becomes a strategic focus for the organization when it embraces management, strategy and organizational culture. Thus, it cannot be effective if viewed solely as a technology solution.
According to M. Littell, president of the CRM Division of EDS, CRM is more a strategy than a process. Buying technology before you have your CRM business goals clearly in mind leads to disaster (Sims 2000).
In the early years of computerized information systems, the focus was on automating the day-to-day transactions of the business and thereby producing significant cost savings. These transaction-based systems contained great volumes of data in files, which could be interrogated and summarized to produce management information. Decision support systems were more interactive systems, which managers could use to improve their decision-making. However, the view of the role of IS was one of supporting the rest of the organization. In more recent times, there are cases where IS has taken on the role of strategic driver in organizations. In other words, the information systems are not just supporting other functions in the business but are the main reason for a company improving its position in relation to its competitors. In this sense, the information systems become a strategic driver for the business. This way new technologies create opportunities for improvement and competitive advantage. IS management in larger organizations operates on several levels. A key person is the chief information officer (CIO), who has overall responsibility for the information systems and for developing the IS strategy for the business.
The executive board of a business is responsible for developing the strategy of the organization and will be led by the chief executive officer (CEO). The CIO advises the board on IS issues and strategy.
Other management responsibilities within the IS function include project manager, who takes charge of particular projects, and senior systems analysts, who are responsible for managing other analysts and programmers.
3. How to Incorporate IT Into Organizational Vision/Mission
An organization should have a vision statement, which defines in a few sentences the company's main purpose. For example, Western Mining Corporation (WMC) is a large mining company with the following vision (Benson and Standing 2002, p.197):
WMC is a minerals company determined to be BEST. BEST represents our commitment to Bottomline, Environment, Safety and Team performance.
Interestingly, WMC's vision statement is not concerned solely with financial profitability. A vision statement can be expanded further, as in WMC's case, to communicate broad organizational aims in a mission statement. These aims should provide a steering mechanism for the functional units where more detailed objectives and goals can be specified along with strategies to achieve them. WMC's mission statement is (Benson and Standing 2002, p.197):
Our aim is to maximize shareholder value by finding, acquiring, developing and operating mineral resource projects throughout the world. We will maintain a diversified portfolio of commodities and exercise prudent financial management. To achieve our purpose, we develop and retain top-quality people, management, skills and technology.
Western Mining's mission statement can be used to strategically align the information systems function with the organizational goals. IS can be used to help manage mineral resource projects. The global focus of the company means that their systems are tightly integrated to facilitate global communication. Systems to provide information for decision-making purposes to save costs would be aligned with the goal of 'prudent financial management'. This may include business intelligence software to provide an extra level of analysis and data mining. The vision statement stresses the environment and safety issues. IS can be used to support these areas, too. Monitoring the environmental impact of mining and modeling the likely impact of future mines can be done with geographical information systems. Safety data can be gathered, analyzed and presented using a spreadsheet package.
A vision statement and mission statement are only two components of a strategic plan. Organizations typically develop strategies at three different levels: corporate, business and functional (Benson and Standing 2002). The corporate-level strategy is developed by the senior people in the business. It can cover new business directions, the closing of some business operations and the allocation of resources between branches of the company's operations.
Business-level strategy applies to organizations that have (semi)auto-nomous businesses operating independently. These businesses need to develop their own strategies as they are usually in the best position to do so. However, the business strategy should support the broad aims of the corporate strategy. In smaller organizations, the business unit level is not applicable.
Functional-level strategy is concerned with plans at the functional business level such as marketing, information systems and finance. Effective strategies at the functional level can provide a competitive edge to the organization as a whole. For example, the development of electronic commerce via a well-designed web site has the potential to improve market share for an organization. IS/IT strategy formulation follows a top-down approach.
4. IT/IS in Porter’s Competitive Forces Model
Competitive strategic analysis takes into account the competition in the business environment and the potential of using IS and technology to gain a competitive advantage over other companies. There are several versions of strategic analysis. The article will explore Porter's competitive forces model, SWOT analysis, and environmental scanning using the Web.
A commonly referred to framework for analyzing the competition within an industry is Porter's competitive forces model (Porter 1985). Although the model was not initially intended for use in IT strategy formulation, it can prove useful for IT strategic planning. Porter's model emphasizes five competitive forces:
− New entrants. To combat a new entrant, the company may have to lower its prices, change the product in some way or improve distribution channels.
− Increased bargaining power of buyers. When buyers have increased bargaining power, the company should investigate, for example, how to develop loyal customers or provide better service.
− Increased bargaining power of suppliers. Suppliers may increase prices or reduce the quality of their products and services.
− Threat of other industries offering substitutes. When a company finds other companies offering product substitutes, profits are difficult to maintain.
− Rivalry between competing sellers. Competing companies often lower prices, engage in advertising battles, or offer special incentives to consumers. These all mean that profits are difficult to maintain. A company can examine how its information systems can be used to gain a competitive edge.
The five forces can form a framework for analyzing potential threats. IS managers can examine how information systems can be used to alleviate the competitive forces. For example, a company may look at how the Internet can be used to promote cost-effectiveness in acquiring products from suppliers, or it could set up an electronic marketplace (e-market) or join one to have more flexibility in choosing suppliers. 5. IT/IS in SWOT Analysis
SWOT analysis is another form of competitive analysis (Thompson & Strickland 1995). The competitive situation for a company is assessed by examining its strengths (S), weaknesses (W), environmental opportunities (O), and threats (T).
Table 1. Swot analysis examples Source: own study
INTERNAL TO ORGANIZATION EXTERNAL TO ORGANIZATION STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Sound
management
Poor administrative procedures
Growth market New legislation
…… …… …….. ……. Latest IT infrastructure Employees’ resistance towards IT Advantages of new IT capitalized on Danger of rapid obsolescence of IT An example area is that of travel industry, and in particular the role of the travel agency. A strength of many travel agencies is the personal customer service they provide. This, in turn, often results in a high level of customer loyalty. Many travel agents have expert knowledge on certain holiday destinations and have a wealth of experience in the industry.
One of the weaknesses of travel agencies is that they typically offer only what is available through their customer reservation systems, which is quite a restricted set of options. Many travel agencies also operate on small profit margins.
Of course, there are opportunities in relation to using the Internet. Threats come from all sides — from airlines offering direct ticket sales to consumers and from online travel agencies and travel brokers marketing directly to the consumer.
Many small businesses have recognized the opportunities provided by the Internet. Unfortunately, a large percentage of small companies that develop their own web sites bypass the strategic planning needed for it to make a significant impact on the business. Many small businesses use the Web. Unfortunately, a large percentage of them are not obtaining significant returns from their investments in e-commerce. For example, a study of travel agencies revealed that few companies had a strategic plan and, of those that had, many still did not include how e-commerce could strategically affect the business (Standing & Vasudavan 2000). Most travel agencies viewed e-commerce as an add-on for their business and had only a weak vision for e-commerce within their own companies. However. most companies realized that e-commerce would have a significant impact on the travel sector and would necessitate a restructuring of the industry.
6. Technology-enabled Environmental Scanning
Companies must have effective methods for obtaining information about the changing business environment. They need to build changes into their strategic plans to take advantage of opportunities and minimize the impact of emerging threats.
Companies pay substantial amounts of money to market research institutions for market information. However, organizations also gather their own information and data. Some information is gathered through informal networks of contacts. Increasingly, the Internet and the World Wide Web are being used to gather information on competitors, trends and changing consumer buying patterns. The Web is a cost-effective tool for gathering competitive intelligence. People may be using the Web for environmental scanning without being aware that they are doing so. Many employees gather information on trends and competitors while using the Internet for some other purpose, and share this with colleagues, either face to face or by email. This is informal environmental scanning. Some companies employ people to spend some of their time doing environmental scanning. As the amount of data and information available on the Web continues to increase, it is likely that it will be increasingly used for environmental scanning.
Environmental scanning is not a form of competitive analysis in its own right but rather a technique for helping in competitive analysis. It can be used, for example, to identify opportunities and threats in the business environment as part of a SWOT analysis. As an example of this approach, the Institute of Economic Computer Science at the Wroclaw University of Economics uses environmental scanning to modernize its teaching programs and make them fully compatible with those offered at the universities in the European Union. The type of information the Institute can gather includes:
− number of similar courses being offered in the same state and country − course fees charged by other universities
− target market of other universities − course content and teaching methods − trends in other countries for certain courses − staffing profiles.
7. IS/IT Outsourcing
For strategic reasons, many organizations have decided to outsource some or all of their IS/IT function. Outsourcing in this context means off-loading the responsibility to an external organization. One of the main reasons cited for doing this is cost savings, although there are others.
Various forms of IT outsourcing exist. For example, the external organization might be used to manage the project but the people actually developing the system are internal to the organization. This arrangement would be made when complex project management skills are required or when there is a history of projects not being completed on time or budget.
Table 2. The benefits of outsourcing Source: Based on (Benson and Standing 2002)
BENEFIT REASON
Savings on IS/IT Reduces staffing levels. Reduces IS/IT training.
Reduces cost of IS/IT recruitment.
Saves on hardware and software (some data may be processed at external service provider's site). Better planning Easier to determine budget and, therefore, to
plan.
Better decision making Management is free to focus on other areas of business.
Access better skills External agency is the expert.
Access better hardware and software IT/IS is the core business of the external agency. Knowledge transfer Internal staff may learn from external agency. However, there are also serious pitfalls of the outsourcing implementation. For example, over time the external service provider may increase prices significantly, thus posing the question whether it is cost-effective to outsource. A company may feel that the level of service declines but they are locked in to the service provider contractually.
It may be difficult to gain a strategic advantage from information systems when the main responsibility for IS/IT is handed over to an external agency. Although service providers may work hard to keep the contract, it is unlikely they would be as strategically focused as the company employing them.
8. Enhancing Organizational Dynamics Through the use of IT
Most strategic analysis approaches are based on outlining a strategic direction with complementary goals and objectives. Many organizations use one or a combination of strategic analysis methods, such as SWOT analysis, Porter's competitive forces model or value chain analysis. However, another approach to developing a competitive organization is to focus less on developing long-term goals and objectives and more on creating a dynamic and creative environment which organically spawns ideas and develops effective courses of action. The former approach is one where senior man-agement set the strategic agenda in a top-down fashion, whereas in the latter approach there is much wider scope for ideas and creativity. Although the two approaches may appear to be opposed, they are not, in fact, mutually exclusive. Making the development of the organizational environment a key focus does not preclude strategic analysis in
other forms being carried out. Goals, objectives and action plans are still needed but there is likely to be a much wider ownership and responsibility for setting strategy. When an organization embarks on recreating its organizational culture, it needs to develop appropriate information systems. The technological infrastructure in “learning organizations” (i.e. companies with an ability to learn quickly) where knowledge workers predominate is typically quite sophisticated. It consists c widespread use of email, groupware for document management and control, multifunctional intranet for knowledge management, heavy use of the Internet and the Web, powerful database query interfaces, and perhaps business intelligence software.
9. IT and Learning Organization
Knowledge management can be viewed as the process o creating, storing, managing, accessing and sharing tacit knowledge (in a person's head) and explicit knowledge (documented in books, intranets, etc.). It relates to the corporate memory of an organization and its intellectual capital. A simple classification of knowledge is shown below (Cranfield 2000):
− Know-why — explanatory knowledge, scientific knowledge of principles (laws o nature)
− Know-how — skills, the ability to organize resources to achieve desired outcomes − Know-who — social knowledge, refers to specific social relations, e.g. who control
the resources needed in a particular situation
− Know-when/know-where — economically useful knowledge about markets − Know-what — catalogue knowledge.
Many diverse companies are effectively developing knowledge management programs. These are applied to cost reduction, process improvement, improving productivity, improving time to market, and increasing innovation. The types o applications include frequently asked questions (FAQs), best practices, problem solving software, decision support systems, resource management systems, and asset management systems.
The term “learning organization” was used by P. Senge (1990) to describe companies whose ability to learn quickly will provide them with a competitive edge Although a learning organization may generate new knowledge, it may no necessarily manage it effectively. This is where the learning organization and know ledge management go hand in hand. Companies need to learn quickly in a rapidly changing environment, and efficiently manage and share the knowledge gained.
10. Conclusions
There are many ways to go about using IS/IT within organizations and no one strategic planning approach can guarantee business success. However, the methods presented in this article do provide a starting point and framework for examining the potential of IT
and IS in organizations. No matter, which approach, each organization should incorporate the latest technological advancements into its strategic plan. This incorporation can be done using the traditional strategic analysis methods, e.g., Porter’s competitive forces model or SWOT analysis. It can also capitalize on the use of the Internet, and conduct environmental scanning using the Web.
The ultimate goal of an organization, as far as IS strategic planning is concerned, is to achieve the status of a knowledge management enterprise and a learning organization, which can adapt instantly to the constantly changing information environment.
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