Information Systems Strategy Triangle

1.Why is it important for business strategy to drive organisational strategy and IS strategy? What might happen if business strategy was not the driver?

Business strategy:
Where a business wants to go and how it’s going to get there.
Derived from market forces, customer demand, and organizational capabilities.
Competitive Advantage
Doing something well that customers value and competitors can’t do well.
If a capability is going to provide competitive advantage, it must be:
rare
valuable
inimitable
Competitive advantage produces “super-normal” profits.
It is often the result of many small decisions, which, in totality, create a “system” that has competitive advantage over other “systems.”
First-mover advantage – being the first to implement a particular strategy can “distance” one firm from the others, at least temporarily.
Sometimes, moving first allows a firm to develop a large enough market share that the competitive advantage can be sustained for a long period.
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
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:
Low cost
Differentiation
Focus (niche)
Hypercompetition Framework
Assumptions:
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.
Sustaining an advantage is less important than creating new ones.
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.
Initiatives should be started before the benefits of a current advantage erode.

Reflection question: How can a firm use information systems to
become a low cost leader
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)
Organization
Business processes
Formal reporting relationships (structure)
Informal networks/communication
Decision processes/authority
Control
Decision processes/authority
Data (availability and use)
Planning processes
Performance measurement and evaluation
Culture
Values
Incentives and rewards
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).
Specifically, what IT architecture (hardware, software, network capabilities, and data) will allow the implementation of the chosen business strategy?

2
Electronic markets allow cooperating competing companies to control how a market in a certain business area operates. This can have strategic implications due to way this manipulates the environmental threat and opportunities. Internet commerce has the potential to replace traditional sales channels in both the business-to consumer and business-to-business sectors. In addition e-commerce can generate new business opportunities, for instance the sale of electronic content has provided a new channel for the distribution of music, and it may be argued, provided a different product. Overall, the business model has changed, so the operation of the organization also would be changed.


3. Chief information officers (CIOs) have the difficult job of running a function that rues a lot of resources but offers little measurable evidence of its value. Line managers are increasingly assuming responsibility for planning, building, and running information systems that affect their operations. To respond to business and technological changes, CIOs now must build relationships with line managers and assume new and more strategic roles. The strategic role of the CIO is becoming ever more complex, requiring an expansion of the organizational and structural possibilities for filling that role. This paper presents an extensive literature review on the role of the CIO. The research examines CIO role in Norwegian organizations. In this paper, results from a survey of Norwegian CIOs are presented. Norwegian CIOs have on average worked in the current organization for eight years, have worked in information technology (IT) for twelve years, report mostly to the CEO or CFO, and have eleven people reporting to them. A large percentage have a masters degree. Also, formal IS planning tended to be adopted by organizations with higher annual revenue, larger number of total employees, and broader span of control (i.e., the number of people reporting to the CIO). Higher CIO reporting level was also associated with greater extent of information systems plan implementation.
CIOs have two targets when they manage the IT project portfolio, money and time. CIOs estimate how much time each IT employee has to work on projects (as opposed to support). The combination of that time is use to determine the total project time for the year.
Typically, if a CIO does not spend all they planned then can accrue that money for future use. However, time is different. Every hour that reserved for projects is lost forever if it is not used that way.
In this troubled times, there is a huge demand for IT projects, it is critical that staff time is utilized efficiently. Historically CIOs approved projects, and then they waited for those championing the projects to bring them forward. The issue with that approach is that many managers are busy they tend to wait until the last possible moment to get things going. In the mean time, that time set aside for projects is going unused.
CIOs should encourage business manager and other champions to getting things moving sooner and telling them the resources are available now.

1. M.A. Dorenbos, The Information Systems Strategy Triangle, Available at: http://fhict.fontys.nl/es/MScModules/Isom/Shared%20Documents/Sheets/Chapter+1_Info+Stg+Triangle%5B1%5D.ppt ( Access on February 28, 2009)
2.Information Systems Strategy Triangle:
www.cobhomepages.cob.isu.edu/KreggAytes/mba624/no...