Strategic Management of Information Systems - Term Paper Example

Strategic Management of Information Systems Introduction Strategic management of information systems entails the development and management of systems viewed as important in achieving the overall objectives and goals of an organisation. Information systems have been relied on by most organisations for a while now in implementing various business strategies geared at improving performance and gaining competitive advantage. However, it has to be considered that information technology is relatively new in the business strategy scene. The facilities that information technology provides have an impact on people, organisations and the society in general. In the contemporary business world, it is almost impossible to ignore the importance of information systems in strategic management. Organisations today require information systems to remain relevant in the business world since they provide strategic opportunities (Daniels 1998, p. 167). Different departments in organisations are now relying on information systems to enhance efficiency and improve business effectiveness. The managerial tasks in the business world today have become complex and this means that the information systems that are used also have to change to meet the demands of an organisation. As such, it has become a necessity for organisations to engage in strategic management of IS (Daniels 1998, p. 170). This paper provides a critical analysis of the role that porter’s strategic advantage competitive theory play in the development of strategic management of IS. In addition, this paper also looks at the significance of studying and reviewing porter’s competitive advantage since it can be used as a model for strategic management of IS. To this end, three important research questions and problems have been identified with regard to the study of strategic management of IS. On the other hand, a literature review related to the topic at hand is important in providing empirical evidence on the key issues that the topic discusses. The key findings identified in this paper are derived from researches in an attempt to understand their implication in the strategic management of IS. Other than the key findings, this paper also looks at the limitations associated with this study, and presents recommendation for further research on the same topic. The conclusion in this paper draws attention to a summary of the key points mentioned and described in this study. Importance of the topic This topic brings attention of readers to the importance of information systems in an organisational set up, and how it has evolved over the years. Information systems denote a number of measures that are geared towards improving efficiency in an organisation. Information systems are necessary because they facilitate the utilisation of various business models. In this sense, the available information systems are critical in supporting operations, the management and decision making process (Heeks 2007, p. 8). In addition, this topic allows the reader to understand how information systems play a role in controlling the performance within a business process. This topic further brings to attention the reliance on information systems as a type of work system. In this respect, information systems are important in facilitating the work of humans and machines. Terming information systems as a work system means that, the function of IS entails processing information. Further, this topic is also important in terms of highlighting on how IS can be used to implement business strategies. Another important aspect of this topic is the review of a number of strategies that have been posited to explain the evolution of strategic management of IS and its use (Heeks 2007, p. 10). An example in this sense includes differentiation strategy; according to Porter, differentiation strategy assists an organisation to become unique in the industry that it operates. This involves identifying certain attributes that customers view to the important and meeting such objectives. As such, a firm is rewarded for being unique; for instance, a firm can improve its competitive advantage by coming up with an idea that is different from other firms in the same industry. This may involve for example, relying on IS to improve service delivery to customers or buyers. While other firms may regard the reliance on IS as expensive to maintain, a firm using information technology to deliver services can take advantage that such technology offer and rewarded by delivering efficient services to clients. As such, how an organisation sets up its information systems can assist to gain advantage over other organisations in the same field of business. In this regard, it is necessary to understand porter’s competitive advantage theory and how it impacts on the strategic management of IS (Heeks 2007, p.12). Research Questions This paper aims to answer the following questions: How is information systems important for organisation? In what ways does Porters competitive advantage theory explains issues related to information systems? How can effective use of information systems provide a firm with a competitive edge over firms in the same industry? Literature review As reiterated by Porter, the performance of an organisation depends on the strategy utilised to deal with the forces viewed by Porter as shaping the market. The forces that Porter mentions include the bargaining power of the suppliers, threats from competitors, new entrants in the market, dealing with substitute products and the rivalry that may exist among firms in the same industry. As a way of dealing with competition, Porter proposes two essential strategies that a firm can rely on to gain a competitive edge. This includes low cost strategy and differentiation, which can help a firm to remain relevant in a competitive market (Heeks 2007, p. 15). On the other hand, the reliance on information technology can assist a firm to cut on costs related to production and other overhead expenditures. In addition, IT can also be used by organisations to develop product differentiation. For instance, a firm can rely on information technology to venture into electronic market where buying and selling is fast compared to the conventional way of doing business like relying on distribution channels. This is evident with the EDI (Electronic data interchange) that fast track transactions and elicit confidence among subscribers with regard to information received from either the suppliers or buyers. This further allows firms to benefit as a result of cost reductions by relying on an automated process to conduct business. Because of rapid advancement with regard to IT, the business environment has become unpredictable. As such, organisations need to take advantage of the constant changes in IT to improve efficiency of their services. For instance, in formulating a strategy, the management of a firm can rely on IT to disseminate information to customers and suppliers to enhance efficient delivery of services (Antonia & Tomas 2008, p. 21). Providing efficient services to clients rather than competitors provides a firm with the differentiation necessary to gain a competitive edge over other firms in the same industry. In this regard, it is essential for organisations to identify the necessary information that can be used to implement important decisions. In gathering information, IT can be relied on for quicker dissemination of information within an organisation (Antonia & Tomas 2008, p. 26). Other than a quicker processing of information within the organisation that is necessary to improve business, improved IS can also help a firm to gather information from external environment and process it quicker for implementing concise decision necessary for a firm to stay ahead of others in terms of competition (Green & Liu 2009, p. 215). The strategy of relying on improved IS does not only apply to improve profitability by reducing extra costs, it can also apply in improving administrative tasks in an organisation. On another note, in order to gain an upper hand over competitors, a firm needs to develop an edge that is unique from other firms. In a competitive business world, every opportunity counts in identifying strategies to remain at the top. In addition, gaining an edge require strategic planning and an emphasis on research (Gerald & Kagan 1995, p. 161). In the mid-80s, information systems received a new strategic task. This involved the use of IS to assist firms to realise unprecedented results with regard to their markets. These systems as relied on by organisations have essentially changed the way business is conducted, how firms compete and the position that a company intends to occupy in their markets. In essence, the role that information systems play in improving business is strategic and thus, firms need to consider incorporating improved IS in their business strategy and doing away with slower systems. This is necessary in terms of enabling organisations to be at par with the latest improvements in technology (Gerald & Kagan 1995, p. 161). An IS strategy allows organisations to develop new approaches of engaging in business and thus, provides an orderly way of implementing strategies and system planning. In addition, linking an improved IS to business strategy would allow firms to deliver services in tandem with the expectation of both the business and their clients (Loebbecke & Wareham 2003, p. 171).Conversely, it is also important to note that, information systems are often developed to solve certain problems while, others may be created to usurp opportunities. Within a business set up, it is often easier to pinpoint problems than identifying an opportunity. This is because problems are there in a business environment and often acts as an impediment to a desired system of conducting business (Byrd, Lewis & Bradely 2006, p. 108). However, opportunities are often considered to be limited and it requires creativity or vision to identify and seize an opportunity. In this regard, a business entity can lay a strategy where, it relies on IS that can help it to seize the identified opportunities. This involves relying on SISs (strategic information systems) that can be created from scratch or in other words, such a system can emerge from a firm’s existing ISs. In a liberalised economy, it is often difficult for firms to achieve success without relying on a strategic plan. Despite the existence of different strategies, these strategies often emanate from some basic categories that include for instance, developing a new product or changing service delivery to attract more clients. However, not all strategies require the use of IS, but it is necessary for organisations to improve their innovation by relying on information systems. This would assist companies in maximising their profits and minimising costs. In addition, it is important to note that, efficient information allows organisations to establish a competitive edge within the market place (Huang 2009, p. 76). Organisations can design an IS that they deem is compatible with their plan of improving performance or profitability. This in turn ensures that a firm remains relevant in the market place regardless of stiff competition from other firms. For instance, Dell capitalised on the use of the Web to receive orders from clients. This was unique in the sense that it was the first firm to take this initiative and the reward was gaining advantage over competitors. This strategy has worked on a long-term basis because, even though other firms in the PC industry imitated Dell, the firm still maintained its Web audience because customers had already developed confidence in the services that Dell offers through the Web. Up to date, Dell still sells more PCs through the Web than its competitors. It is vital for firms to identity the strategy that can work while utilising SISs. This is because poor planning with regard to the use of SISs may lead to failures in implementing business strategies (Bento, Regina & Ferreira 2014, p. 28). Key Findings from the Research Organisations need to conduct an intensive research before adopting particular SISs to implement in its business. This is because, relying on efficient information systems is critical in remaining relevant in a competitive market. In addition, firms can gain a competitive edge by implementing strategies such as differentiation and low cost related to production and other overhead expenditures through reliance on efficient SISs. For instance, where a company wants to improve the processing of paper work for instance in a warehouse, the particular firm can rely on the latest technology that will ensure that the various paper work are dealt with on time and there is no delay in delivering goods to customers. Any delay means that clients will shift to other firms that can deliver services efficiently; thus, such a firm needs to remain relevant in a competitive market by adapting efficient SISs. Limitations of the Study and Recommendations This study has one limitation in that there is little research that has been conducted on how IT can be used to improve business strategies. This is because IT continues to change from time to time and thus; previously conducted research becomes irrelevant. In order to improve research on SISs, corporations need to channel funds for R&D in the area of information systems and how they can improve business strategies on a long term basis. Conclusion The porter’s competitive advantage theory is important in understanding the strategic management of information systems. Most strategies that organisations implement are often influenced by the need to gain competitive edge in the market. Achieving this objective means that organisations need to capitalise on SISs that will ensure costs are minimised and profits improve (Chen & Preston 2010, p. 233). References Antonia, G., & Tomas, F 2008, ‘Strategic value and resources and capabilities of the information systems area and their impact on organizational performance in the hotel sector’, Tourism Review of AIEST - International Association of Scientific Experts in Tourism, Vol.63, no. 3, pp.21-47. Bento, A., Regina, B., & Ferreira, W 2014, ‘Strategic performance management systems: impact on business results’, Journal of Computer Information Systems, Vol. 54, no.3, pp.25-33. Byrd, A., Lewis, B., & Bradley, R 2006, ‘IS infrastructure: the influence of senior it leadership and strategic information systems planning’, The Journal of Computer Information Systems, Vol. 47, no. 1, pp. 101-113. 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Huang, L 2009, ‘The Contingent Role of Innovation between IT Management Sophistication and Strategic Alignment’, Journal of Global Information Management, Vol.17, no.2, pp. 75-77. Loebbecke, C., & Wareham, J 2003, ‘The Impact of eBusiness and the Information Society on STRATEGY and STRATEGIC PLANNING: An Assessment of New Concepts and Challenges’, Information Technology and Management, Vol. 4, no.2, pp. 165-182. Read More