IS and Strategic Management

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1. Functions of Business IS

One way to consider the fundamental role of Information Systems (IS) in business organisations is to classify the types of IS employed in the business sector. One classification is to consider whether the IS supports mainly one of the three traditional levels of management hierarchy found in organisations (for example: strategic, middle-level and operational management). This classification is more useful for our purpose as it leads us to identify the three vital roles performed by IS in most business organisations. These are:

• Support for business processes and applications
• Support for decision making at operational and middle level management
• Support for strategic planning and management

Strategic IS planning is primarily concerned with the management of an organisation's IS while the latter is about the role of IS in managing the entire organisation strategically.

2. Using IS in the Strategy Development Process

Strategies will be developed based on the broad choices that organisations have regarding which products/services they offer, and which market(s) they need to target in order to achieve or maintain competitive advantage. For example: managers will look at the organisation's current:

• strength on cost
• strength on quality
• potential for uniqueness
• market share and best distribution network

Strategies may be developed in a number of ways:

• Planned strategy: this is a highly structured strategy
• Emergent strategy: no formal strategy is devised, but evolves from everyday processes and decisions
• Unrealised: where a strategy is proposed, but it does not materialise

Increasingly, computer-based IS are seen as an important element in the strategy development process, by providing new tools to help an organisation to achieve competitive advantage. For example: automation of certain tasks can:

• Cut Costs
  billing/invoicing systems require fewer staff than manually operated departments.

• Improve the speed and quality of goods delivery/customer services
  inventory/order processing processes, automated teller machines, on-line booking systems.

• Provide opportunities to offer unique or specialist services
  on-line ordering of goods, Internet banking etc.

• Provide an improved distribution network 
  the Internet provides access to a world-wide customer base without costly advertising/marketing initiatives.

3. Problems Facing IS Strategy

Developing a clear information strategy for an organisation is difficult to do well. Problems can arise for the following reasons:

• IS investments often do not support the organisation's business strategy;
• Top managers often lack interest in or knowledge about IS, and have other priorities. There is therefore a tendency to delegate to IS experts, who often lack sufficient business knowledge, but are keen to implement the latest technology. This in turn can result in a tendency to invest in technology for technology's sake, and introduce solutions that do not necessarily meet business strategy needs.
• Payback from IS investments is inadequate (i.e. there is too much investment for too little return)
• Designer's lack of understanding of user requirements and working practices. This is likely to result in poor performance once the IS solution is in place. This in turn will generate a negative view of IS by users and management alike.
• Poor communication and relations between IS users and IS specialists. This, too, is likely to result in poor performance and negative attitudes.
• The impact of the IS solution on other parts of the organisation are often not fully appreciated.

4. Strategic Fit between IS & Business Strategies

The general view is that the corporate strategy should drive the IS strategy, rather than the other way round. Having said that, however, it must also be recognised that the existence of certain IS solutions may influence the strategic business approach, by opening up new strategic opportunities. For example: the Internet has opened up opportunities for new market entrants with little or no office space or staff, by enabling them to access a wide customer base with very few assets and set-up costs.

IS should not, therefore, be seen only as a means of implementing chosen strategies, since it can also inspire and support new business strategies. There is often an interactive relationship between the two: strategy dictates the IS solution, but the IS solution can equally well shape strategy. It is important, therefore, for strategy to remain flexible.

5. Organisation Theory & IS Strategy

Organisational theory supports the concept that alignment should reflect the type of environment in which an organisation operates. This is the contingency approach to alignment. The contingency approach considers the following factors when trying to align IS solutions with business needs: whether the organisation operates in a stable or non-stable environment, whether there is a high or low requirement for interaction between business units, departments or individuals, and whether core tasks are routine or ad hoc.

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Reference(s)
	Book		Johnson, G., Scholes, K. & Whittington, R. (2007) Exploring Corporate Strategy: Text & Cases with Companion Website Student Access Card: Text and Cases. 8th Edition. Financial Times Prentice Hall: United Kingdom (UK), England, Essex, Harlow. [ISBN: 9780273711926]. [Available on: Amazon: https://amzn.to/3f7sg4u].
	Book		Laudon, K. C. & Laudon, J. P. (2007) Management Information Systems: Managing the Digital Firm. 10th Edition. Pearson Prentice Hall: United States of America (USA), New Jersey (NJ), Bergen, Upper Saddle River. [ISBN: 9780132415798]. [Available on: Amazon: https://amzn.to/3UhgqDH].
	Book		Pearlson, K. E. & Saunders, C. S. (2004) Managing and Using Information Systems: A Strategic Approach. 5th Edition. John Wiley & Sons: United States of America (USA), New York (NY). [ISBN: 9781118281734]. [Available on: Amazon: https://amzn.to/3TMqOTZ].
	Book		Robson, W. (1997) Strategic Management and Information Systems: An Integrated Approach. 2nd Edition. Pitman: United Kingdom (UK), England, London. [ISBN: 9780273615910]. [Available on: Amazon: https://amzn.to/3EZNmvZ].
	Book		Thompson, A. A. & Strickland, A. J. (2003) Strategic Management: Concepts and Cases. 13th Edition. Mcgraw-Hill: United Kingdom (UK), England, London. [ISBN: 9780072443714]. [Available on: Amazon: https://amzn.to/3f6Foa7].
	Book		Ward, J. & Peppard, J. (2002) Strategic Planning for Information Systems. 3rd Edition. John Wiley & Sons: United Kingdom (UK), England, West Sussex, Chichester. [ISBN: 9780470841471]. [Available on: Amazon: https://amzn.to/3NgTQZB].

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Reference (or cite) Article
	Kahlon, R. S. (2012) IS & Strategic Management [Online]. dkode: United Kingdom, England, London. [Published on: 2012-07-18]. [Article ID: RSK666-0000051]. [Available on: dkode | Ravi - https://ravi.dkode.co/2012/07/is-strategic-management.html].

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