The document discusses how firms can gain competitive advantage through effective management of information resources. It describes the firm's environment and value chain. Firms use strategic planning processes like SPIR to develop information resource strategies that align with business strategies. The Chief Information Officer plays a key role in strategic planning and management of information resources, which include hardware, software, facilities, databases, specialists, and users. Effective information resource management is needed at all levels of the firm.

1. MANAGEMENT INFORMATION SYSTEMS 8/E
Raymond McLeod, Jr. and George Schell
Chapter 2
Using Information Technology
for Competitive Advantage
2-1
Copyright 2001, Prentice-Hall, Inc.
What is a Firm?
Physical System
– Closed-loop
– Controlled by management
– Uses feedback to ensure objectives met
– Open because of environmental interaction
Managed through use of a conceptual
system
2-2

2. Importance of Environment
Very reason for a firm’s existence
Firm takes resources from environment,
transforms them, and returns goods and
services to environment
2-3
The Firm’s Environment
Society
Financial
Community
Suppliers
Government
The
Firm
Labor
unions
Global
Community
Customers
Competitors
Stockholders
or owners
2-4

3. The Firm Is Connected to Its
Environment by Resource Flows
Physical and conceptual
Some flows are major
Some should not occur at all
All resources that enter the firm from the
environment eventually return to the
environment
2-5
Competitive Advantage
Computer field perspective
– Use of information to gain leverage in
marketplace
– Relies on more than physical resources
Addressed with strategic objectives
2-6

4. A Value Chain
Firm Infrastructure
Ma
Human resource management
n
rgi
Support
Activities
Technology development
Inbound Operations Outbound Marketing
and
logistics
logistics
sales
Service
Primary Activities
Ma
rgin
Procurement
2-7
Source : Michael E. Porter
A Value System
Supplier
value
chains
Firm
value
chain
Channel
value
chains
Buyer
value
chains
2-8
Source : Michael E. Porter

5. The Information Resources
Two views of information management
1. Manage data by implementing computerbased database management systems
(DBMS)
2. Manage resources that produce the
information
2-9
The Information Resources
Software
Hardware
Information
Specialists
Database
Information
Users
Facilities
2-10

6. The Information Resource
Manager -- the CIO
Chief Information Officer (CIO) is not
simply a title, but role
Manager of information services
Contributes managerial skills
– Solves information resources problems
– Solves problems in other areas of firm’s
operations
2-11
The CIO Attitude
Spend time the business and in business training.
Learn the business, not just the technology
Build partnerships/ties with the rest of the firm
Improve basic business processes
Communicate in business terms, not IS jargon
Provide reliable IS services
Be positive, not defensive
2-12

7. Strategic Planning
Long-range planning
– Intends to give firm most favorable position in
its environment
– Specifies strategies for achieving objectives
Need for each functional area to create its
own strategic plan
2-13
The Functional Areas Should Cooperate
in Developing Their Strategic Plans
Strategic
planning for
information resources
Strategic
planning for
marketing
resources
Strategic
planning for
financial resources
Strategic
planning for
manufacturing
resources
Strategic
planning for
human
resources
2-14

8. Strategy Set Transformation
Organizational
strategy set
MIS
strategy set
Mission
System
objectives
Objectives
System
constraints
Strategy
Other
strategic
organizational
attributes
MIS
strategic
planning
process
System
design
strategies
2-15
Strategy Set Transformation:
Basic Flaw
Business areas do not always have the
resources to ensure accomplishment of
strategic objectives
2-16

9. SPIR
Strategy set transformation; support the
firm’s objectives
Strategic planning for information resources
(SPIR) develops firm and IS strategic plans
concurrently
– SPIR content
» 1. What is to be achieved
» 2. What will be required
2-17
Strategic Planning for
Information Resources
Influence on
Information
Resources
Business
strategy
Influence on
Business
Strategy
Information
resources
and
IS
strategy
2-18

10. Strategic Plan Framework for
Information Resources
Strategic Plan
for Information
Resources
AIS
Objectives
MIS
Objectives
DSS
Objectives
Virtual
Office
Objectives
Knowledgebased systems
Objectives
Required
Information
Resources
Required
Information
Resources
Required
Information
Resources
Required
Information
Resources
Required
Information
Resources
2-19
The Strategic Implications of
End-User Computing (EUC)
Levels of end users in terms of capabilities
– menu-level end users
– command-level end users
– end-user programmers
– functional support personnel
Benefits of EUC
– shifts workload so that end-users and
information specialists’ talents are better used
– reduces communications gap
2-20

11. EUC Risks
Poorly aimed systems
Poorly designed/ documented systems
Inefficient use of information resources
Loss of data integrity
Loss of security
Loss of control
2-21
Information Resources
Management (IRM) Concept
Realization that firm’s information
resources go far beyond the information
itself
Activity pursued by managers at all levels
Identifying, acquiring, and managing
information resources needed to satisfy
information needs
2-22

12. IRM - Required Elements
A recognition that competitive advantage
can be achieved by means of superior
information resources
A recognition that information services is a
major functional area
A recognition that the CIO is a top-level
executive
2-23
IRM-Required Elements (cont.)
A consideration of the firm’s information
resources when engaging in strategic
planning
A formal strategic plan for information
resources
A strategy for stimulating and managing
end-user computing
2-24

13. The IRM Model
The environment of the firm
ENVIRONMENTAL INFLUENCES
The firm’s executives
Other executives
CIO
Internal influences
Firm’s strategic plan
FUNCTIONAL AREAS
Information
services
Finance
Human
resources
Manufacturing
Marketing
INFORMATION RESOURCES
Central computing
resources
Disbursed computing
resources
DATA AND INFORMATION
Users engaged in
end-user computing
Other users
2-25
IRM Model: Firm Environment
Provides setting for achieving competitive
advantage
Executives are aware of need to manage
resource flows to meet needs of
environmental elements
2-26

14. IRM Model: Firm’s Executives
Includes CIO
Guides firm toward objectives
Key activity is strategic planning
2-27
IRM Model: Functional Areas
Information services is a major functional
area
Each area develops own strategic plans
One functional area strategic plan is for
information resources
2-28

15. IRM Model: Information
Resources
Strategic plan for information resources
details acquisition and management
Information resources
– Centralized
– Dispersed throughout firm
2-29
IRM Model: Users
Details data and information flows between
resources and users
Some users engage in end-user computing
2-30

16. Summary
Environment of a firm consists of eight
elements
Firms attempt to achieve competitive
advantage
– Margin - value of products and services over
cost
– Value chain
Information resources
– Hardware, software, facilities, database,
information specialists, information, and users
2-31
Summary [cont.]
Executives perform strategic planning
– SPIR
All firm’s managers need to engage in IRM
2-32