Strategic Information System in Business Firm

1. 12-1
Chap – 10
Strategic Information
Systems

2. Managerial Issues
What are the key
objectives of the
organization?
What is its
strategic
direction?
CEO
CIO

3. Managerial Issues
What objectives and strategies
should IS pursue? What
policies should it establish?
How should investments in IT
be justified?
CEO
CIO

4. 12-4
Definition of SIS
 Researchers have classified IS into
three categories:
Systems that support business
functions
Systems that support strategic
planning such as DSS and EIS
Systems that are a part of a
firm’s strategy

5. 12-5
Definition of SIS Contd…
 Strategic Information System (SIS)
A system that delivers information
products and services that play a
direct and prominent role in helping
the firm achieve its strategic goals.

6. 12-6
Definition of SIS Contd…
An SIS also supplies an organization with
Business Intelligence or competitive
information
 Business Intelligence
Business Intelligence consists of internal
and external data used to assess and
analyze opportunities and threats in
business environment

7. 12-7
Types of SIS
SIS can be external or internal systems.
External strategic systems are used primarily by
external entities in the business environment,
such as customers, suppliers, and distributors.
Benefits to the customer:
1. Increased customer satisfaction
2. Increased customer control
3. Reduction in transaction costs (shipping and
handling costs)

8. 12-8
Types of SIS Contd…
SIS can be external or internal systems.
Internal Strategic Systems are used by employees
within the organization and do not have a value-
added component. They focus on issues such as
improving the quality of products and services
and enhancing the decision-making capabilities
of managers.
Benefits to the Organization:
1. Increased market share
2. Reduction of processing costs
3. Ability to charge higher prices because of
value-added component
4. Increase in profit margins

9. 12-9
Examples of SIS
An example for a SIS is the Automated Teller
Machine (ATM) first introduced by Citibank in
1977. This completely revolutionized the system
in banking industry and forever changed the way
people conducted financial transactions.
ATMs were strategic systems because the only
alternative to ATMs would require banks to open
branch offices at a large number of convenient
locations and these offices would have to remain
open for 24hrs per day, 7 days per week, to
provide the same level of service as ATMs.

10. 12-10
Strategic Information Systems Plan (SISP)
 Strategic Business Plan:
A plan that identifies a company’s goals as a means
of achieving the organizational mission; also
includes what is popularly referred to as SWOT
analysis.
 Strategic Information Systems Plan (SISP):
Identifies the information systems and technologies
that are vital to support a firm’s business strategy;
derived from the strategic business plan.
-Is like a road map that helps IS managers to
identify any potential gaps between what is available
and what should be available to promote good
decision making.

11. 12-11
Strategic Information Systems Plan (SISP) Contd…
The SISP should specifically target the following four
areas:
- Aligning IS investment with business goals
- Exploiting information technologies for competitive
edge
- Ensuring the efficient management of IS resources
-Developing technology policies and practices

12. 12-12
Strategies for Developing an SIS
Steps involved in developing an SISP:
 Establish the purpose of the plan and develop a broad outline
describing what the plan will address.
 Update the strategic business plan and the goals of the
business. Reassess the current business environment
 Identify the existing information systems including hardware,
software, and networking capabilities. Determine future
information needs and systems
 Identify the new systems, projects, and capabilities required to
meet the changing environment and changing information
needs.
 Identify the resources required to implement the plan and to
win the support of top management for the plan.
An organization should ask two important questions before
investing in strategic systems:
- Is the project financially feasible?
- Is the project technically feasible?

13. 12-13
Steps to Ensure Success of Strategic Systems
Re-engineering:
Re-evaluating and radically redesigning the way in which a
company does business; driven by the question, “Why do
we do what we do?”
 Technology decisions should be grounded in a clear
understanding of the processes that drive the technology.
 Strategic systems should be driven by strategic alliances
between trading partners
 Continuous improvement and investment in strategic
systems are essential for their long-term success
 The organizational culture should encourage some risk
taking
 Users must be fully trained if the full potential of the
strategic system is to be achieved

14. 12-14
Potential Barriers for Developing an SIS
 Development (Definition) Barriers:
- Generating Workable ideas requires leadership and teamwork
- Many innovative ideas are technically feasible
- Many innovative ideas are prohibitively expensive
-Many ideas die because they lack a sufficient market.
 Implementation Barriers:
- Telecommunications increases the complexity of implementing
SIS
- Multiple systems are difficult to integrate
- SIS systems often require inter-organizational cooperation
- State-of-the-art technologies are difficult to implement
 Maintenance Barriers:
- Competitors can copy SIS
- Unanticipated demand can overwhelm the usefulness of an SIS
- Applications can be expensive to maintain or enhance
- High exit barriers can cause devastating losses.