Well in the beginning, I expected all ready-made solutions to the various IT problems. I was of the opinion that one can develop Strategic IS on the fly and then query the system and get all the answers to the problems. Following were some of my misbelieves of SIS:
• They have an internal focus
• They can be easily copied and applied to various situations
• They cannot change the way the firm competes
• They are aimed at cost reduction
• They are technology driven
• They are a single all-encompassing strategic system


My experience has helped me to appreciate and understand various frameworks and models. It has also helped me to reflect back on the problems / failures I experienced in my previous IT project. My experience has helped me to work on alternate strategies and back up plans.

As I started to record my thoughts and insights regarding the difference in my understanding of the subject, patterns started to emerge.
Following each of these patterns/leads/experiences and digging them as far as possible, I started to create new ideas, which sounded very ridiculous to me as an IT consultant, but I didn’t let my mindset to censure any ideas at this stage. The way to come up with one great idea is to generate many of them and this has helped me to

• Having a clear-cut business strategy (even if it’s a dummy business strategy as of now)
• Anticipate new IT developments
• Associate people and politics

My learning outcome assumed that I had

• The power to make decisions in the organization
• Clearly understand the goals and to translate business objectives and strategies into action plans
• People management skills
• Change management skills

My mental map changed when I started to ask the following thought-provoking questions from different perspectives:

• What are the success factors in SIS?
• How is this situation similar to others I have faced before?
• Why do IT strategies fail?
• How would someone else solve this problem?
• What are the problem or obstacles on launching IT project?
• What experts could I call upon to help me solve this problem?
• What are some excellent sources of information on this topic or related areas?
• If this problem involves another person, how does he or she view this situation?
• How to anticipate new IT developments?

I realized that a simple solution could be the answer for a very complex problem only when we dig deep and think out of the box. My mind is now open to all ideas - big and small. I will take a mental "walk" around my problem. Imagine hanging it from a hook in the center of the room and then walking slowly around it, viewing it from all sides.

I have realized the importance of devoting time for thinking, reflecting, connecting, acting and creative problem solving. It deepens our inner conscious that often gets overlooked during the busy-ness of our everyday lives. It allows us to consider our opportunities and challenges, goals and dreams. It frees us from needless worry and allows us to focus on more constructive pursuits. It's been said that successful people have as many problems as anyone else. What gives them such tremendous leverage over their lives is a simple, systematic method for analyzing and solving their problems


Most of the time my actions were the consequence of my past experiences. I always let my mindset interfere with my actions. While undergoing the process of learning, I slowly started to know the importance of seeing and perceiving things in a different way. My mental map changed when I Started to ask myself incisive, well thought-out, open-ended questions -, questions that cannot be answered with "yes" or "no." Open-ended questions can yield a treasure trove of valuable information and insights. This helped me to cultivate an "insight outlook" -- consider information, trends and other data from multiple perspectives, and try to identify the inferences, underlying trends or connections they may contain. And when we do so, our perspective changes. Solutions that may have been hidden from us are now suddenly obvious. Obstacles to the progress, seen in a new light, are often much smaller than they appeared to be. And barriers that once seemed insurmountable often evaporate under this rigorous scrutiny.

Well, please read ahead if you'd like to know more about Strategic Information System.

Strategic Information Systems
An information system that enables business is considered a strategic information system. A strategic information system is defined as an information system that creates or enhances the company's competitive advantage or changes the industry structure by fundamentally changing how business is conducted. "Strategic information systems are conventional informational systems used in innovative ways. For the most part, they are transaction based, simple, evolve over time, and solve problems." (Chalero 2000)
“Strategic information systems change the goals, operations, products, services, or environmental relationships of organizations to help them gain an edge over competitors” Source: Kenneth c Laudon, Jane P. Laudon “Managing the digital firm” 8th Edition

What are the characteristics of an SIS that make it strategic?

Unique
First of its kind
Hard to imitate
Raises entry barriers.
Creates new dependencies
(i.e. provides solutions to the five forces)

Frameworks & methodologies
IT solution providers and consultants employ (often proprietary) methodologies. Many times, these methodologies are supported by tools that contain a rich encyclopaedia/dictionary of high-level data structures of almost universal applicability [Bytheway, 1995]. These are then "specialised" or customised to fit the needs of individual clients or customers. The methodologies are typically supported by a specific structural view of the organisation and IT, as embodied in underlying more theoretical frameworks such as the Zachman framework [Zachman, 1987; Evernden, 1996].
Strategic planning methodologies are unique to each application. There is no "one size fits all" methodology. Strategic planning methodologies come in different shapes and sizes. Each methodology is a conglomerate of best practices that are tailored to specific organizational needs. Strategic business and information system plans that are implemented today may not meet the needs of doing business tomorrow. Furthermore, the strategic planning methodologies that were effective today may not be effective tomorrow. As a result, business and information system plans, as well as, strategic planning methodologies are continuously evaluated in order to guarantee that the desired long-term business gains are achieved.
Three Era Model

Data Processing Era
To improve operational efficiency by automating information-based processes

Management Information Systems Era
To increase management effectiveness by satisfying their information requirements for decision-making

Strategic Information Systems Era
To improve competitiveness by changing the nature or conduct of business –IS/IT as a source of competitive advantage
Why use strategic frameworks?
• structure to analyze complex systems
• relation between business strategy and information technolgy becomes clear
• it is a shorthand for complex relationships
• it highlights dimensions of importance
Negative aspects of Strategic Frameworks:
• they are not theories, they cannot be proven
• they are not empirically verifiable
• they are not enough for making decisions, they are descriptions
• they try to categorize, make static, relationships which are dynamic
• they do not explain how to use information technology
Types of Frameworks
Frameworks can be used by managers to understand the firms business environment and to seek opportunities for improvement. We will discuss some of the frameworks in detail in the next few classes. Here again, is a summary of the types of frameworks.
• Foundation Frameworks - Porter's Forces Model (Porter,1980), InterOrganization Systems, Wiseman's Strategic Thrusts. These help to understand the industry structure.
• SIS Opportunity Seeking Frameworks - Value Chain Analysis, Strategic Options Generator. These examine where the firm fits within the industry and searches for strategic opportunities.
• Strategic Impact/Value Framework - Strategic Grid. This Assesses the value and cost of adding IT. What will IT do the the firms position in the industry?
• Contingency Factors Framework - Critical Success Factors, Sustainability Analysis. These identify factors which are unique or specifically significant to an individual firm or industry.
How do firms identify and gain a strategic advantage?
Frameworks can be used by managers to understand the firms business environment and to seek opportunities for improvement. This is one way to create categories of frameworks.Different frameworks use different initiatives to achieving a Competitive Advantage
Initiative #1: Reduce Costs

• Lower Costs
• Lower Price
• Bigger Market Share

Initiative #2: Raise Barriers to Entrants

• Patenting
• High expense of entering industry

Initiative #3: Establish High Switching Costs

• Explicit Switching Costs
• Fixed and nonrecurring
• Implicit Switching Costs
• Indirect costs in time and money of adjusting to a new product


Initiative #4: Create New Products and Services

The advantage lasts only until other organizations in the industry start offering an identical or similar product or service for a comparable or lower price.




Initiative #5: Differentiate Products and Services

• Product differentiation
• Brand recognition

Initiative #6: Enhance Products and Services

Initiative #7: Establish Alliances

• Combined service may attract customers
• Lower cost
• Convenience

Initiative #8: Lock in Suppliers or Buyers

• Bargaining Power
• Purchase volume
• Strengthen perception as a leader
• Create a standard


Michael Porter's Competitive Forces Model

A wide variety of schemes visualizing the strategic planning process are available. In essence they usually consists of a series of steps (building blocks).
The analysis starts with defining the business and formulating a vision and then goes on to assess the internal and external environment. The strategic planning process ends with the financial budget and goes into a feedback loop

The main steps in the strategic planning process are
Analysis- Planning -Implementation -Control

The essence of formulating a strategy is relating a company to its environment. Therefore the analysis phase is crucial to the outcome of the total planning process. A major part of the analysis phase is a diagnosis of the external environment. Several tools and techniques have been developed to assist the planners in evaluating the external environment. Of particular interest is the assessment of the profit potential in the industry.

Michael Porter's Competitive Forces Model (commonly referred to as Porter's Five Forces Model) is by far the most widely used framework for an assessment of the profit potential in the industry. The collective strength of the so-called five forces differ from industry to industry. Each of those five forces is based on structural features (dimensions), which collectively impact the profit potential. All five forces jointly determine the intensity of the industry competition and profitability. The strongest forces become crucial from the point of view of strategy formulation.


The Porter Competitive Forces Model is an industry level analytical model used to describe the external influences on the firm, especially the theats and opportunities. The model links
• Customers / buyers (bargaining power),
• suppliers (bargaining power),
• competitiors (position of competitors),
• substitutes (products and services),
• industry rivalry (new entrants).
Potential New Entrants:
• can lower profit margins,
• lower prices to consumers,
• decrease the size of market shares,
• the threat of new entry can encourage existing firms to put up barriers to entry.
Barriers to entry:

These are the important structural components with an industry to limit or prohibit the entrance of new competitors. The major components are scale economies (advantage of experience, learning and volume), differentiation (brand image and loyalty), capital requirements (new entrants will face a risk premium), switching cost involved by the customer, access to distribution channels and cost disadvantages (patents, location, subsidies).

Sources of barriers to entry are:
• raising switching costs,
• economies of scale,
• high investment in IT base,
• economies of experience,
• limited access to a choice of distribution channels,
• government policy, and asymetric treatment of firms.
Rivalry among existing competitors:

In most industries, especially when there are only a few major competitors, competition will very closely match the offering of others. Aggressiveness will depend mainly on factors like number of competitors, industry growth, high fixed costs, lack of differentiation, capacity augmented in large increments, diversity in type of competitors and strategic importance of the business unit.
• Rivalry invokes counter moves.
• Rivalry can result in lower prices, long run reduced profit margins, and weaker industry.
• Or it can result in quality improvements, diverse products.
The intensity of rivalry is influenced by the following industry characteristics:
1. A larger number of firms
2. Slow market growth
3. High fixed costs.
4. High storage costs or highly perishable products
5. Low switching
6. Low levels of product differentiation.
7. Strategic stakes are high
8. High exit barriers
9. A diversity of rivals
10. Industry Shakeout
Substitutes or new products:
These are products or solutions that basically perform the same function but are often based on a different technology. Depending on the level of abstraction nearly everything can be a substitution. In general the only factor that really matters is a shift in technology. These substitutes put pressure on providers to improve products. Price can increase if the new product in non-standard. Substitutes can raise the cost to compete. Often they introduce a non-sustainable advantage because others will try to imitate.
Powerful Buyers:
Powerful Buyers can force prices down, can bargain for better service, can improve quality.
A buyers strength is characterized by:
• the percent of its suppliers sales that it is responsible for,
• if they purchase standard products,
• if they face few switching costs,
• if they can buy (integrate) its supplier firm.
Powerful Suppliers can demand higher prices, or decrease quantity or quality.
Suppliers are powerful if
• they can lock-in buyers,
• provide differentiated products,
• pre-select buyers that are not in a position to threaten,
• if they can merge with customers.
Through addressing these dimensions which make up the Five Forces we have outlined factors which will be taken into account and applied to support the formulation of Information Strategy. It will still be the expert’s in-sight who will assert the value of impact of each individual variable. Another aspect is the relative weight of each of the factors in the overall assessment.
Use of Competitive Strategies
The individual advantages of the firm determine the firms ability to deal with threats from the market. In other words, how do firms compete? Porter has outlined several Competitive Strategies:
• Product Differentiation: use of innovation to produce different products or services that cannot be easily copied. The firm attempts to develop brand loyalty. This strategy can address threats such as: position of competitors and substitutes.
• Focused Differentiation (niche): the firm uses a niche strategy, it targets its product for a specific section of the market. It tries to serve the market segment better than the competition. This addresses: position of cometitors and new entrants.
• Develop tight links to customers and suppliers: the firm can try to lockin either suppliers or customers. They try to lock suppliers into a delivery time table and price structure. They also can try to lock buyers into a price structure. The idea is to raise the switching costs of the supplier/buyer or try to lower the bargaining power of the supplier/buyer. This addresses: bargaining power theats and position of the competitors.
• Become the Low Cost producer: Offer the same quality or level of service as competitors at a lower price. This addresses: threat of new entrants and the position of the competitors.
• Establish Partnerships: participants in partnerships can share costs, benefits and risks. Often this redefines the firms relationship with competitors. This addresses: position of competitors and the threat of new entrants.